U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
OMEGA MED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 3845
(State or other jurisdiction (Primary Standard Industrial
of incorporation or organization) Classification Code Number)
33-0855883
(I.R.S. Employer Identification No.)
4907 Morena Boulevard, Suite 1402, San Diego, California 92110
(Address of registrant's principal executive offices) (Zip Code)
(858) 270-0801
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed Maximum Amount of Registration Fee
securities to be registered registered offering price per Aggregate Offering
share Price
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 1,200,000 $5.00 $6,000,000.00 $1,584.00
====================================================================================================================
</TABLE>
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
<PAGE>
Preliminary Prospectus
Omega Med Corporation,
a Delaware corporation
1,200,000 Shares of $.001 Par Value Common Stock
This prospectus ("Prospectus") relates to 1,200,000 shares (the "Shares") of
common stock, $.001 par value (the "Common Stock"), of Omega Med Corporation, a
Delaware corporation (the "Company"). We are offering for sale 1,200,000 Shares
on a "best efforts" basis pursuant to this Registration Statement on Form SB-2
("Form SB-2").
We will realize $6,000,000.00 from the sale of 1,200,000 Shares, and will use
those funds to pay for the costs of the offering, for working capital, for sales
and marketing of our products and to fund our continuing research and
development activities. See "Use of Proceeds." All expenses of registration
incurred in connection with this offering will be paid by the Company.
Any broker-dealers participating in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the 1933 Act, and any commissions or
discounts given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the 1933 Act.
The Shares have not been registered for sale by the Company under the securities
laws of any state as of the date of this Prospectus. Brokers or dealers
effecting transactions in the Shares should confirm the registration thereof
under the securities laws of the states in which transactions occur or the
existence of any exemption from registration.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT OFFER OR SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March 3, 2000.
2
<PAGE>
TABLE OF CONTENTS
Item
Number Caption Page
- ------ ------- ----
3. Summary Information......................................................5
Risk Factors.............................................................6
We Have a Limited Operating History..................................6
Regulatory Approvals May Not Be Granted..............................6
We Are in a Very Competitive Industry................................7
We Must Comply with Environmental Laws...............................8
We Have No Product Liability Insurance...............................8
Future Capital Needs and Uncertainty of Additional Funding...........8
Limited Protection of Proprietary Technology.........................9
We Must Adapt to Rapid Technological Change..........................9
We Rely on Key Personnel.............................................9
Growth of Business...................................................9
Conflicts of Interest...............................................10
Limitation of Liability of Officers and Directors of the Company....10
Penny Stock Regulation..............................................10
Control by Existing Shareholders; Anti-Takeover Provisions..........10
Securities Market Factors...........................................11
No Foreseeable Dividends............................................11
No Assurances of Revenue or Operating Profits.......................11
Federal Income Tax Consequences.....................................11
Impact of the Year 2000.............................................11
4. Use of Proceeds........................................................ 11
5. Determination of Offering Price.........................................12
6. Dilution................................................................12
7. Selling Security Holders................................................13
8. Plan of Distribution....................................................13
9. Legal Proceedings.......................................................14
10. Directors, Executive Officers, Promoters and Control Persons............14
11. Security Ownership of Certain Beneficial Owners and Management..........15
12. Description of Securities...............................................16
13. Interest of Named Experts and Counsel...................................16
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities............................................16
15. Organization Within Last Five Years.....................................16
16. Description of Business.................................................17
17. Management' Discussion and Analysis of Financial Condition
and Results of Operations...............................................18
18. Description of Property.................................................20
19. Certain Relationships and Related Transactions ...................20
20. Market for Common Equity and Related Stockholder Matters................21
21. Executive Compensation..................................................21
22. Financial Statements....................................................22
23. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................................22
Legal Matters...........................................................22
Experts.................................................................22
Additional Information..................................................22
24. Indemnification of Directors and Officers...............................22
25. Other Expenses of Issuance and Distribution.............................23
3
<PAGE>
26. Recent Sales of Unregistered Securities.................................23
27. Exhibits................................................................23
28. Undertakings............................................................24
Signatures..............................................................26
Power of Attorney.......................................................27
Consent of Independent Auditors.........................................28
4
<PAGE>
Item 3. Summary Information and Risk Factors.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS, WHICH CONTAINS MORE DETAILED INFORMATION WITH RESPECT TO EACH OF THE
MATTERS SUMMARIZED IN THIS PROSPECTUS AS WELL AS OTHER MATTERS NOT COVERED IN
THE SUMMARY. ALL PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE ENTIRE
CONTENTS OF THE PROSPECTUS AND THE EXHIBITS ATTACHED HERETO, INDIVIDUALLY AND
WITH THEIR OWN TAX, LEGAL AND BUSINESS ADVISORS.
The Company: Our principal business address is 4907 Morena Boulevard,
Suite 1402, San Diego, California 92110; telephone
number (858) 270-0801.
Business of the We manufacture and market medical devices and equipment,
Company: and we are presently continuing research and development
activities related to those medical devices. In October,
1999, we acquired the assets of Alpha Mark, Inc., a Utah
corporation, which included the worldwide rights to a
disposable ambulatory infusion pump, a medical device
which pumps a continuous flow of therapeutic drugs into
the blood stream at an adjustable flow rate. We intend
to develop, produce, distribute and market the
disposable ambulatory infusion pump in the United
States, pending the approval of the Food and Drug
Administration ("FDA"). Our wholly owned subsidiary,
Decoria, Inc., a Nevada corporation, owns the rights to
develop, produce, distribute and market a fully
sterilized ear and body-piercing device. We are also
actively seeking companies for acquisition or joint
venture whose product lines include medical devices and
equipment, which can be developed, produced and marketed
by us.
State of organization The Company was incorporated pursuant to the provisions
of the General Corporation Law of Delaware on of the
Company: April 15, 1999.
Risk Factors: A purchase of the Common Stock involves various risks
that must be considered carefully by any potential
purchaser. Those risks include, but are not necessarily
limited to, (i) there can be no assurance that our
products and services will achieve significant market
acceptance, and that acceptance, if achieved, will be
sustained for any significant period or that product and
service life cycles will be sufficient (or substitute
products and services developed) to permit us to recover
associated costs; (ii) the Company has a limited
operating history upon which an evaluation of our
prospects can be made; (iii) the officers and directors
of the Company may be subject to various conflicts of
interest; (iv) substantially all of our products and
services are subject to significant regulation, and,
therefore, our ability to generate significant revenues
will depend upon, among other things, our ability to
comply with all such regulations, laws and statutes,
both in the United States and in other countries; (v) we
may be required to raise substantial funds in order to
implement our business plans and objectives; (vi) we
have significant competition from other medical device
manufacturers, suppliers, and distributors; (vii) our
results of operations may vary from period to period as
a result of a variety of factors; (viii) the market for
our products and services is characterized by continuous
development and introduction of new products and
services; (ix) changing political, economic and
regulatory influences may affect our business practices
and operations; (x) we are dependent on our key
personnel and management; (xi) we do not anticipate
paying dividends on our Common Stock in the foreseeable
future; and (xii) there can be no assurance that our
operations will become profitable. See "RISK FACTORS".
The Shares: We are offering for sale 1,200,000 Shares on a "best
efforts" basis pursuant to this Form SB-2.
5
<PAGE>
Estimated use of We will realize $6,000,000.00 from the sale of 1,200,000
proceeds: Shares, and will use those funds to pay for the costs of
the offering, for working capital, for sales and
marketing of our products and to fund our continuing
research and development activities. See "Use of
Proceeds."
RISK FACTORS
In addition to the other information specified in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and our
business before purchasing any of the Shares. A purchase of the Shares is
speculative in nature and involves numerous risks. No purchase of the Shares
should be made by any person who cannot afford to lose the entire amount of such
investment.
THIS PROSPECTUS SPECIFIES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SPECIFIED IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS. PROSPECTIVE PURCHASERS OF SHARES MUST BE PREPARED FOR THE POSSIBLE
LOSS OF THEIR ENTIRE INVESTMENTS IN THE COMPANY. THE ORDER IN WHICH THE
FOLLOWING RISK FACTORS ARE PRESENTED IS ARBITRARY, AND PROSPECTIVE PURCHASERS OF
SHARES SHOULD NOT CONCLUDE, BECAUSE OF THE ORDER OF PRESENTATION OF THE
FOLLOWING RISK FACTORS, THAT ONE RISK FACTOR IS MORE SIGNIFICANT THAN THE OTHER
RISK FACTORS.
Information specified in this Prospectus contains "forward looking statements"
which can be identified by the use of forward-looking terminology such as
"believes", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or the negative thereof or
other variations thereon or comparable terminology. Such statements are subject
to certain risks, uncertainties and assumptions. No assurances can be given that
the future results anticipated by the forward looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties that could cause actual results to vary
materially from the future results covered in such forward-looking statements.
Among the key factors that have a direct bearing on the Company's results of
operations are the effects of various governmental regulations, the fluctuation
of the Company's direct costs and the costs and effectiveness of the Company's
operating strategy. Other factors could also cause actual results to vary
materially from the future results covered in such forward-looking statements.
We Have a Limited Operating History. We have a very limited operating history
upon which an evaluation of our prospects can be made. We are currently engaged
primarily in research and development activities. We have not generated any
revenues and do not anticipate generating any revenues in our current fiscal
year. Our prospects must be considered speculative, considering the risks,
expenses, and difficulties frequently encountered in the establishment of a new
business, specifically the risks inherent in the development of medical devices.
There can be no assurance that unanticipated technical or other problems will
not occur which would result in material delays in future product and service
commercialization or that our efforts will result in successful product and
service commercialization. There can be no assurance that we will be able to
achieve profitable operations.
Regulatory Approvals May Not Be Granted. A "medical device" is defined by
Section 201(h) of the Food, Drug and Cosmetic Act, Title 21 United States Code
Section 321 as an instrument, apparatus, or machine which is intended for use in
the diagnosis of disease or other conditions, or in the cure, mitigation,
treatment, or prevention of disease in man and other animals. Confusion
sometimes exists between unregulated consumer products and medical devices.
Products are not considered medical devices if they have general utility and are
not dedicated to medical applications. Such products are subject to the Consumer
Product Safety Act.
6
<PAGE>
Human therapeutic products are subject to rigorous pre-clinical and clinical
testing and other approval procedures. The FDA and other similar government
regulatory agencies require laboratory and clinical testing and other costly and
time-consuming procedures before medical products such as the disposable
ambulatory infusion pump and the ear piercing device can be marketed, including,
but not limited to, premarket notification to the FDA. Various federal, state
and foreign statutes may also govern or affect the manufacturing, safety,
labeling, storage, and marketing of such products, as well as record-keeping
incidental to such marketing. The disposable ambulatory infusion pump and the
ear piercing device may be subject to (i) the Medical Device Amendments of 1976
to the Federal Food, Drug and Cosmetic Act, cited above; (ii) the Medical Device
Reporting Rule implemented by the FDA in 1984; (iii) the standards for medical
device manufacturers promulgated by the FDA; and (iv) other rules and
regulations developed, implemented and enforced by the Center for Devices and
Radiological Health, an FDA sub-agency. However, the FDA Modernization Act of
1997 ("1997 Act") exempts from premarket notification devices that do not
present a potential unreasonable risk of illness or injury. The 1997 Act also
directs the FDA to concentrate its postmarket surveillance on higher risk
devices. Moreover, the 1997 Act expanded the FDA's pilot program pursuant to
which the FDA accredits third party experts to conduct the initial review of all
low-to-intermediate risk devices. The Company believes that the disposable
ambulatory infusion pump and the ear piercing device are such
low-to-intermediate risk devices and, therefore, may be subject to the
exemptions from premarket notification specified in the 1997 Act. If such is not
the case, the disposable ambulatory infusion pump and the ear piercing device
may be subject to premarket notification and, therefore, subject to significant
delay before being offered for sale, which would have a material adverse effect
on the financial condition of the Company.
