U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
QUOTEMEDIA.COM, INC.
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(Name of Small Business Issuer in its charter)
Nevada 91-2008633
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11100 NE 8th Street, Suite 300
Bellevue, Washington 98004
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (415) 451-1604
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Page One of One Hundred Eighty Four Pages
Exhibit Index is Located at Page Sixty Seven
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . . . . . . . . 17
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . . . 25
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . . . . . . . . 26
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . . . . . 27
Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 29
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . . . . . . . . 33
Item 8. Description of Securities. . . . . . . . . . . . . . . . . . . . 35
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . . . . . . . . 35
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 37
Item 3. Changes in and Disagreements with Accountants. . . . . . . . . . 38
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . . . . 38
Item 5. Indemnification of Directors and Officers. . . . . . . . . . . . 41
PART F/S
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 42
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . . 67
Item 2. Description of Exhibits. . . . . . . . . . . . . . . . . . . . . 70
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PART I
Item 1. Description of Business
The Company was incorporated in the state of Nevada on June 29, 1992, under
the name "Genetic Futures, Inc." Since its inception, the Company has undertaken
to implement numerous business plans and, in relation to such various
businesses, has been known under many different names, including (in order)
Physician's Cybernetic Systems, Inc., Videocom International, Inc., Canadian
Tasty Fries, Inc., International Tasty Fries, Inc., Filtered Souls
Entertainment, Inc., Skyline Entertainment, Inc. and, finally, its current name,
QuoteMedia.com, Inc. (the "Company" or "QMI"). As of the date of this
registration statement, the Company's principal business purpose is an Internet
technology company specializing in the collection, aggregation and delivery of
"delayed" and "real-time" financial data and complementary content via the
Internet. The Company utilizes existing browser based technology, as well as
unique and proprietary Java based analytic tools and components, to deliver
information to the user's desktop. The Company also intends to license and
develop light weight, sophisticated and reliable on-line trading technologies.
The Company is a development stage company which intends to engage in the
on-line financial services market through what management considers to be a
unique subscriber aggregation strategy. The strategy focuses on private labeling
the Company's turnkey Internet products to established web portals, brokerage
and other financial services firms which management believes currently offer no
or inadequate on-line financial information and trading tools. QMI's systems
allow existing web portals and brokerage firms to offer premium investment
information and services to their clients via the Internet. Investors can
monitor investments through the Company's customizable portfolio tracker,
research investment opportunities, watch live video and execute trades, all
within their browser. The private label model allows QMI to take advantage of
existing brand recognition and loyalties already established between the firms
and their clients.
In November 1998, pursuant to the affirmative vote of the Company's Board
of Directors and a majority of the Company's issued and outstanding common
stockholders, the Company undertook a "reverse split" of its issued and
outstanding common stock, whereby 20 shares of common stock then issued and
outstanding were exchanged for one (1) share of the Company's common stock. For
purposes herein, all references to the Company's issued and outstanding common
stock reflect this reverse stock split.
HISTORY OF BUSINESS
The Company's current business was acquired in July 1999 as a result of a
merger between the Company and QuoteMedia.com, Inc., a
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Colorado corporation ("Old QMI"). Pursuant to a definitive agreement, the
Company issued an aggregate of 11,000,000 shares of its common stock in exchange
for all of the issued and outstanding securities of Old QMI. As a result of this
transaction, Old QMI did not survive this transaction and the Company changed
its name to QuoteMedia.com, Inc. Mr. R. Keith Guelpa also joined the Company as
President, Treasurer and a director. With the exception of Mr. Ian Lambert, the
balance of the Company's officers and directors resigned their respective
positions with the Company. Mr. Lambert has remained as Secretary and a director
of the Company.
Subsequent to the closing of the transaction with Old QMI, in August 1999,
the Company undertook a private offering of its securities pursuant to the
exemption from registration provided by Rule 505 of Regulation D and Regulation
S, each promulgated under the Securities Act of 1933, as amended (the "33 Act").
In this offering, the Company sold 1,540,669 shares of common stock at an
offering price of $.75 per share and the Company received net proceeds of
approximately $1,155,000 therefrom. The principal reason for this offering was
to provide initial funding to allow the implementation of the Company's current
business plan. The Company's common stock was sold to one US resident who was an
accredited investor (as that term is defined under the 33 Act), and seven (7)
non-US residents.
In October 1998 through March 1999, the Company was a party to a series of
agreements with Skyline Records, Inc., a privately held British Columbia, Canada
corporation ("SRI"), engaged in music production and distribution and the
exclusive owner of certain rights to produce and distribute albums for five
individual artists, collectively known as Filtered Souls. On October 6, 1998,
the Company reached an agreement with SRI to acquire a fifty percent (50%)
interest in the net revenues derived from the independent, national,
international and Internet distribution and sales in the initial Filtered Souls
album to be produced and distributed by SRI. The purchase price payable by the
Company to SRI for the interests was originally $1,000,000 (US) and issuance by
the Company of 1,250,000 "restricted" shares of its Common Stock. The aforesaid
funds were payable over a period of time when the costs associated with the
production and distribution of the music were incurred by SRI. However, this
agreement was subsequently amended in July 1999, by which time the Company had
tendered $500,000 of the original $1 million due. The amendment to the SRI
agreement provided for (i) a waiver of any and all additional cash contributions
due SRI by the Company; (ii) the issuance by the Company of an additional
1,250,000 shares to SRI; and (iii) the payment to the Company by SRI of up to $3
million out of the net revenues derived by SRI from album sales. To date, the
Company has not received any funds from SRI, but management remains hopeful that
revenues will be received from SRI in the future. Based upon representations
made to the Company by management of
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SRI, it is anticipated that SRI will begin generating revenues from the sale and
distribution of its album sales in late spring of the year 2000. However, there
can be no assurances that SRI will generate profits from this endeavor within
the time parameters estimated herein, or at all.
Prior to engaging in the transaction with SRI, the Company had obtained the
distribution rights in various countries in Europe to market and distribute a
french fry vending machine which allegedly was to produce a "fat free" french
fry. The Company acquired these rights in 1995 from Tasty Fries, Inc., a
Delaware corporation ("TFI") in exchange for a cash payment of $800,000. In
addition to the distribution rights, the Company also received 10 million shares
of TFI "restricted" common stock. TFI subsequently undertook a reverse split of
its common stock on a 20 for 1 basis. To date, the Company has sold some of the
TFI shares, recovering a nominal amount of its initial investment. However, the
Company has retained the European rights originally acquired.
The principal problem with the aforesaid business was that TFI has been
unable to deliver a machine which can meet the representations made by TFI
relating to the fat free nature of the potato end product. However, management
continues to remain in contact with TFI and it has been represented that the
machine may become available in the Spring of 2000. No assurances can be
provided that this will occur. In the event the french fry vending machine is
successfully produced, management will consider selling these rights either to a
third party, or back to TFI. No discussions in this regard have occurred as of
the date of this registration statement and none are expected until the
viability of the machine is confirmed.
Because the Company was relatively dormant after the SRI transaction, the
then management began seeking out other business opportunities in order to
enhance shareholder value. As a result, the Company identified and consummated
the transaction with Old QMI described above.
CURRENT BUSINESS ACTIVITIES
The Company is an Internet technology company specializing in the
collection, aggregation and delivery of "delayed" and "real-time" financial data
and complementary content via the Internet. The Company utilizes existing
browser based technology, as well as proprietary Java based analytic tools and
components to deliver information to the user's desktop. The Company also
intends to license and develop light weight, sophisticated and reliable on-line
trading technologies.
The Company intends to engage in the on-line financial services market
through what management perceives as a unique subscriber aggregation strategy.
The strategy focuses on private
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labeling the Company's turnkey Internet products to established web portals,
brokerage and other financial services firms which currently offer no or
inadequate on-line financial information and trading tools to its clients.
QMI's products allow existing web portals and brokerage firms to offer
investment information and services to their clients via the Internet. Investors
can monitor investments through the Company's customizable portfolio tracker,
research investment opportunities, watch live video and execute trades all
within their browser. Management believes that the business model of providing
turnkey, cost effective, solutions to these firms on a private label basis is
unique and timely. The private label model allows QMI to take advantage of
existing brand recognition and loyalties already established between the firms
and their clients.
The alternative to QMI's private label program is expensive, for both the
initial development (estimated $2 million to $5 million) and the on going
monthly content and maintenance (estimated $150,000 to $250,000 per month). The
time to completion of a comparable system would be approximately 8 to 12 months,
not including the on-line trading systems. The advertising and transaction based
revenue model which the Company employs allows the Company to offer these
systems to the brokerage firms at a very attractive price point and it is hoped
that this will enable the Company to build a large subscriber/user base at an
accelerated rate. However, no assurances can be provided that this will occur.
Most of the firms currently offering on-line trading have been slow in
providing their client base with comprehensive financial content and investment
research. The Company intends to offer financial content engines (which navigate
the Internet) to the most popular on-line brokerages to offer their users the
ability to conduct investment research by providing an aggregation of
comprehensive financial content, advisory content, discussion forums and virtual
communities complemented with an improved trading interface to their existing
on-line brokerage. This combination of content and transactional elements offers
the user what management believes to be the first true one-stop, on-line trading
experience.
The Company has identified four potential target markets for its products,
including large web portals, brokerage firms, banks and financial institutions,
cyber investors and corporate advertisers. Initially, cyber investors will not
be direct paying customers for QMI's basic service, as they will receive them
free of charge. They are still deemed extremely important by management to QMI's
overall revenue equation because cyber investors accessing the Company's site
generate quantifiable, site-specific Internet traffic and site-specific Internet
traffic generates advertising and revenues. In the future, cyber investors will
be charged a
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monthly subscription fee for real time streaming quotes and analytical tools.
Public companies are expected to be direct paying customers for the
products and services provided in the Select Gallery on the Company's site.
Commercial advertisers and publishers will contribute to revenues by supporting
banner advertising and mutual links on the QuoteMedia site. Financial
institutions will have the opportunity to license the Company's interface for
their own private label Internet-based investment sites and/or the Select
Gallery to reside on their own corporate Intranets.
As of the date of this registration statement, the Company has established
relationships with 2 large web portals, TappedInto.com, Inc. ("TIC") and Pronet
Enterprises, Inc. ("PEI"). These 2 partnered sites provide a substantial number
of users. In this regard, on October 29, 1999, the Company executed an agreement
with TIC whereby TIC appointed the Company as its exclusive financial content
provider for the TIC website and the Company granted TIC a non-exclusive,
non-transferable right to distribute the Company's Private Branded Site solely
by Hypertext Links from TIC's site and to use the tradename "QuoteMedia" solely
in connection with the marketing and promotion of the Private Branded Site. TIC
provided QMI with the worldwide non-exclusive, non-transferable rights to use
TIC's graphics in connection with developing the Private Branded Site. The term
of this agreement is for a three (3) year period commencing upon the Company's
website launch date.
As of the date of this registration statement, the Company has executed a
letter of intent with PEI and is in the process of finalizing a formal
definitive agreement, which is expected to be executed by the end of January
2000.
The Company plans to establish other similar relationships throughout the
course of the next few years with the ultimate goal of developing a large enough
user base to sustain profitability through the sale of banner ads on each of the
partnered sites. For a more detailed description of the Company's business plan,
see "Item 2, Plan of Operation" below.
Employees
The Company has six (6) full time employees, including Mr. R. Keith Guelpa,
CEO, President and a director of the Company, its chief technologist, chief
financial officer, manager of investment relations, an executive assistant and a
receptionist. None of the Company's employees are members of any union, nor has
the Company entered into any collective bargaining agreements regarding its
employees. Management believes that its relationship with its employees is
satisfactory. It is anticipated that, in the event the Company is successful in
implementing its business plan described herein, additional employees will be
retained in the next
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year to handle this anticipated growth. These areas include administration and
sales and marketing, technology customer care and legal.
Competition
The ability to provide stock quotes and related information is not
exclusive to the Company. There are literally hundreds of websites offering
stock quotes and charts on the Web today. The most popular and largest of these
websites include MSN Investor, Quicken, CBS MarketWatch, The Street.com, and PC
Quote. Many online brokerages also offer detailed market information to their
clients, such as E*Trade, Charles Schwab, SureTrade and many others.
Management believes that the Company's business model offers strong market
differentiation through its strategy of offering turn-key private labeled
financial web solutions to large, well established web portals and brokerages.
This should allow the Company to take advantage of existing brand recognition
and loyalties already established between the partnered sites and their
clients/users. However, there can be no assurances that this will occur. See
"Risk Factors" below.
GOVERNMENTAL REGULATIONS
The Company is not subject to any extraordinary governmental regulations.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
THE COMPANY'S INDEPENDENT AUDITORS HAVE EXPRESSED A GOING CONCERN OPINION
As a result of the Company's lack of revenues and its accumulated deficit
of $(189,047) at September 30, 1999, the Company's financial statements
accompanying this Registration Statement have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty. The Company has had a limited operating history and
has not generated any revenues or earnings from its current operations. The
Company will, in all likelihood, continue to sustain operating expenses without
corresponding revenues, at least until the Company's business plan described
herein is fully implemented. This may result in the Company continuing to incur
a net operating loss until it is able to generate profits from operations, which
is not expected to occur until the end of year 2000. However, there are
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no assurances that the Company will generate profits from operations within the
aforesaid time period, or at all.
THE COMPANY'S PROPOSED OPERATIONS ARE SPECULATIVE. THE COMPANY HAS NOT CONDUCTED
ANY MARKET RESEARCH, NOR DOES IT HAVE A MARKETING ORGANIZATION OTHER THAN ITS
CURRENT MANAGEMENT.
The success of the Company's proposed plan of operation will depend to a
great extent on the acceptance of the Company's business premise by the general
public. The Company has neither conducted, nor have others made available to it,
results of market research indicating that market demand exists for the business
plan contemplated by the Company. Moreover, the Company does not yet have a
formal marketing organization. However, management believes that the Company's
business plan is viable based upon the success achieved by other current
competitive financial information portals. Even in the event demand is
identified for the business contemplated by the Company, there is no assurance
the Company will be successful in generating profitable operations.
THE COMPANY IS A DEVELOPMENT STAGE COMPANY, HAS A LIMITED OPERATING HISTORY, IT
ANTICIPATES CONTINUED LOSSES IN THE NEAR FUTURE AND FUTURE RESULTS ARE
UNCERTAIN.
The Company has only a limited operating history upon which an evaluation
of the Company and its prospects can be based. The Company's prospects must be
evaluated with a view to the risks encountered by a company in an early stage of
development, particularly in light of the uncertainties relating to the new and
evolving markets in which the Company has begun to operate and whether there
will be acceptance of the Company's business model. QMI will be incurring costs
to continue to develop and enhance its website, to establish marketing and
distribution relationships and acquire additional hardware and software and to
enhance its existing administrative organization. To the extent that such
expenses are not subsequently followed by commensurate revenues, the Company's
business, results of operations and financial condition will be materially
adversely affected. There can be no assurance that the Company will be able to
generate sufficient revenues from the sales through its business to achieve or
maintain profitability on a quarterly or an annual basis in the future. QMI
expects negative cash flow from operations to continue, at least for the
foreseeable future, as it continues to develop and market its business. If cash
generated by operations is insufficient to satisfy the Company's liquidity
requirements, the Company may be required to sell debt or additional equity
securities. The sale of additional equity or convertible debt securities would
result in additional dilution to the Company's stockholders. Further, there can
be no assurances that the Company will successfully be able to sell its
securities in order to obtain additional capital.
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THE COMPANY'S BUSINESS PLAN IS DEPENDENT IN PART ON THE INTERNET AND THERE IS
UNCERTAIN ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE.
Use of the Internet by consumers is at an early stage of development and
market acceptance of the Internet as a medium for commerce is subject to a high
level of uncertainty. The Company's future success will depend on its ability to
generate significant revenues, which will require the development and widespread
acceptance of the Internet as a medium for commerce. There can be no assurance
that the Internet will be a successful retailing channel. The Internet may not
prove to be a viable commercial marketplace because of inadequate development of
the necessary infrastructure, such as reliable network backbones, or
complementary services, such as high speed modems and security procedures for
financial transactions. The viability of the Internet may prove uncertain due to
delays in the development and adoption of new standards and protocols (for
example, the next generation Internet Protocol) to handle increased levels of
Internet activity or due to increased governmental regulation. If use of the
Internet does not continue to grow, or if the necessary Internet infrastructure
or complementary services are not developed to support effectively the growth
that may occur, the Company's business, results of operations and financial
condition could be materially adversely affected.
The Company's future success will be significantly dependent upon its
ability to attract users and advertisers to its website. There can be no
assurance that the Company will be attractive to a sufficient number of users to
generate significant revenues. There can also be no assurance that the Company
will be able to anticipate, monitor and successfully respond to rapidly changing
consumer tastes and preferences so as to continually attract a sufficient number
of users to its websites. If the Company is unable to develop Internet content
that allows it to attract, retain and expand a loyal user base, its business,
results of operations and financial condition will be materially adversely
affected.
THERE IS A RISK OF CHANGES IN TECHNOLOGY.
The Company's success will also depend upon its ability to develop and
provide new products and services. The delivery of the Company's products and
services on-line is, and will continue to be, like the Internet, characterized
by rapidly changing technology, evolving industry standards, changes in customer
requirements and frequent new service and product introductions. The Company's
future success will depend, in part, on its ability to use effectively leading
technologies to continue its technological expertise, to enhance its current
services, to develop new services that meet changing customer requirements and
to influence and respond to emerging industry standards and other technological
changes on a timely and cost-effective basis. There
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can be no assurance that the Company will so respond to these changing
technological conditions.
THE COMPANY IS SUBJECT TO SIGNIFICANT COMPETITION.
The market for Internet content providers is new, highly competitive and
rapidly changing. Since the Internet's commercialization in the early 1990's,
the number of websites on the Internet competing for consumers' attention and
spending has proliferated. With no substantial barriers to entry, the Company
expects that competition will continue to intensify. Currently, there are
hundreds of real time data information, research and trading services websites
on the Internet. With respect to competing for consumers' attention, in addition
to intense competition from Internet content providers, the Company also faces
competition from traditional brokerage institutions.
The Company believes that the primary competitive factors in providing its
services via the Internet are name recognition, content available on an
exclusive basis, variety of value-added services, ease of use, price, quality of
service, availability of customer support, reliability, technical expertise and
experience. The Company's success in this market will depend heavily upon its
ability to provide high quality content, along with cutting-edge technology and
value-added Internet services. Other factors that will affect the Company's
success include the Company's ability to attract experienced marketing, sales
and management talent. In addition, the competition for advertising revenues,
both on Internet websites and in more traditional media, is intense. Management
believes that the Company's business model offers strong market differentiation
through its strategy of offering turn-key private labeled financial web
solutions to large, well established web portals and brokerages. This should
allow the Company to take advantage of existing brand recognition and loyalties
already established between the partnered sites and their clients/users.
However, there can be no assurances that this will occur.
The Company's industry is highly competitive. Many of the Company's current
and potential competitors in the Internet and financial industry have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition and larger existing customer bases than the
Company. These competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements and to devote greater
resources to the development, promotion and sale of their services than the
Company. There can be no assurance that the Company will be able to compete
successfully against current or future competitors.
In addition, the market in which the Company competes is characterized by
frequent new product introductions, rapidly changing technology and the
emergence of new industry standards.
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The rapid development of new technologies increases the risk that current or new
competitors will develop products or services that reduce the competitiveness
and are superior to the Company's products and services. The Company's future
success will depend to a substantial degree upon its ability to develop and
introduce in a timely fashion new products and services and enhancements to its
existing products and services that meet changing customer requirements and
emerging industry standards. The development of new, technologically advanced
products and services is a complex and uncertain process requiring high levels
of innovation, as well as the accurate anticipation of technological and market
trends. There is a potential for product development delay due to the need to
comply with new or modified standards. There can be no assurance that the
Company will be able to identify, develop, market, support, or manage the
transition to new or enhanced products or services successfully or on a timely
basis; that new products or services will be responsive to technological changes
or will gain market acceptance; or that the Company will be able to respond
effectively to announcements by competitors, technological changes, or emerging
industry standards. The Company's business, results of operations and financial
condition would be materially and adversely affected if the Company were to be
unsuccessful, or to incur significant delays, in developing and introducing new
products, services, or enhancements.
THE COMPANY'S QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.
The Company's quarterly operating results may fluctuate significantly in
the future as a result of a variety of factors, most of which are outside the
Company's control, including: the level of use of the Internet; Internet
advertising; seasonal trends in Internet use, purchases and advertising
placements; the addition or loss of advertisers; the level of traffic on the
Company's Internet sites; the amount and timing of capital expenditures and
other costs relating to the expansion of the Company's Internet operations; the
introduction of new sites and services by the Company or its competitors; price
competition or pricing changes in the industry; technical difficulties or system
downtime; general economic conditions; and economic conditions specific to the
Internet and Internet media. Due to the foregoing factors, among others, it is
likely that the Company's operating results will fall below the expectations of
the Company or investors in some future quarter.
THE COMPANY IS DEPENDENT ON KEY PERSONNEL AND EXPECTS TO HIRE ADDITIONAL
PERSONNEL.
The Company's performance is substantially dependent on the services of R.
Keith Guelpa, its Chief Executive Officer and President. The Company's success
also depends on its ability to attract and retain additional qualified
employees. Competition for qualified personnel is intense. There can be no
assurance that the
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Company will be able to attract and retain key personnel. The loss of Mr. Guelpa
or more key employees could have a material adverse affect on the Company.
The Company believes its future success will also depend in large part upon
its ability to attract and retain highly skilled management, technical
engineers, sales and marketing, finance and technical personnel. Competition for
such personnel is intense and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. The loss of the services
of any of the key personnel, the inability to attract or retain qualified
personnel in the future, or delays in hiring required personnel, particularly
technical engineers and sales personnel, could have a material adverse affect on
the Company's business, results of operations and financial condition.
THE COMPANY IS DEPENDENT ON THIRD PARTIES FOR INTERNET OPERATIONS AND PRODUCT
DELIVERIES.
The Company's ability to advertise on other Internet sites and the
willingness of the owners of such sites to direct users to the Company's
Internet sites through hypertext links are critical to the success of the
Company's Internet operations. The Company also relies on the cooperation of
owners of copyrighted materials and Internet search services and on its
relationships with third party vendors of Internet development tools and
technologies. There can be no assurance that the necessary cooperation from
third parties will be available on acceptable commercial terms or at all. If the
Company is unable to develop and maintain satisfactory relationships with such
third parties on acceptable commercial terms, or if the Company's competitors
are better able to leverage such relationships, the Company's business, results
of operations and financial condition will be materially adversely affected.
THE COMPANY MAY NEED TO SPEND SIGNIFICANT AMOUNTS OF MONEY TO PROTECT AGAINST
SECURITY BREACHES.
A party who is able to circumvent the Company's security measures could
misappropriate proprietary information or cause interruptions in the Company's
Internet operations. The Company may be required to expend significant capital
and resources to protect against the threat of such security breaches or to
alleviate problems caused by such breaches. Consumer concern over Internet
security has been, and could continue to be, a barrier to commercial activities
requiring consumers to send their credit card information over the Internet.
Computer viruses, break-ins, or other security problems could lead to
misappropriation of proprietary information and interruptions, delays, or
cessation in service to the Company's customers. Moreover, until more
comprehensive security technologies are developed, the security and privacy
concerns of existing and potential customers may inhibit the growth of the
Internet as a merchandising medium. Were these
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risks to occur, the Company's business, results of operations and financial
condition could be materially adversely affected.
THE COMPANY WILL NEED ADDITIONAL CAPITAL WITH WHICH TO IMPLEMENT ITS BUSINESS
PAN AND THERE IS NO AGREEMENT WITH ANY THIRD PARTY TO PROVIDE SUCH CAPITAL IF
NEEDED AS EXPECTED.
Based on current levels of operations and planned growth, the Company
anticipates that the proceeds derived from the closing of the Company's current
private offering, wherein it is attempting to raise up to $2 million, will be
sufficient to meet the Company's needs for the immediate future. As of the date
of this registration statement, the Company has received approximately
$1,155,000 from this offering. There can be no assurances that the Company will
be able to raise the balance of the additional $845,000. In addition, if the
Company requires additional funding or determines it appropriate to raise
additional funding in the future, there is no assurance that adequate funds,
whether through additional equity financing, debt financing or other sources,
will be available when needed or on terms acceptable to the Company. Further,
any such funding may result in significant dilution to existing stockholders.
The inability to obtain sufficient funds from operations and external sources
when needed would have a material adverse affect on the Company's business,
results of operations and financial condition.
THE INTERNET MAY BECOME SUBJECT TO SIGNIFICANT GOVERNMENT REGULATIONS IN THE
FUTURE WHICH COULD NEGATIVELY IMPACT THE COMPANY'S PROPOSED BUSINESS.
The Company is not currently subject to direct federal, state, or local
regulation and laws or regulations applicable to access to, or commerce on, the
Internet, other than regulations applicable to business generally. However, due
to the increasing popularity and use of the Internet and other on-line services,
it is possible that a number of laws and regulations may be adopted with respect
to the Internet or other on-line services covering issues such as user privacy,
"indecent" materials, freedom of expression, pricing, content and quality of
products and services, taxation, advertising, intellectual property rights and
information security. The adoption of any such laws or regulations might also
decrease the rate of growth of Internet use, which in turn could decrease the
demand for the Company's products and services or increase the cost of doing
business or in some other manner have a material adverse affect on the Company's
business, results of operations and financial condition. In addition,
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy is uncertain. The vast majority of such laws were
adopted prior to the advent of the Internet and related technologies and, as a
result, do not contemplate or address the unique issues of the Internet and
related technologies. The Company does not believe that such regulations, which
were
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adopted prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state implying that the
Company is subject to such legislation. There can be no assurance, however, that
a state will not attempt to impose these regulations upon the Company in the
future or that such imposition will not have a material adverse affect on the
Company's business, results of operations and financial condition.
Several states have also proposed legislation that would limit the uses of
personal user information gathered on-line or require on-line services to
establish privacy policies. The Federal Trade Commission has also initiated
action against at least one on-line service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues could create uncertainty in the marketplace that could reduce the demand
for the services of the Company or increase its costs of doing business as a
result of litigation costs or increased service delivery costs, or could in some
other manner have a material adverse affect on the Company's business, results
of operations and financial condition. In addition, because the Company's
services are accessible worldwide, other jurisdictions may claim that the
Company is required to qualify to do business as a foreign corporation in a
particular state or foreign country. The Company is qualified to do business in
Nevada and failure by the Company to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject the Company to taxes
and penalties for the failure to qualify and could result in the inability of
the Company to enforce contracts in such jurisdictions. Any such new legislation
or regulation, or the application of laws or regulations from jurisdictions
whose laws do not currently apply to the Company's business, could have a
material adverse affect on the Company's business, results of operations and
financial condition.
THE SUCCESS OF THE COMPANY'S ANTICIPATED FUTURE GROWTH IS DEPENDENT UPON ITS
ABILITY TO SUCCESSFULLY MANAGE THE GROWTH OF ITS PROPOSED OPERATIONS.
The Company expects to experience significant growth in the number of
employees and the scope of its operations. The Company's future success will be
highly dependent upon its ability to successfully manage the expansion of its
operations. The Company's ability to manage and support its growth effectively
will be substantially dependent on its ability to implement adequate
improvements to financial and management controls, reporting and order entry
systems and other procedures and hire sufficient numbers of financial,
accounting, administrative and management personnel. The Company's expansion,
and the resulting growth in the number of its employees, will result in
increased responsibility for both existing and new management personnel. There
can be no assurance that the Company will be able to identify, attract and
retain experienced accounting and financial
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personnel. The Company's future operating results will depend on the ability of
its management and other key employees to implement and improve its systems for
operations, financial control and information management, and to recruit, train,
and manage its employee base. There can be no assurance that the Company will be
able to achieve or manage any such growth successfully or to implement and
maintain adequate financial and management controls and procedures. Any
inability to do so would have a material adverse affect on the Company's
business, results of operations and financial condition.