Obtaining such approvals and maintaining ongoing compliance with these
requirements can require the expenditure of significant resources. We have not
yet determined what procedures, if any, will be required in this regard and we
have not begun any of these procedures. We are currently investigating the
possibility that either the disposable ambulatory infusion pump or the ear
piercing device or both products fall in a category for which FDA approval has
already been given. We anticipate that the disposable ambulatory infusion pump
or the ear piercing device may be included in such a category, but we are still
researching the appropriate regulatory requirements. In addition, regulatory
testing and approval would require significant funding. In the event that such
funding exceeded our present financial resources, we would have to receive
additional capital to market the disposable ambulatory infusion pump and the ear
piercing device. An inability to obtain additional financing may have a material
adverse effect on the Company, including the possibility that we would be forced
to curtail our operations significantly or to cease our operations altogether.
We Are in a Very Competitive Industry. Competition in the medical products
industry, generally, is intense. We compete directly with other companies and
businesses that have developed and are in the process of developing technologies
and products which will be competitive with our products. There can be no
assurance that other technologies or products which are functionally equivalent
or similar to our technologies and products have not been developed or are not
in development. We expect to compete with companies or businesses which may have
developed or are developing such technologies and products as well as other
companies and businesses which have the expertise which would encourage them to
develop and market products directly competitive with those developed and
marketed by the Company. Many of these competitors have greater financial and
other resources, and more experience in research and development, than the
Company.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by the Company or which would render our products
obsolete and noncompetitive. Most of our competitors have substantially greater
experience, financial and technical resources and production, marketing and
development capabilities than we do. If we begin commercial sales of our
products, we will also be competing with respect to manufacturing efficiency and
sales and marketing capabilities. To the extent that customers exhibit loyalty
to the supplier that first supplies them with a particular service or
technology, our competitors may have an advantage over us with respect to
services and technologies first developed by such competitors. As a result of
their size and breadth of their service offerings, certain of these competitors
have been and will be able to establish managed accounts by which they seek to
gain a disproportionate share of users for their services and technologies. Such
managed accounts present significant competitive barriers to the Company. There
can be no assurance that competitors
7
<PAGE>
have not or will not succeed in developing technologies and services that are
more effective than any which have been or are being developed by us or which
would render our products obsolete and noncompetitive.
We Must Comply with Environmental Laws. Our management believes that no toxic or
hazardous materials will be byproducts of the manufacturing processes of the
disposable ambulatory infusion pump and the ear piercing device; accordingly, we
believe that the Company will not incur unforeseen material expenditures related
to the cost of compliance with applicable environmental laws, rules or
regulations. We believe that we are presently in compliance with all applicable
federal, state, and local environmental laws, rules and regulations.
Furthermore, in the event we license the manufacturing rights of the disposable
ambulatory infusion pump and the ear piercing device to third parties, we will
not become subject to any such restrictions. However, at some time in the
future, our research, development, manufacturing and production processes may
involve the controlled use of hazardous materials. We may be subject to various
laws and regulations governing the use, manufacture, storage, handling, and
disposal of such materials and certain waste products. The risk of accidental
contamination or injury from hazardous materials cannot be completely
eliminated. In the event of such an accident, we could be held liable for any
damages that result, and any such liability could exceed our financial
resources. In addition, there can be no assurance that in the future we will not
be required to incur significant costs to comply with environmental laws and
regulations relating to hazardous materials. We cannot estimate the potential
costs of complying with local, state, and federal environmental laws.
We Have No Product Liability Insurance. Our business will expose us to potential
product liability risks that are inherent in the testing, manufacturing and
marketing of medical products. We do not have product liability insurance, and
there can be no assurance that we will be able to obtain or maintain such
insurance on acceptable terms or, if obtained, that such insurance will provide
adequate coverage against potential liabilities. We face an inherent business
risk of exposure to product liability and other claims in the event that the
development or use of our technology or products is alleged to have resulted in
adverse effects. Such risk exists even with respect to those products that are
manufactured in licensed and regulated facilities or that otherwise possess
regulatory approval for commercial sale. There can be no assurance that the
Company will avoid significant product liability exposure. There can be no
assurance that insurance coverage will be available in the future, on
commercially reasonable terms; or that such insurance will be adequate to cover
potential product liability claims; or that a loss of insurance coverage would
not materially adversely affect our business, financial condition and results of
operations. While we have taken, and will continue to take, what we believe are
appropriate precautions, there can be no assurance that we will avoid
significant liability exposure. An inability to obtain product liability
insurance at acceptable cost or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of products we
develop. A product liability claim could have a material adverse effect on our
business, financial condition and results of operations.
Future Capital Needs and Uncertainty of Additional Funding. The medical products
industry is rapidly changing through the continuous development and introduction
of new products. Our strategy for growth is substantially dependent upon our
ability to successfully introduce the disposable ambulatory infusion pump and
the ear piercing device. Accordingly, our ability to compete may be dependent
upon our ability to enhance our products continually. There can be no assurance
that competitors will not develop technologies or products that render our
products obsolete or less marketable. We may be required to adapt to
technological changes in the industry and develop products to satisfy evolving
industry or customer requirements, any of which could require the expenditure of
significant funds. At this time, we do not have a source of commitment for such
funds. Continued refinement and improvement costs are risks inherent in new
product development, including unanticipated technical or other problems which
could result in material delays in product commercialization.
The cash and equivalents constitute our present internal sources of liquidity.
Because we are not generating any revenues from the sale or licensing of our
products, our only external source of liquidity is the sale of our capital
stock. We believe our current cash resources are sufficient to complete
prototype development and limited clinical trials of the disposable ambulatory
infusion pump and the ear piercing device. If the disposable ambulatory infusion
pump and the ear piercing device perform as anticipated, we believe that we will
be able to raise the funds necessary to begin production of the
8
<PAGE>
disposable ambulatory infusion pump and the ear piercing device - for the North
American and international clinical trials and the FDA approval process -
through the sale of equity, debt, or receipt of licensing fees. Should the
development of the prototype or clinical testing of the prototype take more time
than anticipated, or if the results of testing require significant modifications
to the disposable ambulatory infusion pump and the ear piercing device,
sufficient funds may not be available to enable the disposable ambulatory
infusion pump and the ear piercing device to be completed and brought to market
during the time period currently anticipated by the Company. Failure to complete
our research and development program will have a significant adverse affect on
our business operations.
Limited Protection of Proprietary Technology. We will attempt to protect our
proprietary technology through the enforcement of our patent and by applying for
additional patent protection when appropriate. We exclusively own any and all
software and other technology that we develop and we regard such technology as
proprietary. We may rely on a combination of patent, trademark and trade secret
laws, as well as contractual restrictions on disclosure, copying and
distribution (including but not limited to confidentiality agreements with our
employees and subcontractors), to attempt to protect our intellectual property
rights in our products and services. There is a possibility that such patent,
trademark and trade secret laws, as well as such confidentiality agreements, may
not be enforceable in certain jurisdictions. It may be possible for unauthorized
third parties to copy our products or to reverse engineer or obtain and use
information that we regard as proprietary. There can be no assurance that our
competitors will not independently develop technologies that are substantially
equivalent or superior to our technologies. In addition, because we anticipate
distributing our products internationally, the laws of certain countries in
which our products and services are or may be distributed or utilized may not
protect our products and intellectual rights to the same extent as the laws of
the United States. There can be no assurance that third parties will not assert
infringement claims against us in the future or that any such assertion will not
result in costly litigation or require us to obtain a license to use
intellectual property rights of third parties. If we are required to obtain such
licenses, there can be no assurance that such licenses will be available on
reasonable terms, or at all. Moreover, in the event we were forced to sue third
parties for patent infringement or unfair competition, such litigation can be
extremely costly and time consuming, and may have a significant adverse affect
on our business and operations, even if we prevail in such lawsuit.
We Must Adapt to Rapid Technological Change. The medical devices industry is
characterized by rapidly changing technology, resulting in short product life
cycles and rapid price declines. We must continuously update our existing and
planned products and services to keep them current with changing technologies
and must develop new products and services, to take advantage of new
technologies that could render our existing products and services obsolete. Our
future prospects are highly dependent on our ability to increase the
functionality of our products and services in a timely manner and to develop new
products that address new technologies and achieve market acceptance. There can
be no assurance that we will be successful in these efforts. If we were unable
to develop and introduce such products and services in a timely manner, due to
resource constraints or technological or other reasons, this inability could
have a material adverse effect on our results of operations. In particular, the
introduction of new products and services is subject to the inherent risk of
development delays and delays in obtaining regulatory approvals, all of which
are beyond our control.
We Rely on Our Key Personnel. Our future success will depend on the service of
our key personnel and, additionally, our ability to identify, hire and retain
additional qualified personnel. There is intense competition for qualified
personnel in the medical products field, and there can be no assurance that we
will be able to continue to attract and retain such personnel necessary for the
development of our business. Because of the intense competition, there can be no
assurance that we will be successful in adding personnel as needed to satisfy
our staffing requirements. Failure to attract and retain key personnel could
have a material adverse effect on the Company.
Growth of Business. We expect to experience growth and expect such growth to
continue for the foreseeable future. Our growth may place a significant strain
on our management, financial, operating and technical resources. Our ability to
manage future growth will depend upon a significant expansion of our accounting
and other internal management systems and the implementation and subsequent
improvement of a variety of systems, procedures, and controls. Moreover, we will
need to continue to train, motivate, and manage our employees and attract and
retain qualified senior managers and
9
<PAGE>
technical professionals. If our management is unable to manage growth
effectively, there could be a material adverse effect on our business, financial
condition, and operating results.
Conflicts of Interest. The persons serving as our officers and directors may
have existing responsibilities and, in the future, may have additional
responsibilities, to provide management and services to other entities in
addition to the Company. As a result, conflicts of interest between the Company
and the other activities of those persons may occur from time to time, in that
those persons shall have conflicts of interest in allocating time, services, and
functions between the other business ventures in which those persons may be or
become involved and, also, the affairs of the Company .
Limitation on Liability of Officers and Directors of the Company. The
Certificate of Incorporation of the Company includes a provision eliminating or
limiting the personal liability of the officers and directors of the Company to
the Company and its shareholders for damages for breach of fiduciary duty as a
director or officer. Accordingly, the officers and directors of the Company may
have no liability to the shareholders of the Company for any mistakes or errors
of judgment or for any act of omission, unless such act or omission involves
intentional misconduct, fraud, or a knowing violation of law or results in
unlawful distributions to the shareholders of the Company.
DISCLOSURE OF OPINION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the Commission, which
specifies information about penny stocks and the nature and significance of
risks of the penny stock market. The broker-dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These disclosure requirements may have the effect of reducing
the trading activity in the secondary market for a stock that becomes subject to
the penny stock rules. If our common stock becomes subject to the penny stock
rules, purchasers of Shares may find it more difficult to sell their Shares.
Control by Existing Security Holders; Anti-Takeover Provisions. All of the
Company's issued and outstanding common stock is owned by Alpha Mark, Inc., a
Utah corporation. Our directors, officers and principal (greater than 5%)
Security Holders, taken as a group, together with their affiliates, beneficially
own, in the aggregate, approximately 100% of the Company's outstanding Common
Stock. Certain principal Security Holders are directors or executive officers of
the Company. As a result of such ownership, these Security Holders may be able
to exert significant influence over, or even control, matters requiring approval
by the Security Holders of the Company, including the election of directors. In
addition, certain provisions of Delaware law could have the effect of making it
more difficult or more expensive for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of the Company.
10
<PAGE>
Securities Market Factors. There is no public market for the Company's
securities including, but not limited to, the Company's common stock. Should
there develop a significant market for the Company's securities, the market
price for those securities may be significantly affected by such factors as the
Company's financial results and introduction of new products and services. No
assurance can be given that an active public market will develop or be
sustained. Factors such as announcements of the introduction of new or enhanced
products by the Company or its competitors and quarter-to-quarter variations in
the Company's results of operations, as well as market conditions in the medical
and emerging growth company sector, may have a significant impact on the market
price of the Company's shares. Further, the stock market has experienced extreme
volatility that has particularly affected the market prices of equity securities
of many medical companies and that often has been unrelated or disproportionate
to the operating performance of such companies. These market fluctuations may
adversely affect the price of the Common Stock.
No Foreseeable Dividends. The Company does not anticipate paying dividends on
the Common Stock in the foreseeable future; but, rather, the Company plans to
retain earnings, if any, for the operation and expansion of the business of the
Company.
No Assurances of Revenue or Operating Profits. There can be no assurance that
the Company will be able to develop consistent revenue sources or that its
operations will become profitable.
Federal Income Tax Consequences. The Company has obtained no ruling from the
Internal Revenue Service and no opinion of counsel with respect to the federal
income tax consequences of the purchase or sale of Shares. Consequently,
investors must evaluate for themselves the income tax implications which attach
to their purchase, and any subsequent sale, of the Shares.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K") issue
resulted from the fact that many computer programs were written using two,
rather than four, digits to identify the applicable year. As a result, many
people were concerned that computer programs with time-sensitive software might
recognize a two digit code for any year in the next century as related to this
century. For example, "00", entered in a date-field for the year 2000, might be
interpreted as the year 1900, resulting in system failures or miscalculations
and disruptions of operations, including, among other things, a temporary
inability to process transactions or engage in other normal business activities.
While companies and governments in the United States spent an estimated $150
billion to $225 billion repairing the problem, countries like Russia and China,
which spent relatively minor amounts, seemed to clear the New Year's Day hurdle
with equal success. Major news media in the United States are reporting that,
after years of work and billions of dollars spent repairing the Year 2000
computer glitch, the technological tranquility of New Year's Day has raised a
new concern that the United States overreacted to this problem. While it is
still too soon to state positively that the Y2K transition has passed without
mishap, we believe that Y2K issues will not have a material adverse affect on
our business.
Item 4. Use of Proceeds
We will receive up to $6,000,000 if all of the Shares offered by the Company on
a "best efforts" basis at $5.00 per share are purchased, and we intend to use
any proceeds from such sale for, among other things, working capital, for sales
and marketing of our products, and to fund our continuing research and
development activities. Our management has significant and absolute discretion
to adjust the application and allocation of proceeds of the offering in order to
adjust and respond to various circumstances and opportunities. As a result of
the foregoing, our success will be affected by the discretion and judgment of
our management with respect to the application and allocation of the proceeds of
the offering.
11
<PAGE>
The following table outlines the anticipated use of proceeds:
===============================================================================
Estimated Use Amount(1) Percentage of
Proceeds(1)
- --------------------------------------------------------------------------------
Increase plant capacity $ 600,000.00 10.0%
- --------------------------------------------------------------------------------
Tooling for Ear Piercing Device $ 500,000.00 8.33%
- --------------------------------------------------------------------------------
Marketing $ 3,000,000.00 50.0%
- --------------------------------------------------------------------------------
Inventory $ 200,000.00 3.33%
- --------------------------------------------------------------------------------
General Corporate Purposes(2) $ 1,500,000.00 25.0%
- --------------------------------------------------------------------------------
Legal and Accounting $ 80,000.00 1.34%
- --------------------------------------------------------------------------------
Offering Expenses (3) $ 120,000.00 2.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total $ 6,000,000.00 100%
===============================================================================
(1) Assumes the Company sells the maximum offering amount of $6,000,000.
(2) Working capital, general corporate purposes, and legal and accounting
reflect funds allocated to pay for daily expenditures incurred in our
business, operations and general and administrative overhead for the
twelve-month period following the closing of this offering.
(3) We believe that Offering Expenses, which include legal, accounting,
miscellaneous, compliance and offering expenses and printing costs will be
in an amount not to exceed 2% of the gross proceeds received from the offer
and sale of the Shares.
Item 5. Determination of Offering Price
Factors Used to Determine Share Price. The offering price of the 1,200,000
Shares being offered on a "best efforts" basis has been determined primarily by
the capital requirements of the Company and has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have not
generated any revenues to date, the price of the Shares is not based on past
earnings, nor is the price of the Shares indicative of current market value for
the assets owned by the Company. No valuation or appraisal has been prepared for
the business and potential business expansion of the Company.
Item 6. Dilution
We will not be a reporting company until the effective date of the Registration
Statement on this Form SB-2. The Company is selling 1,200,000 Shares on a "best
efforts" basis.
The following table sets forth the number of shares of $.001 par value common
stock issued by the Company, the total consideration paid and the price per
share. The table assumes all of the Shares will be sold.
<TABLE>
<CAPTION>
====================================================================================================================================
Shares Issued Total Consideration Price Per
------------- ------------------- Share
Number Percent Amount Percent -----
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders(1) 10,500,000 Shares 89.74% $555,533.00 8.47% $0.053
- ------------------------------------------------------------------------------------------------------------------------------------
Purchasers of Shares(2) 1,200,000 Shares 10.26% $6,000,000.00 91.53% $5.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total 11,700,000 Shares 100.00% $6,555,533.00 100.00%
====================================================================================================================================
</TABLE>
(1) 10,500,000 shares were issued to Alpha Mark, Inc., a Utah corporation, to
acquire substantially all of its assets pursuant to an Agreement of
Purchase and Sale of Assets dated September 30, 1999.
(2) Assuming all of the Shares will be purchased.
12
<PAGE>
Item 7. Selling Security Holders
Not applicable.
Item 8. Plan of Distribution
We are offering for sale 1,200,000 Shares on a "best efforts" basis pursuant to
this Form SB-2. We may from time to time sell all or a portion of the Shares in
the over-the-counter market, or on any other national securities exchange on
which our Common Stock is or becomes listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The Shares will not be sold in an
underwritten public offering. The Shares may be sold directly or through brokers
or dealers. The methods by which the Shares may be sold include: (a) a block
trade (which may involve crosses) in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its own account;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and (d) privately negotiated transactions. In effecting
sales, brokers and dealers we engage, if any, may arrange for other brokers or
dealers to participate. Brokers or dealers may receive commissions or discounts
(or, if any such broker-dealer acts as agent for the purchaser of such shares,
from such purchaser) in amounts to be negotiated which are not expected to
exceed those customary in the types of transactions involved. Broker-dealers may
agree to sell a specified number of such shares at a stipulated price per share,
and, to the extent such broker-dealer is unable to do so, to purchase as
principal any unsold shares at the price required to fulfill the broker-dealer
commitment. Broker-dealers who acquire shares as principal may thereafter resell
such shares from time to time in transactions (which may involve crosses and
block transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive from the purchasers of
such shares commissions as described above.
Broker-dealers participating in the distributions of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the 1933 Act and any
commissions or discounts given to any such broker-dealer may be deemed to be
underwriting commissions or discounts pursuant to the Act. The Shares may also
be sold pursuant to Rule 144 under the 1933 Act beginning one year after the
Shares were issued.
We have filed the Registration Statement, of which this Prospectus forms a part,
with respect to the sale of the Shares. There can be no assurance that we will
sell any or all of the Shares that we desire to sell. We will pay all of the
expenses incident to the offering and sale of the Shares, other than
commissions, discounts and fees of underwriters, dealers or agents.
Under the Securities Exchange Act of 1934 ("Exchange Act") and the regulations
thereunder, any person engaged in a distribution of the Shares offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the Common Stock of the Company during the applicable "cooling off"
periods prior to the commencement of such distribution.
We shall advise any person engaged in a distribution of the Shares offered by
this Prospectus that, during such time as it may be engaged in a distribution of
any of the Shares we are registering by this Registration Statement, it is
required to comply with Regulation M promulgated under the Securities Exchange
Act of 1934. In general, Regulation M precludes any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase, any security which is the subject of the distribution until the entire
distribution is complete. Regulation M defines a "distribution" as an offering
of securities that is distinguished from ordinary trading activities by the
magnitude of the offering and the presence of special selling efforts and
selling methods. Regulation M also defines a "distribution participant" as an
underwriter, prospective underwriter, broker, dealer, or other person who has
agreed to participate or who is participating in a distribution.
13
<PAGE>
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. We have advised any person
engaged in a distribution of the Shares offered by this Prospectus that
stabilizing transactions permitted by Regulation M allow bids to purchase our
common stock so long as the stabilizing bids do not exceed a specified maximum,
and that Regulation M specifically prohibits stabilizing that is the result of
fraudulent, manipulative, or deceptive practices. Distribution participants will
be required to consult with their own legal counsel to ensure compliance with
Regulation M.
We have entered into a Consultant Agreement with Albermarle Investments Ltd.
("Albermarle"). After this Registration Statement is effective, we anticipate
that Albermarle will introduce the Company to investment bankers, broker
dealers, institutional investors and other qualified prospective purchasers of
the Shares. Albermarle is not a Registered broker-dealer.
Item 9. Legal Proceedings
There are no legal actions pending against the Company nor are any such legal
actions contemplated.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
The directors and principal executive officers of the Company are as specified
on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Richard Schioldager 49 President, Director
- --------------------------------------------------------------------------------
Ulrich Cochran 34 Vice President, Director
- --------------------------------------------------------------------------------
Douglas Letson 57 Secretary/Treasurer
- --------------------------------------------------------------------------------
David Brown 57 Director
================================================================================
Richard Schioldager is the President and a director of the Company since its
inception. Mr. Schioldager is responsible for the operations of the Company as
well as identifying and qualifying possible acquisition candidates. From 1998 to
1999, Mr. Schioldager was the Vice President and Chief Financial Officer of
Alpha Mark, Inc. and was primarily responsible for the development of disposable
ambulatory infusion pumps. Prior to 1998, Mr. Schioldager operated a business
consulting firm which specialized in the development of marketing and business
plans for start-up ventures. He has also held several executive level positions
such as Chief Financial Officer of Fabulous Inns of America, Marketing Product
Manager of ATV Systems, Corporate Controller of SNC Inc., and Divisional
Controller of Del Webb Corporation. Mr. Schioldager holds a Bachelor of Science
degree in hotel administration from the University of Nevada Las Vegas.
Ulrich Cochran is the Vice President of Engineering and a director of the
Company since its inception. For approximately one year prior to joining the
Company in April 1999, Mr. Cochran served as a consultant to Alpha Mark, Inc.
From 1994 to 1998, Mr. Cochran owned and operated C/B Associates which was
involved in perfecting and improving disposable ambulatory infusions systems.
From 1991 to 1994, Mr. Cochran was a full time inventor consultant to Cordis
Research Corp., where he developed and tested gas powered hydraulic rate
controlled pump technology which later led to the invention of the vacuum
powered disposable infusion pump. Mr. Cochran has also held senior positions
with Nashua Corp, Hollister Medical Inc. and Tektronix Inc.
Douglas Letson is and has been the Secretary and Treasurer of the Company since
its inception. Prior to joining the Company in April 1999, Mr. Letson served as
Secretary and Treasurer of Alpha Mark, Inc. Mr. Letson is a retired entrepreneur
and specializes in marketing and promotion of the Company's products.
14
<PAGE>
David C. Brown is a director of the Company. Mr. Brown is employed by General
Scanning as the Vice President of Manufacturing. In 1994, he formed C/B
Associates with Mr. Cochran to develop the ambulatory infusion technology. Prior
to forming C/B Associates, Mr. Brown secured patents on an external blood
parameter diagnostic system, and a differential thermal expansion driven
implantable pump. From 1985 to 1993, Mr. Brown worked as Director of
Manufacturing at Digilab where he invented, developed, and commercialized
multiple medical instruments. Mr. Brown received his education at Harvard
University, with double majors in Engineering Science, and Anthropology.
Key Personnel:
Daniel J. Kelly has been a consultant to the Company since July 1999. Mr. Kelly
has developed marketing strategies and plans for positioning of the Disposable
Ambulatory Infusion Pump. From 1996 to 1998, Mr. Kelly served as President and
CEO of Healthwatch Technologies, a manufacturer of non-invasive cardiovascular
diagnostic products, and intravenous infusion devices. From 1994 to 1995, Mr.