The Company's future success depends upon its ability to address potential
market opportunities while managing its expenses to match its ability to finance
its operations. This need to manage its expenses will place a significant strain
on the Company's management and operational resources. If the Company is unable
to manage its expenses effectively, the Company's business, results of
operations and financial condition will be adversely affected.
THE COMPANY DEALS WITH THIRD PARTIES WHICH MAY NOT BE Y2K COMPLIANT.
Because the Company's systems and software are relatively new, management
does not expect Year 2000 issues related to its own internal systems to be
significant and does not anticipate that it will incur significant operating
expenses or be required to invest heavily in computer systems improvements to be
Year 2000 compliant. As the Company makes arrangements with significant
suppliers and service providers, the Company intends to determine the extent to
which the Company's interface systems may be vulnerable should those third
parties fail to address and correct their own Year 2000 issues. There can be no
assurance that the systems of suppliers or other companies on which the Company
relies will be converted in a timely manner and, accordingly, will not have a
material adverse affect on the Company's systems.
While management believes that the Company complies with Year 2000
requirements, there is a risk that Y2K issues will adversely affect third-party
network or application software that is integrated with the Company's products.
There are also similar risks of failure from the telecommunications networks,
the electric power grid and other systems on which the proposed operations of
the Company's Internet products and the delivery of the Company's services will
depend. The disruption of these broader services would have an adverse affect on
the Company's ability to provide its products and services to its customers, and
could then have a material adverse affect on the Company's proposed business,
financial condition and results of operations.
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THE COMPANY'S COMMON STOCK IS CURRENTLY DESIGNATED AS A "PENNY STOCK", WHICH HAS
AN ADVERSE EFFECT ON TRADING.
The Securities and Exchange Commission has adopted a Rule which established
the definition of a"penny stock," for purposes relevant to the Company, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny stocks are
suitable for that person and that person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stock in both public offering and in secondary trading, and about
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
Because the Company's securities are currently subject to the rules on penny
stocks, the market liquidity for the Company's securities is adversely affected.
INVESTORS SHOULD NOT EXPECT TO RECEIVE A DIVIDEND IN THE FUTURE.
No dividend has been paid on any of the Company's securities since
inception and none is contemplated at any time in the foreseeable future.
Item 2. Plan of Operation
The Company's business strategy is comprised of three distinct, yet
interrelated facets: (i) Private Label Product Strategy; (ii) Interactive
Financial & On-line Trading Portal Strategy; and (iii) Vendor Relationship
Strategy. Following is a description of these facets.
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PRIVATE LABEL PRODUCT STRATEGY
In order to compete effectively, the Company must adopt an original and
animated product strategy designed to provide service access to huge audiences
with underlying demographic parallels. Through private label product adaptation,
QMI intends to offer a customized suite of products, tools, and permitting
technologies to financial and investment industry institutions such as retail
brokerages, mutual fund companies, banks, credit unions and investment advisory
firms. The Company's Private Label Products (PLP) strategy is designed to meet
the necessity of comprehensive systems employed by the financial community.
Research has determined that there is a waiting market of potential
institutional clients who wish to nurture and serve the specific requirements of
their own distinct investor clients.
Through the PLP program, QMI intends to offer a wide selection of
components that include but are not limited to: (i) branded analytical tools,
applications and functions; (ii) access to account information; (iii) on-line
trading systems; (iv) registered rep/employee web pages; (v) specialty client to
representative e-mail response services; (vi) branded identification for the PLP
usage; and (vii) branded versions of the Company's desktop applications.
INTERACTIVE FINANCIAL & ON-LINE TRADING PORTAL STRATEGY
Management believes that what matters in the new environment on the
Internet is not only what providers deliver in terms of content but also how it
is delivered. As such, QMI incorporates a fundamentally new approach to this
paradigm by becoming a true portal to a myriad of "financial applications,"
rather than "web pages" of information. In effect, the Company abandons the
"online newspaper" format and HTTP protocol so common in today's leading
financial websites. The Company leverages the browser and eventually the Desktop
for massive interactivity and optimal responsiveness. The Company's site is a
large set of financial applications allowing an investor to trade, watch charts,
quote- grids, news tickers and conduct research, using advanced Internet "thin
client" (Java) technology. The Company's browser technology in effect becomes
customized for the retrieval of financial information, with application-like
responsiveness. QMI's private label marketing strategy supports the applications
by being the first screen that a user sees when he first brings up his or her
browser, and empowers the user to conduct transactions and use applications from
within the comfort of the QMI or branded site's environment.
The Company intends to incorporate unique technologies, which allow the
user to trade with his broker of choice within the QMI portal. The content and
technologies offered provides the user
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with a more personalized and informative environment in which to execute
investment decisions.
QMI's financial content offering includes investment performance data,
financial and business news and company-specific information. Investment
performance data is raw financial data about a company's stock, its industry and
the economy as a whole. This data includes specific information in price quotes,
performance charts, company-specific fundamental data and market indices.
Financial and business news consists of real-time and delayed broadcasts of
general and business/financial news as well as company-specific press releases.
The Company will assemble the current news and company press releases from data
feeds provided by Comtex. Company specific content is corporate information that
complements the investment performance data for a particular company's
securities offering. Such data includes a briefing about products and services,
corporate management, historic performance, financial statements and disclosure
documents.
Analytic provisions are expected to enable investors to enhance the
accuracy of their decisions to improve the productivity and performance of their
portfolios. On the QMI website, analytic tools enable retail investors to
screen/source investment opportunities, track investment performance and analyze
and interpret financial information through fundamental and technical tools.
Analytic tools that will be offered include, but are not limited to, advanced
charting for technical analysis, adept systems which interpret financial
fundamentals, library research tools which retrieve and store relevant
information about an investor's portfolio in the investor's personal library,
portfolio monitoring and management tools.
VENDOR RELATIONSHIP STRATEGY
The Company's approach is to establish relationships with premier industry
contenders whose products have established brand equity. Most brokerage firms
and financial services organizations are realizing that financial information
creating, packaging, and hosting is not their core business and can actually
save extensive financial resources by outsourcing these services through
partnering.
The "bundling" of this information and content and technology within the
Company's data warehouse allows the Company to selectively contract individual
data from specific content providers under the best financial and redistribution
terms and provides the user with a true one-stop shopping environment.
The Company has negotiated a number of contracts with major providers of
financial content, including but not limited to StockPoint Inc., which provides
quotes, charts, company background data and general information; Thomson
Information Services Inc.,
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which provides research reports, analysis and educational data; CNBC/Dow Jones,
which provides video feeds; IPO.com, Inc., which provides IPO information;
Market Guide Inc., which provides company performance reports, financial
analysis and a "What's Hot, What's Not" report; and Prophet Finance.com, Inc.,
which provides stock charting. All of the aforesaid companies have signed
multi-year contracts with the Company, based upon a worldwide license fee and/or
cost per page thousand page view format. While no assurances can be provided,
management expects that similar additional agreements with key content providers
will be reached in the future.
The Company believes that it has assembled one of the industries most
impressive and comprehensive data warehouses. QMI has identified content areas
for specialization and as they are not currently aggregated in a single "portal"
by other investment services, the Company should have a basis of differentiation
from its competitors.
Such areas of specialization are expected to support QMI in creating and
fostering an Internet community. An Internet community is established by
providing targeted information and comprehensive opportunities for electronic
transactions. The community becomes a reference point for users with shared
interests or tasks. Establishing such a community is very consequential because
the community becomes the continuous, "repeat traffic" to the Company's site.
The financial services industry on the Internet is currently fragmented and
confusing. An overwhelming number of providers are offering various types of
investment-related information and services. The large financial aggregation
providers such as Yahoo Financial, Microsoft(TM) Investor, Quicken Financial
Network and Wall Street City are engaged in a fierce competition to bundle
content and analytic tools and provide access through super web portals. Their
goal is to become one-stop super-sites and entry portals to large arrays of
financial content in the traditional library or newspaper approach.
Management believes that one critical component has been overlooked in the
drive to become super portals. The financial information providers still oblige
the user to conduct business within the confines and limitations of the World
Wide Web. The users often must leave the portal to conduct trades with their
chosen online broker, discount broker, or full service broker. Through strategic
alliances, online discount brokers are also bundling resources in an attempt to
attract and retain end users. Discount brokerages, however, have been
apprehensive to supply any research at $7.95 per trade and only minimal
information for $29.95 per trade.
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QMI offers a multi faceted revenue model consisting of the following: (i)
monthly service fees; (ii) advertising revenue; (iii) delivery of real time data
(streaming quotes, etc.); (iv) delivery of research content (reports, analyst's
recommendations, etc.); and (v) the on-line sale of books, magazine and
newsletter subscriptions, investment software, investment tools and
complementary goods and services.
QMI will install turnkey website and on-line trading systems for brokerage
firms and other companies for a license fee. The fee structure will vary based
on the number of clients, existing Internet and server components and the back
office system employed by the firm. The Company will charge the private labeled
firms a monthly fee based on the number of active accounts and the level of
service and site content selected by the firm.
In addition, QMI intends to retain an advertising agency on behalf of the
networked partner firms to place advertisements on the private labeled websites.
The ads will be of a non-competitive nature to the partnered firms. The
advertising rate charged will be competitive within the industry and is
estimated at approximately $20 to $35 per 1,000 page views after the Company
achieves approximately 20 million page views per month. There can be no
assurances the Company will ever meet this threshold.
In the future, the Company intends to offer real time streaming
information, streaming quotes, real time stock and index monitors and Internet
delivered information to complementary market analysis legacy software programs
such as TradeStation and Windows on Wall Street. QuoteMedia will offer users the
ability to purchase on-line research reports from top analysis firms and
financial services firms such as Thomson Financial Interactive, Inc.
The Company's portal is also expected to offer for sale relevant and
complementary goods and services to its subscriber base. The Company will offer
financial books, magazine and newsletter subscriptions, investment software,
investment tools and other relevant goods and services. The Company is also an
Amazon.com affiliate member.
SALES ADVERTISING AND PROMOTIONS STRATEGY
The Company's products will be marketed through a combination of direct
sales and online subscriptions. QMI will rely on a multifaceted direct sales
team to sell its product line, private label contracts and bundled content to
other financial sites. The Company is currently building a sales team consisting
of account managers and executive salespersons to market and distribute its
products throughout North America. Sales Executives will be responsible for the
sale of private label contracts, QMI's content,
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related products and tools to financial institutions, or other financial sites.
QMI's marketing communications strategy will encompass extensive promotions
on and offline directed at its cyber investor, institutional, corporate
advertiser and public company audiences. This is intended to be executed
aggressively throughout North America. The Company's promotional campaigns may
be comprised of digital or online marketing, direct marketing, print media
advertising, and public relations. To accomplish its sales goals, QMI expects to
engage an Internet advertising network/agency to promote the sale of advertising
space on the website.
Management acknowledges that simply having a website does not guarantee
automatically reaching millions of customers. In this regard, QMI will expand
its online presence by trafficking its name, Internet address, identity and
message in front of as many end users as possible in a manner that is respectful
of Net culture. The Company will use the following listed online tools to
accomplish these goals:
(i) Usenet Newsgroups. A newsgroup is a place on the Internet where groups
of people post and read messages on a particular topic. QMI will participate in
industry related newsgroups to gain visibility and develop relationships with
its targeted audiences. Newsgroups offer the Company a great deal of marketing
leverage because their potential audiences include participants who are
interested in related topics.
(ii) Mailing Lists. Mailing lists are not direct mail lists but, rather,
they are similar to e-mail newsletters or on-going dialogues dedicated to
special interests. Like newsgroups where messages are posted, e-mail messages
are sent to specific mailing lists. The Company will participate in special
interest mailing lists to gain visibility among a targeted audience and generate
traffic for its site.
(iii) Internet Advertising. Advertising online is expected to help the
Company create visibility in cyberspace. QMI will develop, purchase and place
banner ads with links to its site on industry-related and high volume search
engines. These ads are expected to promote the Company's online presence and
help direct traffic to the site. The Company will employ online ad networks and
brokers such as Web Connect to guide the Company's purchase of ad space on
appropriate sites. It will also actively post notices on What's New sites and
newsgroups that cover new Net features and websites. The Company also
anticipates submitting its site to all What's Cool rating services and contests
in order to position it as a "best of breed" site.
(iv) Search Engines, Directories, Regional Indexes, and Business Indices.
QMI intends to register and list its web
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addresses with search engines and directories such as Yahoo, Lycos, Web Crawler,
and Infoseek. It may use a professional service company such as
www.submitit.com, www.netcreations.com, or www.mgroup.com to register the
appropriate URLs with the most significant search engines. When registering, the
Company will include keyword sensitive content tags and titles to ensure that it
results in the top 20 or better in most search returns. Professional services
will also be employed to list its URL with numerous e-mail directories (similar
to the White pages), business and regional indices and promotional sites.
(v) Mutual Links. For every search engine there are at least 100 special
interest websites dedicated to a specific market. Management believes that
creating mutual links can be more powerful than listing with search engines and
directories because mutual links allow QMI to target a very specific market.
This tactic is considerably more successful than banner ads, as the link is
perceived by the user to be "information," rather than advertising. QMI will
attempt to select industry-related and trade association websites (NIRI, CIRI,
and American Association for Individual Investors) and negotiate reciprocal
links to and from their web pages.
(vi) Public Relations. The Company intends to engage the services of a
dedicated public relations company to devise and implement an aggressive public
relations campaign. This contractor will act as the primary spokesperson for the
Company. The PR agent will be expected to create and distribute press kits to
appropriate audiences to acquire substantial exposure for the Company on local,
national and radio talk shows and TV magazines shows both in Canada and the US.
This firm will also be responsible for organizing press tours and interviews to
further enhance editorial coverage for QuoteMedia in key business and technology
magazines and newspapers.
INDUSTRY OVERVIEW
There has been enormous growth in the business of providing investment
information to retail investors via the Internet. In a recent study, the
American Home Financial Services Survey, October 1997, conducted by SVP and
Jupiter Communications concludes that 6.7 million households (7% of total US
households and 17% of PC households) use investment related online services.
Another national survey, conducted by Peter D. Hart Research Associates on
behalf of the NASDAQ Stock Market in January 1997 (the "NASDAQ survey")
discovered that 37% of American investors regularly use the Internet or other
online computer information services at work or home to access investment
related information.
The NASDAQ survey clearly indicates that today's investors are increasingly
interested in managing and diversifying their own investments and should
continue to drive investment funds into
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stocks, mutual funds and 401Ks. As investors take control of managing their own
funds it is expected that they will seek new sources of independent research and
recommendations without the "sell-side" bias of brokerage firms. The growth of
discount brokers (from 2% in 1980 to 14% in 1995) and the unbundling of
investment services created a need to make research and advisory information
available to this growing market.
This new ethic of self-reliance has investors aspiring to gain better
control over their finances. They demand "faster, more personalized access to
relevant investment information," and the Internet plays a major role in
providing the information that is now being sought. In the past 12 months, the
supply of investment information such as financial data, market news, investment
tools and the execution of securities transactions has been profoundly affected
by the rise in user traffic on the Internet.
TRENDS
The Company intends to continue to identify, purchase and develop
complimentary, proprietary technologies and investment tools to enhance its
websites and help to build strong market differentiation. As of the date of this
registration statement, the Company has established contractual relationships
with two unrelated web portals, including Tappedinto.com and Pronett.com. The
Company intends to develop similar relationships over the next few months and
fiscal year and has targeted other well established web portals which can
demonstrate significant registered user bases. It is management's intention to
continue the development of similar relationships, with the ultimate goal of
developing a large enough user base to sustain profitability through the sale of
banner ads of each of the partnered sites. However, as of the date of this
registration statement, no other definitive agreements have been reached by the
Company and there can be no assurances that the Company will contract with other
web portals meeting the aforesaid characteristics in the future.
Management has projected that the Company will commence generating revenues
from operations in December 1999, and the Company is expected to become
profitable by the end of 2000. However, no assurances can be provided that this
will occur within the time parameters stated herein, or at all.
YEAR 2000 DISCLOSURE
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. As a result, many companies will be required to undertake major projects
to address the Year 2000 issue. The Year 2000 issue is the result
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of computer programs written using two digits rather than four to define the
applicable year. As a result, date-sensitive software may recognize dates using
"00" as the year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions of operations, including, among
others, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
Because the Company's systems and software are relatively new, management
does not expect Year 2000 issues related to its own internal systems to be
significant and does not anticipate that it will incur significant operating
expenses or be required to invest heavily in computer systems improvements to be
Year 2000 compliant. As the Company makes arrangements with significant
suppliers and service providers, the Company intends to determine the extent to
which the Company's interface systems may be vulnerable should those third
parties fail to address and correct their own Year 2000 issues. There can be no
assurance that the systems of suppliers or other companies on which the Company
relies will be converted in a timely manner and, accordingly, will not have a
material adverse affect on the Company's systems. Additionally, there can be no
assurance that the computer systems necessary to maintain the viability of the
Internet or any of the websites that direct consumers to the Company's website
will be Year 2000 compliant. As part of the Company's overall Year 2000
compliance plan, the Company intends to monitor systems performance and plans to
develop a rapid response program in the event of any significant disruption as a
result of the Year 2000 issues. To date, the Company has not developed a formal
contingency plan. The Company believes it is taking the steps necessary
regarding Year 2000 compliance with respect to matters within its control.
However, no assurance can be given that the Company's systems will be made Year
2000 compliant in a timely manner or that the Year 2000 problem will not have a
material adverse affect on the Company's business, results of operations and
financial condition.
Item 3. Description of Property
The Company principal office is located at 11100 NE 8th Street, Suite 300,
Bellevue, Washington 98004 which the Company subleases pursuant to an oral month
to month lease. This space consists of approximately 700 square feet of
executive office space, which is provided to the Company on a rent free basis.
Its telephone number is (415) 451-1604.
In addition, the Company also subleases approximately 6,120 square feet of
office space which is utilized for sales and marketing at 701 W. Georgia Street,
Suite 1260, Vancouver, British Columbia Canada V7Y 1C6, at a monthly rent of
approximately $7,300 (CDN). This sublease expires September 29, 2000. Management
anticipates that all or a portion of this space will be re-leased upon
expiration of the sublease. Management believes that the
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Company's current leased space is sufficient to meet the Company's needs for the
foreseeable future.
The Company has no other properties and has no agreements to acquire any
properties.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as the securities of the Company
beneficially owned by all directors and officers of the Company. Unless
otherwise indicated, the shareholders listed possess sole voting and investment
power with respect to the shares shown.
Amount and
Nature of
Title Name and Address of Beneficial Percent of
of Class Beneficial Owner Ownership Class
- -------- ---------------- --------- -----
Common R. Keith Guelpa(1) 3,597,000(2)(3) 20.2%
6-2240 Nordic Dr.
Whistler, British Columbia
Canada V0N 1B2
Common Duane & Bev Nelson 4,270,000(4) 24.0%
3339 Huntleigh Ct.
N. Vancouver, British Columbia
Canada V7H 1C9
Common Skyline Records, Inc. 2,500,802(5) 14.0%
Suite 602
595 Howe St.
Vancouver, British Columbia
Canada V6C 2T5
Common Ian D. Lambert(1) 350,000(3) 2.0%
1220 Eastview Road
N. Vancouver, British Columbia
Canada V7J 1L6
Common Keith J. Randall 125,000(6) 1.0%
1206 - 110 West 4th St.
North Vancouver, British Columbia
Canada V7M 3H3
Common All Officers and 4,072,000(2)(3) 22.9%
Directors as a
Group (3 persons)
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- ---------------
(1) Officer and/or director of the Company
(2) Includes 3,360,000 shares of the Company's common stock held in the name of
Keeva Trust, trustee for a trust to which Mr. Guelpa's wife and children
are beneficiaries, as well as 14,500 shares of common stock owned in the
name of Mr. Guelpa's wife. Mr. Guelpa disclaims any and all beneficial
ownership of such shares.
(3) Includes 200,000 shares subject to option, which option is exercisable
pursuant to the Company's stock option plan described below, at an option
price of $1.27 per share.
(4) Includes 200,000 shares subject to option, which option is exercisable
pursuant to the Company's stock option plan described below, at an option
price of $1.85 per share.
(5) Includes 802 shares of common stock held in the name of Dan Tartaglia, the
sole shareholder of Skyline Records, Inc.
(6) Includes 125,000 shares subject to option, which option is exercisable
pursuant to the Company's stock option plan described below, at an option
price of $1.85 per share.
The balance of the Company's outstanding Common Shares are held by 256
persons, not including those persons who hold their shares in "street name."
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
Name Age Position
---- --- --------
R. Keith Guelpa 52 Chief Executive Officer,
President and a director
Ian D. Lambert 54 Secretary and a director
Keith J. Randall 33 Vice President, Treasurer
and Chief Financial Officer
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There is no family relationship between any
executive officer and director of the Company.
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Resumes
R. Keith Guelpa, Director, President and Chief Executive Officer. Mr.
Guelpa assumed his positions with the Company in July 1999. From March 1999
through June 1999, Mr. Guelpa was President of R.K. Guelpa & Associates, a
private consulting company. Prior, from January 1998 through February 1999, Mr.
Guelpa was Chairman and Chief Executive Officer of Mailbank.com, Inc.,
Vancouver, Canada, a privately held Canadian Internet based corporation which
owned the largest registration of top level Domain names in the world. From
November 1995 through December 1997, Mr. Guelpa was President/CDO of C.M. Oliver
Inc., a publicly held Canadian corporation offering brokerage/financial planning
and investment banking services. From November 1991 through October 1995, Mr.
Guelpa was President and Chief Executive Officer of Western Pro Imaging Labs
Ltd., a privately held Canadian corporation engaged in the business of digital
imaging. Mr. Guelpa received a Bachelor of Commerce degree from the University
of British Columbia in 1970. He devotes substantially all of his business time
to the affairs of the Company.
Ian D. Lambert, Secretary and a Director. Mr. Lambert was President and a
director of the Company from May 1994 through July 1999. In July 1999, he
resigned his position as President and was appointed as Secretary. In addition
to his positions with the Company, since 1983 Mr. Lambert has been President and
a director of Canasia Data Corporation, Vancouver, Canada, a privately held
management services and consulting company. Mr. Lambert is also a director of
Tasty Fries, Inc., a Delaware publicly held corporation engaged in development,
manufacturing and marketing of a french fry vending machine, and Litewave Corp.,
a publicly held Nevada corporation engaged in the installation and operation of
voice over Internet protocol telecom networks. Mr. Lambert received a Bachelor
of Commerce degree in quantitative analysis and computer science from the
University of Saskatchewan in 1970. He devotes approximately 20% of his time to
the business of the Company.
Keith J. Randall, Vice President, Treasurer and Chief Financial Officer.
Mr. Randall assumed his positions with the Company in September 1999. In
addition, from August 1998 through August 1999, Mr. Randall was Controller of
C.M. Oliver & Company Ltd., a publicly held Canadian corporation offering
brokerage/financial planning and investment banking services. Mr. Randall was
promoted to the position of Vice President and Chief Financial Officer of C.M.
Oliver in August 1999 and, in addition to his positions with the Company, he
remains employed part time by C.M. Oliver as of the date of this registration
statement. Also, from April 1998 through August 1998, Mr. Randall was a
consultant with KPMG, Inc., an accounting firm. From December 1997 through
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April 1998, Mr. Randall was the Chief Financial Officer for Vantage Securities
Inc., a Canadian brokerage firm. From November 1995 through December 1997, Mr.
Randall was an exchange examiner for the Vancouver Stock Exchange. From
September 1991 through November 1995, Mr. Randall was employed as a chartered
accountant with KPMG, Inc. Mr. Randall is a licensed chartered accountant in
Canada. He received a Bachelor of Commerce degree with Honors from Queen's
University in May 1991. He devotes approximately 60% of his time to the business
of the Company.
Item 6. Executive Compensation.
Remuneration
The following table reflects all forms of compensation for services to the
Company for the fiscal years ended December 31, 1997 and 1998 of the Chief
Executive Officer of the Company.
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
--------------------- -------------------- -------
Securities
Other Under- All
Name Annual Restricted lying Other
and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------- ---- ------ ----- ------ -------- ------- ------- ------
Ian Lambert 1997 $30,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
President &
Director(1)
Ian Lambert 1998 $32,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
President &
Director(1)
- -------------------------
(1) Mr. Lambert resigned his position as President of the Company in July 1999.
Mr. Guelpa was appointed to his position as President and Treasurer, as
well as a director of the Company in July 1999. In September 1999, Mr. Guelpa
was appointed as Chief Executive Officer and resigned as Treasurer and Keith J.
Randall was appointed to that office. The terms of an employment agreement have
been agreed in writing by the parties and approved by the Company's Board of
Directors. These terms include an initial five (5) year term, a starting salary
in July 1999 of $120,000 per annum, increasing
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<PAGE>
based upon Company profitability as follows: annual profit level of $.5 million
- - salary of $175,000 per annum; $3 million in annual profits - $250,000 annual
salary; $6 million in annual profits - $350,000 per annum. In addition, in the
event and at such time as the Company achieves cumulative profits of $10 million
calculated from July 14, 1999 forward, Mr. Guelpa is entitled to a bonus of
500,000 shares of the Company's common stock at a price of $.0001 per share.
Further salary increases are tied to Company performance and are to be
negotiated with the Company's Board of Directors at an unspecified date. In
addition, Mr. Guelpa's compensation includes a $650 per month car allowance, 30
days vacation per annum and reimbursement of all Company business related
expenses. In the event of termination by the Company without cause beginning
October 15, 1999, Mr. Guelpa is entitled to receive 6 months salary as
severance, plus all perquisites. After 6 months of employment, Mr. Guelpa would
receive one year salary, plus perquisites. After one year of employment, Mr.
Guelpa would receive two years's salary, plus perquisites. In the event of a
change in control of the Company that results in more than 25%, which change
results in termination of employment, Mr. Guelpa would receive three (3) years
salary, plus perquisites. In the event of a change in control and Mr. Guelpa
elects to terminate his employment, he would be entitled to one (1) years'
salary, plus perquisites. Mr. Guelpa is also entitled to participate in all
employee benefit plans, including but not limited to health insurance and such
other plans which may be adopted by the Company in the future.
Mr. Keith J. Randall was appointed to his positions as Vice President,
Treasurer and Chief Financial Officer of the Company in September 1999. The
terms of an employment agreement have been agreed in writing by the parties and
approved by the Company's Board of Directors. These terms include an initial
three (3) year term commencing March 1, 2000, subject to a probationary period
of employment on a part time basis commencing on November 15, 1999 through March
1, 1999, and thereafter on a full time basis, at a starting salary of $75,000
per annum prorated to November 1, 1999, increasing to $80,000 per annum
commencing February 1, 2000, with annual increases based on performance, plus
four (4) weeks paid vacation per year and other benefits as are standard and
customary in the industry.
In addition, management of the Company has agreed in writing upon the terms
of an employment agreement with Mr. Duane Nelson as Manager of Business
Development and Chief Technologist of the Company, which has been approved by
the Company's Board of Directors. These terms include an initial five (5) year
term retroactive to July 15, 1999, a starting salary of $120,000 per annum,
increasing based upon Company profitability as follows: annual profit level of
$.5 million - salary of $175,000 per annum; $3 million in annual profits -
$250,000 annual salary; $6 million in annual profits - $350,000 per annum. In
addition, in the event
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<PAGE>
and at such time as the Company achieves cumulative profits of $10 million
calculated from July 14, 1999 forward, Mr. Nelson is entitled to a bonus of
500,000 shares of the Company's common stock at a price of $.0001 per share. In
addition, Mr. Nelson's compensation includes a $650 per month car allowance, 30
days vacation per annum and reimbursement of all Company business related
expenses.
It is also anticipated that the Company will employ a Vice President of
Sales and Marketing during the fiscal year ending December 31, 2001, who is
expected to receive a salary in excess of $100,000, provided that the Company
has sufficient financial resources to meet such obligation.
The Company maintains a policy whereby the directors of the Company may be
compensated for out of pocket expenses incurred by each of them in the
performance of their relevant duties. The Company provided reimbursement to Mr.
Lambert of $300 for out of pocket expenses during the fiscal years ended
December 31, 1997 and 1998.