Kelly was Executive Vice President of Sales and was subsequently promoted to
President of Block Medical, which specializes in manufacturing electronic
infusion pumps. From 1980 to 1994, Mr. Kelly worked for and was promoted to Vice
President of Worldwide Sales at IMED Corporation, a world leader in infusion
devices and disposable administration sets. Mr. Kelly received his Bachelor of
Arts from the University of Massachusetts and his Masters of Business
Administration from Suffolk University.
There is no family relationship between any of the officers or directors of the
Company. There are no orders, judgments, or decrees of any governmental agency
or administrator, or of any court of competent jurisdiction, revoking or
suspending for cause any license, permit or other authority to engage in the
securities business or in the sale of a particular security or temporarily or
permanently restraining any officer or director of the Company from engaging in
or continuing any conduct, practice or employment in connection with the
purchase or sale of securities, or convicting such person of any felony or
misdemeanor involving a security, or any aspect of the securities business or of
theft or of any felony, nor are any of the officers or directors of any
corporation or entity affiliated with the Company so enjoined.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of March 3, 2000 by (i) each person
or entity known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each of the Company's directors and
named executive officers, and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Amount and Nature of Beneficial Percent of Class
Owner Owner
- -------------------------- ----------------------------------- ------------------------------------ ----------------
<S> <C> <C> <C>
$.001 Par Value Common Alpha Mark, Inc. Shareholder 100 %
Stock a Utah corporation (1) 10,500,000 shares
$.001 Par Value Common All directors and named executive 0%
Stock officers as a group
</TABLE>
(1) The officers and directors of the Company as a group own approximately 19%
of the issued and outstanding shares of Alpha Mark Inc., a Utah
corporation.
Beneficial Ownership. Beneficial ownership is determined in accordance with the
rules of the Commission and generally includes voting or investment power with
respect to securities. In accordance with Commission rules, shares of the
Company's common stock which may be acquired upon exercise of stock options or
warrants which are currently exercisable or which become exercisable within 60
days of the date of the table are deemed beneficially owned by the optionees.
Subject to community property laws, where applicable, the persons or entities
named in the table above have
15
<PAGE>
sole voting and investment power with respect to all shares of the Company's
common stock indicated as beneficially owned by them.
Changes in Control. Management of the Company is not aware of any arrangements
which may result in "changes in control" as that term is defined by the
provisions of Item 403(c) of Regulation S-B.
Item 12. Description of Securities
The Company is authorized to issue 30,000,000 shares of common stock, $.001 par
value, each share of common stock having equal rights and preferences, including
voting privileges. As of March 3, 2000, 10,500,000 shares of the Company's
common stock were issued and outstanding. The Company is authorized to designate
some of its capital stock as preferred stock.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to holders of common stock, including dividend payments. The
holders of the Company's common stock are entitled to one vote for each share of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors of the Company or any other
matter, with the result that the holders of more than 50% of the shares voted
for the election of those directors can elect all of the directors. The holders
of the Company's common stock are entitled to receive dividends when, as and if
declared by the Company's Board of Directors from funds legally available
therefor; provided, however, that cash dividends are at the sole discretion of
the Company's Board of Directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities of the Company and after provision has been made for each class
of stock, if any, having preference in relation to the Company's common stock.
Holders of the shares of the Company's common stock have no conversion,
preemptive or other subscription rights, and there are no redemption provisions
applicable to the Company's common stock.
Dividend Policy. The Company has never declared or paid a cash dividend on its
capital stock and does not expect to pay cash dividends on its Common Stock in
the foreseeable future. The Company currently intends to retain its earnings, if
any, for use in its business. Any dividends declared in the future will be at
the discretion of the Board of Directors and subject to any restrictions that
may be imposed by the Company's lenders.
Item 13. Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or the Company's "counsel", as that term is defined pursuant
to Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in the Company, or was a
promoter, underwriter, voting trustee, director, officer, or employee of the
Company, at any time prior to the filing of this Registration Statement.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 15. Organization Within Last Five Years
Transactions with Promoters. The incorporator of the Company did not receive any
compensation from or securities of the Company.
16
<PAGE>
Item 16. Description of Business
We manufacture and market medical devices and equipment, and we are presently
continuing research and development activities related to those medical devices.
In October, 1999, we acquired the assets of Alpha Mark, Inc., a Utah
corporation, which included the worldwide rights to the disposable ambulatory
infusion pump, a medical device which pumps a continuous flow of therapeutic
drugs into the blood stream at an adjustable flow rate. We intend to develop,
produce, distribute and market the disposable ambulatory infusion pump in the
United States, pending the approval of the Food and Drug Administration ("FDA").
Our wholly owned subsidiary, Decoria, Inc., a Nevada corporation, owns the
rights to develop, produce, distribute and market a fully sterilized ear and
body-piercing device. We are also actively seeking companies for acquisition or
joint venture whose product lines include medical devices and equipment, which
can be developed, produced and marketed by us.
Administration of Therapeutic Drugs by Infusion. Intravenous (IV) delivery is
standard practice for a wide variety of therapeutic drugs. Infusion is the
continuous flow of the drug into the blood stream usually at a slow rate,
regulated by means of a drip system or by a metering pump. Traditional devices
include IV Drip, Bedside Pump & Ambulatory Pump. The Ambulatory Pump allows the
patient to receive the appropriate medication while carrying on normal
activities.
In hospitals, programmable electronic pumps are either battery or electrically
powered and can be programmed to a complex delivery protocol. Each programmable
electronic pump costs between $3,000 and $5,000 and requires a disposable,
single use, cassette and drug path system that costs approximately $30.00. For
home care, disposable pumps combine drug reservoir, driving system and flow
control into a single assembly which is discarded after the dose is expended.
Their use has been largely limited to high flow rate delivery of antibiotics
where one half hour to one hour infusions are acceptable.
Disposable Ambulatory Infusion Pump. The Disposable Ambulatory Infusion Pump
("DAI Pump") is a syringe-type, calibrated reservoir with self powered
adjustable flow rate configured for continuous infusion. The DAI Pump extends
the utility of disposable pumps to overlap applications for which expensive
electronic and syringe pumps are now standard. The DAI Pump permits patients to
perform normal activities while receiving IV medication. Our DAI Pump can
accommodate many delivery protocols which require continuous infusion over
various periods from hours to several days. The disposable pumps currently
available on the market cannot accommodate these various protocols. We believe
that the DAI Pump's ability to accommodate these delivery protocols will result
in our products successfully competing with the expensive electronic and syringe
pumps that are commonly used. Our DAI Pump features adjustable rates which cover
a broad spectrum of common protocols for micro-infusions. The DAI Pump can
accommodate any drug conventionally supplied in mini-bags or by unit use of
syringes. Our DAI Pump permits a minimally trained caregiver to safely compound
drugs from standard vials and load the pump at the treatment site without
intervention by other skilled personnel.
Unlike the current balloon type pumps, we believe that the DAI Pump provides for
multiple rate settings in ranges to suit a wide variety of commonly used
infusion durations, which allows for easier filling as well as safer and more
convenient size and shape for ambulatory use. We believe that our DAI Pump is
unaffected by drug characteristics, making it ideal for the multi-day infusions
necessary with many of the most widely used chemotherapy drugs. We believe that
the DAI Pump emulates many of the desirable characteristics of reusable pumps at
lower per treatment cost, thereby making it a viable product in many drug
treatment niches that the present disposable pumps have failed to penetrate.
We believe that the DAI Pump also provides an alternative to the bulky bedside
IV systems customarily used in hospitals. The DAI Pump is lightweight and
designed to be worn by the patient, permitting normal activities while receiving
medication. The DAI Pumps are also used "piggy back" to meter small volumes of
drug IV systems. More than 20 manufacturers make syringe type and compact
programmable pumps which cost from $1500 to $4000, which require a disposable
drug reservoir or cassette costing $8.00 to $25.00 per treatment.
Ear and Body Piercing. Our wholly owned subsidiary, Decoria, Inc., a Nevada
corporation, owns the rights to develop,
17
<PAGE>
produce, distribute and market a fully sterilized ear and body-piercing device.
We believe that our fully sterilized piercing system reduces the risk of
infection, improves alignment of the piercing, and accomodates a greater variety
of jewelry. We anticipate that our piercing system will be the only system on
the market which offers the customer the option of changing his or her jewelry
without compromising the antiseptic state of the pierced hole. We believe that
our piercing system will not only perform a safer piercing, but also provide
additional revenue generating opportunities via the sale of additional
interchangeable jewelry. We plan to market the system to beauty salons and major
pharmacies and anticipate that all of the practitioners will be certified.
Research and Development. We will expand our products line by the development of
new products. New product ideas are derived from a number of sources, including
in-house research and development trade publications, scientific and health
journals, our executives, staffs, consultants and outside parties. In advance of
introducing products, local counsel and other representatives retained by us
investigate product design matters as they relate to regulatory compliance and
other issues. Our products are then redesigned to accommodate both the
regulatory and marketing requirements of the particular market. There can be no
assurance as to the final form of any new regulations or that an appropriate
regulatory authority will not seek to impose additional regulations, possibly
prohibiting, or placing other restrictions on the sale of such products, or the
impact, if any, of such regulations or our actions.
Competition. The market for medical equipment and devices in the United States
is significantly competitive and competition is expected to continue to increase
significantly. We compete with many other providers of medical equipment and
devices. Although we have continued to refine the design of the DAI Pump to
enhance its functionality while maintaining its competitive pricing, we still
have significant competition, which may result in current and future providers
of similar products competing on the basis of price and functionality, which
could result in a reduction in revenues.
We compete directly with other companies and businesses that have developed and
are in the process of developing technologies and products which will be
competitive with the products developed and offered by us. There can be no
assurance that other technologies or products which are functionally equivalent
or similar to our technologies and products have not been developed or are not
in development. We expect to compete with companies or businesses which may have
developed or are developing such technologies and products as well as other
companies and businesses which have the expertise which would encourage them to
develop and market products directly competitive with those developed and
marketed by us. Many of these competitors have greater financial and other
resources, and more experience in research and development, than us.
Employees. We currently have 4 employees. Our management anticipates using
consultants for business, accounting, engineering, and legal services on an
as-needed basis.
The Company's Facilities. The following table specifies the location, square
footage and lease terms for our facilities:
<TABLE>
<CAPTION>
====================================================================================================================================
Property Description Lease Rent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4907 Morena Boulevard, Suite 1402, Our Main Office - 600 square feet 1 year lease expires $534/month
San Diego, California 92117 April 2000
- ------------------------------------------------------------------------------------------------------------------------------------
1425 Russ Boulevard Our Research and Development facility Month-to-month lease $1,225/month
San Diego, California 92101 - 1300 square feet
- ------------------------------------------------------------------------------------------------------------------------------------
3901 Oregon Street Our additional office space - 125 Month-to-month lease $125/month
San Diego, California 92104 square feet
====================================================================================================================================
</TABLE>
Item 17. Management's Discussion and Analysis of Financial Condition and Results
of Operations
THIS PROSPECTUS SPECIFIES FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF THE
COMPANY ("FORWARD-LOOKING STATEMENTS") INCLUDING, WITHOUT LIMITATION,
FORWARD-LOOKING STATEMENTS REGARDING OUR EXPECTATIONS, BELIEFS, INTENTIONS AND
FUTURE STRATEGIES.
18
<PAGE>
FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF FUTURE
EVENTS AND ARE NOT BASED ON HISTORICAL FACTS. FORWARD-LOOKING STATEMENTS MAY BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS "COULD", "MAY",
"WILL", "EXPECT", "SHALL", "ESTIMATE", "ANTICIPATE", "PROBABLE", "POSSIBLE",
"SHOULD", "CONTINUE", "INTEND" OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR
THE NEGATIVE OF THOSE TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS
PROSPECTUS HAVE BEEN COMPILED BY MANAGEMENT OF THE COMPANY ON THE BASIS OF
ASSUMPTIONS MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE.