STOCK PLAN
In March 1999, the Company's Board of Directors adopted the Company's 1999
Stock Option Plan (the "Plan"), reserving an aggregate of 400,000 shares of the
Company's common stock for issuance thereunder. The Plan was subsequently
approved by the Company's shareholders. Thereafter, in September 1999, the
Company's Board and shareholders authorized an increase in the number of shares
authorized for issuance under the Plan, to 2,500,000 shares.
The Plan provides for the Board of Directors, or a designated committee, to
administer the Plan, which provides for the issuance of both incentive and non
qualified options. Following is a description of the provisions of the Plan:
Grants. Grants under the Plan may consist of:
- options intended to qualify as incentive stock options within the
meaning of Section 422 of the Internal Revenue Code
- non qualified stock options that are not intended to so qualify
Eligibility for participation. Grants may be made to employees, officers,
directors, advisors and independent contractors of the Company and its
subsidiaries, including any non-employee member of the board of directors.
As of the date
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<PAGE>
of this Registration Statement, 750,000 options were outstanding under the
Plan.
Options. Incentive stock options may be granted only to officers and
directors who are employees. Non qualified stock options may be granted to
employees, officers, directors, advisors and independent contractors. The
exercise price of common stock underlying an option will be determined by
the board of directors or compensation committee and may be equal to,
greater than, or less than the fair market value but in no event less than
50% of fair market value, provided that:
- the exercise price of an incentive stock option shall be
equal to or greater than the fair market value of a share
of common stock on the date such incentive stock option is
granted
- the exercise price of an incentive stock option granted to an
employee who owns more than 10% of the common stock must not
be less than 110% of the fair market value of the
underlying shares of common stock on the date of grant
The participant may pay the exercise price:
- in cash
- by delivering shares of common stock owned by the
participant and having a fair market value on the date of
exercise equal to the exercise price of the grant
- by such other method as the board of directors or
compensation committee shall approve, including payment
through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board
Options vest according to the terms and conditions determined by
the board of directors or compensation committee.
The board of directors or compensation committee will determine the term of
each option up to a maximum of ten years from the date of grant except
that the term of an incentive stock option granted to an employee who
owns more than 10% of the common stock may not exceed five years from the
date of grant. The board of directors or compensation committee may
accelerate the exercisability of any or all outstanding options at any time
for any reason.
Amendment and termination of the plan. The board of directors or
compensation committee may amend or terminate the plan
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<PAGE>
at any time, except that it may not make any amendment that requires
shareholder approval as provided in Rule 16b-3 or Section 162(m) of the
Securities Exchange Act of 1934 without shareholder approval. The Plan
will terminate on the day immediately preceding the tenth anniversary of
its effective date, unless terminated earlier by the board of directors or
compensation committee.
Acceleration of rights and options. If the Company's board of directors
or shareholders agree to dispose of all or substantially all of the
Company's assets or stock, any right or option granted will become
immediately and fully exercisable during the period from the date of the
agreement to the date the agreement is consummated or, if earlier, the
date the right or option is terminated in accordance with the Plan. No
option or right will be accelerated if the shareholders immediately before
the contemplated transaction will own 50% or more of the total combined
voting power of all classes of voting stock of the surviving entity
(whether it is the Company or some other entity) immediately after the
transaction.
Item 7. Certain Relationships and Related Transactions.
Since 1995 the Company has borrowed funds from management and its
shareholders in order to meet its obligations. As of September 30, 1999,
included in these borrowings was the balance of $44,006 due to Ian Lambert, an
officer and director of the Company and parties related to Mr. Lambert. On
December 16, 1999, the Company and Mr. Lambert and parties related to Mr.
Lambert (hereinafter jointly referred to as the "Lambert Parties"), did execute
a settlement agreement whereby the Lambert Parties did agree to accept the sum
of $9,803 as full and complete settlement of all balances due. The Company paid
$5,574 against the outstanding obligations on December 16, 1999 and is obligated
to issue an aggregate of 5,638 shares of its common stock to Mr. Lambert for the
balance. As of the date of this Registration Statement, these shares have not
been issued, but it is expected that these shares will be issued in January
2000.
As of September 30, 1999, the Company owed Lee Kramer (or companies which
he controls) the balance of $145,154. On December 16, 1999, the Company and Mr.
Kramer did enter into a settlement agreement whereby Mr. Kramer agreed to accept
$5,000 in cash, plus 111,000 shares of the Company's common stock, in full and
complete settlement of all obligations. As of the date of this Registration
Statement, the relevant shares have not been issued by the Company, but it is
anticipated that these shares will be issued in January 2000.
As of September 30, 1999, the Company also owed the balance of $56,449 to
Dan Tartaglia (or companies which he controls), a
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<PAGE>
shareholder. Effective December 16, 1999, the Company did enter into a
settlement agreement with Mr. Tartaglia, whereby a definitive repayment schedule
was adopted. Relevant thereto, the only outstanding obligation owed by the
Company to Mr. Tartaglia as of the date of this Registration Statement is
$12,966, which is due on or before February 1, 2000.
Finally, Leah Lambert, the daughter of Ian Lambert, did loan the Company
$8,228. On December 16, 1999, Ms. Lambert did agree to accept the payment of
$4,000 as full and complete settlement of all outstanding obligations. Each of
the aforesaid persons did execute a release in favor of the Company as part of
the terms of settlement.
In October 1998 through March 1999, the Company was a party to a series of
agreements with Skyline Records, Inc., a privately held British Columbia, Canada
corporation ("SRI"), engaged in music production and distribution and the
exclusive owner of certain rights to produce and distribute albums for five
individual artists, collectively known as Filtered Souls. Mr. Dan Tartaglia, a
majority shareholder of the Company, is also the principal shareholder and an
officer and director of SRI. On October 6, 1998, the Company reached an
agreement with SRI to acquire a fifty percent (50%) interest in the net revenues
derived from the independent, national, international and Internet distribution
and sales in the initial Filtered Souls album to be produced and distributed by
SRI. The purchase price payable by the Company to SRI for the interests was
originally $1,000,000 (US) and issuance by the Company of 1,250,000 "restricted"
shares of its Common Stock. The aforesaid funds were payable over a period of
time when the costs associated with the production and distribution of the music
were incurred by SRI. However, this agreement was subsequently amended in July
1999, by which time the Company had tendered $500,000 of the original $1 million
due. The amendment to the SRI agreement provided for (i) a waiver of any and all
additional cash contributions due SRI by the Company; (ii) the issuance by the
Company of an additional 1,250,000 shares to SRI; and (iii) the payment to the
Company by SRI of up to $3 million out of the net revenues derived by SRI from
album sales. To date, the Company has not received any funds from SRI, but
management remains hopeful that revenues will be received from SRI in the
future. Based upon representations made to the Company by management of SRI, it
is anticipated that SRI will begin generating revenues from the sale and
distribution of its album sales in late spring of the year 2000. However, there
can be no assurances that SRI will generate profits from this endeavor within
the time parameters estimated herein, or at all.
There have been no other related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation SB.
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<PAGE>
Item 8. Description of Securities.
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, par value $0.001 per share and 10,000,000 shares of Preferred
Stock, par value $0.001 per share. There are 17,094,379 Common Shares issued and
outstanding as of the date of this registration statement. No shares of
Preferred Stock have been issued or are outstanding.
Common Stock. All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
as fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued from time to time
in one or more series as may be determined by the Board of Directors. The voting
powers and preferences, the relative rights of each such series and the
qualifications, limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall have
preemptive rights. The Company has no shares of Preferred Stock outstanding, and
the Board of Directors does not plan to issue any shares of Preferred Stock for
the foreseeable future, unless the issuance thereof shall be in the best
interests of the Company.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
(a) Market Information. Through November 1999, the Company's common stock
was traded on the OTC Bulletin Board operated by the National Association of
Securities Dealers, Inc. ("NASD"). Below are the reported high and low bid
prices for the Company's common
35
<PAGE>
stock for the previous two years. The bid prices shown reflect quotations
between dealers, without adjustment for markups, markdowns or commissions, and
may not represent actual transactions in the Company's securities.
Bid Price
Date High Low
---- ---- ---
March 31, 1998 $0.090 $0.063
June 30, 1998 $0.063 $0.015
September 30, 1998 $0.031 $0.010
December 31, 1998 $1.313 $0.015
March 31, 1999 $3.063 $0.500
June 30, 1999 $1.50 $0.500
September 30, 1999 $2.625 $0.594
As of December 17, 1999, the closing price for the Company's common stock
was $2.25.
Effective December 1, 1999, the Company's common stock was delisted from
the OTC Bulletin Board as a result of new rules adopted by the NASD, wherein
only those companies who are reporting companies pursuant to the Securities
Exchange Act of 1934, as amended, are entitled to be listed on said exchange. It
is anticipated that upon effectiveness of this registration statement, the
Company will cause to be filed a new application to list its common stock for
trading on the Bulletin Board. There are no assurances that the Company's
application will be approved for trading on the OTC Bulletin Board. As of the
date of this registration statement, the Company's common stock is traded only
on the "pink sheets" under the symbol "QMCI." Failure to obtain listing of the
Company's common stock on the OTC Bulletin Board may have a negative impact on a
shareholder's ability to dispose of his shares in the Company. See "Risk
Factors."
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of
36
<PAGE>
evaluating the risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public
offering and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
b. Holders. There are two hundred sixty-one (261) holders of the Company's
Common Stock, not including those persons who hold their shares in "street
name."
Of the Company's shareholders, ten (10) of the shareholders representing
1,775,000 shares of common stock (10.4% of the Company's issued and outstanding
common shares) have executed a "pooling agreement" wherein they have agreed not
to sell their respective shares in the Company, except as follows: (i) 25% of
their shares may be sold on or after August 2, 2000; (ii) 25% of their shares
may be sold on or after November 2, 2000; (iii) 25% of their shares may be sold
on or after February 2, 2001; and the balance of their shares may be sold on or
after May 2, 2001. As of the date of this registration statement, four (4) other
shareholders representing an aggregate of 1,510,000 issued and outstanding
common shares of the Company (8.8%) have verbally agreed to these restrictions
as well, but have not yet executed the applicable agreement. The restriction on
transferability may be released by the Company's Board of Directors, in their
sole discretion. The relevant certificates representing the shares have been
deposited with the Company's transfer agent.
c. Dividends. The Company has not paid any dividends to date and has no
plans to do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the Company.
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Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
Item 4. Recent Sales of Unregistered Securities.
In August 1999, the Company commenced a private offering of its securities
pursuant to the exemption from registration provided by Rule 505 of Regulation D
and Regulation S, each promulgated under the Securities Act of 1933, as amended
(the "33 Act"). To date in this offering, the Company has sold 1,540,669 shares
of common stock at an offering price of $.75 per share and received net proceeds
of approximately $1,155,000 therefrom. The total amount of the offering is $2
million. The Company's common stock was sold to one US resident who was an
accredited investor (as that term is defined under the 33 Act) and seven non-US
residents, including the following:
Number
Name of Shares
---- ---------
International Cetec Investments, Inc. 133,335
Clariden Bank 405,000
Intercon Ventures Inc. 133,333
Fieldstone Services Limited 135,000
Jirehouse Et Cie 333,334
Jeffrey Putnam(1) 66,667
Valor Investments Ltd. 134,000
Welcome Opportunities Ltd. 200,000
----------
(1) US resident.
In July 1999, the Company and QuoteMedia.com, Inc., a Colorado corporation
("Old QMI") engaged in a "reverse merger" pursuant to a definitive agreement. As
part of the terms of this transaction, the Company issued an aggregate of
11,000,000 shares of its common stock in exchange for all of the issued and
outstanding securities of Old QMI. Following is a list of the Old QMI
shareholders and the number of shares each received as a result of the aforesaid
transaction:
Number
Name of Shares
---- ---------
Duane and Bev Nelson 4,070,000
Rutherford Asset Management Ltd. 100,000
Keeva Trust 3,360,000
Western Skyline Capital Corp. 325,000
Choguy Ltd. 750,000
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Number
Name of Shares
---- ---------
Torquay Holdings Ltd. 550,000
Canasia Data Corp. 150,000
Leroy Kramer(1) 100,000
CookieJar Investments Ltd. 400,000
Joseph Schaefer 20,000
Philip Oakes 20,000
Leah K. Lambert 10,000
Seija Tyllinen 150,000
James Zellner(1) 100,000
Ranbir Dhaliwal 150,000
Derrick Huston 50,000
Rana Charanek 15,000
James Kattany(1) 15,000
Elizabeth Anderson 20,000
Brown Simpson Asset Management. LLC(1) 40,000
Matfam Holdings Inc. 50,000
Paul Holbrook(1) 100,000
Allen H. Finalyson 50,000
Rolf Dedamm(1) 100,000
Wetcoast Capital 40,000
Admirality Fund 40,000
PMGN Inc. 200,000
Leonard T. Doust 25,000
(1) US resident
The Company relied upon the exemptions from registration provided by
Regulation S, Regulation D and Section 4(2) of the 33 Act. Each shareholder of
Old QMI have signed Investment Letters acknowledging that they are experienced
in evaluation and investing in securities of companies in the development stage
and acknowledges that they are able to fend for himself or herself, can bear the
economic risk of the investment and has such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the investment in the relevant securities.
In December 1998, the Company undertook a private offering of its common
stock pursuant to the exemption from registration provided by Rule 504 of
Regulation D, promulgated under the 33 Act, wherein it sold an aggregate of
1,250,000 shares at an offering price of $.80 per share and received proceeds of
$1 million therefrom. These shares were sold to the following persons, in the
amount of shares indicated:
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<PAGE>
Number
Name of Shares
---- ---------
Denise Tartaglia 522,250
Larry McNabb 150,000
CDC Capital, Inc. 146,000
EVC Capital, Inc. 126,250
Denise Daniels Consulting Corp. 197,000
Medallion International
Communications Inc. 108,500
Each investor executed subscription documents wherein they represented that
they have sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of investments generally
and of their investment in the relevant shares, they are able to bear the
economic risk of the investment with the full understanding that they could lose
their entire investment without producing a material adverse change in their
standard of living as of the date of their subscription.
In November 1998, the Company issued 1,250,000 shares of its "restricted"
common shares in favor of Skyline Records, Inc. pursuant to the terms of the
applicable agreement between the Company and Skyline. Thereafter, this agreement
was amended and pursuant to the terms of the amendment, the Company issued an
additional 1,250,000 shares of common stock to Skyline. The Company relied upon
the exemption from registration afforded by Regulation S promulgated under the
33 Act. The principals of the Company at the time had a preexisting business and
personal relationship with the principal of Skyline, which had existed for in
excess of three (3) years and the Company believed that this shareholder is
considered a "sophisticated" and "accredited" investor based upon Skyline's
management previous investment experience. Skyline is a Canadian corporation.
In June 1997, the Company undertook a private offering of its common stock
pursuant to Regulation D, Rule 504 promulgated under the 33 Act, whereby it sold
an aggregate of 248,600 (post reverse split) shares of its common stock to the
following nine entities at a price of $2.50 per share for aggregate proceeds of
$621,500:
Number
Name of Shares
---- ---------
Denise Ulbarri 12,000
Dan J. Tartaglia 26,400
CDC Capital Inc. 60,600
EVC Capital Inc. 60,000
Denise Daniels Consulting Corp. 18,000
Leroy Kramer 18,000
40
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Number
Name of Shares
---- ---------
Medallion International
Communications Inc. 42,000
Andrew I. Telsey 2,000
Jim Zellner 9,600
There have been no other issuances of the Company's securities during the
previous three year period required to be disclosed pursuant to Item 701 of
Regulation SB.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation, incorporate the provisions of the
Nevada Corporation Code providing for the indemnification of officers and
directors and other persons against expenses, judgments, fines and amounts paid
in settlement in connection with threatened, pending or completed suits or
proceedings against such persons by reason of serving or having served as
officers, directors or in other capacities, except in relation to matters with
respect to which such persons shall be determined not to have acted in good
faith and in the best interests of the Company. With respect to matters as to
which the Company's officers and directors and others are determined to be
liable for misconduct or negligence, including gross negligence in the
performance of their duties to the Company, Nevada law provides for
indemnification only to the extent that the court in which the action or suit is
brought determines that such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the 33 Act may be
permitted to officers, directors or persons controlling the Company pursuant to
the foregoing, the Company has been informed that in the opinion of the U.S.
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
In accordance with the laws of the State of Nevada, the Company's Bylaws
authorize indemnification of a director, officer, employee, or agent of the
Company for expenses incurred in connection with any action, suit, or proceeding
to which he or she is named a party by reason of his having acted or served in
such capacity, except for liabilities arising from his own misconduct or
negligence in performance of his or her duty. In addition, even a director,
officer, employee, or agent of the Company who was found liable for misconduct
or negligence in the performance of his or her duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities
41
<PAGE>
arising under the Securities Act of 1933, as amended, may be permitted to
directors, officers, or persons controlling the issuing Company pursuant to the
foregoing provisions, the Company has 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.
PART F/S
Financial Statements.
The audited financial statements for the fiscal years ended December 31,
1998 and 1997 of the Company are attached to this Registration Statement and
filed as a part hereof. See page 43.
1) Independent Auditors' Report
2) Balance Sheet
3) Statement of Operations
4) Statement of Cash Flows
5) Statement of Stockholders' Equity
6) Notes to Financial Statements
The audited financial statements for the nine month periods ended September
30, 1999 and 1998, are also attached to this Registration Statement and filed as
a part hereof. See page 55.
42
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc.,
Filtered Souls Entertainment, Inc.,
International Tasty Fries, Inc.)
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1998
43
<PAGE>
DUNCAN BUDGE, C.A.
CHARTERED ACCOUNTANT
Ste. #200 - 120 Lonsdale Ave.
North Vancouver, B.C. V7M 2E8
Telephone: (604) 990-7718
Facsimile: (604) 990-7701
INDEPENDENT AUDITOR'S REPORT
The Stockholders and Board of Directors
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc.,
Filtered Souls Entertainment, Inc.,
International Tasty Fries, Inc.)
I have audited the balance sheet of QUOTEMEDIA.COM, INC. (formerly Skyline
Entertainment, Inc., Filtered Souls Entertainment, Inc., International Tasty
Fries, Inc.) as at December 31, 1998 and the statements operations,
stockholders' equity and cash flows for the years ended December 31, 1998 and
1997. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998 and the
results of its operations and its cash flows for the years ended December 31,
1998 and 1997 in accordance with generally accepted accounting principles
applied on a consistent basis.
The accompanying financial statements have been prepared assuming that
QUOTEMEDIA.COM, INC. (formerly Skyline Entertainment, Inc., Filtered Souls
Entertainment, Inc., International Tasty Fries, Inc.) will continue as a going
concern. As discussed in Note 2 to the financial statements, the Company has no
established sources of revenue. This raises substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Vancouver, Canada "DUNCAN BUDGE, C.A."
October 6, 1999 CHARTERED ACCOUNTANT
44
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
BALANCE SHEET
as at December 31
(United States Dollars)
<CAPTION>
1998
-----------
<S> <C>
ASSETS
CURRENT
Cash $ 559
Marketable securities (Note 4) 153,750
Accounts receivable 1,376
-----------
155,685
Fixed assets (Note 5) 1,212
Investments and advances (Note 6) 1,368,877
-----------
1,525,774
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accruals 64,291
Due to related parties (Note 7) 109,842
-----------
174,133
-----------
STOCKHOLDERS' EQUITY
Capital stock (Note 8)
Issued 2,351
Additional paid-in capital 4,684,990
Deficit accumulated during the
development stage (3,335,700)
-----------
"Subsequent Events" (Note 9) 1,351,641
-----------
1,525,774
===========
See accompany notes
</TABLE>
45
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
Years Ended December 31
(United States Dollars)
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
EXPENSES
Legal and accounting $ 31,077 $ 5,725
Promotion and shareholder relations 2,099 -
Management fees 30,000 32,000
Administration fees 24,000 27,000
Office and miscellaneous 11,706 10,917
Regulatory and transfer agent 990 -
Depreciation 519 742
Travel and accommodation 300 18,529
Skyline operating expenses 45,000 -
Loss on marketable securities 109,470 460,672
-------- --------
LOSS FOR THE YEARS $255,161 $555,585
======== ========
Basic and dilutive loss per share $ (0.34) $ (1.46)
Weighted average number of shares outstanding 753,869 380,691
See accompanying notes
</TABLE>
46
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Years Ended December 31
(United States Dollars)
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the years $(255,161) $(555,585)
Adjustments to reconcile loss to net cash
used in operating activities
Depreciation 519 742
Loss on marketable securities 109,470 460,672
Issuance of capital stock for services 7,000 -
Changes in non-cash working capital items
Accounts receivable - 633
Marketable securities 68,186 7,922
Accounts payable and accruals 19,776 (294,270)
Due to related parties 52,809 (217,194)
--------- ---------
2,599 (597,080)
--------- ---------
Cash flows from investing activities
Advances (368,877) -
--------- ---------
Cash flow from financing activities
Issuance of capital stock for cash 365,520 597,500
--------- ---------
Net increase (decrease) in cash (758) 420
Cash, Beginning 1,317 897
--------- ---------
Cash, Ending 559 1,317
========= =========
See accompanying notes
</TABLE>
47
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Years Ended December 31
(United States Dollars)
<CAPTION>
Deficit
Capital Stock Accumulated
------------------- Additional During the
Common Paid-in Development
Shares Amount Capital Stage
---------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 7,199,494 $ 7,199 $2,710,122 $(2,524,954)
Shares issued - for cash 4,972,000 4,972 592,528 -
Loss for the year - - - (555,585)
---------- ------- ---------- -----------
Balance, December 31, 1997 12,171,494 12,171 3,302,650 (3,080,539)
Reverse stock split 20:1 (11,562,784) (11,562) 11,562
Shares issued - for cash 456,900 457 365,063 -
- for services 35,000 35 6,965
- for investment 1,250,000 1,250 998,750
Loss for the year - - - (255,161)
---------- ------- ---------- -----------
Balance, December 31, 1998 2,350,610 2,351 4,684,990 (3,335,700)
========== ======= ========== ===========
See accompanying notes
</TABLE>
48
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated as Capital Resources Corporation in August 1983
under the laws of the State of Utah. As a result of a merger in 1986, the
company became a Nevada corporation and changed its name to Capital Resources,
Inc. Further name changes have occurred as follows:
QuoteMedia.com, Inc. (July 1999)
Skyline Entertainment, Inc. (March 1999)
Filtered Souls Entertainment, Inc. (October 1998)
International Tasty Fries, Inc. (April 1995)
Canadian Tasty Fries, Inc. (January 1995)
Videocom International, Inc. (July 1994)
Physician's Cybernetic Systems, Inc. (October 1992)
Genetic Futures, Inc. (June 1992)
QuoteMedia.com, Inc. ("QuoteMedia") is in the business of providing stock market
information, research and other services via the Internet. See also Note 9d).
2. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principals applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through the acquisition of QuoteMedia.com, Inc. and subsequent financings. As
disclosed in Notes 9b) and d), the Company and QuoteMedia have completed
financings to provide working capital for future operations.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation is calculated on a declining-balance basis at a rate of 30%
for the computer. In the years of acquisition and disposal, depreciation is
calculated at one-half the normal rate.
b) Loss per share
Financial Accounting Standards No. 128 "Earnings Per Share" require the
presentation of basic and diluted earnings per share. Basic earnings
per share is computed by dividing income by the weighted average number
of shares outstanding during the year. Diluted earnings per share takes
into account shares outstanding (computed under basic earnings per share)
and potentially dilutive common shares (such as stock options outstanding).
The effect of a stock split or reverse split is applied retroactively to
preceding periods.
49
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Stock based compensation
Statement of Financial Accounting Standards No. 123 "Accounting Per Stock-
Based Compensation" encourages, but does not require, to record the
compensation cost or stock-based employee compensation plans at fair value.
The Company has chosen to account for stock-based compensation using
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees". Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee is
required to pay for the stock.
d) Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between income
for financial statement purposes and income for tax purposes as well as
operating loss carryforwards. Deferred tax expenses or recovery result from
the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance, when, in the
opinion of management, it is likely that some portion of the deferred tax
asset will not be realized. Deferred taxes are adjusted for the effects of
changes in tax laws and rates.
e) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that effect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities as at the year end and the
reported amount of revenues and expenses during the year. Actual results
may vary from the estimates.
f) New accounting standards
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" establishes accounting and
reporting standards for derivative instruments and hedging activities and
is effective for all fiscal quarters or years beginning after June 15,
1999. The Company does not anticipate that adoption of the statement will
have a significant impact on its financial statements.
50
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Reporting on costs of start-up activities
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5: "Reporting the Costs of Start-Up
Activities" which provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The statement is effective
for fiscal years beginning after December 15, 1998. The company does not
anticipate that the statement will have a significant impact on its future
financial statements.
4. MARKETABLE SECURITIES
1998
----
Tasty Fries, Inc.
number of shares 375,000
recorded value $153,750
Tasty Fries, Inc., a U.S. corporation trades on the OTC Bulletin Board.
Tasty Fries, Inc. owns the right to manufacture, distribute and sell a fully
automated french fry vending machine. In addition to acquiring the above shares
in Tasty Fries, Inc. during 1995, the company was interested in become involved
in the business. The company was granted the distribution rights for 15 European
Countries. Consideration is only payable to Tasty Fries, Inc. at the time
vending machines are ordered and delivered. To date, no business has evolved
from this distributorship agreement.
5. FIXED ASSETS
1998
----
Computer
Cost $2,909
Accumulated Depreciation 1,697
------
Net Value $1,212
======
51
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
6. INVESTMENT AND ADVANCES
Cash Advances $368,877
Shares Issued - 1,250,000 at a deemed price of $0.80 per share 1,000,000
---------
Total $1,368,877
==========
On October 6, 1998, the Company entered into an agreement with Skyline Records,
Inc. of San Diego, California under which the Company was to earn a 50% interest
in net revenues (after artists' royalties) from sales proceeds of music albums
being produced and distributed by Skyline.
The agreement and amendments required the Company to pay $500,000 and issue
1,250,000 common shares. To December 31, 1998, the Company has advanced $362,
877 and has issued the 1,250,000 shares. The balance of advances owing, $131,123
were advanced subsequently.
Subsequent to year-end, the Company and Skyline entered into an agreement under
which the Company could participate in future music albums on the same 50% basis
as detailed above in consideration for the Company issuing an additional
1,250,000 post reverse split common shares. These shares were issued on July 2,
1999 at a deemed price of $0.80 per share ($1,000,000).
On July 2, 1999, the company and Skyline entered into an agreement to terminate
the above agreements. All of the Company's interests under prior agreements
revert to Skyline and Skyline relieves the Company of any obligations under the
agreements. As consideration, Skyline is required to pay the Company a total of
$3,000,000. The money is to be paid from time to time from Skyline's net
revenues derived from the sales of albums as detailed in the above agreements.
7. RELATED PARTY TRANSACTIONS
a) Management and Administration Fees
The company paid management fees and administration fees to directors and
officers and to corporations controlled by directors and officers as
follows:
Management fees Administration fees
--------------- -------------------
$ $
1998 30,000 24,000
1997 32,000 27,000
52
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
7. RELATED PARTY TRANSACTIONS (Continued)
b) Due to the related parties
Amounts owing to related parties are unsecured, non-interest bearing and
due on demand.
8. CAPITAL STOCK
a) Authorized share capital
400,000 Series A-1 preferred, $0.001 par value
1,036,500 Series A-11 preferred, $0.001 par value
8,563,000 non-designated preferred, $0.001 par value
50,000,000 common shares, $0.001 par value
b) Issued share capital
Preferred, Series A-1, A-11 and non-designated, none issued
Common - December 31, 1998 2,350,610
c) Additional paid-in capital
The excess of proceeds received for common shares over their par value of
$0.001 is credited to additional paid in capital.
d) Reverse Stock Split
On October 6, 1998, the Board of Directors approved a 20:1 reverse split of
the Company's common stock. The issued common shares at that time,
12,171,494 were consolidated into 608,710 common shares.
9. SUBSEQUENT EVENTS
a) Change of Name
On March 8, 1999, the Company changed its name to Skyline Entertainment,
Inc.. Subsequently, in conjunction with a planned reorganization and merger
with QuoteMedia.com, Inc., the Company has changed its name to
QuoteMedia.com, Inc.