FUTURE OPERATING RESULTS OF THE COMPANY, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND
NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE
FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS REPRESENT
ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES
IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A RESULT, THE
IDENTIFICATION AND INTERPRETATION OF DATA AND OTHER INFORMATION AND THEIR USE IN
DEVELOPING AND SELECTING ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES
REQUIRE THE EXERCISE OF JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT
OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED RESULTS,
AND, ACCORDINGLY, NO OPINION IS EXPRESSED ON THE ACHIEVABILITY OF THOSE
FORWARD-LOOKING STATEMENTS.
NO ASSURANCE CAN BE GIVEN THAT ANY OF THE ASSUMPTIONS RELATING TO THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS REPORT ARE ACCURATE, AND WE ASSUME
NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.
General. We manufacture and market medical devices. We are currently negotiating
proposed marketing agreements and plans to negotiate and enter into marketing
agreements with appropriate distributors and marketing agents. Other than costs
related to the continued development of the DAI Pump and the ear and body
piercing device, we do not anticipate significant expenditures on acquisition or
development of other products during the current fiscal year.
Our business will expose us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of medical products. We do
not have product liability insurance, and there can be no assurance that we will
be able to obtain or maintain such insurance on acceptable terms or, if
obtained, that such insurance will provide adequate coverage against potential
liabilities. We face an inherent business risk of exposure to product liability
and other claims in the event that the development or use of our technology or
products is alleged to have resulted in adverse effects. Such risk exists even
with respect to those products that are manufactured in licensed and regulated
facilities or that otherwise possess regulatory approval for commercial sale.
There can be no assurance that we will avoid significant product liability
exposure. There can be no assurance that insurance coverage will be available in
the future, on commercially reasonable terms; or that such insurance will be
adequate to cover potential product liability claims; or that a loss of
insurance coverage would not materially adversely affect our business, financial
condition and results of operations. While we have taken, and will continue to
take, what we believe are appropriate precautions, there can be no assurance
that we will avoid significant liability exposure. An inability to obtain
product liability insurance at acceptable cost or to otherwise protect against
potential product liability claims could prevent or inhibit the
commercialization of products developed by the Company. A product liability
claim could have a material adverse effect on our business, financial condition
and results of operations.
Our strategy for growth is substantially dependent upon our ability to market
and distribute products successfully. Other companies, including those with
substantially greater financial, marketing and sales resources, compete with the
Company, and have the advantage of marketing existing products with existing
production and distribution facilities. There can be no assurance that we will
be able to market and distribute products on acceptable terms, or at all. Our
failure to market our products successfully could have a material adverse effect
on our business, financial condition or results of operations.
19
<PAGE>
The medical products industry has been under increasing scrutiny by various
state and federal regulatory agencies. While we do not presently require any
government approval to create, develop or manufacture the DAI Pump, we may be
subject to various forms of government regulations, including consumer safety
laws and environmental safety laws. Any future violation of, or the cost of
compliance with, these laws and regulations could have a material adverse effect
on our business, financial condition and results of operations.
The medical products industry is rapidly changing through the continuous
development and introduction of new products. Our strategy for growth is
substantially dependent upon our ability to successfully introduce the DAI Pump.
Accordingly, our ability to compete may be dependent upon our ability to enhance
and improve our products continually. There can be no assurance that competitors
will not develop technologies or products that render our products obsolete or
less marketable. We may be required to adapt to technological changes in the
industry and develop products to satisfy evolving industry or customer
requirements, any of which could require the expenditure of significant funds.
At this time, we do not have a source of commitment for such funds. Continued
refinement and improvement costs are risks inherent in new product development,
including unanticipated technical or other problems which could result in
material delays in product commercialization.
Liquidity and Capital Resources. The Company's only known sources of capital are
the proceeds from this Offering and cash anticipated from revenues. The Company
may require additional financing and there is no assurance that such additional
financing will be available.
Results of Operations. The Company has not yet realized any revenue from
operations.
Item 18. Description of Property
Property held by the Company. The consolidated financial statements filed as
exhibits to this Registration Statement include the accounts of the Company and
its wholly-owned subsidiary, Decoria, Inc., a Nevada corporation. All
significant intercompany transactions have been eliminated. As of the dates
specified in the following table, the Company held the following property:
====================================================
Property December 31, 1999
----------------------------------------------------
Cash and equivalents $123,582.00
----------------------------------------------------
Furniture and Equipment $110,090.00
====================================================
The Company defines cash equivalents as all highly liquid investments with a
maturity of 3 months or less when purchased. The Company does not presently own
any interests in real estate. The Company does not presently own any inventory
or equipment.
Item 19. Certain Relationships and Related Transactions
Related Party Transactions. There have been no related party transactions which
would be required to be disclosed pursuant to Item 404 of Regulation S-B, except
for the following:
On or about September 30, 1999, the Company entered into an Agreement of
Purchase and Sale of Assets with Alpha Mark, Inc., a Utah corporation for the
purpose of acquiring substantially all of the assets of Alpha Mark, Inc. At that
time, the Company's directors and officers were officers and directors of Alpha
Mark, Inc.
20
<PAGE>
Item 20. Market for Common Equity and Related Stockholder Matters
Reports to Security Holders. The Company will be a reporting company with the
Securities and Exchange Commission ("SEC") upon the effectiveness of this
Registration Statement on Form SB-2. The public may read and copy any materials
filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. The Company
currently maintains its own Internet address at www.omega-med.com.
There have been no cash dividends declared on the Company's common stock since
the Company's inception. Dividends will be declared at the sole discretion of
the Company's Board of Directors.
The Company anticipates that it will adopt a stock option plan ("Stock Option
Plan"), pursuant to which 2,500,000 shares of the Company's $.001 par value
common stock will be reserved for issuance to satisfy the exercise of options.
The Stock Option Plan will be designed to retain qualified and competent
officers, employees, and directors of the Company. The Company's Board of
Directors, or a committee thereof, shall administer the Stock Option Plan and
will be authorized, in its sole and absolute discretion, to grant options
thereunder to all eligible employees of the Company, including officers, and to
the Company's directors, whether or not those directors are also employees of
the Company. Options will be granted pursuant to the provisions of the Stock
Option Plan on such terms, subject to such conditions and at such exercise
prices as shall be determined by the Company's Board of Directors. Options
granted pursuant to the Stock Option Plan shall not be exercisable after the
expiration of ten years from the date of grant.
Item 21. Executive Compensation - Remuneration of Directors and Officers.
Any compensation received by officers, directors, and management personnel of
the Company will be determined from time to time by the Board of Directors of
the Company. Officers, directors, and management personnel of the Company will
be reimbursed for any out-of-pocket expenses incurred on behalf of the Company.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to the Company payable to
the Chief Executive Officer of the Company and the other executive officers of
the Company whose total annual salary and bonus is anticipated to exceed $50,000
during the year ending December 31, 2000. The Board of Directors of the Company
may adopt an incentive stock option plan for its executive officers which would
result in additional compensation.
<TABLE>
<CAPTION>
====================================================================================================================================
Name and Principal Position Year Annual Salary($) Bonus ($) Other Annual All Other Compensation
Compensation ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Richard Schioldager, President 2000 $48,000 None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Ulrich Cochran, Vice-President 2000 $48,000 None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas Letson, Secretary, 2000 $36,000 None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Treasurer
====================================================================================================================================
</TABLE>
Compensation of Directors. Directors who are also employees of the Company
receive no extra compensation for their service on the Board of Directors of the
Company.
Employment Contracts. The Company anticipates that it will enter into employment
contracts with Richard Schioldager and Ulrich Cochran.
21
<PAGE>
Specified below, in tabular form, is the aggregate annual remuneration of the
Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
<TABLE>
<CAPTION>
====================================================================================================================================
Name of individual or Identity of Group Capacities in which remuneration was Aggregate remuneration
received
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard Schioldager President $48,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ulrich Cochran Vice-President $48,000
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas Letson Secretary/Treasurer $36,000
- ------------------------------------------------------------------------------------------------------------------------------------
All Executive Officers as a Group $132,000
====================================================================================================================================
</TABLE>
Item 22. Financial Statements
OMEGA MED CORPORATION
(A Development Stage Company)
Consolidated Balance Sheet
(December 31, 1999)
Unaudited
ASSETS
Current assets:
Cash and Equivalents 123,582
Accounts Receivable 570
Prepaid Assets/Advance Deposits 2,098
Advances 1,415
Inventory 17,113
--------
Total Current Assets 144,778
Property and Equipment, net 110,090
Licensed Technology, net 197,259
--------
Total Assets
452,127
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable 10,271
Accrued Payroll Taxes 7,311
--------
Total Liabilities 17,582
Shareholders' Equity:
Common Stock $.001 par value; 30,000,000 10,500
shares authorized; 10,500,000 outstanding
December 31, 1999
Additional Paid-in Capital 534,498
Deficit accumulated during development stage (110,452)
--------
Total Shareholders' Equity 434,546
Total Liabilities and Shareholders' Equity 452,127
========
The accompanying notes are an integral part of the financial statements.
<PAGE>
OMEGA MED CORPORATION
(A Development Stage Company)
Consolidated Statement of Operations
From Inception April, 1999 through December 31 1999
(Unaudited)
Revenue 931
Cost of Sales 450
---------
Gross Profit $ 481.00
---------
Operating Expenses $ 110,933
---------
Loss From Operations $(110,452)
Provision for Income Taxes --
---------
Net Loss $(110,452)
=========
Net Loss Per Share $ 0.01
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
OMEGA MED CORPORATION
(A Development Stage Company)
Consolidated Statement of Cash Flows
From Inception to December 31 1999
Unaudited
Beginning Cash 0
Net loss from operations (110,452.21)
Cash proceeds as a result of Asset 220,526.59
Purchase Agreement with Alpha Mark
Corporation
Depreciation, Amortization 10,476.00
Net Proceeds $120,550.38
(Increases) Decreases in Assets
Advances (1,415.18)
Inventory (2,600.00)
Increases, (Decreases in Liabilities)
Payroll Taxes 7,046.42
Ending Cash Balance December 31, 1999 $123,581.62
The accompanying notes are an integral part of the financial statements.
<PAGE>
OMEGA MED CORPORATION
(A Development Stage Company)
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity Deficit
From Inception to December 31 1999 accumulated
Unaudited Additional during the
Common Common Paid-in development
Shares Stock Capital stage Total
------ ----- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at Inception April 5, 1999 0 0 0 0
Common shares issued as a result of purchase 10,500,000 $ 10,500 $ 534,498 0 $ 544,998
agreement with AlphaMark Corporation
Sept. 30, 1999
Net Loss -110452 -110452
---------------------------------------------------------------------------
Balance December 31,1999 10,500,000 $ 10,500 $ 534,498 -110452 $ 434,546
===========================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
ALPHA MARK CORPORATION
Consolidated Balance Sheet
September 30, 1999
Unaudited
ASSETS
Current assets:
Cash and Equivalents 220,527
Accounts Receivable 570
Prepaid Assets/Advance Deposits 2,098
Advances --
Inventory 14,513
-------
Total Current Assets 237,708
Property and Equipment, net 110,528
Licensed Technology, net 207,297
-------
Total Assets
555,533
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable 10,535
Accrued Payroll Taxes --
-------
Total Liabilities 10,535
Shareholders' Equity: 544,998
-------
Total Shareholders' Equity 544,998
Total Liabilities and Shareholders' Equity 555,533
=======
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Financial Statements
As of December 31, 1998 and
1997, For Each of the Two Years in the Period
Ended December 31, 1998 and
For the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Index to the Consolidated Financial Statements
As of December 31, 1998 and
1997 and For Each of the Two Years in the
Period Ended December 31, 1998 and
For the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
Report of Independent Auditors 1
Consolidated Financial Statements of Alpha Mark, Inc.:
Consolidated Balance Sheets, December 31, 1998 and 1997 2
Consolidated Statements of Operations for Each of the Two
Years in the Period Ended December 31, 1998 and for the
Period from October 23, 1997 (Inception of the Development
Stage) to December 31, 1998 3
Consolidated Statements of Shareholders' Equity for Each of
the Two Years in the Period Ended December 31, 1998 and for
the Period from October 23, 1997 (Inception of the
Development Stage) to December 31, 1998 4
Consolidated Statements of Cash Flows for Each of the Two
Years in the Period Ended December 31, 1998 and for the
Period from October 23, 1997 (Inception of the Development
Stage) to December 31, 1998 7
Notes to the Consolidated Financial Statements 10
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
ASSETS
1998 1997
--------- ---------
Current assets:
Cash and equivalents $ 257,574 $ 39,857
Time certificate of deposit 103,073 --
Prepaid assets 10,441 --
Advances -- 700
--------- ---------
Total current assets 371,088 40,557
Property and equipment, net 62,250 --
Licensed technology, net 237,384 --
--------- ---------
Total assets $ 670,722 $ 40,557
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued payroll taxes $ 8,217 $ 462
--------- ---------
Total liabilities 8,217 462
--------- ---------
Shareholders' equity:
Common stock, $.002 par value; 25,000,000
shares authorized; 18,669,650 and 16,923,600
shares issued and outstanding at
December 31, 1998 and 1997, respectively 37,340 33,847
Additional paid-in capital 887,703 14,303
Deficit accumulated during development stage (262,538) (8,055)
--------- ---------
Total shareholders' equity 662,505 40,095
--------- ---------
Total liabilities and shareholders' equity $ 670,722 $ 40,557
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
October 23, 1997
(Inception of the
Year Ended Year Ended Development Stage) to
December 31, 1998 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue -- -- --
Cost of sales -- -- --
--------- --------- ---------
Gross profit -- -- --
--------- --------- ---------
Operating expenses $(263,404) $ (8,055) $(271,459)
--------- --------- ---------
Loss from operations (263,404) (8,055) (271,459)
Interest income 8,921 -- 8,921
--------- --------- ---------
Loss before provision for income taxes (254,483) (8,055) (262,538)
Provision for income taxes -- -- --
--------- --------- ---------
Net loss $(254,483) $ (8,055) $(262,538)
========= ========= =========
Net loss per share, basic and diluted $ (0.01) $ -- $ (0.01)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Price Common Paid-in Development
Shares Per Share Stock Capital Stage Total
------ --------- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 16,854,100 $33,708 $(33,708) -- --
---------- ------ ------ ------ ------
Balance, October
23, 1997 (inception of the
development stage) 16,854,100 33,708 (33,708) -- --
Common shares issued
through private placement,
net of commissions 69,500 $1.00 139 48,011 -- $48,150
Net loss -- -- -- $(8,055) (8,055)
---------- ------ ------ ------ ------
Balance, December 31, 1997 16,923,600 33,847 14,303 (8,055) 40,095
========== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Price Common Paid-in Development
Shares Per Share Stock Capital Stage Total
------ --------- ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 16,923,600 $ 33,847 $ 14,303 $ (8,055) $ 40,095
Common shares issued
through private
placement (net
of commissions) 719,050 $1.00-$1.50 1,439 568,868 -- 570,307
Shares issued
pursuant to licensing
agreement based on the
fair value of the shares
issued 1,000,000 $ 0.28 2,000 277,586 -- 279,586
Shares issued
pursuant to strategic
alliance agreement
based on the
fair value of
the shares issued 27,000 $ 1.00 54 26,946 -- 27,000
Net loss -- -- -- (254,483) (254,483)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1998 18,669,650 $ 37,340 $ 887,703 $ (262,538) $ 662,505
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
October 23, 1997
(Inception of the
Year Ended Year Ended Development Stage) to
December 31, 1998 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C
Cash flows from operating activities:
Net loss $(254,483) $ (8,055) $(262,538)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Shares issued pursuant to strategic alliance
agreement 27,000 -- 27,000
Depreciation and amortization 42,349 -- 42,349
(Increase) decrease in assets:
Advances 700 (700) --
Prepaid expenses (10,441) -- (10,441)
Increase in liabilities:
Payroll taxes 7,755 462 8,217
--------- --------- ---------
Cash used in operating activities (187,120) (8,293) (195,413)
--------- --------- ---------
Cash flows used in investing activities:
Purchase of equipment (62,397) -- (62,397)
Purchase of time certificate of deposit (103,073) -- (103,073)
--------- --------- ---------
Cash used in investing activities (165,470) -- (165,470)
--------- --------- ---------
Cash flows provided by financing activities:
Proceeds from issuance of stock - private placement 570,307 48,150 618,457
--------- --------- ---------
Cash provided by financing activities 570,307 48,150 618,457
--------- --------- ---------
Net increase in cash 217,717 39,857 257,574
--------- --------- ---------
Cash and cash equivalents at beginning of period 39,857 -- --
--------- --------- ---------
Cash at end of period $ 257,574 $ 39,857 $ 257,574
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
<TABLE>
<CAPTION>
Period from
October 23, 1997
(Inception of the
Year Ended Year Ended Development Stage) to
December 31, 1998 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Interest paid -- -- --
Income taxes paid -- -- --
Supplemental Schedule of Non-Cash Investing and Financing Activities
Acquisition of intangible asset:
Acquisition of licensed technology $ 279,586 -- $ 279,586
Issuance of common stock $(279,586) -- $(279,586)
Cost of a strategic alliance agreement:
Operating expense $ 27,000 -- $ 27,000
Issuance of common stock $ (27,000) -- $ (27,000)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
1. Development Stage Operations
Alpha Mark, Inc. (formerly Omega-Med Corporation) (a development stage
company) (the "Company") was incorporated in the state of Utah on April 8,
1981 using the name Omega-Med Corporation. On May 20, 1981, the Company
changed its name to Alpha-Mark, Inc. On November 12, 1997, the Company
changed its name from Alpha-Mark, Inc.to Omega-Med Corporation, and on June
14, 1999 changed its name to Alpha Mark, Inc. After years of dormancy, on
October 23, 1997, the Company obtained new management and redirected its
efforts and became a development stage company. The Company's current
business plan anticipates the development and sales of medical devices. As
such, the Company is subject to the risks and uncertainties associated with
that of a new business. The success of the Company's future operation is
dependent upon the Company's ability to successfully identify, develop and
market its products and obtain the necessary capital to achieve its goals.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Alpha Mark, Inc. (a Utah corporation) (formerly Omega-Med Corporation) (the
"Company") and its subsidiary, Decoria (a Nevada corporation)("Decoria").
All significant intercompany transactions have been eliminated.
Revenue Recognition
Revenue will be recognized when the Company's goods are shipped.
Cash and Equivalents
The Company invests portions of its excess cash in highly liquid
investments. Cash and equivalents include time deposits with original
maturities of three months or less. In addition, the Company has no
compensating balance requirements. The Company maintains its cash in bank
accounts, which exceeded federally insured limits by $263,910 at December
31, 1998, and has not experienced any losses in such accounts. The Company
believes it is not exposed to any significant credit risk on cash.
8
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Property and Equipment
The Company records property and equipment at cost. Significant
improvements, which extend the life of the underlying asset, are
capitalized, and expenditures for normal maintenance and repairs are
charged to operations. Depreciation is provided for property and equipment
using the straight-line method over the expected useful lives. The
Company's property and equipment consists of office equipment and
capitalized tooling costs with expected useful lives of 5 years.
Licensed Technology
The licensed technology is the cost to acquire a license to certain
patented technology that is being amortized on a straight-line basis over
the remaining life of the patent.
Impairment of Long-Lived Assets
The Company annually evaluates its long-lived assets, including the
intangible asset, described as a license to patented technology, for
potential impairment. When circumstances indicate that the carrying amount
of the asset is not recoverable, as demonstrated by the projected
undiscounted cash flows, an impairment loss will be recognized. The
Company's management has determined that there was no such impairment
present at December 31, 1998 and 1997.
Income Taxes
The Company accounts for income taxes under the liability method. Under the
liability method, deferred income taxes are determined based on differences
between the financial reporting and tax bases of assets and liabilities.
They are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company is
required to adjust its deferred tax liabilities in the period when tax
rates or the provisions of the income tax laws change. Valuations
allowances are established to reduce deferred tax assets to the amounts
expected to be realized.
9
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Disclosures about Fair Value of Financial Instruments
The Company accounts for the value of financial instruments using the fair
value method.
Earnings per Common Share
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings Per Share. This pronouncement replaced the previously reported
primary and fully diluted earnings per share with basic and diluted
earnings per share ("EPS"), respectively. Losses for the years ended
December 31, 1998 and 1997 have been calculated in accordance with this
pronouncement.
Basic EPS is computed by dividing income or loss available to common
shareholders by the weighted average number of common shares outstanding
for the year. Diluted EPS is similar to Basic EPS except that the weighted
average of common shares outstanding is increased to include the number of
additional common shares that would have been outstanding if potentially
dilutive common shares had been issued.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Property and Equipment
Property and equipment consist of the following:
1998 1997
---- ----
Computers $ 3,228 --
Tooling costs 59,169 --
-------- -------
Less: accumulated depreciation (147) --
-------- -------
Total property and equipment, net $ 62,250 --
======== =======
10
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
3. Property and Equipment, Continued
Depreciation expense for the year ended December 31, 1998 was $147.
4. Licensed Technology
During 1998, the Company entered into an license agreement to patented
technology relating to a medical infusion pump. Beginning at the date of
the first sale of licensed product, the Company will be required to make a
minimum royalty payment of $50,000 at the start of each fiscal quarter.
Royalties payable are due at the rate of 6% of sales up to $1,000,000, 5%
on the sales between $1,000,000 and $3,000,000, 4% on the sales between
$3,000,000 and $6,000,000, and 3.5% of all sales over $6,000,000. At the
end of the fiscal year, royalties due will be credited against the minimum
royalty payments. In exchange for the license, the Company issued 1,000,000
shares of its common stock. The fair value of the shares was determined to
be $279,586 and has been recorded as an intangible asset on the balance
sheet. Amortization expense for the year ended December 31, 1998 was
$42,202, and accumulated amortization was $42,202 at December 31, 1998.
5. Deferred Income Taxes
The components of the provision for income taxes are as follows:
1998 1997
---- ----
Current tax expense:
Federal -- --
State -- --
------- --------
-- --
------- --------
Deferred tax expense:
Federal -- --
State -- --
------- --------
-- --
------- --------
Total provision -- --
======= ========
11
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
5. Deferred Income Taxes, Continued
Significant components of the Company's deferred income tax assets and
liabilities at December 31, 1998 and 1997 are as follows:
1998 1997
Deferred income tax asset:
Capitalized start-up expenses $ 111,264 $ 3,451
--------- ---------
Total deferred income tax asset 111,264 3,451
Valuation allowance (111,264) (3,451)
--------- ---------
Net deferred income tax liability $ -- $ --
========= =========
The Company, based upon its history of losses and management's assessment
of when operations are anticipated to generate taxable income, has
concluded that it is more likely than not that none of the net deferred
income tax assets will be realized through future taxable earnings and has
established a valuation allowance for them.
Reconciliation of the effective tax rate to the U.S. statutory rate is as
follows:
1998 1997
---- ----
Tax expense at U.S. statutory rate (34.0)% (34.0)%
Change in the valuation allowance 33.6 34.0
Other 0.4 --
----- -----
Effective income tax rate -- % -- %
===== =====
6. Commitments and Contingencies
Operating Lease
In December 1998, the Company entered into a lease agreement commencing
January 1, 1999 for a research and development facility. The term of the
lease is for a six month period. After the initial six months, the lease
will revert to month to month. Monthly lease payments are $1,668. Future
minimum lease payments are $10,008 at December 31, 1998.
12
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
6. Commitments and Contingencies, Continued
Employment Taxes
The Company, in its fiduciary capacity as an employer, has the primary
responsibility for deducting and remitting both the employer and employee
portions of payroll related taxes to the appropriate governmental agencies.