53
<PAGE>
QUOTEMEDIA.COM, INC.
(formerly Skyline Entertainment, Inc., Filtered
Souls Entertainment, Inc., International Tasty Fries, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
9. SUBSEQUENT EVENTS (Continued)
b) Share Capital Issued
The Company has completed a series of private placements of common shares
totalling 793,100 shares at $0.80 per share (total proceeds of $634,480).
In addition, on July 2, 1999, the Company issued 1,250,000 shares at a
deemed value of $0.80 per share ($1,000,000) to Skyline Records, Inc.
pursuant to the October 6, 1998 joint venture agreement. 4, 393,710 common
shares are now outstanding.
c) Investment and Advances
The company's agreements were amended and a termination agreement was
entered into with Skyline Records, Inc. as detailed in Note 6.
d) QuoteMedia.com, Inc.
On July 14, 1999, The Company announced that it had entered into an
agreement to acquire the assets of QuoteMedia.com, Inc. QuoteMedia is in
the business of providing stock market information, research and other
services via the Internet. Consideration for the acquisition is the
issuance of 11,000,000 common shares of the Company. The Company has
changed its name to QuoteMedia.com, Inc. During 1999, QuoteMedia has raised
$1,155,501 through a private placement of its shares.
10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when using year 2000
dates is processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the year 2000 Issue may be experienced before, on, or after January
1, 2000, and, if not addressed, the impact on operations and financial reporting
range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity, including
those related to the efforts of customers, suppliers, or other third parties,
will be fully resolved.
54
<PAGE>
QUOTEMEDIA.COM, INC.
FINANCIAL STATEMENTS
September 30, 1999
55
<PAGE>
DUNCAN BUDGE, C.A.
CHARTERED ACCOUNTANT
Ste. #200 - 120 Lonsdale Ave.
North Vancouver, B.C. V7M 2E8
Telephone: (604) 990-6680
Facsimile: (604) 990-7701
INDEPENDENT AUDITOR'S REPORT
The Stockholders and Board of Directors
QUOTEMEDIA.COM, INC.
I have audited the balance sheet of QUOTEMEDIA.COM, INC. as at September 30,
1999 and the statements operations, stockholders' equity and cash flows for the
period from date of incorporation, June 28, 1999 to September 30, 1999. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audits.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at September 30, 1999 and the
results of its operations and its cash flows for the period from the date of
incorporation, June 28, 1999 to September 30, 1999, in accordance with generally
accepted accounting principles applied on a consistent basis.
The accompanying financial statements have been prepared assuming that
QUOTEMEDIA.COM, INC. will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company has no established sources of revenue.
This raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada "DUNCAN BUDGE, C.A."
December 10, 1999 CHARTERED ACCOUNTANT
56
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
BALANCE SHEET
as at September 30
(United States Dollars)
<CAPTION>
1999
---------
<S> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 612,904
Marketable securities (Note 4) 102,500
Accounts receivable 2,306
---------
717,710
Fixed assets (Note 5) 1,965
Investments and advances (Note 6) 241,783
---------
961,458
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accruals 28,455
Due to related parties (Note 7) 246,093
---------
274,548
---------
STOCKHOLDERS' EQUITY
Capital stock issued (Note 8) 5,416
Additional paid-in capital 870,541
Deficit (189,047)
---------
"Subsequent Events" (Note 9) 686,910
---------
961,458
=========
See accompanying notes
</TABLE>
57
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from Date of Incorporation June 28, 1999 to September 30, 1999
(United States Dollars)
<CAPTION>
1999
----------
<S> <C>
REVENUE
Interest $ 118
----------
EXPENSES
Consulting fees 24,306
Corporate finance 124,035
Depreciation 134
Website content fees 22,500
Development costs 13,798
Legal and accounting 28,354
Marketing and business development 7,320
Office and miscellaneous (38,945)
Regulatory and transfer agent 2,253
Telephone 1,956
Travel and accommodation 3,454
----------
189,165
----------
LOSS FOR THE PERIOD (189,047)
==========
Basic loss per share $(0.01)
Diluted loss per share $(0.01)
Weighted average number of shares outstanding
- basic 15,678,014
- diluted 16,278,014
See accompanying notes
</TABLE>
58
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from Date of Incorporation June 28, 1999 to September 30, 1999
(United States Dollars)
<CAPTION>
1999
---------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $(189,047)
Adjustments to reconcile loss to net cash
used in operating activities
Depreciation 134
Issuance of capital stock for services 120,000
Changes in non-cash working capital items
Accounts payable (34,639)
Due to related parties (39,645)
---------
(143,197)
---------
Cash flow from investing activities
Cash acquired in acquisition of subsidiary 1,100
---------
Cash flow from financing activities
Issuance of capital stock for cash 755,001
---------
Net increase in cash 612,904
Cash, Beginning -
---------
Cash, Ending 612,904
=========
Cash represented by
Bank accounts 112,786
Money market fund 500,118
---------
612,904
=========
</TABLE>
59
<PAGE>
<TABLE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER' EQUITY
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
<CAPTION>
Capital Stock
--------------------- Additional
Common Paid-in
Shares Amount Capital Deficit
---------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, July 13, 1999 4,393,710 4,394 6,317,427 (3,624,835)
Elimination of deficit
and net assets of Quotemedia.com,
Inc., as at date of acquisition - (3,294) (6,317,427) 3,624,835
---------- ------- ---------- ----------
4,393,710 1,100 - -
Shares issued - for cash 1,006,668 1,006 753,995 -
Shares issued
- - acquisition of
QuoteMedia.com Inc. 11,000,000 11,000 - -
Shares issued - for services 160,000 160 119,840 -
Transfer to par value - 3,294 (3,294) -
Loss for the period - - - (189,047)
---------- ------- ---------- ----------
Balance, September 30, 1999 16,560,378 16,560 870,541 (189,047)
========== ======= ========== ==========
</TABLE>
60
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company (QuoteMedia.com Inc.) was incorporated June 28, 1999 under the laws
of the State of Colorado.
On July 14, 1999, the Company entered into a plan of reorganization and plan of
merger with Skyline Entertainment, Inc. (Skyline). Skyline was incorporated as
Capital Resources Corporation in August 1983 under the laws of the State of
Utah. As a result of a merger in 1986, the company became a Nevada corporation
and changed its name to Capital Resources, Inc. Further name changes have
occurred as follows:
QuoteMedia.com, Inc. (July 1999)
Skyline Entertainment, Inc. (March 1999)
Filtered Souls Entertainment, Inc. (October 1998)
International Tasty Fries, Inc. (April 1995)
Canadian Tasty Fries, Inc. (January 1995)
Videocom International, Inc. (July 1994)
Physician's Cybernetic Systems, Inc. (October 1992)
Genetic Futures, Inc. (June 1992)
QuoteMedia.com, Inc. ("QuoteMedia") is in the business of providing stock market
information, research and other services via the Internet.
On July 14, 1999, Skyline issued 11,000,000 common shares to acquire 100% of the
issued and outstanding shares of QuoteMedia. This issuance represented
approximately 72% of the issued and outstanding shares of Skyline. As a result,
the selling shareholders of QuoteMedia have become the controlling shareholders
of Skyline. This transaction, under which control of the parent company passes
to the former shareholders of the subsidiary, is accounted as a reverse
takeover.
Under reverse takeover accounting, the cost of the acquisition of QuoteMedia has
been recorded using the purchase method, with QuoteMedia (the legal subsidiary)
being recognized as the parent for accounting purposes.
Under the July 14, 1999 agreement, immediately after the reverse takeover,
QuoteMedia was merged into Skyline, with Skyline being the surviving
corporation. Skyline's name was then changed to QuoteMedia.com, inc.
2. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principals applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern.
61
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
2. GOING CONCERN (continued)
During the period, the Company raised $755,001 through share capital financings
and as disclosed in Note 9 a), an additional $400,500 has been raised subsequent
to September 30, 1999.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation is calculated on a declining-balance basis at a rate of 30%
for the computer. In the years of acquisition and disposal, depreciation is
calculated at one-half the normal rate.
b) Loss per share
Financial Accounting Standards No. 128 "Earnings Per Share" require the
presentation of basic and diluted earnings per share. Basic earnings per
share is computed by dividing income by the weighted average number of
shares outstanding during the year. Diluted earnings per share takes into
account shares outstanding (computed under basic earnings per share) and
potentially dilutive common shares (such as stock options outstanding). The
effect of a stock split or reverse split is applied retroactively to
preceding periods.
c) Stock based compensation
Statement of Financial Accounting Standards No. 123 "Accounting Per Stock-
Based Compensation" encourages, but does not require, to record the
compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation using
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees". Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at
the date of the grant over the amount an employee is required to pay for
the stock.
d) Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between income
for financial statement purposes and income for tax purposes as well as
operating loss carry forwards. Deferred tax expenses or recovery result
from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance, when, in the
opinion of management, it is likely that some portion of the deferred tax
asset will not be realized. Deferred taxes are adjusted for the effects of
changes in tax laws and rates.
62
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
e) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that effect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities as at the year end and the
reported amount of revenues and expenses during the year. Actual results
may vary from the estimates.
f) New accounting standards
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" establishes accounting and
reporting standards for derivative instruments and hedging activities and
is effective for all fiscal quarters or years beginning after June 15,
1999. The Company does not anticipate that adoption of the statement will
have a significant impact on its financial statements.
g) Reporting on costs of start-up activities
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5: "Reporting the Costs of Start-Up
Activities" which provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The statement is effective
for fiscal years beginning after December 15, 1998. The company does not
anticipate that the statement will have a significant impact on its future
financial statements.
4. MARKETABLE SECURITIES
1999
--------
Tasty Fries, Inc.
number of shares 250,000
recorded value $102,500
Tasty Fries, Inc., a U.S. corporation trades on the OTC Bulletin Board.
Tasty Fries, Inc. owns the right to manufacture, distribute and sell a fully
automated French fry vending machine. In addition to acquiring the above
shares in Tasty Fries, Inc. during 1995, the company was interested in become
involved in the business. The company was granted the distribution rights for 15
European Countries. Consideration is only payable to Tasty Fries, Inc. at the
time vending machines are ordered and delivered. To date, no business has
evolved from this distributorship agreement.
63
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
5. FIXED ASSETS
1999
------
Computer
Cost $4,065
Accumulated Depreciation 2,100
------
Net Value $1,965
======
6. INVESTMENT AND ADVANCES
Cash Advances $ 938,913
Shares Issued - 2,500,00 at a deemed price of $0.80 per share 2,000,000
---------
2,983,913
Write down recorded on July 14, 1999 (2,697,130)
---------
Total $ 241,783
=========
On October 6, 1998, the Company entered into an agreement with Skyline Records,
Inc. of San Diego, California under which the Company was to earn a 50% interest
in net revenues (after artists' royalties) from sales proceeds of music albums
being produced and distributed by Skyline.
The agreement and amendments required the Company to pay $500,000 and issue
1,250,000 common shares.
In March, 1999, the Company and Skyline entered into an agreement under which
the Company could participate in future music albums on the same 50% basis as
detailed above in consideration for the Company issuing an additional 1,250,000
post reverse split common shares. These shares were issued on July 2, 1999 at a
deemed price of $0.80 per share ($1,000,000).
On July 2, 1999, the company and Skyline entered into an agreement to terminate
the above agreements. All of the Company's interests under prior agreements
revert to Skyline and Skyline relieves the Company of any obligations under the
agreements. As consideration, Skyline is required to pay the Company a total of
$3,000,000. The money is to be paid from time to time from Skyline's net
revenues derived from the sales of albums as detailed in the above agreements.
7. RELATED PARTY TRANSACTIONS
a) Management and Administration Fees
The company paid $24,306 in consulting to directors and officers and to
corporations controlled by directors and officers.
64
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
7. RELATED PARTY TRANSACTIONS (continued)
b) Due to the related parties
Amounts owing to related parties are unsecured, non-interest bearing and
due on demand. See Note 9 c)
8. CAPITAL STOCK
a) Authorized share capital
400,000 Series A-1 preferred, $0.001 par value
1,036,500 Series A-11 preferred, $0.001 par value
8,563,000 non-designated preferred, $0.001 par value
50,000,000 common shares, $0.001 par value
b) Issued share capital
Preferred, Series A-1, A-11 and non-designated, none issued
Common - September 30, 1999 16,560,378 (See Note 9 a)
c) Additional paid-in capital
The excess of proceeds received for common shares over their par value of
$0.001 is credited to additional paid in capital.
d) Stock options outstanding
Number Exercise Price Expiry Date
------- -------------- ---------------
200,000 $0.75 August 11, 2004
400,000 $1.27 August 11, 2009
-------
600,000
Additional options were subsequently granted. See Note 9 b)
9. SUBSEQUENT EVENTS
a) Share Capital Issued
The Company has completed a series of private placements of common shares
totalling 534,001 shares at $0.75 per share (total proceeds of $400,500).
65
<PAGE>
QUOTEMEDIA.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from Date of Incorporation, June 28, 1999 to September 30, 1999
9. SUBSEQUENT EVENTS (Continued)
b) Stock Options
During November, 1999, the Company has granted additional stock options as
follows:
Number Exercise Price Expiry Date
------- -------------- ----------------
325,000 $1.85 November 8, 2009
75,000 $1.68 November 8, 2004
-------
400,000
c) Due to related parties
Subsequent to September 30, 1999, $49,000 in amounts owing to related
parties has been forgiven.
10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when using year 2000
dates is processed. In addition, similar problems may arise in some systems,
which use certain dates in 1999 to represent something other than a date. The
effects of the year 2000 Issue may be experienced before, on, or after January
1, 2000, and, if not addressed, the impact on operations and financial reporting
range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity, including
those related to the efforts of customers, suppliers, or other third parties,
will be fully resolved.
66
<PAGE>
PART III
Item 1. Exhibit Index
No.
- --- Sequential
Page No.
--------
(3) Articles of Incorporation and Bylaws
3.1 Articles of Merger Between Physician
Cybernetic System, Inc. and Genetic
Futures, Inc. 70
3.2 Articles of Amendment to Articles of
Incorporation 78
3.3 Amended and Restated Articles of
Incorporation 81
3.4 Certificate of Amendment to Articles
of Incorporation 94
3.5 Certificate of Amendment to Articles
of Incorporation 96
3.6 Certificate of Amendment to Articles
of Incorporation 99
3.7 Certificate of Amendment to Articles
of Incorporation 101
3.8 Articles of Merger Between Skyline
Entertainment, Inc. and Quotemedia.com,
Inc. 103
3.9 Bylaws 106
(4) Instruments Defining the Rights of Holders
4.1 Form of "Pooling Agreement" Executed
by certain of the Company's Shareholders 123
(10) Material Contracts
10.1 Agreement and Plan of Reorganization
between the Company and Old QMI 144
10.2 Employment Agreement between the Company
and R. Keith Guelpa 172
67
<PAGE>
No.
- --- Sequential
Page No.
--------
10.3 Employment Agreement between the Company
and Keith Randall 176
10.4 Employment Agreement between the Company
and Duane Nelson 179
(27) Financial Data Schedule
27.1 Financial Data Schedule 183
68
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
QUOTEMEDIA.COM, INC.
(Registrant)
Date: December 21, 1999
By: s\ R. Keith Guelpa
----------------------
R. Keith Guelpa,
President
69
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.1
-------------------------
ARTICLES OF MERGER
BETWEEN PHYSICIAN CYBERNETIC SYSTEM, INC.
AND GENETIC FUTURES, INC.
-------------------------
70
<PAGE>
STATE OF NEVADA
DEPARTMENT OF STATE
I, CHERYL A. LAU, the duly qualified and elected Secretary of the State of
Nevada, do
hereby certify that there was filed in this office on August 19, 1992.
ARTICLES OF MERGER
merging
PHYSICIAN CYBERNETIC SYSTEM, INC.
(A Nevada Corporation)
into
GENETIC FUTURES, INC.
(A Nevada Corporation)
name changed to
PHYSICIAN'S CYBERNETIC SYSTEM, INC.
(a Nevada Corporation)
IN WITNESS WHEREOF, I have hereunto set my hand
and affixed the Great Seal of State, at my office, in
Carson city, Nevada, this Nineteenth day of
August , A.D., 19 92.
s/Cheryl A. Lau
-----------------------------------------------------
Secretary of State
By s/Deborah M. Farmer
--------------------------------------------------
71
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA ARTICLES OF MERGER
AUG 19 1992 BY AND BETWEEN
Cheryl A. Lau, Secretary of State
s/Cheryl A. Lau GENETIC FUTURES, INC., (A NEVADA CORPORATION)
No. 7038-92 AND
PHYSICIAN CYBERNETIC SYSTEM, INC., (A NEVADA CORPORATION)
AND
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
GENETIC FUTURES, INC.
Pursuant Nevada Revised Statutes, a Special Meeting of the Shareholders
representing a majority of shares of Record, (being more than 50%) of Genetic
Futures, Inc., a Nevada corporation, which shares are fully paid and validly
issued and outstanding on the books of the corporation was held on August 4,
1992, there being 7,545,000 shares issued and outstanding entitled to vote
(pre-merger), a majority of the shareholders of record voted either by proxy or
in person 6,258,840 shares FOR, which represents 83%, with 0 shares AGAINST, to
acquire 123,729 common shares of outstanding stock of Physician Cybernetic
System, Inc., a Nevada corporation through a stock exchange as described in a
definitive "Plan of Reorganization and Acquisition Agreement", which has been
executed between the parties, and to complete a merger by and between Genetic
Futures, Inc., and Physician Cybernetic System, Inc., wherein Genetic Futures,
Inc., would be the survivor corporation but would amend the First Article of its
Articles of Incorporation as agreed between the parties, changing its name to
Physician's Cybernetic System, Inc..
GENETIC FUTURES, INC., hereinafter referred to as GENETIC- NV, or the
Company, by a majority of its Directors and approval of a majority of its
Shareholders and PHYSICIAN CYBERNETIC SYSTEM, INC., hereinafter referred to as
PHYSICIAN-NV, by a majority of its shareholders and Directors thereof, do agree
to a merger upon the following terms and conditions;
WHEREAS, GENETIC-NV has authorized capital stock as described in its
Articles of Incorporation as adopted; and
WHEREAS, PHYSICIAN-NV has authorized capital stock as described in its
articles of incorporation as adopted; and
WHEREAS, the principal office of PHYSICIAN-NV in the State of Nevada is
located at 821 Riverside Drive, Reno, Nevada, and Oliver Merservy, is the
registered agent of PHYSICIAN-NV upon whom service of process for PHYSICIAN-NV
may be received within the State of Nevada; and
1
72
<PAGE>
WHEREAS, the principal office of GENETIC-NV in the State of Nevada is
located at 3172 N. Rainbow Blvd., Suite 101, Las Vegas, NV. 89108, and R.A.
LeStourgeon, is the registered agent of GENETIC-NV upon whom service of process
for GENETIC-NV may be received within the State of Nevada; and
WHEREAS, the Board of Directors of PHYSICIAN-NV and GENETIC- NV,
respectively, deem it advisable and generally to the advantage and welfare of
the two corporate parties and their respective shareholders that PHYSICIAN-NV
merge into GENETIC-NV under and pursuant to the Provisions of Nevada Revised
Statutes, wherein both PHYSICIAN-NV and GENETIC-NV consent as follows:
The SURVIVING CORPORATION, as in this case, GENETIC-NV, is to be governed
by the laws of the State of Nevada, and shall comply with the provisions of
Nevada Revised Statutes as amended pertaining to corporations, and the
provisions and statutes of other states to which it may be subject.
NOW THEREFORE, in consideration of the premises and of the mutual agreement
herein contained and of the mutual benefits provided, it is agreed by and
between the parties hereto as follows:
1. MERGER. PHYSICIAN-NV shall be and it hereby is merged into GENETIC-NV.
2. EFFECTIVE DATE. These Articles of Merger shall comply with the Statutes
of the State of Nevada and become effective immediately upon filing of the same,
and the approval thereof with the Secretary of State of Nevada, at the time of
such effectiveness, hereinafter called the Effective Date.
3. SURVIVING CORPORATION. GENETIC-NV shall survive the merger herein
contemplated and shall continue to be governed by the laws of the State of
Nevada, but the separate existence of PHYSICIAN-NV shall cease forthwith upon
the Effective Date, or when cleared with the Secretary of the State of Nevada.
4. AUTHORIZED CAPITAL. The authorized capital stock of GENETIC-NV following
the Effective date shall be that as described in its Articles of Incorporation,
unless or until the same may be amended by a majority of shareholders, in
accordance with the laws of the State of Nevada.
5. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation, shall be
the Certificate of Incorporation of GENETIC-NV following the Effective Date
unless and until the same shall be amended or repealed in accordance with the
provisions thereof, and include all rights or powers of whatsoever nature
conferred with such Certificate of Incorporation upon any shareholder or
director or officer of GENETIC-NV or upon any other
2
73
<PAGE>
person whomsoever are subject to this reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation of GENETIC-NV
separate and apart from these Articles of Merger and amy be separately certified
as the Certificate of Incorporation of GENETIC-NV.
6. BY-LAWS. The Corporate By-Laws shall be the By-Laws as adopted by the
Board of Directors of GENETIC-NV following the Effective Date unless and until
the same shall be amended or repealed in accordance with the provisions thereof.
7. FURTHER ASSURANCE OF TITLE. If at any time GENETIC-NV shall consider or
be advised that any acknowledgements or assurances in law or other similar
actions are necessary or desirable in order to acknowledge or confirm in and to
GENETIC-NV any right, title, or interest in PHYSICIAN-NV held immediately prior
to the Effective Date, then PHYSICIAN-NV and its proper officers and directors
shall and will execute and deliver all such acknowledgements or assurances in
law and do all things necessary or proper to acknowledge or confirm such right,
title of interest in PHYSICIAN-NV as shall be necessary to carry out the
purposes of these Articles of Merger with GENETIC-NV and the proper officers and
directors thereof are fully authorized to take any and all such action in the
name of GENETIC-NV or otherwise.
8. RETIREMENT OF STOCK CERTIFICATES. Forthwith upon the Effective Date, all
blank common stock certificates held by the Transfer Agent of PHYSICIAN-NV shall
be void or destroyed and no shares of Common Stock or other securities of
PHYSICIAN-NV shall be issued in respect thereof.
9. CONVERSION OF OUTSTANDING STOCK OF PHYSICIAN-NV. As consideration, in
exchange for the assets and stockholder interests transferred by PHYSICIAN-NV
through this merger, GENETIC-NV will exchange, issue and deliver to PHYSICIAN-NV
and or it's shareholders or assignees as directed, the number of shares of
various type, class and series as described in the definitive "Plan of
Reorganization and Acquisition Agreement" as executed between the parties. All
shares of stock when exchanged shall be deemed as fully paid, non-assessable,
and authorized on the corporate books of GENETIC-NV.
10. RETIREMENT OF TREASURY STOCK. Forthwith upon the Effective Date, shares
of Common Stock of PHYSICIAN-NV held in the Treasury of PHYSICIAN-NV, if any, on
the Effective Date, shall be retired and no shares of common stock or any other
securities of PHYSICIAN-NV shall be issued in respect thereof.
11. BOOK ENTRIES. The merger contemplated hereby shall be treated as a
pooling of interests and as of the Effective Date, entries shall be made upon
the books of GENETIC-NV in accordance with the terms of this Agreement.
3
74
<PAGE>
12. BOARD OF DIRECTORS AND OFFICERS. The members of the first Board of
Directors and the officers of GENETIC-NV immediately after the Effective date of
the merger shall be those persons who were nominated by the Board of Directors
respectively of PHYSICIAN-NV. as elected by a majority of the shareholders of
GENETIC-NV at the Special Meeting of Shareholders of GENETIC-NV, held August 4,
1992, and such persons shall serve in such offices, respectively, for the terms
provided in the Articles of Incorporation of GENETIC-NV or in the By-Laws of
GENETIC-NV, or until their successors are duly appointed and qualified.
13. VACANCIES. If, upon the Effective Date or thereafter, a vacancy shall
exist in the Board of Directors or in any or the officers of GENETIC-NV as the
same are specified above, such vacancy shall thereafter be filled by appointment
and majority approval in the manner provided by in the Articles and the ByLaws
of GENETIC-NV.
14. TERMINATION. These Articles of Merger may be terminated and abandoned
by action of the Board of Directors of GENETIC-NV at any time prior to the
Effective Date, whether before or after approval of the shareholders of the two
corporate parties hereto, for cause due to misrepresentation if any, related
thereto.
15. AUTHORIZATION. These Articles of Merger were duly authorized by the
directors of GENETIC-NV and PHYSICIAN-NV, and were subject to a majority vote of
the directors and shareholders of GENETIC-NV and PHYSICIAN-NV at a meeting held
on August 4, 1992.
16. AMENDMENT TO THE FIRST ARTICLE OF INCORPORATION OF GENETIC FUTURES,
INC., a Nevada Corporation, being the SURVIVOR of these ARTICLES OF MERGER,
having agreed to the above described actions and pursuant to majority approval
at said Special Meeting of the Shareholders of GENETIC-NV, and a majority of
shareholders of PHYSICIAN-NV, held according to Nevada Revised Statutes,
therefore, Genetic Futures, Inc., does by these presents:
Amend its First Article of its Articles of Incorporation, changing its
corporate name as follows:
FIRST: Name.
The name of the corporation is:
PHYSICIAN'S CYBERNETIC SYSTEM, INC.
4
75
<PAGE>
IN WITNESS WHEREOF, each of the corporate parties hereto, pursuant to authority
duly granted by the Board of Directors and a majority of each company's
shareholders, has caused these Articles of Merger between GENETIC-NV and
PHYSICIAN-NV, and the Amendment of the First Article of the Articles of
Incorporation of GENETIC-NV, to be executed by its respective Secretary and
President on the dates first indicated below.
Signed and Agreed on the date(s) as first show below.
Date 8-11-92 Date 8-18-92
------------------ -------------------
GENETIC FUTURES, INC. PHYSICIAN CYBERNETIC SYSTEM, INC.
(a Nevada corporation) (a Nevada corporation)
s/Charles L. King s/John Young
- --------------------------- ------------------------------
President President
s/Carle T. Wise s/Chad Nintze
- --------------------------- ------------------------------
Secretary Secretary
STATE OF OHIO )
: ss
COUNTY OF KNOX )
These Articles of Merger by and between GENETIC FUTURES, INC., a Nevada
corporation, and PHYSICIAN CYBERNETIC SYSTEM, INC., a Nevada corporation, and
amendment to the First Article of the Articles of Incorporation of GENETIC
FUTURES, INC., has been acknowledged before me this 11th day of August, 1992, by
Carle T Wise, and Charles L King, who have each sworn and stated that they are
the respective President and Secretary of GENETIC FUTURES, INC., that they have
executed the aforementioned document on behalf of GENETIC FUTURES, INC., as set
forth under their respective signatures.
s/Lois A. Badger
------------------------------
Notary Public
Lois A. Badger
Notary Public, State of Ohio
My commission expires 7-25-94
5
76
<PAGE>
STATE OF COLORADO )
: ss
COUNTY OF DENVER )
This Articles of Merger by and between GENETIC FUTURES, INC., a Nevada
corporation, and PHYSICIAN CYBERNETIC SYSTEM, INC., a Nevada corporation, and
the Amendment to the First Article of the Articles of Incorporation of GENETIC
FUTURES, INC., has been acknowledged before me this 18th day of August, 1992, by
John Young, and Chad Nintze, who have each sworn and stated that they are the
respective President and Secretary of PHYSICIAN CYBERNETIC SYSTEM, INC., and
that they have executed the aforementioned document on behalf of PHYSICIAN
CYBERNETIC SYSTEM, INC., as set forth under their respective signatures.
s/Phyllis J. Aragen
------------------------------
Notary Public
My commission expires 12/25/93 ,
------------
Residing at _______________________
6
77
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.2
-------------------------
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION
-------------------------
78
<PAGE>
FILING FEE: $75.00 DF C601419
EXPEDITE #E029361
WHIT LUND
FILED C/O WASATCH SUMMIT REALTY
IN THE OFFICE OF THE 255 MAIN, STE. D-2
SECRETARY OF STATE OF THE PARK CITY, UT 84060
STATE OF NEVADA
OCT 08 1992
Cheryl A. Lau, Secretary of State
s/Cheryl A. Lau
- ---------------------------------
No. 7038-92
------------------------------
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
PHYSICIAN'S CYBERNETIC SYSTEM, INC.