During 1998 and 1997, the Company paid a total of $76,141 in compensation
to its officers upon which these taxes were not withheld from the employee
nor remitted to the governmental authorities involved. If, as a result of
not withholding employment taxes, the employees incur an income tax
liability that ultimately results in a deficiency, the Company becomes
contingently responsible if the employees cannot or do not satisfy that
liability. At December 31, 1998, the Company is contingently liable for
these taxes, penalties, and interest, which approximate $27,600. The
employer portion of the payroll related taxes has been recorded as a
liability by the Company.
7. Strategic Alliance
During the year ended December 31, 1998, the Company entered into a
strategic alliance agreement with an entity whereby the Company paid
$10,000 in cash and 27,000 shares of its common stock valued at $27,000
based on its market value at that time.
The Company was to receive a favorable purchasing contract on certain "body
piercing" products and equipment as well as receive certain other
concessions.
The Company did not record the value of the strategic alliance agreement as
an asset because the right to purchase assets was at or above the prices
that similar assets could be acquired on the open market. In addition, the
equipment was never received by the Company. Accordingly, the full amount
paid by the Company in this strategic venture agreement has been recorded
in operating expenses.
8. Loss Per Common Share
In the year ended December 31, 1997, the Company adopted SFAS No. 128,
Earnings per Share. Loss per common share has been calculated in accordance
with this statement.
14
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
Basic and diluted loss per common share have been computed by dividing the
loss available to common shareholders by the weighted-average number of
common shares for the period.
15
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
8. Loss Per Common Share, Continued
The computations of basic and diluted loss per common share for the years
ended December 31, 1998 and 1997 and for the period from October 23, 1997
(inception of the development stage) to December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Period from
October 23, 1997
(Inception of the
Year Ended Year Ended Development Stage) to
December 31, 1998 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net loss available to common stockholders $ (254,483) $ (8,055) (262,538)
Weighted-average shares, basic and diluted 18,053,069 16,894,993 17,866,712
------------ ------------ ------------
Loss per common share, basic and diluted $ (0.01) $ -- $ (0.01)
============ ============ ============
</TABLE>
9. Stock Transactions
Private Placement Offering
During 1997, in conjunction with a private placement offering, the Company
issued 69,500 shares of its common stock at $1.00 per share, and received
net proceeds of $48,150.
During 1998, in conjunction with a private placement offering, the Company
issued 674,800 shares of its common stock at prices ranging from $1.00 to
$1.50 per share, and received net proceeds of $570,307. In connection with
the private placement, the Company issued 44,250 shares of common stock as
finders' fees.
License Agreement
During 1998, the Company issued 1,000,000 shares of its common stock with a
fair value of $279,586 at the date of issue, to obtain a license to
patented technology.
Strategic Alliance
During 1998, the Company issued 27,000 shares of its common stock with a
fair value of $27,000 at the date of issue, in connection with a strategic
alliance agreement.
15
<PAGE>
Alpha Mark, Inc.
(Formerly Omega-Med Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For Each of the Two Years in the Period Ended December 31, 1998
And for the Period from
October 23, 1997 (Inception of the Development Stage) to December 31, 1998
- --------------------------------------------------------------------------------
10. Subsequent Event
In September 1999, the Company entered into an asset sales agreement with a
company that is a related party. Under the terms of this agreement, the
Company agreed to sell all of its assets, tangible and intangible,
including contractual, warranty, and other rights, subject to the assumed
liabilities, in exchange for 10,500,000 shares of common stock of the
related party. At the completion of the transaction, the Company ceased
operations and became dormant. The only remaining assets of the Company are
the shares received in the transaction.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheets of Alpha Mark, Inc.
(formerly Omega-Med Corporation) (a development stage company) as of December
31, 1998 and 1997, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the years ended December 31, 1998 and
1997 and for the period from October 23, 1997 (inception of the development
stage) to December 31, 1998. These consolidated financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly in all material respects, the consolidated financial position of Alpha
Mark, Inc. (formerly Omega-Med Corporation) (a development stage company) as of
December 31, 1998 and 1997, and the consolidated results of operations and cash
flows for the years ended December 31, 1998 and 1997 and for the period from
October 23, 1997 (inception of the development stage) to December 31, 1998, in
conformity with generally accepted accounting principles.
Kelly & Company
Kelly & Company
Newport Beach, California
January 24, 2000
<PAGE>
Item 23. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's accountants
since the formation of the Company required to be disclosed pursuant to Item 304
of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby has
been passed upon for the Company by Stepp & Beauchamp LLP, located in Newport
Beach, California.
EXPERTS
The financial statements of Alpha Mark, Inc., whose assets were acquired by the
Company, for the year ending December 31, 1998, appearing in this Prospectus and
Registration Statement have been audited by Kelly and Company, and are included
in reliance upon such reports given upon the authority of Kelly and Company as
experts in accounting and auditing. The financial statements of the Company for
the period from incorporation to December 31, 1999 are also included in this
Prospectus and Registration Statement.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 with the Commission
pursuant to the 1933 Act with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement on Form SB-2 and the exhibits and schedules to the Registration
Statement on Form SB-2. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration Statement
on Form SB-2 and the exhibits and schedules filed as a part of the Registration
Statement on Form SB-2. Statements contained in this Prospectus concerning the
contents of any contract or any other document referred to are not necessarily
complete, and reference is made in each instance to the copy of such contract or
document filed as an exhibit to the Registration Statement on Form SB-2. Each
such statement is qualified in all respects by such reference to such exhibit.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Article VI of the Certificate of Incorporation of the Company provides, among
other things, that directors of the Company shall not be personally liable to
the Company or its shareholders for monetary damages for breach of fiduciary
duty as a
22
<PAGE>
director, except for liability (i) for any breach of such director's duty of
loyalty to the Company or its security holders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) liability for unlawful payments of dividends or unlawful stock
purchase or redemption by the corporation; or (iv) for any transaction from
which such director derived any improper personal benefit. Accordingly, the
directors of the Company may have no liability to the shareholders of the
Company for any mistakes or errors of judgment or for any act of omission,
unless such act or omission involves intentional misconduct, fraud, or a knowing
violation of law or results in unlawful distributions to the shareholders of the
Company.
The Company anticipates that it will enter into indemnification agreements with
each of its executive officers pursuant to which the Company will agree to
indemnify each such person for all expenses and liabilities, including criminal
monetary judgments, penalties and fines, incurred by such person in connection
with any criminal or civil action brought or threatened against such person by
reason of such person being or having been an officer or director or employee of
the Company. In order to be entitled to indemnification by the Company, such
person must have acted in good faith and in a manner such person believed to be
in the best interests of the Company and, with respect to criminal actions, such
person must have had no reasonable cause to believe his or her conduct was
unlawful.
Item 25. Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
Shares. The estimated expenses of issuance and distribution are set forth below.
Registration Fees Approximately $1,584.00
Transfer Agent Fees Approximately $5,000.00
Costs of Printing and Engraving Approximately $20,000.00
Legal Fees Approximately $25,000.00
Accounting Fees Approximately $35,000.00
Item 26. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about September 30, 1999, the Company entered into an Agreement of
Purchase and Sale of Assets with Alpha Mark, Inc., a Utah corporation for the
purpose of acquiring substantially all of the assets of Alpha Mark, Inc. The
Company issued 10,500,000 shares of its $.001 par value common stock in exchange
for the assets of Alpha Mark, Inc., in reliance on the exemption specified by
the provisions of Section 4(2) of the Securities Act of 1933. A copy of that
agreement is attached hereto as Exhibit 10.1.
Item 27. Exhibits.
Copies of the following documents are filed with this Registration Statement,
Form SB-2, as exhibits:
Exhibit No.
3.1 Certificate of Incorporation (Charter Document)
3.2 Bylaws
5. Opinion Re: Legality
23
<PAGE>
8. Opinion Re: Tax Matters (not applicable)
10.1 Asset Purchase and Sale Agreement between Alpha Mark, Inc., a Utah
corporation and Omega Med Corporation, a Delaware corporation. (material
contract)
11. Statement Re: Computation of Per Share Earnings*
23.1 Consent of Auditors
23.2 Consent of Counsel
24. Power of Attorney is included on the Signature Page of the Registration
Statement
27. Financial Data Schedule
* included in financial statements
Item 28. Undertakings.
A. Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
B. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section 230.424(b) of
Regulation S-B) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
24
<PAGE>
(iii) To include any additional or changed material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
25
<PAGE>
SIGNATURES
In accordance with the requirements of the 1933 Act, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, in the City of San Diego,
California, on March3, 2000.
OMEGA MED CORPORATION,
a Delaware corporation
By: /s/
------------
Richard Schioldager
Its: President
_______________/s/_____________ March 3, 2000
Douglas Letson
Secretary, Treasurer
_______________/s/_____________ March 3, 2000
Ulrich Cochran
Vice President and Director
______________/s/______________ March 2, 2000
David Brown
Director
26
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Richard Schioldager with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the 1933 Act, this Registration Statement
was signed by the following persons in the capacities and on the dates stated.
OMEGA MED CORPORATION
________________/s/____________ March 3, 2000
Richard Schioldager
President and Director
_______________/s/_____________ March 3, 2000
Ulrich Cochran
Vice President and Director
_______________/s/_____________ March 2, 2000
David Brown
Director
27
CERTIFICATE or INCORPORATION
OF
OMEGA-MED CORPORATION
ARTICLE I
The name of the Corporation is Omega-Med Corporationan.
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wi1mington,
County of New Castle, 19801. The name of its registered agent at such address is
the Corporation Trust Company.
ARTICLE III
The purpose of the Corporation as to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
The total authorized number of shares of the Corporation shall be 30,000,000
shares all designated as Common Stock, $.00l par value. The Board of Directors
is hereby empowered to cause the Preferred Stock to be issued from time to time
for such consideration as it may from time to time fix, and to cause such
Preferred Stock to be issued in Series with such voting powers and such
designations, preferences and relative, participation or optional or other
special rights as designated by the board of directors in the resolution
providing for the issuance of such series. Shares of Preferred Stock of any one
series shall be identical in all respects.
ARTICLE V
The name and mailing address of the Incorporator is:
Robert B. Krintzman
Venture Counsel, Inc.
4330 La Jolla Village Drive, Suite 330
San Diego, CA 92122
<PAGE>
ARTICLE VI
A. The Corporation may indemnity, to the full extent authorized or
permitted by law, any person made, or threatened to be made, a defendant or
witness to any action, suit or proceeding (whether civil or criminal or
otherwise) by reason of the fact that he, his testator or intestate, is or was a
director or officer of the corporation or by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Corporation or by
reason of the fact that such director or officer, at the request of the
Corporation, is or was serving any other corporation, partnership, joint
venture, employee benefit plan or other enterprise, in any capacity. Nothing
contained herein shall affect any rights to indemnification to which employees
other than directors or officers may be entitled by law. No amendment or repeal
of this Section A of Article VI shall apply to or have any effect on any right
to indemnification provided hereunder with respect to any acts or omissions
occurring prior to such amendment or repeal.
B. No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of low (iii) pursuant to Section 174 of the
GCL, or (iv) for any transaction form which such director derived an improper
personal benefit. No amendment to or repeal of this Section B of this Article V
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
C. In furtherance and not in limitation of the powers conferred by
stature:
(i) the Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is serving at the request of the Corporations as a
director, officer, employee or agent of any corporation, partnership, joint
venture, trust, employee benefit plan 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 the provisions
of law; and
(ii) the Corporation may create a trust fund, grant a security
interest and/or use other means (including, without limitation, Letters of
credit, surety bonds and/or other similar arrangements), as well as enter
into contracts providing
<PAGE>
indemnification to the full extent authorized or permitted by law and including
as part hereof provisions with respect to any or all of the foregoing to ensure
the payment of such amounts as may become necessary to effect indemnification as
provided therin, or elsewhere.
ARTICLE VII
Subject to the foregoing, the Corporation reserves the right to appeal,
alter, amend, or rescind arty provision contained in this Amended Certificate of
Incorporation, in the manner now or hereafter prescribed by statue, and all
rights conferred on stockholders heroin are granted subject to this reservation.