On the 30th day of September , 1992, pursuant to Nevada Revised Statutes
78.320 and other applicable NRS, a Special Meeting of Shareholders of
Physician's Cybernetic System, Inc., a Nevada corporation was called. In person
or by proxy, there were present, sufficient shares voted, representing a
majority of shares of record (being more than 50%) of the shares outstanding of
the corporation, said shares being fully paid, validly issued and outstanding on
the books of the corporation.
Whereas, there are 6,553,000 Common shares (entitled to one vote per each
outstanding share, and Whereas, there are 400,000 shares outstanding of Series
A-I Preferred Stock (entitled to 75 votes per each outstanding share) and
Whereas, there are 1,036,500 shares outstanding of Series A-II Preferred Stock
(entitled to one vote per each outstanding share; Thereafter, 6,148,500 Common
shares were voted in the affirmative representing 93% of the Common shares
outstanding being a majority, thereafter, 400,000 Series A-I Preferred shares
representing 100% of the outstanding shares of said class, were vote in the
Affirmative; thereafter, 1,036,500 Series A-II Preferred shares representing
100% of the outstanding shares of said class were voted in the Affirmative, and
there were -0- shares Against, to Amend the FIRST Article of the Articles of
Incorporation as to the Corporate name.
Therefore, the Corporation does by these presents Amend the FIRST Article
of the Articles of Incorporation as the corporate name as follows:
FIRST: Name
The name of the corporation is:
PHYSICIAN'S CYBERNETIC SYSTEMS, INC.
Dated this 30th day of September, 1992.
s/R. Chad Nintze
------------------------------
R. Chad Nintze, Secretary
79
<PAGE>
I, John Young, President of Physician's Cybernetic System, Inc., formerly
known as Genetic Futures, Inc., do hereby swear and affirm that the Articles of
Amendment to the Articles of Incorporation as stated above are true and correct
as approved by a majority of shareholders on September 30, 1992, and executed by
the Corporate Secretary on behalf of the Corporation.
Dated this 30th day of September, 1992.
s/John Young
------------------------------
John Young, President
State of Colorado )
:ss
County of Denver )
The undersigned Notary Public certifies, deposes, and states that John
Young, and R. Chad Nintze, have each sworn and stated that the above is a true
and correct Amendment to the Articles of Incorporation of Physician's Cybernetic
System, Inc., and that they have executed the aforementioned Amendment on behalf
of the Corporation this 30th day of September, 1992.
s/Phylis J. Aragon
------------------------------
80
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.3
-------------------------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
-------------------------
81
<PAGE>
AMENDED AND RESTATED ARTICLES FILED
OF INCORPORATION FOR A NEVADA CORPORATION IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUL 18 1994
Cheryl A. Lau, Secretary of State
7038-92
1. Name of corporation Physician's Cybernetic Systems, Inc.
--------------------------------------------------------
2. Date of adoption of Amended and Restated Articles June 15, 1994
--------------------------
3. If the articles were amended, please indicate what changes have been made:
(a) Was there a name change? Yes X No If yes, what is the new name?
--- ---
Videocom International, Inc.
----------------------------------------------------------------------------
(b) Did you change the resident agent? Yes X No If yes, please
indicate the new resident agent and address. --- ---
State Agent and Transfer Syndicate, Inc.
311 N. Carson Street
Carson City, Nevada 89701
Please attach the resident agent acceptance certificate.
(c) Did you change the purposes? Yes No X Did you add Banking?
Gaming? Insurance? None of these? X
--- --- ---
(d) Did you change the capital stock? Yes No X If yes, what is the new
capital stock? --- ---
-----------------------------------------------------------------------
(e) Did you change the directors? Yes X No If yes, indicate the change:
--- ---
New directors: See Attached List.
-----------------------------------------------------------------------
(f) Did you add the directors liability provision? Yes No X
--- ---
(g) Did you change the period of existence? Yes No X If yes, what is
the new existence? --- ---
-----------------------------------------------------------------------
(h) If none of the above apply, and you have amended or modified the
articles, how did you change your articles?
-----------------------------------------------------------------------
-----------------------------------------------------------------------
s/Valerie L. Winters, Secretary July 13, 1994
- ------------------------------------------------------------- ----------------
Name and Title of Officer
Valerie L. Winters, Secretary
State of New Mexico )
: ss.
County of Bernalilto )
On July , 1994 , personally appeared before me, a Notary Public,
-----------------------
Valerie L. Winters, Secretary of Physician's Cybernetic Systems, Inc., who
- --------------------------------------------------------------------------
acknowledged that she executed the above instrument.
s/Paul Baum
(Notary Stamp or Seal) ------------------------------
Notary Public
OFFICIAL SEAL
PAUL BAUM
NOTARY PUBLIC, NEW MEXICO
Notary Bond Filed with Secretary of State
My Commission Expires 10-1-94
---------
82
<PAGE>
Directors:
- ----------
Norman Hanash Robert Cabana
215 51st Ave. 8 Desrochers St. Est.
Lachine, Quebec Chateauguay, Quebec
Canada H8T 2W3 Canada J6J 2W3
Marc Fredette Ian D. Lambert
96 Angell 1220 Eastview Rd.
Beaconsfield, Quebec N. Vancouver, British Columbia
Canada H9W 4V7 Canada V7J 1L6
83
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JULY 18 1994
Cheryl A. Lau, Secretary of State
s/Cheryl A. Lau
7038-92 RESTATED ARTICLES OF INCORPORATION
OF
PHYSICIAN'S CYBERNETIC SYSTEMS, INC.
Physician's Cybernetic Systems, Inc., a corporation organized and existing
under the laws of the State of Nevada, hereby certifies as follows:
1. Pursuant to Section 78.403 of the Nevada Revised Statutes Annotated,
these Restated Articles of Incorporation restate, in their entirety, and amend,
the provisions of the Articles of Incorporation of this Corporation.
2. The text of the Restated Articles of Incorporation is hereby restated to
read in its entirety as follows:
FIRST: The corporate name and style of this Corporation shall be Videocom
International, Inc.
SECOND: The Corporation's registered office in the State of Nevada is
located at 311 N. Carson Street, Carson City, Nevada 89701. The name of its
resident agent at that address is State Agent and Transfer Syndicate, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized pursuant to
the Private Corporation Law of the Nevada Revised Statutes.
FOURTH: The said Corporation is to have perpetual existence unless
dissolved according to law.
FIFTH: The total number of shares of all classes which the Corporation
shall have authority to issue is 60,000,000, of which 10,000,000 shares shall be
Preferred Shares, par value $0.001 per share, and 50,000,000 shall be Common
Shares, par value $0.001 per share, and the designations, preferences,
limitations, and relative rights of the shares of each class are as follows:
1. Preferred Shares: The Corporation may divide and issue
the Preferred Shares in series. Preferred Shares of each series
when issued shall be designated to distinguish them from the
shares of all other series. The Board of Directors is hereby
expressly vested with authority to divide the class of Preferred
Shares into series and to fix and determine the relative rights
and preferences of the shares of any such series so established
to the full extent permitted by these Articles of Incorporation
and the laws of the State of Nevada in respect of the following:
Page 1 of 10
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a. The number of shares to constitute such series, and
the distinctive designations thereof;
b. The rate and preference of dividends, if any, the
time of payment of dividends, whether dividends are
cumulative and the date from which any dividend shall
accrue;
c. Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
d. The amount payable upon shares in event of
involuntary liquidation;
e. The amount payable upon shares in event of voluntary
liquidation;
f. Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
g. The terms and conditions on which shares may be
converted, if the shares of any series are issued with the
privilege of conversion;
h. Voting powers, as a class, to elect up to two
directors to the Board of Directors, if any; and
i. Any other relative rights and preferences of shares
of such series including, without limitation, any
restriction on an increase in the number of shares of any
series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any
future series shall be subject.
2. Common Shares:
a. The rights of holders of Common Shares to receive
dividends or share in the distribution of assets in the
event of liquidation, dissolution, winding up of the affairs
of the Corporation shall be subject to the preferences,
limitations, and relative rights of the Preferred Shares
fixed in the resolution or resolutions which may be adopted
from time to time by the Board of Directors of the
Corporation providing for the issuance of one or more series
of the Preferred Shares.
b. The holders of the Common Shares shall be entitled
to one vote for each shares of Common Shares
Page 2 of 10
85
<PAGE>
held by them of record at the time for determining the
holders thereof entitled to vote.
c. Unless otherwise ordered by a court of competent
jurisdiction, at all meetings of shareholders a majority of
the shareholders entitled to vote at such meeting,
represented in person or by proxy, shall constitute a
quorum.
d. The shareholders, by vote or concurrence of a
majority of the outstanding shares of the Corporation, or
any class or series thereof, entitled to vote on the subject
matter, may take any action which, except for this
provision, would require a two-thirds vote under the Nevada
Corporation Code.
SIXTH: Cumulative voting in the election of Directors shall not be
permitted by this Corporation.
SEVENTH: A shareholder of the Corporation shall not be entitled to a
preemptive right to purchase, subscribe for, or otherwise acquire any unissued
or treasury shares of stock of the Corporation, or any options or warrants to
purchase, subscribe for or otherwise acquire any such unissued or treasury
shares or any shares, bonds, notes, debentures, or other securities convertible
into or carrying options or warrants to purchase, subscribe for or otherwise
acquire any such unissued or treasury shares.
EIGHTH: The governing board of this Corporation shall be known as
directors. The affairs and management of this Corporation shall be under the
control of the Corporation's Board of Directors, which shall consist of not less
than one (1) nor more than seven (7) directors, to serve until his, her, or
their successors are duly elected and qualified, or until the Corporation is
required by statute or otherwise to increase the number of Board members. The
Board of Directors shall be:
Norman Hanash Marc Fredette
215 51st Ave. 96 Angell
Lachine, Quebec Beaconsfield,
Canada H8T 2W3 Quebec, Canada H9W 4V7
Robert Cabana Ian Lambert
8 Desrochers St. Est. 1220 Eastview Rd.
Chateauguay, Quebec N. Vancouver, British Columbia
Canada J6J 2W3 Canada V7J 1L6
NINTH: None of the directors or officers of this Corporation shall, in the
absence of fraud, be disqualified by his office from
Page 3 of 10
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<PAGE>
contracting, leasing, or otherwise dealing with this corporation, either as a
vendor, lessor, purchaser, or otherwise, of which he shall be a member or in
which he may be pecuniarily interested in any manner from doing business with
the Corporation. No director or officer, nor any firm, association or
corporation or with which he is connected as aforesaid shall be liable to
account to this Corporation or its stockholders for any profit realized by him
from or through any such contract, lease or transaction, it being the express
intent and purpose of this Article to permit this corporation to buy or lease
from, sell to or otherwise deal with partnerships, firms or corporations of
which the directors and officers or in which they or any of them may have a
pecuniary interest, and that the contracts or leases of this Corporation, in the
absence of fraud, not be void or voidable or affected in any manner by reason of
any such membership. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or a
committee thereof which authorizes, approves, or ratifies such contract or
transaction.
TENTH:
1. The Corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (except that an action by or in the right of the
Corporation), by reason of the fact that he is or was a director, officer,
employee, fiduciary, or agent of the shares or is or was serving at the
request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorney fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation and that, with respect
to any criminal action or proceeding, had reasonable cause to believe his
conduct was unlawful.
2. The Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any
Page 4 of 10
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<PAGE>
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
including amounts paid in settlement and attorney fees actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation;
but no indemnification shall be made in respect of any claim, issue, or
matter as to which such person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the Corporation or for amounts paid in settlement to the Corporation unless
and only to the extent that the court in which such action or suit was
brought or other court of competent jurisdiction determines upon
application that, despite the adjudication of liability, but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
3. To the extent that a director, officer, employee, fiduciary or
agent of a corporation has been successful on the merits in defense of any
action, suit, or proceeding referred to in (1) or (2) or this Article Tenth
or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney fees) actually and
reasonably incurred by him in connection therewith.
4. Any indemnification under (1) or (2) of this Article Tenth (unless
ordered by a court) and as distinguished from (3) of this Article shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
fiduciary or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in (1) or (2) above. Such
determination shall be made by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action,suit,
or proceeding, or, if such a quorum is not obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or by the shareholders.
Page 5 of 10
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<PAGE>
5. Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the Corporation in
advance of the final disposition in (3) or (4) above, upon receipt of an
undertaking by or on behalf of the director, officer, employee, fiduciary
or agent to repay such amount unless it is ultimately determined that he is
entitled to be indemnified by the Corporation as authorized in this in this
Article Tenth.
6. The indemnification provided by this Article Tenth shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise, and any procedure provided for by any of the
foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, fiduciary or
agent and shall inure to the benefit of heirs, executors, and
administrators of such a person.
7. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary or agent
of the Corporation, or who is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under provisions of
this Article Tenth.
8. Anything herein to the contrary notwithstanding, to the fullest
extent permitted by the Private Corporation Law of the Nevada Revised
Statutes Annotated, as the same exists or may hereafter be amended, a
director or officer of this Corporation shall not be liable t the
Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director or officer.
ELEVENTH: The Corporation shall be permitted to conduct business in other
states of the United States and to have one or more offices outside of the State
of Nevada.
TWELFTH: The Board of Directors and stockholders of this Corporation shall
have the right to hold their meetings outside of the State of Nevada when deemed
most convenient or to the best interests of the Corporation.
Page 6 of 10
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<PAGE>
THIRTEENTH: The Board of Directors may at any meeting, by a majority vote,
sell, lease, exchange, and/or convey all of its property and assets, including
its good will and/or its corporate franchises, upon such terms and conditions
and for such consideration or considerations as the Board of Directors in their
sole discretion deem expedient and for the best interest of the Corporation and
said consideration or considerations may consist in whole or in part of shares
of stock and/or securities of any other corporation or corporations; provided,
however, in all such cases the affirmative vote of the holders of a majority of
the Common Stock of said Corporation then issued and outstanding shall be voted
in ratification of the Board of Directors action, said vote to be taken at a
special stockholders' meeting of the Corporation, duly called for that purpose.
Nothing herein shall be construed to limit the power of the Board of Directors
of the Corporation and said Board shall have power in its sole discretion to
sell, lease, exchange and/or convey such parts or parcels of land or personal
property or assets as the Board of Directors determine are no longer necessary
or expedient to be held by the Corporation. It is, however, specifically
understood that the Board of Directors may at their discretion create a lien or
mortgage on any or all of the assets of the Corporation in order to borrow money
should the Board of Directors feel that it is necessary for the conduct of the
business.
FOURTEENTH: Stockholders shall at all times have the right to examine the
books of the Corporation except as limited by these Articles of Incorporation.
Such examination as hereinafter provided shall be made only by the stockholder
in person, and no extract from the books or records of the Corporation shall be
permitted to be made by any stockholder(s) of the Corporation. Such stockholder
shall give assurance in writing satisfactory to the Board of Directors that he
does not desire the information required or to be obtained by such inspection
for the purpose of communicating the same to others who are not stockholders
and, further, that he will not directly or indirectly disclose the Company's
business or affairs to any person or persons whomsoever.
No information in regard to the business or operations of the Corporation
and no copy of, or extract from, any of the books or records of the Corporation
shall be furnished to any person by any officer or director of the Corporation
except by direction and/or approval by the Board of Directors. Stockholders
desiring information in regard to the business or operations of the Corporation,
or desiring to make inspection of the books or records, shall first make
application in writing to the Board of Directors stating the specific purpose of
the application, the particular information desired and the books and records
required for that purpose by such stockholder before such examination, and
Page 7 of 10
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<PAGE>
shall further satisfy the Board of Directors that said application is made in
good faith and that said examination will not be detrimental to the interests of
the Corporation.
FIFTEENTH: The Corporation shall be entitled to treat the registered holder
of any shares of the Corporation as the owner thereof for all purposes,
including all rights deriving from such shares, and the Corporation shall not be
bound to recognize any equitable or other claim to, or interest in, such shares
or rights deriving from such shares on the part of any other person including
without limiting the generality hereof, a purchaser, assignee or transferee of
such shares or rights deriving from such shares, unless and until such other
person becomes the registered holder of such shares, whether or not the
Corporation shall have either actual or constructive notice of the claimed
interest of such other person. By way of example and not of limitation, until
such person has become the registered holder of such shares, he shall not be
entitled: to receive notice of the meetings of the shareholders; to vote at such
meetings; to examine a list of the shareholders; to be paid dividends or other
sums payable to shareholders; or to own, enjoy and exercise any other rights
deriving from such shares against the Corporation.
SIXTEENTH: The Board of Directors shall have the power to make and amend
such prudential Bylaws as they deem proper and not inconsistent with the
Constitution or the laws of the United States or of this State for the
management of the property of this corporation, the regulation and government of
its affairs, and for the certificate and transfer of its stock.
CERTIFICATE OF PRESIDENT AND SECRETARY
The undersigned, being the duly elected President and Secretary of Videocom
International, Inc., f/k/a Physician's Cybernetic Systems, Inc., a Nevada
corporation, (the "Company"), hereby certify that the Restated Articles of
Incorporation included hereinabove, were approved by a majority of the
shareholders of the Company by a vote of 2,964,500 in favor, -0- against, -0-
abstaining, at a meeting of the Company's shareholders duly called pursuant to
notice , held on the 15th day of June, 1994.
By: s/Norman Hanash
-----------------------------
Norman Hanash, President
s/Valerie L. Winters
-----------------------------
Valerie L. Winters, Secretary
Page 8 of 10
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<PAGE>
STATE OF CANADA )
) ss.
COUNTY OF LACHINE )
On this 7th day of July, 1994, before me, a Notary Public, personally
appeared Norman Hanash who subscribed and swore to the foregoing instrument.
Witness my hand and official seal:
s/Gilbert Baufford
-----------------------------------
Notary Public
My Commission Expires: for life
-------------
STATE OF NEW MEXICO )
) ss.
COUNTY OF SANDOVAL )
On this 1st day of July , 1994, before me, a Notary Public, personally
appeared Valerie Winters who subscribed and swore to the foregoing instrument.
Witness my hand and official seal:
s/Larry Koch
-----------------------------------
Notary Public
My Commission Expires: 4-12-97
------------
OFFICIAL SEAL
LARRY KOCH
NOTARY PUBLIC
STATE OF NEW MEXICO
My Commission Expires 4-12-97
--------
Page 9 of 10
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<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
The State Agent & Transfer Syndicate, Inc. hereby accepts the appointment
as Resident Agent of the above named corporation.
STATE AGENT & TRANSFER SYNDICATE, INC.,
Registered Agent
By: s/John A. McQuirk
--------------------------------------
Date: July 12, 1994
------------------------------------
Page 10 of 10
93
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.4
-------------------------
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
-------------------------
94
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FILED (After Issuance of Stock)
In the Office of the
Secretary of State of the
STATE OF NEVADA
JAN 26 1995
No. 7038-92
--------------
Dean Heller, Secretary of State
VIDEOCOM INTERNATIONAL, INC.
---------------------------------------------
We, the undersigned Ian D. Lambert and
-------------------------------------------------
President or Vice President
Valerie L. Winters of VIDEOCOM INTERNATIONAL, INC.
- --------------------------------------- ------------------------------------
Secretary or Assistant Secretary Name of Corporation do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 29th day of November 19 94 , adopted a resolution
-------- ----------- ----
to amend the original articles as follows:
Article FIRST is hereby amended to read as follows:
-----
The corporate name and style of this Corporation shall be Canadian
Tasty Fries, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 13,767,828 ; that the said
----------
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
s/Ian D. Lambert
s/Joseph Schaefer ------------------------------------
_____________________________ President or Vice President
JOSEPH SCHAEFER Ian D. Lambert
BARRISTER & SOLICITOR s/Valerie L. Winters
602 - 595 Howe Street ------------------------------------
Vancouver, B.C. V6C 2T5 Secretary or Assistant Secretary
As to Ian D. Lambert Valerie L. Winters
State of New Mexico )
-------------------- )
: ss.
County of Bernalilto )
-------------------
On 1-7-95 , personally appeared before me, a Notary Public,
---------------------
Valerie L. Winters , who acknowledged
- ------------------------------------------------------------
that they executed the above instrument.
s/Karen Marionneaux
------------------------------------
Signature of Notary
OFFICIAL SEAL
NOTARY PUBLIC
STATE OF NEW MEXICO
My Commission Expires 3-16-96
----------
(Notary Stamp or Seal)
95
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.5
-------------------------
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
-------------------------
96
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FILED (After Issuance of Stock)
In the Office of the
Secretary of State of the
STATE OF NEVADA
APR 04 1995
No. 7038-92
--------------
Dean Heller, Secretary of State
CANADIAN TASTY FRIES, INC.
---------------------------------------------
We, the undersigned Ian D. Lambert and
-------------------------------------------------
President or Vice President Lee Kramer of
CANADIAN TASTY FRIES, INC.
- --------------------------------------- ------------------------------------
Secretary or Assistant Secretary Name of Corporation do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 7th day of March 19 95 , adopted a resolution
-------- ----------- ----
to amend the original articles as follows:
Article FIRST is hereby amended to read as follows:
-----
The corporate name and style of this Corporation shall be
International Tasty Fries, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 4,267,828 ; that the said
----------
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
s/Ian D. Lambert
------------------------------------
President or Vice President
Ian D. Lambert
s/LeRoy A. Kramer
------------------------------------
Secretary or Assistant Secretary
LeRoy A. Kramer
Province of B. C. )
)ss.
Canada )
On March 29 / 95 , personally appeared before me, a Notary Public,
---------------------
Ian D. Lambert , who acknowledged
- ------------------------------------------------------------
that they executed the above instrument.
s/Joseph Schaefer
------------------------------------
Signature of Notary
(Notary Stamp or Seal)
97
<PAGE>
State of Colorado )
-------------------- )
: ss.
County of Arapahoe )
-------------------
On April 4, 1995 , personally appeared before me, a Notary Public,
---------------------
LeRoy A. Kramer , who acknowledged
- ------------------------------------------------------------
that they executed the above instrument.
s/Leigh K. McDonnell
------------------------------------
Signature of Notary
My Commission Expires 8-10-95
----------
(Notary Stamp or Seal)
98
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.6
-------------------------
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
-------------------------
99
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FILED (After Issuance of Stock)
In the Office of the
Secretary of State of the
STATE OF NEVADA
NOV 24 1998
No. 7038-92
--------------
Dean Heller, Secretary of State
INTERNATIONAL TASTY FRIES, INC.
---------------------------------------------
We, the undersigned Ian D. Lambert and
-------------------------------------------------
President or Vice President
Joseph Schaefer of INTERNATIONAL TASTY FRIES, INC.
- --------------------------------------- ------------------------------------
Secretary or Assistant Secretary Name of Corporation do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 6th day of October 19 98 , adopted a resolution
-------- ----------- ----
to amend the original articles as follows:
Article FIRST is hereby amended to read as follows:
-----
The corporate name and style of this Corporation shall be Filtered
Souls Entertainment, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 37,171,494 ; that the said
----------
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
INTERNATIONAL TASTY FRIES, INC.
s/Ian D. Lambert
------------------------------------
President or Vice President
Ian D. Lambert
s/Joseph Schaefer
------------------------------------
Secretary or Assistant Secretary
Joseph Schaefer
Province of British )
Columbia )ss.
Canada )
On November 19, 1998 , personally appeared before me, a Notary Public,
---------------------
Ian D. Lambert and Joseph Schaefer , who acknowledged
- ------------------------------------------------------------
that they executed the above instrument.
s/John R. Coleman
------------------------------------
Signature of Notary
JOHN R. COLEMAN
Barrister & Solicitor
(Notary Stamp or Seal) #700 - 595 Howe Street
VANCOUVER, B.C. V6C 2T5
100
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.7
-------------------------
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
-------------------------
101
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
FILED (After Issuance of Stock)
In the Office of the
Secretary of State of the
STATE OF NEVADA
MAR 19 1999
No. 7038-92
--------------
Dean Heller, Secretary of State
FILTERED SOULS ENTERTAINMENT, INC.
---------------------------------------------
We, the undersigned Ian D. Lambert and
-------------------------------------------------
President or Vice President
Joseph Schaefer of FILTERED SOULS ENTERTAINMENT, INC.
- --------------------------------------- ------------------------------------
Secretary or Assistant Secretary Name of Corporation do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 8th day of March 19 99 , adopted a resolution
-------- ----------- ----
to amend the original articles as follows:
Article FIRST is hereby amended to read as follows:
-----
The corporate name and style of this Corporation shall be Skyline
Entertainment, Inc.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 37,108,574 ; that the said
----------
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
FILTERED SOULS ENTERTAINMENT, INC.
s/Ian D. Lambert
------------------------------------
President or Vice President
Ian D. Lambert
s/Joseph Schaefer
------------------------------------
Secretary or Assistant Secretary
Joseph Schaefer
Province of British )
Columbia )ss.
Canada )
On March 17, 1999 , personally appeared before me, a Notary Public,
---------------------
Ian D. Lambert and Joseph Schaefer , who acknowledged
- ------------------------------------------------------------
that they executed the above instrument.
s/John R. Coleman
------------------------------------
Signature of Notary
JOHN R. COLEMAN
Barrister & Solicitor
(Notary Stamp or Seal) #700 - 595 Howe Street
VANCOUVER, B.C. V6C 2T5
102
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.8
-------------------------
ARTICLES OF MERGER
BETWEEN SKYLINE ENTERTAINMENT, INC.
AND QUOTEMEDIA.COM, INC.
-------------------------
103
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 19, 1999
No. C7038-92
----------------
s/Dean Heller
Dean Heller, Secretary of State
ARTICLES OF MERGER
THIS IS TO CERTIFY:
1. Parties. Pursuant to the terms of that certain definitive Agreement and
Plan of Reorganization dated July 14, 1999 (the "Agreement") Skyline
Entertainment, Inc. ("Skyline"), a corporation formed pursuant to the laws of
the State of Nevada, has acquired all of the issued and outstanding common
voting stock of Quotemedia.com, Inc. ("Quote"), a corporation formed pursuant to
the laws of the State of Colorado, effective July 14, 1999 (the "Effective
Date").
2. Approval. The terms of the Agreement were approved by the unanimous vote
of the of the Board of Directors and Shareholders holding all of the issued and
outstanding common stock of Quote by written consent pursuant to the laws of the
State of Colorado. The terms of the Agreement were approved by the affirmative
vote of the Board of Directors and Shareholders of Skyline by written consent
pursuant to the laws of the State of Nevada, the holders of 4,259,460 shares of
Common Stock being entitled to vote thereon and 2,891,524 , representing a
majority of the issued and outstanding common stock of Skyline sufficient for
approval of the Agreement having executed and approved such written consent.
3. Share Exchange. The Agreement provides that all of the shareholders of
Quote, representing 5,500,000 issued and outstanding common shares, shall
exchange their respective shares for an aggregate of 11,000,000 shares of
Skyline common stock, to be distributed to each Quote shareholder on a two for
one basis. Immediately prior to the Effective Date, there were 4,259,460 common
shares of Skyline issued and outstanding.
4. Surviving Entity. Pursuant to the terms of the Agreement, Skyline shall
be the surviving entity and, upon the Effective Date and filing of these
Articles of Merger with the Secretary of State for the State of Nevada and
applicable filing with the Secretary of State for the State of Colorado, Quote
shall cease to exist as a bona fide Colorado corporation.
5. Name Change. Pursuant to the affirmative vote of the shareholders of
Skyline, the Skyline Articles of Incorporation shall be amended to reflect a
change in Skyline's name to "QUOTEMEDIA.COM, INC."
6. Agreement and Plan of Merger. A complete, executed copy of the Agreement
and Plan of Merger is on file at the registered office of the Corporation, State
Agent and Transfer Syndicate, Inc., 318 North Carson Street, Suite 214, Carson
City, Nevada 89701.
7. Counterparts. These Articles of Merger may be executed in counterparts,
each of which shall be deemed an original document, but together shall be deemed
to constitute only one agreement.
104
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Executed this 14th day of July, 1999.
SKYLINE ENTERTAINMENT, INC.
By s/Curtis Shaw
----------------------------------
Curtis Shaw, President
And s/Ian D. Lambert
---------------------------------
Ian D. Lambert, Secretary
QUOTEMEDIA.COM, INC.
By s/Duane Nelson
----------------------------------
Duane Nelson, President
And s/Keith Guelpa
---------------------------------
Keith Guelpa, Secretary
PROVINCE OF BRITISH COLUMBIA )
: ss.
CANADA )
This instrument was acknowledged before me on July 14, 1999, by Curtis Shaw
and Ian D. Lambert, as President and Secretary, respectively, of Skyline
Entertainment, Inc.
My commission expires: Non-Expiring -------------------------
s/Joseph Schaefer
------------------------------------
Notary Public
PROVINCE OF BRITISH COLUMBIA )
: ss.
CANADA )
This instrument was acknowledged before me on July 14, 1999, by Duane
Nelson and Keith Guelpa, as President and Secretary, respectively, of
Quotemedia.com, Inc.
My commission expires: Non-Expiring ----------------------
s/Joseph Schaefer
------------------------------------
Notary Public
105
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QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 3.9
-------------------------
BYLAWS
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PHYSICIAN CYBERNETIC SYSTEM, INC.
BYLAWS
ARTICLE I
Offices
1.1 Principal Office: The principal offices of the Corporation shall be at
P.O. Box 751, Galeton, Colorado 80622, but the Board of Directors, in its
discretion, may keep and maintain offices wherever the business of the
Corporation may require.
1.2 Registered Office and Agent: The Corporation shall have and
continuously maintain in the State of Nevada a registered office, which may be
the same as its principal office, and a registered agent whose business office
is identical with such registered office. The registered office and the
registered agent are specified in the Articles of Incorporation. The Corporation
may change its registered office or change its registered agent, or both, upon
filing a statement as specified by law in the office of the Secretary of State
of Nevada.
ARTICLE II
Shareholders
2.1 Time and Place: Any meeting of the shareholders may be held at such
time and place, within or outside of the State of Nevada, as may be fixed by the
Board of Directors or as shall be specified in the notice of the meeting or
waiver of notice of the meeting.
2.2 Annual Meeting: The annual meeting of the shareholders shall be held at
the principal offices of the Corporation on the first of of each year or at such
other place or on such other date as the Board of Directors may determine.
2.3 Special Meetings: Special meetings of the shareholders, for any purpose
or purposes, may be called by the President, the Board of Directors, or the
holders of not less than 30% of the shareholders entitled to vote at the
meeting.
2.4 Closing of Transfer Books or Fixing of Record Date: For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books
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shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting, except that when it is
proposed that the authorized shares be increased, the record date shall be not
less than thirty (30) days before the date of such action. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such date in any
case to be not more than thirty (30) days, and, in case of a meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of the
closing has expired.
2.5 Voting List: At least ten days before each meeting of shareholders, the
secretary of the Corporation shall make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment of such meeting, which list
shall be arranged in alphabetical order and shall contain the address of and
number of shares held by each shareholder. This list shall be kept on file at
the principal office of the Corporation for period of ten days prior to such
meeting, shall be produced and kept open at the meeting, and shall be subject to
inspection by any shareholder for any purpose germane to the meeting during
usual business hours of the Corporation and during the whole time of the
meeting.
2.6 Notices: Written notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) days nor more than sixty
(60) days before the date of the meeting unless it is proposed that the
authorized shares be increased, in which case at least thirty (30) days notice
shall be given. Notice shall be given either personally or by mail, by or at the
direction of the President, the Secretary, or the officer for person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the shareholder at his or her address
as it appears on the stock transfer books of the Corporation.
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2.6.1 If requested by the person or persons lawfully calling such meeting,
the secretary shall give notice thereof at corporate expense. No notice need be
sent to any shareholder of record if three successive letters mailed to the last
known address of such shareholder have been returned as undeliverable until such
time as another address for such shareholder is provided to the Corporation by
such shareholder. In order to be entitled to receive notice of any meeting, a
shareholder shall advise the Corporation in writing of any change in such
shareholder's mailing address as shown on the Corporation's books and records.
2.6.2 When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place of such meeting are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder of
record entitled to vote at the meeting.
2.6.3 By attending a meeting, either in person or by proxy, a shareholder
waives objection to lack of notice or defective notice of the meeting unless the
shareholder, at the beginning of the meeting, objects to the holding of the
meeting or the transacting of business of the meeting. By attending the meeting,
the shareholder also waives any objection to consideration at the meeting of a
matter not within the purpose or purposes described in the meeting notice unless
the shareholder objects to considering the matter when it is presented.
2.7 Certification Procedure for Beneficial Owners: The Board of Directors
may adopt by resolution a procedure whereby a shareholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth: (i) the
classification of shareholder who may certify; (ii) the purpose or purposes for
which the certification may be made; (iii) the form of certification and the
information to be contained therein; (iv) if the certification is with respect
to a record date or closing of the stock transfer books, the time within which
the certification must be received by the Corporation; and (v) such other
provisions with respect to the procedure that the board deems necessary or
desirable. Upon receipt by the Corporation of a certificate complying with this
procedure, the persons specified in the certification shall be deemed, for the
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purpose or purposes set forth in the certification, to be the holders of record
of the number of shares specified in place of the shareholder making the
certification.
2.8 Quorum: Except as otherwise provided by law, a majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum
at any meeting of the shareholders. If a quorum shall not be present or
represented, the shareholders present in person or by proxy may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, for a period not to exceed sixty days at any one adjournment, until the
number of shares required for a quorum shall be present. At any such adjourned
meeting at which a quorum is represented, any business may be transacted which
might have been transacted at the meeting originally called. The shareholders
present or represented at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.9 Voting and Proxies: Except as otherwise provided by law, all matters
shall be decided by vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter. Each outstanding share shall
be entitled to one vote on such matters submitted to a vote of the shareholders.
A shareholder may vote either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall by valid after eleven months from the date of its
execution, unless otherwise provided in the proxy. Voting shall be oral, except
as otherwise provided by law, but shall be by written ballot if such written
vote is demanded by any shareholder present in person or by proxy and entitled
to vote.
2.10 Voting of Shares By Certain Holders: Neither treasury shares, nor
shares of its own stock held by the Corporation in a fiduciary capacity, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of directors of such other corporation is held by this
Corporation shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on and after the date on which written notice of redemption has
been mailed to shareholders and a sum sufficient to redeem such shares has been
deposited with a bank or trust company with irrevocable instruction and
authority to pay the redemption price to the holders of the shares upon
surrender of certificates therefor.
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Shares standing in the name of another corporation may be voted by such
officer, agent, or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares entitled to vote and held by a personal representative, custodian,
guardian or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name of
a receiver may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the transfer thereof
into his name if he is authorized to vote the shares in an appropriate order of
the court by which the receiver was appointed. Unless the secretary of the
Corporation is given written note of alternate voting provisions and is
furnished with a copy of the instrument or order wherein the alternate voting
provisions are stated, if shares or other securities having voting power are
held of record in the name of two or more persons, whether fiduciaries, members
of a partnership, joint tenants, tenants in common, tenants by the entirety, or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, voting with respect to the shares shall have the
following effect: (1) if only one person votes, his vote binds all; (2) if two
or more persons vote,the act of the majority in interest so voting binds all; or
(3) if two or more persons vote, but the vote is evenly split on any particular
matter, each faction may vote the securities in question proportionately, or any
person voting the shares of a beneficiary, if any, may apply to any court of
competent jurisdiction in the State of Nevada to appoint an additional person to
act with the persons so voting the shares. The shares shall then be voted as
determined by a majority of such persons and the person appointed by the court.
If a tenancy is held in unequal interests, a majority even split for the purpose
of this item (3) of this subparagraph shall be a majority or even split in
interest. All other shares may be voted only by the record holder thereof,
except as may be otherwise required by the laws of Nevada.
2.11 Waiver: Whenever law or these bylaws require a notice of a meeting to
be given, a written waiver of notice signed by a shareholder entitled to notice,
whether before, at, or after the time stated in the notice, shall be equivalent
to the giving of notice. Attendance of a shareholder in person or by proxy at a
meeting constitutes a waiver of notice of a meeting, except where a shareholder
attends a meeting for the express purpose of objection to the transaction of any
business because the meeting is not lawfully called or convened.
2.12 Action By Shareholders Without a Meeting: Any action required to or
which may be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by shareholders holding at least a majority of the voting power
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entitled to vote with respect to such action, except that if a different
proportion of voting power is required for such an action at a meeting, then
that proportion of written consents is required. Such consent may be executed in
counterparts and shall be effective as of the date specified in the consent.
ARTICLE III
Directors
3.1 Authority of Board of Directors: The business and affairs of the
Corporation shall be managed by a Board of Directors which shall exercise all
the powers of the Corporation, except as otherwise provided by Nevada law or the
Articles of Incorporation of the Corporation.
3.2 Number: The number of directors of this Corporation shall, in no case,
be less than one (1), nor more than seven (7). Subject to such limitations, the
number of directors shall be fixed by resolution of the Board of Directors, and
may be increased or decreased by resolution of the Board of Directors, but no
decrease shall have the effect of shortening the term of any incumbent director.
3.3 Qualification: Directors shall be natural persons at the age of
eighteen years or older, but need not be residents of the State of Nevada or
shareholders of the Corporation. Directors shall be removed in the manner
provided by the Nevada Private Corporation Law.
3.4 Election: The Board of Directors shall be elected at the annual meeting
of shareholders or at a special meeting called for that purpose.
3.5 Term: Each director shall be elected to hold office until the next
annual meeting of shareholders and until his or her successor shall have been
elected and qualified.
3.6 Removal and Resignation: Any director may be removed at a shareholders
meeting expressly called for that purpose, with or without cause, by a vote of
the holders of representing of not less than two-thirds of the shares entitled
to vote at an election of directors. Any director may resign at any time by
giving written notice to the President or to the Secretary, and acceptance of
such resignation shall not be necessary to make it effective unless the notice
so provides.
3.7 Vacancies: Any vacancy occurring on the Board of Directors and any
directorship to be filled by reason of an increase in the size of the Board of
Directors shall be filled by the affirmative vote of the remaining majority of
directors. A director elected to fill a vacancy shall hold office during the
unexpired term of his or her predecessor in office. A director elected to fill a
position resulting from an increase in the Board of Directors shall hold office
until the next annual
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meeting of shareholders and until his or her successor shall have been elected
and qualified.
3.8 Meetings: A regular meeting of the Board of Directors shall be held
immediately after, and at the same place as, the annual meeting of shareholders.
No notice of this meeting of the Board of Directors need be given. The Board of
Directors, or any committee designated by the Board of Directors, may, by
resolution, establish a time and place for additional regular meetings which may
thereafter be held without further notice.
3.9 Special Meetings: Special meetings of the Board of Directors may be
called by or at the request of the President or any two Directors. The persons
or persons authorized to call special meetings of the Board of Directors may fix
any place, either within or outside Nevada, as the place for holding any special
meeting of the Board of Directors called by them.
3.10 Notices: Notice of a special meting stating the date, hour and place
of such meeting shall be given to each member of the Board of Directors, or
committee of the Board of Directors, by the Secretary, the President or the
members of the Board or such committee calling the meeting. The notice may by
deposited in the United States mail at least five (5) days before the meeting
addressed to the Director at the last address he or she has furnished to the
Corporation for this purpose, and any notice so mailed shall be deemed to have
been given at the time it is mailed. Notice may also be given at least three (3)
days before the meeting in person, or by telephone, prepaid telegram, telex,
facsimilie, cablegram or radiogram, and such notice shall be deemed to have been
given at the time when the personal or telephone conversation occurs, or when
the telegram, telex, facsimile, cablegram or radiogram is either personally
delivered to the Director or delivered to the last address of the director
furnished to the Corporation by him or her for this purpose.
3.11 Quorum: Except as provided in Section 3.7 of these bylaws, a majority
of the number of directors fixed in accordance with these bylaws shall
constitute a quorum for the transaction of business at all meetings of the Board
of Directors. The act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors, except as
otherwise specifically required by law.
3.12 Waiver: A written waiver of notice signed by a director entitled to
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of notice. Attendance of a director at a meeting
constitutes a waiver of notice of such meeting, except where a Director attends
a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
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3.13 Attendance by Telephone: Members of the Board of Directors or any
committee designated by the Board of Directors may participate in a meeting of
the board or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other at the same time. Such participation shall constitute presence
in person at the meeting.
3.14 Action by Directors Without a Meeting: Any action required to or which
may be taken at a meeting of the Board of Directors, executive committee, or
other committee of the directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors, executive or other committee members entitled to vote with respect to
the proposed action. Such consent may be executed in counterparts and shall be
effective as of the date of the last signature thereon.
3.15 Presumption of Assent: A director of the Corporation who is present at
a meeting of the Board of Directors or committee of the board at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless (i) he objects at the beginning of the meeting to the holding of
the meeting or the transaction of business at the meeting; (ii) he
contemporaneously requests that his dissent be entered in the minutes of the
meeting; or (iii) he gives written notice of his dissent to the presiding
officer of the meeting before its adjournment or delivers such dissent by
registered mail to the secretary of the Corporation immediately after the
adjournment of the meeting. A director may dissent to a specific acting at a
meeting, while assenting to others. The right to dissent to a specific action
taken at a meeting of the Board of Directors or a committee of the board shall
not be available to a director who voted in favor of such action.
ARTICLE IV
Committees
4.1 Committees: The Board of Directors, by resolution adopted by a majority
of the full Board of Directors, may designate from among its members an
executive committee and one or more other committees each of which, to the
extent provided in the resolution, shall have all of the authority of the Board
of Directors, except that no such committee shall have the authority to: (i)
declare dividends or distributions; (ii) approve or recommend to shareholders
actions or proposals required by the Nevada Private Corporation Law to be
approved by shareholders; (iii) fill vacancies on the Board of Directors or any
committee thereof; (iv) amend the bylaws; (v) approve a plan of merger not
requiring shareholder approval; (vi) reduce earned or capital surplus; (vii)
authorize or approve the reacquisition of shares unless pursuant to a general
formula or method specified by the Board of Directors; or (viii) authorize or
approve the issuance or sale of, or any contract to issue or
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sell, shares or designate the terms of a series of a class of shares provided
that the Board of Directors, having acted regarding general authorization for
the issuance or sale of shares or any contract thereof and, in the case of a
series, the designation thereof, may, pursuant to a general formula or method
specified by the board by resolution or by adoption of a stock option or other
plan, authorize a committee to fix the terms of any contract for the sale of the
shares and to fix the terms upon which such shares may be issued or sold,
including, without limitation, the price, the dividend rate, provisions for
redemption, sinking fund, conversion, or voting or preferential rights, and
provisions for other features of a class of shares or a series of a class of
shares, with full power in such committee to adopt any final resolution setting
forth all terms thereof and to authorize the statement of the terms of a series
for filing with the Secretary of State under the Nevada Private Corporation Law.
Neither the designation of any such committee, the delegation of authority
to such committee, nor any action by such committee pursuant to its authority
shall alone constitute compliance by any member of the Board of Directors, nor a
member of the committee in question, with his responsibility to conform to the
standard of care set forth in Article V of these Bylaws.
ARTICLE V
Standard
5.1 Standard of Care: A director shall perform his duties as a director,
including his duties as a member of any committee of the board upon which he may
serve, in good faith, in a manner he reasonably believes to be in the best
interests of the Corporation and with such care as an ordinarily prudent person
in a like position should use under similar circumstances. In performing his
duties, a director shall be entitled to rely on information, opinions, reports,
or statements, including financial statements and other financial data, in each
case prepared or presented by the persons herein designated; but he shall not be
considered to be acting in good faith if he has knowledge concerning the matter
in question that would cause such reliance to be unwarranted. A person who so
performs his duties shall not have any liability by reason of being or having
been a director of the Corporation. Any provision in these bylaws to the
contrary notwithstanding, to the fullest extent permitted by the Nevada Private
Corporation Law as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director.
The designated persons on whom a director is entitled to rely are: (1) one
or more officers or employees of the Corporation whom the director reasonably
believes to be reliable and competent in the matters presented; (2) counsel,
public accountants, or other persons as to matters which the director
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reasonably believes to be within such persons' professional or expert
competence; or (3) a committee of the board upon which the director does not
serve, duly designated in accordance with Article IV of these bylaws, as to
matters within its designated authority, which committee the director reasonably
believes to merit confidence.
ARTICLE VI
Officers
6.1 Number and Election: The officers of the Corporation shall be a
President, a Secretary and a Treasurer, who shall be elected by the Board of
Directors. In addition, the Board of Directors may elect one or more Vice
Presidents, and the Board of Directors may appoint one or more Assistant
Secretaries or Assistant Treasurers, and such other subordinate officers as they
shall shall deem necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors. The Board of Directors may also appoint
a Chief Executive Officer, who may also serve in the capacity of President of
the Corporation. Any two or more offices may be held by the same person, except
the offices of President and Secretary. The officers of the Corporation shall be
natural persons of the age of eighteen years or older.
6.2 President: The President shall be the chief executive officer of the
Corporation unless a separate Chief Executive Officer has been appointed by the
Board of Directors in accordance with Section 6.1. He or she shall preside at
all meetings of shareholders and of the Board of Directors. Subject to the
direction and control of the Board of Directors, he or she shall have general
and active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect. He or
she may execute contracts, deeds and other instruments on behalf of the
Corporation as is necessary and appropriate. He or she shall perform such
additional functions and duties as are appropriate and customary for the office
of President and as the Board of Directors may prescribe from time to time.
6.3 Vice President: The Vice President, or, if there shall be more than
one, the Vice Presidents in the order determined by the Board of Directors,
shall be the officer(s) next in seniority after the President and the Chief
Executive Officer, if one has been appointed by the Board of Directors. Each
Vice President shall also perform such duties and exercise such powers as are
appropriate and as are prescribed by the Board of Directors or President. Upon
the death, absence or disability of the President, the Vice President, or if
there shall be more than one, the Vice Presidents in the order determined by the
Board of Directors, shall perform the duties and exercise the powers of the
President.
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6.4 Secretary: The Secretary shall give, or cause to be given, notice of
all meetings of the shareholders and special meetings of the Board of Directors,
keep the minutes of such meetings, have charge of the corporate seal and stock
records, be responsible for the maintenance of all corporate records and files
and the preparation and filing of reports to governmental agencies, other than
tax returns, have authority to affix the corporate seal to any instrument
requiring it (and, when so affixed, it may be attested by his or her signature),
and perform such other functions and duties as are appropriate and customary for
the office of Secretary as the Board of Directors or the President may prescribe
from time to time.
6.5 Assistant Secretary: The Assistant Secretary, or if there shall be more
than one, the Assistant Secretaries in order determined by the Board of
Directors or the President, shall in the death, absence, or disability of the
Secretary or in case such duties are specifically delegated to him by the Board
of Directors, President or Secretary, perform the duties and exercise the powers
of the Secretary and shall, under the supervision of the Secretary, perform such
other duties and have such other powers as may be prescribed from time to time
by the Board of Directors or the President.
6.6 Treasurer: The Treasurer shall have control of the funds and the care
and custody of all stocks, bonds, and other securities owned by the Corporation
and shall be responsible for the preparation and filing of tax returns. He or
she shall receive all moneys paid to the Corporation, and shall have authority
to give receipts and vouchers, to sign and endorse checks and warrants in its
name and on its behalf, and give full discharge for the same. He or she shall
also have charge of disbursement of the funds of the Corporation, shall keep
full and accurate records of the receipts and disbursements, and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as shall be designated by the Board of
Directors. He or she shall perform such other duties and have such other powers
as are appropriate and customary for the office of Treasurer as the Board of
Directors or President may prescribe from time to time.
6.7 Assistant Treasurer: The Assistant Treasurer, or, if there shall be
more than one, the Assistant Treasurers in the order determined by the Board of
Directors or the President, shall, in the death, absence, or disability of the
Treasurer or in case such duties are specifically delegated to him or her by the
Board of Directors, President or Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall, under the supervision of the Treasurer,
perform such other duties and have such other powers as the Board of Directors
or the President may prescribe from time to time.
6.8 Removal and Resignation: Any officer elected or appointed by the Board
of Directors may be removed at any time
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by the affirmative vote of a majority of the Board of Directors. Any officer may
resign at any time by giving written notice of his or her resignation to the
President or to the Secretary, and acceptance of such resignation shall not be
necessary to make it effective, unless the notice so provides. Any vacancy
occurring in any other office of the Corporation may be filled by the President
for the unexpired portion of the term.
6.9 Compensation: Officers shall receive such compensation for their
services as may be authorized or ratified by the Board of Directors. Election or
appointment of an officer shall not of itself create a contract right to
compensation for services performed as such officer.
ARTICLE VII
Stock
7.1 Certificates: Certificates representing shares of the capital stock of
the Corporation shall be in such form as may be approved by the Board of
Directors and shall be signed by the President or any Vice President and by the
Secretary or any Assistant Secretary. All certificates shall be consecutively
numbered and the names of the owners, the number of the shares and the date of
issue shall be entered on the books of the Corporation. Each certificate
representing shares shall state upon its face: (1) that the Corporation is
organized under the laws of the State of Nevada; (2) the name of the person to
whom issued; (3) the number of shares which the certificate represents; (4) the
par value, if any, of each share represented by the certificate; and, (5) any
restrictions placed upon the transfer of the shares represented by the
certificate.
7.2 Facsimile Signatures: When a certificate is signed (1) by a transfer
agent other than the Corporation or its employee, or (2) by a registrar other
than the Corporation or its employee, any other signature on the certificate may
be facsimile. In case any officer, transfer agent, or registrar who has signed,
or whose facsimile signature or signatures have been place upon, any
certificate, shall cease to be such officer, transfer agent, or registrar,
whether because of death, resignation, or otherwise, before the certificate is
issued by the Corporation, it may nevertheless be issued by the Corporation with
the same effect as if he or she were such officer, transfer agent, or registrar
at the date of issue.
7.3 Consideration for Shares: Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the Board of Directors. Such consideration
may consist in whole or in part of money, other property, tangible or
intangible, or in labor or services actually performed for the Corporation.
Neither the promissory note of a subscriber or direct purchaser of shares from
the Corporation nor the unsecured or nonnegotiable promissory note of any other
person shall constitute payment or
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part payment for shares of the Corporation.
Treasury shares shall be disposed of for such consideration expressed in
dollars as may be fixed from time to time by the board.
7.4 Lost Certificates: In case of the alleged loss, destruction or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond in such form and amount and with such surety as it may
determine before issuing a new certificate.
7.5 Transfer of Stock: Transfers of shares shall be made on the books of
the Corporation only upon presentation of the certificate or certificates
representing such shares properly endorsed by the person or persons appearing
upon the face of such certificate, except as may otherwise be expressly provided
by the statutes of the State of Nevada or by order of a court of competent
jurisdiction. The officers or transfer agents of the Corporation may, in their
discretion, require a signature guaranty before making any transfer. The
Corporation shall be entitled to treat the person in whose name any share of
stock is registered on its books as the owner of those shares for all purposes,
and shall not be bound to recognize any equitable or other claim or interest in
the shares on the part of any other person, whether or not the Corporation shall
have notice of such claim or interest.
7.6 Transfer Agent, Registrars, and Paying Agents: The board may at its
discretion appoint one or more transfer agents, registrars and agents for making
payment upon any class of stock, bond, debenture, or other security of the
Corporation. Such agents and registrars may be located either within or outside
Nevada. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VIII
Indemnification of Certain Persons
8.1 Authority for Indemnification: Any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
and whether formal or informal, by reason of the fact that he is or was a
director, officer, employee, fiduciary or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee, or agent of any foreign or domestic corporation or of any
partnership, joint venture, trust or other enterprise, shall be indemnified by
the Corporation against expenses (including attorneys' fees), judgments,
penalties, fines, and amounts paid in settlement reasonably incurred by him in
connection with such action, suit or
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proceeding if it is determined by the groups set forth in Section 8.4 of this
Article that he conducted himself in good faith and in a manner which he
reasonably believed to be in or not opposed to the Corporation's best interests
and, with respect to any criminal action proceeding, had no reasonable cause to
believe his conduct was unlawful. No indemnification shall be made under this
section to a director with respect to any claim, issue or matter in connection
with a proceeding by or in the right of a corporation in which the director was
adjudged liable to the Corporation or in connection with any proceeding charging
improper personal benefit to the director, whether or not involving action in
his official capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him. Further, indemnification under
this Section in connection with a proceeding brought by or in the right of the
Corporation shall be limited to reasonable expenses, including attorneys' fees,
incurred in connection with the proceeding. These limitations shall apply to
directors only and not to officers, employees, fiduciaries or agents of the
Corporation.
8.2 Right to Indemnification: The Corporation shall indemnify any person
who may be indemnified under Section 8.1 who has been wholly successful on the
merits or otherwise, in defense of any action, suit, or proceeding referred to
in Section 8.1 of this Article, or in defense of any claim, issue or matter
therein, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the proceeding without the necessity of any
action by the Corporation other than the determination in good faith that the
defense has been wholly successful.
8.3 Effect of Termination of Action: The termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that the
person seeking indemnification did not meet the standards of conduct described
in Section 1 of this Article. Entry of a judgment by consent as part of a
settlement shall not be deemed an adjudication of liability.
8.4 Groups Authorized to Make Indemnification Determination: In all cases
except where there is a right to indemnification set forth in Section 8.2 of
this article or where indemnification is ordered by a court, any indemnification
shall be made by the Corporation only as authorized in the specific case upon a
determination by a proper group that indemnification of the person is
permissible under the circumstances because he has met the applicable standards
of conduct set forth in Section 1 of this Article. This determination shall be
made by the Board of Directors by a majority vote of a quorum, which quorum
shall consist of directors not parties to the proceeding. If a quorum cannot be
obtained, the determination shall be made by a majority vote of a committee of
the Board of Directors designated by the board, which committee shall consist of
two or more directors not
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parties to the proceeding except that directors who are parties to the
proceeding may participate in the designation of directors for the committee. If
a quorum of the Board of Directors cannot be obtained or the committee cannot be
established, or even if a quorum can be obtained or the committee can be
established but such quorum or committee so directs, the determination shall be
made by independent legal counsel selected by a vote of a quorum of the Board of
Directors or a committee in the manner specified in this Section, or, if a
quorum of the full Board of Directors cannot be obtained and a committee cannot
be established, by independent legal counsel selected by a majority vote of the
full board (including directors who are parties to the action) or by a vote of
the shareholders.
8.5 Court Ordered Indemnification: Any person who may be indemnified under
Section 8.1 may apply for indemnification to the court conducting the proceeding
or to another court of competent jurisdiction for mandatory indemnification
under Section 8.2 of this Article, including indemnification for reasonable
expenses incurred to obtain curt-ordered indemnification. If the court
determines that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not he met
the standards of conduct set forth in Section 1 of this Article or was adjudged
liable in the proceeding, the court may order such indemnification as the court
deems proper except that if the individual has been adjudged liable,
indemnification shall be limited to reasonable expenses incurred.
8.6 Advance of Expenses: Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation to any person who may be indemnified under Section 8.1 in advance of
the final disposition of such action, suit or proceeding upon receipt of (1) a
written affirmation of such person's good faith belief that he has met the
standards of conduct prescribed by Section 1 of this Article; (2) a written
undertaking, executed personally or on his behalf, to repay such advances if it
is ultimately determined that he did not meet the prescribed standards of
conduct (the undertaking shall be an unlimited general obligation of the person
but need not be secured and may be accepted without reference to financial
ability to make repayment); and (3) a determination is made by the proper group
(as described in Section 4 of this Article), that the facts as then known to the
group would not preclude indemnification.
8.7 Report to Shareholders: Any indemnification of or advance of expenses
to a director in accordance with this Article, if arising out of a proceeding by
or on behalf of the Corporation, shall be reported in writing to the
shareholders with or before the notice of the next shareholders' meeting.
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ARTICLE IX
Provision of Insurance
By action of the Board of Directors, notwithstanding any interest of the
directors in the action, the Corporation may purchase and maintain insurance, in
such scope and amounts as the Board of Directors deems appropriate, on behalf of
any person who is or was a director, officer, employee, fiduciary, or agent of
the Corporation, or who, while a director, officer, employee, fiduciary or agent
of the Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any other
foreign or domestic corporation or of any partnership, joint venture, trust,
other enterprise or employee benefit plan, against any liability asserted
against, or incurred by, him in any such capacity or arising out of his status
as such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of Article VIII or applicable law.
ARTICLE X
Miscellaneous
10.1 Corporate Seal: The Board of Directors may adopt a seal which shall be
circular in form and shall bear the name of the Corporation and words "SEAL" and
"NEVADA" which, when adopted, shall constitute the corporate seal of the
Corporation. The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
10.2 Fiscal Year: The Board of Directors may, by resolution, adopt a fiscal
year for this Corporation.
10.3 Amendment of Bylaws: These bylaws may at any time and from time to
time, be amended, supplemented, or repealed by the Board of Directors.
These bylaws were adopted as the bylaws of the Corporation by a resolution of
the Board of Directors dated December 29 , 1993.
s/R. Chad Nintze
- ------------------------
Secretary
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QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 4.1
-------------------------
FORM OF
"POOLING AGREEMENT"
EXECUTED BY CERTAIN OF THE
COMPANY'S SHAREHOLDERS
-------------------------
123
<PAGE>
POOLING AGREEMENT
THIS AGREEMENT dated for reference the ______ day of October, 1999.
BETWEEN:
THE UNDERSIGNED SHAREHOLDER of Quotemedia.com, Inc.
(hereinafter called the "Undersigned")
OF THE FIRST PART
AND:
QUOTEMEDIA.COM, INC. a company duly incorporated in the State of
Nevada, having an office at 11100 N.E. 8th Street Bellevue Washington
98004,
(hereinafter called "Company")
OF THE SECOND PART
AND
ALPHA TECH STOCK TRANSFER INC. a company duly incorporated in the
State of Utah, having its head office at 4504 South Wasatch Blvd.
Suite 205, Salt Lake City, Utah, 84124
(hereinafter called "Transfer Agent")
OF THE THIRD PART
WHEREAS in contemplation of a private financing of the Company, the Undersigned
are desirous of placing in Pool the shares owned by them in the Company, being
in respect of each of the Undersigned the number of shares set opposite his name
(the "Shares"), upon and subject to the terms and conditions hereinafter more
particularly set out;
AND WHEREAS Alpha Tech Stock Transfer Inc. is the Registrar and Transfer agent
for shares issued by the Company, and has agreed to hold the shares in escrow
under this pooling agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and in consideration of the sum of Ten Dollars ($10.00) now paid by the parties
hereto, each to the other, (the receipt whereof is hereby acknowledged) and in
further consideration of the mutual covenants and conditions hereinafter
contained, the parties hereto agree as follows:
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2
1. The Undersigned hereby severally agree each with the other and with the
Company that they will deliver or cause to be delivered to the Company's
Transfer Agent certificates for their Shares to be held by the Transfer Agent
and released, subject as hereinafter provided, on the following basis:
(a) 25% of the Shares on August 2, 2000;
(b) 25% of the Shares on November 2, 2000;
(c) 25% of the Shares on February 2, 2001;
(d) the balance of the Shares May 2, 2001.
2. The Undersigned shall be entitled to a letter or receipt from the Transfer
Agent stating the number of Shares represented by certificates held for him by
the Transfer Agent subject to the terms of this Agreement, but such letter or
receipt shall not be assignable.
3. Except with the written consent of the board of directors of the Company (the
"Board") the undersigned shall not sell, deal in, assign, transfer in any manner
whatsoever, or agree to sell, deal in, assign or transfer in any manner
whatsoever any of the Shares or beneficial ownership of or any interest in them
and, except with the written consent of the Board, the Transfer Agent shall not
accept or acknowledge any transfer, assignment, declaration of trust or any
other document evidencing a change in legal and beneficial ownership or of
interest in the Shares, except as may be required by reason of the death or
bankruptcy of any one or more of the Undersigned, subject to this Agreement for
whatever person or persons, firm or corporation may thus become legally entitled
thereto.
4. The parties hereto acknowledge and agree that the Board shall have the right
to accelerate the releases referred to herein on a pro-rata basis and may from
time to time notify the Transfer Agent of such acceleration. Such acceleration
may be based on whatever consideration the Board considers advisable, provided
however that in all cases the releases shall be on a pro-rata basis.
5. This Agreement shall enure to the benefit of and be binding upon the parties
hereto, and each of their heirs, executors, administrators, successors and
permitted assigns.
6. This Agreement may be executed in several parts in the same form and such
part as so executed shall together constitute one original Agreement, and such
parts, if more than one, shall be read together and construed as if all the
signing parties hereto had executed one copy of this Agreement.
7. The parties hereto agree that in consideration of the Transfer Agent agreeing
to act as aforesaid, the Undersigned do hereby covenant and agree from time to
time and at all times hereinafter well and truly to save, defend, and keep
harmless and fully indemnify the Transfer Agent, its successors and assigns,
from and against all loss, costs, charges, damages and expenses which the
Transfer Agent, its successors or assigns, may at any time or times hereafter
bear,
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3
sustain, suffer or be put to for or by reason or on account of its acting
pursuant to this Agreement.
8. It is further agreed by and between the parties hereto and, without
restricting the foregoing indemnity, that in case proceedings should hereafter
be taken in any Court respecting the Shares hereby pooled, the Transfer Agent
shall not be obliged to defend any such action or submit its rights to the Court
until it shall have been indemnified hereinbefore given against costs of such
proceedings.
9. This agreement shall be interpreted in accordance with the laws of the State
of Nevada.
IN WITNESS WHEREOF the Undersigned, the Company and the Transfer Agent have
executed the presents as and from the day and year first above written.
QUOTEMEDIA.COM, INC.
- ---------------------------------
per: Authorized Signatory
ALPHA TECH STOCK TRANSFER INC.
- ---------------------------------
per: Authorized Signatory
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4
INDI INVESTMENTS INC.
- ---------------------------------
per: Authorized Signatory
Number of Shares: 3,360,000
-----------
127
<PAGE>
5
WESTERN SKYLINE CAPITAL CORP.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 325,000
-------
128
<PAGE>
6
CHOGUY LTD.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 750,000
-------
129
<PAGE>
7
TORQUAY HOLDINGS LTD.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 150,000
-------
130
<PAGE>
8
CANASIA DATA CORP.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 150,000
-------
131
<PAGE>
9
COOKIEJAR INVESTMENTS LTD.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 400,000
-------
132
<PAGE>
10
BANK AUGUST ROTH AG
- ----------------------------------
per: Authorized Signatory
Number of Shares: 400,000
-------
133
<PAGE>
11
PMGN INC.
- ----------------------------------
per: Authorized Signatory
Number of Shares: 200,000
-------
134
<PAGE>
12
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) BEV NELSON
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 1,500,000
---------
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<PAGE>
13
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) LEROY KRAMER
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 100,000
-------
136
<PAGE>
14
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) SEIJA TYLLINEN
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 150,000
-------
137
<PAGE>
15
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) JAMES ZELLNER
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 100,000
-------
138
<PAGE>
16
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) RANBIR DHALIWAL
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 150,000
-------
139
<PAGE>
17
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) PAUL HOLBROOK
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 100,000
-------
140
<PAGE>
18
SIGNED, SEALED AND DELIVERED )
BY BEV NELSON IN THE )
PRESENCE OF: )
)
- -------------------------------- ) ---------------------
Witness ) ROLF DEDAMM
)
- -------------------------------- )
Address )
)
- ------------------------------- )
Occupation )
Number of Shares: 100,000
-------
141
<PAGE>
19
SKYLINE RECORDS INC.
- ----------------------------------
per: Authorized Signatory
Number of Shares 2,500,000
---------
142
<PAGE>
20
RUTHERFORD ASSET MANAGEMENT LTD.
- ----------------------------------
per: Authorized Signatory
Number of Shares 100,000
-------
143
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 10.1
-------------------------
AGREEMENT AND PLAN
OF REORGANIZATION BETWEEN
THE COMPANY AND OLD QMI
-------------------------
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
by and between
SKYLINE ENTERTAINMENT, INC.
a Nevada corporation
and
QUOTEMEDIA.COM, INC.
a Colorado corporation
Effective as of July 14, 1999
145
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this 14th
day of July, 1999, by and between Skyline Entertainment, Inc., a Nevada
corporation ("Skyline") with its principal place of business located at Suite
602, 595 Howe Street, Vancouver, British Columbia, Canada V6C 2T5, and
Quotemedia.com, Inc., a Colorado corporation ("Quotemedia"), with its principal
place of business located at Suite 200, 750 W. Pender, Vancouver, British
Columbia, Canada V6C 1B5.
PREMISES
WHEREAS, this Agreement provides for the merger of Quotemedia into Skyline,
and in connection therewith, the conversion of the outstanding common stock of
Quotemedia into shares of common voting stock of Skyline, all for the purpose of
effecting a tax-free reorganization pursuant to sections 354 and 368(a) of the
Internal Revenue Code of 1986, as amended; and
WHEREAS, the boards of directors and shareholders of Quotemedia and Skyline
have determined, subject to the terms and conditions set forth in this
Agreement, that the merger contemplated hereby is desirable and in the best
interests of their respective corporations. This Agreement is being entered into
for the purpose of setting forth the terms and conditions of the proposed
merger.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
QUOTEMEDIA
As an inducement to and to obtain the reliance of Skyline, Quotemedia
represents and warrants as follows:
Section 1.1 Organization. Quotemedia is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Colorado
and has the corporate power and is duly authorized, qualified, franchised and
licensed under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the jurisdiction in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the Quotemedia Schedules
(as hereinafter defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of Quotemedia as in effect on the
date hereof. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not violate any provision of Quotemedia's articles of
incorporation or bylaws. Quotemedia has full
1
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<PAGE>
power, authority and legal right and has taken all action required by law, its
articles of incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement.
Section 1.2 Capitalization. Quotemedia's total authorized capital consists
of 10,500,000 Common Shares, par value $.0001 per share. As of the date of
Closing, as defined hereinbelow, there will be 5,500,000 Common Shares issued
and outstanding. All issued and outstanding shares are legally issued, fully
paid and nonassessable and are not issued in violation of the preemptive or
other rights of any person. Quotemedia has no other securities, warrants or
options authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Quotemedia does not
have any subsidiaries and does not own, beneficially or of record, any shares of
any other corporation.
Section 1.4 Financial Statements. Included in the Quotemedia Schedules is
an unaudited financial statement, including a balance sheet, statement of
operations, shareholder equity and cash flows and notes thereto, dated as of
June 30, 1999. Relevant thereto:
(a) the Quotemedia balance sheet presents fairly as
of its date the financial condition of Quotemedia. Quotemedia
does not have, as of the date of such balance sheet, except as
noted and to the extent reflected or reserved against therein,
any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto
and all assets reflected therein are properly reported and
present fairly the value of the assets of Quotemedia, in
accordance with generally accepted accounting principles;
(b) Quotemedia has no liabilities with respect to the
payment of any federal, state, county, local or other taxes
(including any deficiencies, interest or penalties), except
for taxes accrued but not yet due and payable;
(c) Quotemedia has filed all state, federal and local
income tax returns required to be filed by it from inception
to the date hereof, if any;
(d) the books and records, financial and other, of
Quotemedia are in all material respects complete and correct
and have been maintained in accordance with good business
accounting practices; and
(e) except as and to the extent disclosed in the most
recent Quotemedia balance sheet and the Quotemedia Schedules,
Quotemedia has no material contingent liabilities, direct or
indirect, matured or unmatured.
Section 1.5 Information. The information concerning Quotemedia set forth in
this Agreement and in the Quotemedia Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 1.6 Options and Warrants/Shares Reserved for Issuance. There are no
existing options, warrants, calls or commitments of any character to which
Quotemedia is a party and by which it is bound.
2
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<PAGE>
Section 1.7 Absence of Certain Changes or Events. Except as set forth in
this Agreement, the Quotemedia Schedules, or as otherwise disclosed to Skyline,
since June 30, 1999:
(a) there has not been: (i) any material adverse
change in the business, operations, properties, assets or
condition of Quotemedia; or (ii) any damage, destruction or
loss to Quotemedia (whether or not covered by insurance)
materially and adversely affecting the business, operations,
properties, assets or condition of Quotemedia;
(b) Quotemedia has not: (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to
declare or make, any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased
or redeemed or agreed to purchase or redeem any of its capital
stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering the business of
Quotemedia; (iv) made any material change in its method of
management, operation or accounting; (v) entered into any
other material transaction; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation
of any kind or any severance or termination pay to any present
or former officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of its
officers or directors or any of its employees whose monthly
compensation exceeds $5,000; or (viii) made any increase in
any profit sharing, bonus, deferred compensation, insurance,
pension, retirement or other employee benefit plan, payment or
arrangement made to, for, or with its officers, directors or
employees;
(c) Quotemedia has not: (i) granted or agreed to
grant any options, warrants or other rights for its stocks,
bonds or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or
incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred
in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent
Quotemedia balance sheet and current liabilities incurred
since that date in the ordinary course of business; (iv) sold
or transferred, or agreed to sell or transfer, any of its
assets, properties or rights (except assets, properties or
rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or
permitted any amendment or termination of any contract,
agreement or license to which it is a party if such amendment
or termination is material, considering the business of
Quotemedia; or (vi) issued, delivered or agreed to issue or
deliver any stock, bonds or other corporate securities,
including debentures (whether authorized and unissued or held
as treasury stock); and
(d) to the best knowledge of Quotemedia, it has not
become subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect, the
business, operations, properties, assets or condition of
Quotemedia.
Section 1.8 Title and Related Matters. Quotemedia has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal (collectively,
the "Assets") which are reflected in the most recent Quotemedia unaudited
balance sheet and the Quotemedia Schedules or acquired after that date (except
properties, interests in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges or encumbrances except: (a) statutory liens or claims
not yet delinquent; (b)
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such imperfections of title and easements as do not and will not, materially
detract from or interfere with the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially impair present
business operations on such properties; and (c) as described in the Quotemedia
Schedules. Except as set forth in the Quotemedia Schedules, Quotemedia owns free
and clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever, all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with Quotemedia's business. Except as set
forth in the Quotemedia Schedules, no third party has any right to, and
Quotemedia has not received any notice of infringement of or conflict with
asserted rights of others with respect to any product, technology, data, trade
secrets, know-how, proprietary techniques, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse affect
on the business, operations, financial conditions or income of Quotemedia or any
material portion of its properties, assets or rights.
Section 1.9 Litigation and Proceedings. To the best of Quotemedia's
knowledge and belief, there are no actions, suits, proceedings or investigations
pending or threatened by or against Quotemedia or affecting Quotemedia or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign or before any arbitrator of any kind
that would have a material adverse affect on the business, operations, financial
condition or income of Quotemedia. Quotemedia does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Quotemedia
Schedules, there are no material contracts, agreements,
franchises, license agreements or other commitments to which
Quotemedia is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) Except as included or described in the Quotemedia
Schedules or reflected in the most recent Quotemedia balance
sheet, Quotemedia is not a party to any oral or written: (i)
contract for the employment of any officer or employee which
is not terminable on thirty (30) days or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guaranty of
any obligation, other than one on which Quotemedia is a
primary obligor, for collection and other guaranties of
obligations, which, in the aggregate do not exceed more than
one year or providing for payments in excess of $10,000 in the
aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective
bargaining agreements; (vii) agreement with any present or
former officer or director of Quotemedia; or (viii) contract,
agreement or other commitment involving payments by it of more
than $10,000 in the aggregate; and
(c) To Quotemedia's knowledge, all contracts,
agreements, franchises, license agreements and other
commitments to which Quotemedia is a party or by which its
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properties are bound and which are material to the operations
of Quotemedia taken as a whole, are valid and enforceable by
Quotemedia in all respects, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of
creditors generally.
Section 1.11 Material Contract Defaults. Except as set forth in the
Quotemedia Schedules, to the best of Quotemedia's knowledge and belief,
Quotemedia is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of Quotemedia, and
there is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Quotemedia has not
taken adequate steps to prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Quotemedia is
a party or to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. To the best of Quotemedia's
knowledge, Quotemedia has all licenses, franchises, permits or other
governmental authorizations legally required to enable Quotemedia to conduct its
business in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Quotemedia of this
Agreement and the consummation by Quotemedia of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. To the best of
Quotemedia's knowledge, except as disclosed in the Quotemedia Schedules,
Quotemedia has complied with all applicable statutes and regulations of any
federal, state or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of Quotemedia or would not
result in Quotemedia's incurring any material liability.
Section 1.15 Insurance. All of the insurable properties of Quotemedia are
insured for Quotemedia's benefit in accordance with the insurance policies
disclosed in the Quotemedia Schedules under valid and enforceable policies
issued by insurers of recognized responsibility. Such policy or policies
containing substantially equivalent coverage will be outstanding and in full
force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors of Quotemedia
have authorized the execution and delivery of this Agreement by Quotemedia and
have approved the transactions contemplated hereby and have taken all action
necessary to submit this Agreement to the Quotemedia shareholders for their
approval.
Section 1.17 Material Transactions or Affiliations. Except as disclosed
herein and in the Quotemedia Schedules, there exists no material contract,
agreement or arrangement between Quotemedia and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director or person owning of record, or known by Quotemedia to own beneficially,
ten percent (10%) or more of the issued and outstanding Quotemedia Common Shares
and which is to be performed in whole or in part after the date hereof. In all
of such transactions, the amount paid or received, whether
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in cash, in services or in kind, has been during the full term thereof, and is
required to be during the unexpired portion of the term thereof, no less
favorable to Quotemedia than terms available from otherwise unrelated parties in
arms length transactions. There are no commitments by Quotemedia, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
Section 1.18 Labor Relations. Quotemedia has never had a work stoppage
resulting from labor problems. To the best knowledge of Quotemedia, no union or
other collective bargaining organization is organizing or attempting to organize
any employee of Quotemedia.
Section 1.19 Previous Sales of Securities. Since inception, Quotemedia has
sold Quotemedia Common Shares to investors in reliance upon applicable
exemptions from the registration requirements under the laws of the United
States, the state of Colorado, such other states in the United States or
overseas jurisdictions where such sales have occurred. All such sales were made
in accordance with the laws of the United States and those states and/or
countries where such securities were sold.
Section 1.20 Quotemedia Schedules. Upon execution hereof, Quotemedia will
deliver to Skyline the following schedules, which are collectively referred to
as the "Quotemedia Schedules" and which consist of separate schedules dated as
of the date of this Agreement and instruments and data as of such date, all
certified by the chief executive officer of Quotemedia as complete, true and
correct in all material respects:
(a) copies of the articles of incorporation, bylaws and
all minutes of shareholders' and directors' meetings of
Quotemedia;
(b) the financial statements of Quotemedia referenced
hereinabove in Section 1.4;
(c) a list indicating the name and address of the
stockholders of Quotemedia, together with the number of
shares owned by them;
(d) copies of all licenses, permits and other
governmental authorizations, requests or applications
therefor, pursuant to which Quotemedia carries on or
proposes to carry on its business (except those which in the
aggregate, are immaterial to the present or proposed
business of Quotemedia);
(e) a list of every debt, mortgage, security interest,
pledge, lien, encumbrance or claim of any nature whatsoever
in excess of $10,000 as may affect Quotemedia, its
properties or assets;
(f) a list of all executive employees of Quotemedia,
including current compensation, with notation as to job
description and whether or not such employee is subject to a
written contract;
(g) a description of all real and personal property
owned by Quotemedia, together with a description of every
mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
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(h) copies of all material contracts, leases,
agreements or other instruments to which Quotemedia is a
party or by which it or its properties are bound;
(i) the name and location of each bank or other
institution with which Quotemedia has an account or safety
deposit box and the names of all persons authorized to draw
thereon or having access thereto;
(j) a list of all patent applications, copyrights,
trademarks, service marks and trade names that are pertinent
in any manner whatsoever to the development, testing,
registration, assembly, manufacture, use or sale of any
products or services used in the business of Quotemedia and
in which either Quotemedia or Quotemedia's stockholders has
or previously had any direct or indirect, equitable or legal
right or interest;
(k) a copy of all material documentation relating to
the sale of Quotemedia Common Shares by Quotemedia to its
present stockholders;
(l) a list of insurance policies referred to in Section
1.15;
(m) a description of any material adverse change in the
business operations, property, inventory, assets or
condition of Quotemedia since the most recent Quotemedia
balance sheet required to be provided pursuant to Section
1.7;
(n) any other information, together with any required
copies of documents required to be disclosed in the
Quotemedia Schedules by Sections 1.1 through 1.19.
Quotemedia shall cause the Quotemedia Schedules and the instruments and
data delivered to Skyline hereunder to be updated after the date hereof up to
and including the Closing Date, as hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF SKYLINE
As an inducement to, and to obtain the reliance of Quotemedia, Skyline
represents and warrants as follows:
Section 2.1 Organization. Skyline is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it are now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the Skyline Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation, and
bylaws of Skyline as in effect on the date hereof. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of Skyline's articles of incorporation or bylaws. Skyline has taken
all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement. Skyline has
full power,
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authority and legal right and has taken all action required by law, its articles
of incorporation, bylaws or otherwise to consummate the transactions herein
contemplate.
Section 2.2 Capitalization. The authorized capitalization of Skyline
consists of 10,000,000 shares of Preferred Stock, par value $0.001 per share,
and 50,000,000 Common Shares, par value $0.001 per share. As of the date hereof
there are 4,259,460 common shares of Skyline issued and outstanding. As of the
Closing Date, as defined herein, there will be no more than 4,259,460 common
shares issued and outstanding and reserved for issuance (the "Skyline Common
Shares") held by the then existing securities holders of Skyline. All issued and
outstanding Skyline Common Shares have been legally issued, fully paid and are
nonassessable. There are no preferred shares issued or outstanding. All issued
and outstanding Skyline Common Shares have been legally issued, fully paid and
are nonassessable.
Section 2.3 Subsidiaries. Skyline has no subsidiary companies.
Section 2.4 Financial Statements.
(a) Included in the Skyline Schedules are the audited
financial statements of Skyline for the years ended December
31, 1998 and 1997 and the related statements of operations,
stockholders' equity and cash flows for the periods then
ended, and unaudited financial statements for the six month
period ended June 30, 1999, which are included in the
schedules identified in Section 2.18(c).
(b) All such financial statements have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The
Skyline balance sheets presents fairly as of their respective
dates the financial condition of Skyline. Skyline did not have
as of the date of any of such Skyline balance sheets, any
liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto
prepared in accordance with generally accepted accounting
principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of
Skyline, in accordance with generally accepted accounting
principles. The statements of operations, stockholders' equity
and changes in financial position reflect fairly the
information required to be set forth therein by generally
accepted accounting principles.
(c) The books and records, financial and others, of
Skyline are in all material respects complete and correct and
have been maintained in accordance with good business
accounting practices.
(d) Skyline has no liabilities with respect to the
payment of any federal, state, county, local or other taxes
(including any deficiencies, interest or penalties).
(e) As of the Closing Date (as defined herein), other
than as previously disclosed by Skyline to Quotemedia or
included in the Skyline financial statements referenced
herein, the Skyline balance sheet and the notes thereto, shall
reflect that Skyline has: (i) no receivables, except that
certain receivable from Skyline Records, Inc.; (ii) no more
than $200,000 in accounts payable; and (iii) no more than
$50,000 in contingent liabilities, direct or indirect, matured
or unmatured.
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Section 2.5 Information. The information concerning Skyline as set forth in
this Agreement and in the Skyline Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as previously
disclosed to Quotemedia, or described herein or in the Skyline Schedules, since
June 30, 1999:
(a) Skyline has not: (i) amended its articles of
incorporation or bylaws; (ii) waived any rights of value which
in the aggregate are extraordinary or material considering the
business of Skyline; (iii) made any material change in its
method of management, operation or accounting; or (iv) made
any accrual or arrangement for or payment of bonuses or
special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(b) Skyline has not: (i) granted or agreed to grant
any options, warrants or other rights for its stocks, bonds or
other corporate securities calling for the issuance thereof,
which option, warrant or other right has not been cancelled as
of the Closing Date; or (ii) borrowed or agreed to borrow any
funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; and
(c) to the best knowledge of Skyline, it has not
become subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect, the
business, operations, properties, assets or condition of
Skyline.
Section 2.7 Title and Related Matters. Skyline has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal (collectively,
the "Assets") which are reflected in the most recent Skyline balance sheet and
the Skyline Schedules or acquired after that date (except properties, interests
in properties and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges or
encumbrances except: (a) statutory liens or claims not yet delinquent; (b) such
imperfections of title and easements as do not and will not, materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in the Skyline Schedules.
Except as set forth in the Skyline Schedules, Skyline owns free and clear of any
liens, claims, encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever, all procedures, techniques, marketing
plans, business plans, methods of management or other information utilized in
connection with Skyline's business. Except as set forth in the Skyline
Schedules, no third party has any right to, and Skyline has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse affect on the business, operations,
financial conditions or income of Skyline or any material portion of its
properties, assets or rights.
Section 2.8 Litigation and Proceedings. Other than as previously disclosed
by Skyline to Quotemedia, or as included in the Skyline Schedules, there are no
actions, suits or proceedings pending or, to the best of Skyline's knowledge and
belief, threatened by or against or affecting Skyline, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before
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any arbitrator of any kind that would have a material adverse affect on the
business, operations, financial condition, income or business prospects of
Skyline. Skyline does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality.
Section 2.9 Contracts. On the Closing Date:
(a) Except as included or described in the Skyline
Schedules, there are no material contracts, agreements,
franchises, license agreements or other commitments to which
Skyline is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) Except as included or described in the Skyline
Schedules or reflected in the most recent Skyline balance
sheet, Skyline is not a party to any oral or written: (i)
contract for the employment of any officer or employee which
is not terminable on thirty (30) days or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guaranty of
any obligation for collection and other guaranties of
obligations, which, in the aggregate do not exceed more than
one year or providing for payments in excess of $10,000 in the
aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective
bargaining agreements; (vii) agreement with any present or
former officer or director of Skyline; or (viii) contract,
agreement or other commitment involving payments by it of more
than $10,000 in the aggregate; and
(c) To Skyline's knowledge, all contracts,
agreements, franchises, license agreements and other
commitments to which Skyline is a party or by which its
properties are bound and which are material to the operations
of Skyline taken as a whole, are valid and enforceable by
Skyline in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of
creditors generally.
Section 2.10 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Skyline is a
party or to which any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. Except as previously disclosed by
Skyline to Quotemedia, or as included in the Skyline Schedules, to the best of
Skyline's knowledge and belief, Skyline is not in default in any material
respect under the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations, properties, assets or
condition of Skyline, and there is no event of default in any material respect
under any such contract, agreement, lease or other commitment in respect of
which Skyline has not taken adequate steps to prevent such a default from
occurring.
Section 2.12 Governmental Authorizations. To the best of Skyline's
knowledge, Skyline has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable
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it to conduct its business operations in all material respects as conducted on
the date hereof. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Skyline of the
transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best of Skyline's
knowledge and belief, Skyline has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
Skyline or would not result in Skyline's incurring any material liability.
Section 2.14 Insurance. Skyline has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
Section 2.15 Approval of Agreement. The board of directors of Skyline has
authorized the execution and delivery of this Agreement by Skyline and have
approved the transactions contemplated hereby, including taking all action
necessary in order to obtain the consent of the Skyline shareholders to this
Agreement.
Section 2.16 Material Transactions or Affiliations. Except for the contract
between Skyline and Skyline Records, Inc., as of the Closing Date there will
exist no other material contract, agreement or arrangement between Skyline and
any person who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known by Skyline to own
beneficially, ten percent (10%) or more of the issued and outstanding common
stock of Skyline and which is to be performed in whole or in part after the date
hereof. Skyline has no commitment, whether written or oral, to lend any funds
to, borrow any money from or enter into any other material transactions with,
any such affiliated person.
Section 2.17 Labor Relations. Skyline has never had a work stoppage
resulting from labor problems. Skyline has no employees other than its officers
and directors.
Section 2.18 Skyline Schedules. Upon execution hereof, Skyline shall
deliver to Quotemedia the following schedules, which are collectively referred
to as the "Skyline Schedules" which are dated the date of this Agreement, all
certified by an officer of Skyline to be complete, true and accurate:
(a) complete and correct copies of the articles of
incorporation and bylaws of Skyline as in effect as of the
date of this Agreement;
(b) copies of all financial statements of Skyline
identified in Section 2.4(a);
(c) the description of any material adverse change in
the business, operations, property, assets, or condition of
Skyline since June 30, 1999 required to be provided pursuant
to Section 2.6; and
(d) any other information, together with any required
copies of documents, required to be disclosed in the Skyline
Schedules by Sections 2.1 through 2.17.
Skyline shall cause the Skyline Schedules and the instruments to be
delivered to Quotemedia hereunder to be updated after the date hereof up to and
including the Closing Date.
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ARTICLE III
MERGER
Section 3.1 Delivery of Quotemedia Securities. On the Closing Date, the
holders of the Quotemedia Common Shares shall deliver to Skyline (i)
certificates or other documents evidencing all of the issued and outstanding
Quotemedia Common Shares, duly endorsed in blank or with executed stock power
attached thereto in transferrable form, and (ii) investment letters, the form of
which is attached hereto as Exhibit "A."
Section 3.2 Issuance of Skyline Common Shares.
(a) In exchange for all of the Quotemedia Common Shares
tendered pursuant to Section 3.1, Skyline shall issue an aggregate of
11,000,000 "restricted" Skyline Common Shares to the Quotemedia
shareholders on a pro rata basis, so that the Quotemedia shareholders
will own 72% of Skyline's issued and outstanding common stock.
(b) No fractional Skyline Common Shares shall be issued
pursuant to this Section 3.2. In lieu of such fractional shares, all
shares to be issued shall be rounded up or down to the nearest whole
share.
Section 3.3 Events Prior to Closing. Upon execution hereof or as soon
thereafter as practical, management of Skyline and Quotemedia shall execute,
acknowledge and deliver (or shall cause to be executed, acknowledged and
delivered) any and all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this Agreement
to be so delivered, together with such other items as may be reasonably
requested by the parties hereto in order to effectuate or evidence the
transactions contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
Section 3.4 Closing. The closing ("Closing" or the "Closing Date") of the
transaction contemplated by this Agreement shall be as of the date in which all
the parties shareholders have approved the terms and conditions of this
Agreement and the conditions included in Sections 3.1 and 3.2 hereinabove and
those additional conditions contained in Article V hereinbelow have been
satisfied by the respective party and all documentation referenced herein is
delivered to the respective party herein, unless a different date is mutually
agreed to in writing by the parties hereto.
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors
of either Skyline or Quotemedia at any time prior to the Closing Date
if:
(i) there shall be any action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated
by this Agreement and which, in the judgment of such board of
directors, made in good faith and based on the advice of its
legal counsel, makes it inadvisable to proceed with the merger
contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions.
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In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Skyline if
Quotemedia shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Quotemedia contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days' written notice thereof is given to
Quotemedia. If this Agreement is terminated pursuant to this paragraph
(b) of this Section 3.5, this Agreement shall be of no further force or
effect and no obligation, right or liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Quotemedia if
Skyline shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of Skyline contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days written notice thereof is given to Skyline.
If this Agreement is terminated pursuant to this paragraph (c) of
Section 3.5, this Agreement shall be of no further force or effect and
no obligation, right or liability shall arise hereunder.
Section 3.6 Directors of Skyline. Upon the Closing, with the exception of
Ian Lambert and Curtis Shaw, the remaining present members of Skyline's Board of
Directors shall tender their resignations seriatim so that the following person
is appointed as a director of Skyline in accordance with procedures set forth in
the Skyline bylaws: Keith Guelpa. Each director shall hold office until his
successor shall have been duly elected and shall have qualified or until his
earlier death, resignation or removal.
Section 3.7 Officers of Skyline. Upon the Closing, except for Ian Lambert,
who shall remain as Secretary of Skyline, the present officers of Skyline shall
tender their resignations and simultaneous therewith, the following person shall
be elected as officer of Skyline in accordance with procedures set forth in the
Skyline bylaws:
NAME OFFICE
Keith Guelpa President
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Skyline and Quotemedia will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of Skyline and Quotemedia, as the
case may be, in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of Skyline and
Quotemedia, as the case may be, as the other shall from time to time reasonably
request.
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Section 4.2 Availability of Rule 144. Each of the parties acknowledge that
the stock of Skyline to be issued pursuant to this Agreement will be "restricted
securities," as that term is defined in Rule 144 promulgated pursuant to the
Securities Act. Skyline is under no obligation to register such shares under the
Securities Act, or otherwise. Notwithstanding the foregoing, however, following
the Closing Date, Skyline will use its best efforts to: (a) make publicly
available on a regular basis not less than semi-annually, business and financial
information regarding Skyline so as to make available to the shareholders of
Skyline the provisions of Rule 144 pursuant to subparagraph (c)(2) thereof; and
(b) within ten (10) days of any written request of any stockholder of Skyline,
Skyline will provide to such stockholder written confirmation of compliance with
such of the foregoing subparagraph as may then be applicable. The stockholders
of Skyline holding restricted securities of Skyline as of the date of this
Agreement and their respective heirs, administrators, personal representatives,
successors and assigns, are intended third party beneficiaries of the provisions
set forth herein. The covenants set forth in this Section 4.2 shall survive the
Closing and the consummation of the transactions herein contemplated.
Section 4.3 Special Covenants and Representations Regarding the Skyline
Common Shares to be Issued in the Merger. The consummation of this Agreement,
including the issuance of the Skyline Common Shares to the stockholders of
Quotemedia as contemplated hereby, constitutes the offer and sale of securities
under the Securities Act, and applicable state statutes. Such transaction shall
be consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the Quotemedia stockholders acquire such securities.
In connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, Quotemedia shall
cause to be delivered, and the Quotemedia stockholders shall deliver to Skyline,
the investment letter referenced in Section 3.1.
Section 4.4 Third Party Consents. Skyline and Quotemedia agree to cooperate
with each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.5 Actions Prior to Closing.
(a) From and after the date of this Agreement until
the Closing Date and except as set forth in the Skyline or
Quotemedia Schedules or as permitted or contemplated by this
Agreement, Skyline and Quotemedia will each use its best
efforts to:
(i) carry on its business in substantially
the same manner as it has heretofore;
(ii) maintain and keep its properties in
states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear
and damage due to casualty;
(iii) maintain in full force and effect
insurance comparable in amount and in scope of
coverage to that now maintained by it;
(iv) perform in all material respects all of
its obligations under material contracts, leases and
instruments relating to or affecting its assets,
properties and business;
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(v) maintain and preserve its business
organization intact, to retain its key employees and
to maintain its relationship with its material
suppliers and customers; and
(vi) fully comply with and perform in all
material respects all obligations and duties imposed
on it by all federal and state laws and all rules,
regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until
the Closing Date, neither Skyline nor Quotemedia will, without
the prior consent of the other party:
(i) except as otherwise specifically set
forth herein, make any change in their respective
certificates or articles of incorporation or bylaws;
(ii) declare or pay any dividend on its
outstanding shares of capital stock, except as may
otherwise be required by law, or effect any stock
split or otherwise change its capitalization, except
as provided herein;
(iii) enter into or amend any employment,
severance or similar agreements or arrangements with
any directors or officers;
(iv) grant, confer or award any options,
warrants, conversion rights or other rights not
existing on the date hereof to acquire any shares of
its capital stock; or
(v) purchase or redeem any shares of its
capital stock, except as disclosed herein.
Section 4.6 Indemnification.
(a) Quotemedia hereby agrees to indemnify Skyline and
each of the officers, agents and directors of Skyline as of
the date of execution of this Agreement against any loss,
liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any
litigation, commenced or threatened or any claim whatsoever),
to which it or they may become subject arising out of or based
on any inaccuracy appearing in or misrepresentation made in
this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this
Agreement for a period of 24 months.
(b) Skyline and its officers and directors hereby
agrees to indemnify Quotemedia and each of the officers,
agents, directors and current shareholders of Quotemedia as of
the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened or
any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section
2.4(b). The indemnification provided for in this Section shall
survive the Closing and consummation of the
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transactions contemplated hereby and termination of this
Agreement for a period of 24 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SKYLINE
The obligations of Skyline under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and warranties
made by Quotemedia in this Agreement were true when made and shall be true at
the Closing Date with the same force and effect as if such representations and
warranties were made at the Closing Date (except for changes therein permitted
by this Agreement), and Quotemedia shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Quotemedia prior to or at the Closing. Skyline shall be furnished with a
certificate, signed by a duly authorized officer of Quotemedia and dated the
Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of Quotemedia shall have
approved this Agreement and the transactions contemplated thereby in accordance
with the laws of the State of Colorado.
Section 5.3 Officer's Certificate. Skyline shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Quotemedia to the effect that no litigation, proceeding, investigation or
inquiry is pending or, to the best knowledge of Quotemedia, threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement or, to the extent not disclosed in
the Quotemedia Schedules, by or against Quotemedia which might result in any
material adverse change in any of the assets, properties, business or operations
of Quotemedia.
Section 5.4 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Quotemedia.
Section 5.5 Other Items. Skyline shall have received such further
documents, certificates or instruments relating to the transactions contemplated
hereby as Skyline may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF QUOTEMEDIA
The obligations of Quotemedia under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1 Accuracy of Representations. The representations and warranties
made by Skyline in this Agreement were true when made and shall be true as of
the Closing Date (except for changes therein permitted by this Agreement) with
the same force and effect as if such representations and
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warranties were made at and as of the Closing Date, and Skyline shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Skyline prior to or at the
Closing. Quotemedia shall have been furnished with a certificate, signed by a
duly authorized executive officer of Skyline and dated the Closing Date, to the
foregoing effect.
Section 6.2 Officer's Certificate. Quotemedia shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Skyline to the effect that no litigation, proceeding, investigation or inquiry
is pending or, to the best knowledge of Skyline, threatened, which might result
in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the Skyline
Schedules, by or against Skyline which might result in any material adverse
change in any of the assets, properties, business or operations of Skyline.
Section 6.3 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Skyline.
Section 6.4 Other Items. Quotemedia shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Quotemedia may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.2 Law; Forum and Jurisdiction. This Agreement shall be construed
and interpreted in accordance with the laws of the State of Colorado, except as
US federal law may be applicable.
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Skyline: Suite #602
595 Howe Street
Vancouver, B.C.
Canada V6C 2T5
Attention: Ian D. Lambert
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If to Quotemedia: Mr. Duane Nelson, President
Quotemedia.com, Inc.
Suite 200
750 W. Pender
Vancouver, B.C.
Canada V6C 1B5
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely among
Skyline and Quotemedia and, except as specifically provided, no director,
officer, stockholder, employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.8 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for 18 months.
Section 7.10 Counterparts Facsimile Execution. For purposes of this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, a facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier machine as a
defense to the
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enforcement of the Agreement or any amendment or other document executed in
compliance with this Section.
Section 7.11 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
Section 7.12 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.13 Expenses. Each party herein shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions provided for herein and the
preparation therefor.
Section 7.14 Headings; Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon and shall inure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17 Severability. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
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Section 7.20 Execution Knowing and Voluntary. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprised of by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, and
entered into as of the date first above written.
SKYLINE ENTERTAINMENT, INC.
By: s/Curtis Shaw
--------------------------------------
Curtis Shaw, President
QUOTEMEDIA.COM, INC.
By: s/Duane Nelson
--------------------------------------
Duane Nelson, President
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COUNTY OF LOS ANGELES }
: ss.
STATE OF CALIFORNIA }
SUBSCRIBED AND SWORN TO BEFORE me by Curtis Shaw , this 23 day of July,
1999.
My Commission Expires: Feb. 13, 2002 .
s/Teena Martin
------------------------------------
TEENA MARTIN Notary Public
COMM. #1208662
NOTARY PUBLIC-CALIFORNIA Printed Name: Teena Martin
Los Angeles County
My Comm. Expires Feb. 13, 2003
PROVINCE OF BRITISH COLUMBIA }
: ss.
CANADA }
SUBSCRIBED AND SWORN TO BEFORE me by Duane Nelson this 20 day of July,
1999.
My Commission Expires: Non-Expiring .
s/J. F. Schaefer
------------------------------------
Notary Public
Printed Name: J.F. Schaefer
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EXHIBIT "A"
---------------
FORM OF INVESTMENT LETTER
----------------
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<PAGE>
INVESTMENT LETTER
(individual)
July ______, 1999
Skyline Entertainment, Inc.
Suite 602, 595 Howe Street
Vancouver, B.C.
Canada V6C 2T5
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
Quotemedia.com, Inc., a Colorado corporation ("Quotemedia"), as described below
(endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement") between Skyline Entertainment, Inc. (the
"Company") and Quotemedia, dated July 14, 1999, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of the Company (the
"Exchange Shares"). If any condition precedent to the Agreement is not satisfied
within the relevant time parameters established in the Agreement (or any
extension thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you that,
in connection with the undersigned's acceptance of the Exchange Shares and as of
the date of this letter:
1. The undersigned is aware that his or her acceptance of the Exchange
Shares is irrevocable, absent an extension of the Expiration Date of any
material change to any of the terms and conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares
referred to above and the Company will acquire good and unencumbered title
thereto.
3. The undersigned has full power and authority to enter into this
Agreement and that this Agreement constitutes a valid and legally binding
obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that the
Company's common stock to be received in exchange for Quotemedia common stock
(the "Securities"), will be acquired for investment for the undersigned's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents that the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party with respect to any of the Securities.
5. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act") or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial review of
such a registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he or she cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state
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Skyline Entertainment, Inc.
July _____, 1999
Page 2
securities laws or exemptions from such registration become available. In this
connection, the undersigned understands that the Company has advised the
Transfer Agent for the Common Shares that the Securities are "restricted
securities" under the 1933 Act and that they may not be transferred by the
undersigned to any person without the prior consent of the Company, which
consent of the Company will require an opinion of the undersigned's counsel to
the effect that, in the event the Securities are not registered under the 1933
Act, any transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a legend to the following effect will be placed
upon the certificate representing the Securities and that the Transfer Agent has
been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on his or her
certificate for the Common Shares limits their value, including their value as
collateral.
6. The undersigned represents that he or she is experienced in
evaluation and investing in securities of companies in the development stage and
acknowledges that he or she is able to fend for himself or herself, can bear the
economic risk of this investment and has such knowledge and experience in
financial and business matters that he or she is capable of evaluating the
merits and risks of the investment in the Securities.
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: July , 1999
Very truly yours,
- - - - - - - - - - - - - - - - - - - -
(signature)
- --------------------------------------
(print name)
- ---------------------------------------
(street address)
- ---------------------------------------
(city, state, country, zip)
- ---------------------------------------
(social security number, if any)
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INVESTMENT LETTER
(corporate)
July ______, 1999
Skyline Entertainment, Inc.
Suite 602, 595 Howe Street
Vancouver, B.C.
Canada V6C 2T5
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
Quotemedia.com, Inc., a Colorado corporation ("Quotemedia"), as described below
(endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement") between Skyline Entertainment, Inc. (the
"Company") and Quotemedia, dated July 14, 1999, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of the Company (the
"Exchange Shares"). If any condition precedent to the Agreement is not satisfied
within the relevant time parameters established in the Agreement (or any
extension thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you that,
in connection with the undersigned's acceptance of the Exchange Shares and as of
the date of this letter:
1. The undersigned is aware that its acceptance of the Exchange Shares
is irrevocable, absent an extension of the Expiration Date of any material
change to any of the terms and conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares
referred to above and the Company will acquire good and unencumbered title
thereto.
3. The undersigned has full power and authority to enter into this
Agreement and that this Agreement constitutes a valid and legally binding
obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that the
Company's common stock to be received in exchange for Quotemedia common stock
(the "Securities"), will be acquired for investment for the undersigned's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents that the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party with respect to any of the Securities.
5. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act") or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial review of
such a registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
it cannot sell the Securities unless such sale is registered under the 1933 Act
and applicable state securities laws or exemptions from such registration become
available. In this connection, the undersigned understands that the Company has
advised the Transfer Agent for the Common Shares that the Securities
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Skyline Entertainment, Inc.
July ____, 1999
Page 2
are "restricted securities" under the 1933 Act and that they may not be
transferred by the undersigned to any person without the prior consent of the
Company, which consent of the Company will require an opinion of the
undersigned's counsel to the effect that, in the event the Securities are not
registered under the 1933 Act, any transfer as may be proposed by the
undersigned must be entitled to an exemption from the registration provisions of
the 1933 Act. To this end, the undersigned acknowledges that a legend to the
following effect will be placed upon the certificate representing the Securities
and that the Transfer Agent has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on its
certificate for the Common Shares limits their value, including their value as
collateral.
6. The undersigned represents that it is experienced in evaluation and
investing in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of this
investment and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities.
In Witness Whereof, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: July , 1999
Very truly yours,
- -----------------------------------------
(name of company)
By_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(signature)
Its ______________________________________
(title)
- ---------------------------------------
(street address)
- ---------------------------------------
(city, state, country, zip)
- ---------------------------------------
(employer identification no., if any)
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QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 10.2
-------------------------
EMPLOYMENT AGREEMENT
BETWEEN THE COMPANY
AND R. KEITH GUELPA
-------------------------
172
<PAGE>
September 22, 1999
Mr. R. Keith Guelpa
6-2240 Nordic Dr.
Whistler, BC
V0N1B2
Reference: Employment Contract
This will serve to outline your employment contract for the position of
President /CEO of QuoteMedia.com Inc.:
Terms of Employment
1. Commencement Date: The position will have an effective commencement
date of July 15, 1999.
2. Terms of Agreement: This Agreement will be for a period of five
years commencing July 15, 1999.
3. Remuneration: Your starting salary will be $120,000 Cdn./yr (payable
bi-weekly) and if sufficient funds are not available to pay the
whole amount, a lesser amount will be mutually agreed to and the
balance will be accrued until funds are available. Upon raising
additional financing (minimum of $1 million US) your salary will be
$120,000 US/yr in the month following the closing of the financing.
When the company attains an actual profit level of $.5 million US
for the year, your salary will be increased to $ 175,000 US/yr (in
the following month). When the company attains an actual profit
level of $3 million US for the year, your salary will be increased
to $250,000 US/yr (in the following month). When the company reaches
an actual profit level of $6 million US for the year, your salary
will be increased to $350,000 US/yr (in the following month).
Further salary increases will be tied to company performance and
will be negotiated in good faith with the Board of Directors, at a
future date.
4. Performance Bonus: The company will develop a performance cash bonus
program that you will be eligible for in the first year onward.
5. Performance Stock Bonus: The company will offer you a performance
bonus of 500,000 shares ($.0001/share) based on reaching the goal
of an actual$10,000,000 US profit level.
6. Stock Options: The company will offer you 200,000 stock options for
serving as a Director at the prescribed cost per share based on the
companies standard stock plan terms.
173
<PAGE>
The company also agrees to set up a performance related stock option
plan for you in time for the awarding of options in your first year
of employment.
7. Vacation: You will be granted 30 days paid vacation each year of the
term of this agreement.
8. Benefits: You will be entitled to Company fully paid medical /
dental / life insurance programs.
9. Parking /Cell/Car Allowance: The Company will pay for your monthly
parking/cell and it will pay a car allowance of $ 650/month plus
gas/ins./repairs.
10. Business Expenses: The Company agrees to reimburse you for all
reasonable out of pocket business expenses.
11. Indemnification: The company will put in place Director's and
Officer's insurance and grant you company indemnification for
serving as an Officer and Director.
12. A. Termination by company: The Company agrees to the following
termination (without just cause) payment within 30 days of the date
of termination (date of employment deemed to be July 15, 1999 ) :
a) During the first 3 months of employment -severance will
be a lump sum payment of 6 months salary and all
perquisites.
b) After 6 months of employment - severance will be a lump
sum payment of 1 year salary and all perquisites.
c) After 1 year of employment-severance will be a lump sum
payment of 2 years salary and all perquisites.
d) In the event of a merger, takeover or any other event
that changes more than 25 % ownership in the company and
this results in the termination of employment, severance
will be a lump sum payment of 3 years salary and all
perquisites.
B. Termination by employee:
In the event of a merger, takeover or any other event that
changes more than 25 % ownership in the company and the
employee (at his sole discretion) terminates this contract, he
shall be entitled to a lump sum payment of 1 year salary and
all perquisites..
13. Director: You will be appointed to the Board of Directors of the
Company.
174
<PAGE>
If this offer is acceptable to you, please confirm your acceptance by
signing below.
.
Sincerely,
QuoteMedia.com, Inc.
Per: The Board Of Directors
s/Ian Lambert
- ----------------------------
Ian Lambert
Director
Agreed to and accepted this 24th day of Sept. 1999.
----- --------
s/R. Keith Guelpa
____________________
R. Keith Guelpa
175
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 10.3
-------------------------
EMPLOYMENT AGREEMENT
BETWEEN THE COMPANY
AND KEITH RANDALL
-------------------------
176
<PAGE>
QUOTE
MEDIA.COM
To: Mr. Keith Randall September 16, 1999
RE: Terms employment
Dear Keith,
This will serve to confirm our offer and terms of employment for the position of
VP Finance/CFO of Quotemedia.com Inc.:
1. Position: VP of Finance and CFO....
2. Commencement date: Full Time-March 1, 2000
Partime-As per attached schedule
3. Term of Contract: Three years from March 1, 2000 with a trial period
commencing November 1,1999
4. Annual Salary: $75,000 moving to $80,000 Feb 1, 2000.
Further review upon profitability of company.
Salary will be pro-rated based on time spent
until full-time. A Salary review will be given
annually.
5. Options: 125,000 options as per company plan at Market plus
10%. Vesting for these options will be 67,500 on
March 1,2000 upon successful completion of trial
period and 67,500 on Dec1, 2000. If you leave
prior to Dec1, 2000 you will only be entitled to
the first 67,500. If the company is purchased
your options will vest immediately. If the company
does not extend your contract pass the trial
period, you will not be entitled to any options.
6. Bonus: Bonus plan to be developed for this position
7. Vacation: 4 weeks per year (usable in first year)
8. Benefits: Company standard benefits fully paid
HEAD OFFICE VANCOUVER OFFICE
11100 North East 8th 750 West Pender Street
Suite 300 Suite 200
Bellevue, WA 98004 Vancouver, BC V6C 1B5
T (425) 451-1604 T (604) 605-4003
F (425) 451-1702 F (604) 605-4030
www.quotemedia.com www.quotemedia.com
177
<PAGE>
9. Parking/Cell: Company paid parking and Cell (up to $50/month)
10. Professional dues: The company will pay your CA dues
11. Lap Top: The company will supply you with a lap top
computer that will remain the property of the
company
12. Termination: If the company decides to not
extend your employment past the end of your
trial period (Feb 29,2000) ,you will be only
entitled to 3 months salary and benefits as
full and final payment.
Keith, I look forward to building the company with your help. If you agree to
the above terms, please sign acceptance of this offer below.
Sincerely yours,
Quotemedia.com
s/R. Keith Guelpa
R. Keith Guelpa Terms accepted: s/Keith Randall
President/CEO ---------------------------
Keith Randall
Date: September 16, 1999
-------------------------------------
178
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 10.4
-------------------------
EMPLOYMENT AGREEMENT
BETWEEN THE COMPANY
AND DUANE NELSON
-------------------------
179
<PAGE>
September 22, 1999
Mr. Duane Nelson
3339 Huntleigh Court
North Vancouver,BC
Reference: Employment Contract
This will serve to outline your employment contract for the position of Manager,
Business Development of QuoteMedia.com Inc.:
Terms of Employment
1. Commencement Date: The position will have an effective commencement date of
July 15, 1999.
2. Terms of Agreement: This Agreement will be for a period of five years
commencing July 15, 1999.
3. Remuneration: Your starting salary will be $120,000 Cdn./yr (payable
bi-weekly) and if sufficient funds are not available to pay the whole
amount, a lesser amount will be mutually agreed to and the balance will be
accrued until funds are available. Upon raising additional financing
(minimum of $1 million US) your salary will be $120,000 US/yr in the month
following the closing of the financing. When the company attains an actual
profit level of $.5 million US for the year, your salary will be increased
to $ 175,000 US/yr (in the following month). When the company attains an
actual profit level of $3 million US for the year, your salary will be
increased to $250,000 US/yr (in the following month). When the company
reaches an actual profit level of $6 million US for the year, your salary
will be increased to $350,000 US/yr (in the following month). Further salary
increases will be tied to company performance and will be negotiated in
good faith with the Board of Directors, at a future date.
4. Development Payment: The company will pay you a one time lump sum
payment of $ 40,000 Cdn. for services and expenses incurred while
developing the software for Quotemedia. Both expense receipts and
service invoices will support this payment.
5. Performance Bonus: The company will develop a performance cash bonus
program that you will be eligible for in the first year onward.
6. Performance Stock Bonus: The company will offer you a performance bonus
of 500,000 shares ($.0001/share) based on reaching the goal of an
actual$10,000,000 US profit level.
180
<PAGE>
7. Stock Options: The company will offer you 200,000 stock options for
serving as a Director at the prescribed cost per share based on the
companies standard stock plan terms.
The company also agrees to set up a performance related stock option
plan for you in time for the awarding of options in your first year of
employment.
8. Vacation: You will be granted 30 days paid vacation each year of the term of
this agreement.
9. Benefits: You will be entitled to Company fully paid medical / dental /
life insurance programs.
10. Parking /Cell/Car Allowance: The Company will pay for your monthly
parking/cell and it will pay a car allowance of $ 650/month plus
gas/ins./repairs.
11. Business Expenses: The Company agrees to reimburse you for all reasonable
out of pocket business expenses.
12. Indemnification: The company will put in place Director's and Officer's
insurance and grant you company indemnification for serving as an Officer
and Director.
13. A. Termination by company: The Company agrees to the following
termination (without just cause) payment within 30 days of the date of
termination (date of employment deemed to be July 15, 1999 ) :
a) During the first 3 months of employment -severance
will be a lump sum payment of 6 months salary and all
perquisites.
b) After 6 months of employment - severance will be a
lump sum payment of 1 year salary and all
perquisites.
c) After 1 year of employment-severance will be a lump
sum payment of 2 years salary and all perquisites.
d) In the event of a merger, takeover or any other event
that changes more than 25 % ownership in the company
and this results in the termination of employment,
severance will be a lump sum payment of 3 years
salary and all perquisites.
181
<PAGE>
B. Termination by employee:
In the event of a merger, takeover or any other event that changes
more than 25 % ownership in the company and the employee (at his
sole discretion) terminates this contract, he shall be entitled to a
lump sum payment of 1 year salary and all perquisites.
14. Director: You will be considered for appointment to the Board of Directors
of the Company.
If this offer is acceptable to you, please confirm your acceptance by signing
below.
.
Sincerely,
QuoteMedia.com, Inc.
Per: The Board of Directors
s/Ian Lambert
- -----------------------
Ian Lambert
Director
Agreed to and accepted this 24 day of Sept. 1999.
---- ---------
s/Duane A. Nelson
--------------------
Duane A. Nelson
182
<PAGE>
QUOTEMEDIA.COM, INC.
-------------------------
EXHIBIT 27.1
-------------------------
FINANCIAL DATA SCHEDULE
-------------------------
183
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AND THE
AUDITED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 559 612,904
<SECURITIES> 153,750 102,500
<RECEIVABLES> 1,376 2,306
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 155,685 717,710
<PP&E> 1,212 1,965
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 1,525,774 961,458
<CURRENT-LIABILITIES> 174,133 274,548
<BONDS> 0 0
0 0
0 0
<COMMON> 2,351 5,416
<OTHER-SE> 1,349,290 681,494
<TOTAL-LIABILITY-AND-EQUITY> 1,525,774 961,458
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 255,161 189,165
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (255,161) (189,047)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (255,161) (189,047)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (255,161) (189,047)
<EPS-BASIC> (.34) (.01)
<EPS-DILUTED> (.34) (.01)
</TABLE>