I, The Undersigned, for the purpose of forming a corporation under the laws
of the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein stated are true, and accordingly hereunto set my
hand this 30th day of March, 1999.
By: /s/ Robert D. Krintzman
---------------------------
(Incorporation)
Name: ROBERT D. KRINTZMAN
(Type or Print)
BY-LAWS
OF
OMEGA-MED, INC.
ARTICLE 1
STOCKHOLDERS
1.1 ANNUAL MEETINGS
An annual meeting of stockholders shall be held for the election of
directors at such date, time and place, either within or without the State of
Delaware, as may be designated by resolution of the board of directors from time
to time. Any other proper business may be transacted at the annual meeting.
1.2 SPECIAL MEETINGS
Special meetings of stockholders for any purpose or purposes may be called
at any time by the board of directors, the chairman of the board of directors,
the president or by a committee of the board of directors which has been duly
designated by the board of directors and whose powers and authority, as
expressly provided in a resolution of the board of directors, include the power
to call such meetings, but such special meetings may not be called by any other
person or persons. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice of such meeting.
1.3 NOTICE OF MEETINGS
Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, the certificate of incorporation or these by-laws, the written notice of
any meeting shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
-1-
<PAGE>
1.4 ADJOURNMENTS
Any meeting of stockholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given
of any such adjourned meeting if the time and place thereof 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 stockholder of record entitled
to vote at the meeting.
1.5 QUORUM
Except as otherwise provided by law, the certificate of incorporation or
these by-laws, at each meeting of stockholders the presence in person or by
proxy of the holders of shares of stock having a majority of the votes which
could be cast by the holders of all outstanding shares of stock entitled to vote
at the meeting shall be necessary and sufficient to constitute a quorum. In the
absence of a quorum, the stockholders so present may, by majority vote, adjourn
the meeting from time to time in the manner provided in Section 1.4 of these
by-laws until a quorum shall attend. Shares of its own stock belonging to the
corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the corporation, shall neither be entitled to vote nor be counted
for quorum purposes; provided, however, that the foregoing shall not limit the
right of the corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
1.6 ORGANIZATION
Meetings of stockholders shall be presided over by the chairman of the
board if any, or in his absence by the vice chairman of the board, if any, or in
his absence by the president, or in his absence by a vice president, or in the
absence of the foregoing persons by a chairman designated by the board of
directors, or in the absence of such designation by a chairman chosen at the
meeting. The secretary shall act as secretary of the meeting, but in his absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
1.7 VOTING; PROXIES
Except as otherwise provided by the certificate of incorporation, each
stockholder entitled to vote at any meeting of stockholders shall be entitled to
one vote for each share of stock held by him which has voting power upon the
matter in question. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy,
but no such proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period. A duly executed
-2-
<PAGE>
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A stockholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or another duly executed proxy bearing a later date
with the secretary of the corporation. Voting at meetings of stockholders need
not be by written ballot and need not be conducted by inspectors of election
unless so determined by the holders of shares of stock having a majority of the
votes which could be cast by the holders of all outstanding shares of stock
entitled to vote thereon which are present in person or by proxy at such
meeting. At all meetings of stockholders for the election of directors a
plurality of the votes cast shall be sufficient to elect. All other elections
and questions shall, unless otherwise provided by law, the certificate of
incorporation or these by-laws, be decided by the vote of the holders of shares
of stock having a majority of the votes which could be cast by the holders of
all shares of stock entitled to vote thereon which ate present in person or
represented by proxy at the meeting.
1.8 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the board of directors and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall, unless otherwise required by law, not be more than
sixty nor less than ten days before the date of such meeting; and (2) in the
case of any other action, shall not be more than sixty days prior to such other
action. If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the dose of business on the day next
preceding the day on which the meeting is held; and (2) the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the board of directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
1.9 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The secretary shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the
-3-
<PAGE>
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof and may be
inspected by any stockholder who is present. Upon the willful neglect or refusal
of the directors to produce such a list at any meeting for the election of
directors, they shall be ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list of stockholders or the books of
the corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE 2
BOARD OF DIRECTORS
2.1 NUMBER; QUALIFICATIONS
The number of directors constituting the entire Board shall be not less
than three (3) nor more than seven (7) as fixed from time to time by vote of a
majority of the entire Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting the
entire Board shall be three (3) unless otherwise fixed by a majority of the
entire Board. Directors need not be stockholders.
2.2 ELECTION; RESIGNATION; VACANCIES
The Board of Directors shall initially consist of the persons named as
directors by the Incorporator, and each director so elected shall hold office
until the first annual meeting of stockholders or until his successor is elected
and qualified. At the first annual meeting of stockholders and at each annual
meeting thereafter, the stock holders shall elect directors each of whom shall
hold office for a term of one year or until his successor is elected and
qualified.
Any director may resign at any time upon written notice to the corporation.
Any newly created directorship or any vacancy occurring in the board of
directors for any cause may be filled by a majority of the remaining members of
the board of directors, although such majority is less than a quorum, or by a
plurality of the votes cast at a meeting of stockholders, and each director so
elected shall hold office until the expiration of the term of office of the
director whom he has replaced or until his successor is elected and qualified.
-4-
<PAGE>
2.3 NOMINATION OF DIRECTORS
Only persons who are nominated in accordance with the following procedures
are eligible for election as directors. Nominations of persons for election to
the board of directors of the corporation may be made at a meeting of
stockholders by or at the direction of the board of directors, by any nominating
committee or person appointed to make nominations by the board of directors, or
by any stockholder of the corporation entitled to vote for the election of
directors at the meeting who complies with the notice provisions set forth in
this section. A stockholder's notice (a "Nomination Notice") shall set forth:
(a) as to each person whom the stockholder proposes to nominate for election or
re-election as a director (i) the name, date of birth, business address and
residence address of such individual; (ii) the business experience during the
past five years of such nominee, including his or her principal occupations and
employment during such period, the name and principal business of any
corporation or other organization in which such occupations and employment were
carried on and such other information as to the nature of his or her
responsibilities and level of professional competence as may be sufficient to
permit assessment of his or her prior business experience; (iii) whether the
nominee is or has ever been at any time a director, officer or owner of 5% or
more of any class of capital stock, partnership interests or other equity
interest of any corporation, partnership or other entity; (iv) any directorships
held by such nominee in any company with a class of securities registered.
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or
subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended; (v) whether, in the last five years, such nominee has been convicted in
a criminal proceeding or has been subject to a judgment, order, finding or
decree of any federal, state or other governmental entity, concerning any
violation of federal, state or other law, or any proceeding in bankruptcy, which
conviction, judgment, order, finding, decree or proceeding may be material to an
evaluation of the ability or integrity of the nominee; and (vi) any other
information relating to the person that would be required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, or any successor rule;
and (b) as to the stockholder giving notice (i) the name and business address of
such Person (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended), (ii) the name and address of such Person and
as it appears on the corporation's books (if it so appears), and (iii) the class
and number of shares of the corporation which are beneficially owned by such
Person. The corporation may require any proposed nominee to furnish additional
information as reasonably required by the corporation to determine the
eligibility of the proposed nominee to serve as a director of the corporation. A
written consent to being named in a proxy statement as a nominee, and to serve
as a director if elected, signed by the nominee, shall be filed with any
Nomination Notice. No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in this
section.
Nominations, if made by a stockholder of the corporation shall be made
pursuant
-5-
<PAGE>
to timely notice in writing addressed to the secretary of the corporation. To be
timely, Nomination Notices shall be delivered to the secretary at the principal
executive office of the corporation not less than sixty (60) and not more than
ninety (90) days prior to the first anniversary of the previous years annual
meeting of stockholders if such Nomination Notice is to be submitted at an
annual stockholders meeting (provided, however, that if such annual meeting (i)
is the 1997 annual meeting of stockholders, or (ii) is called to be held more
than sixty (60) days before the anniversary of the previous year's annual
meeting of stockholders, such Nomination Notice shall be so delivered no later
than the close of business on the tenth day following the day on which notice of
the date of the annual stockholders meeting was given). Nomination Notices shall
be delivered to the secretary at the principal executive office of the
corporation no later than the close of business on the tenth day following the
day on which notice of the date of a special meeting of stockholders was given
if the Nomination Notice is to be submitted at a special stockholders meeting.
The presiding officer at the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and following any such determination, the defective
nomination shall be disregarded.
2.4 REMOVAL
Any director, or the entire board of directors, may be removed from office
at any time, but only for cause, by the affirmative vote of the holders of
record of outstanding shares representing at least sixty-six and two-thirds
percent (66 2/3%) of the voting power of all the shares of capital stock of the
corporation then entitiled to vote generally in the election of directors,
voting together as a singe class, and any director may be removed from office at
any time, but only for cause, by the affirmative vote of a majority of the
entire board of directors. As used in these by-laws, the term "entire board of
directors" shall mean the total authorized number of directors that the
corporation would have if there were no vacancies.
2.5 REGULAR MEETINGS
Regular meetings of the board of directors may be held at such places
within or without the State of Delaware and at such times as the board of
directors may from time to time determine, and if so determined notices thereof
need not be given.
2.6 SPECIAL MEETINGS
Special meetings of the board of directors may be held at any time or place
within or without the State of Delaware whenever called by the president, any
vice president, the secretary, or by any member of the board of directors.
Notice of a special meeting of the board of directors shall be given by the
person or persons calling the meeting at least twenty-four hours before the
special meeting.
-6-
<PAGE>
2.7 TELEPHONIC MEETINGS PERMITTED
Members of the board of directors, or any committee designated by the board
of directors, may participate in a meeting thereof by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this by-law shall constitute presence in person at such meeting.
2.8 QUORUM; VOTE REQUIRED FOR ACTION
At all meetings of the board of directors a majority of the whole board of
directors shall constitute a quorum for the transaction of business. Except in
cases in which the certificate of incorporation or these by-laws otherwise
provide, the vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the board of directors.
2.9 ORGANIZATION
Meetings of the board of directors shall be presided over by the chairman
of the board, if any, or in his absence by the vice chairman of the board, if
any, or in his absence by the president, or in their absence by a chairman
chosen at the meeting. The secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting.
2.10 INFORMAL ACTION BY DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board of directors or such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board of directors or such committee.
2.11 ASSENT TO ACTION BY DIRECTORS
A director who is present at a meeting of the board of directors at which
action is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
-7-
<PAGE>
2.12 COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
by-laws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and/or a stated salary as director. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
ARTICLE 3
COMMITTEES
3.1 COMMITTEES
The board of directors may, by resolution passed by a majority of the whole
board of directors, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of the committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in place of any such absent or
disqualified member. Any such committee, to the extent permitted by law and to
the extent provided in the resolution of the board of directors, shall have and
may exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
3.2 COMMITTEE RULES
Unless the board of directors otherwise provides, each committee designated
by the board of directors may make, alter and repeal ivies for the conduct of
its business. In the absence of such rules each committee shall conduct its
business in the same manner as the board of directors conducts its business
pursuant to Article 2 of these
-8-
<PAGE>
by-laws. Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE 4
OFFICERS
4.1 EXECUTIVE OFFICERS.
The officers of the corporation shall be chosen by the board of directors
and shall be a president, a secretary and a treasurer. The board of directors
may also choose a chairman of the board, one or more vice-presidents, and one or
more assistant secretaries and assistant treasurers. Any number of offices may
be held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
4.2 ELECTION
The board of directors at its first meeting and at its meeting after each
annual meeting of stockholders shall elect its officers (except for those
officers which may be appointed pursuant to Section 3 of this Article V).
4.3 OTHER OFFICERS
The board of directors may appoint such other officers and agents as it
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.
4.4 COMPENSATION OF OFFICERS
The salaries of all officers and agents of the corporation shall be fixed
by the board of directors.
4.5 TERM OF OFFICE; REMOVAL; VACANCIES
The officers of the corporation shall bold office until their successors
are chosen and qualify. Any officer elected or appointed by the board of
directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
4.6 CHAIRMAN OF THE BOARD
The chairman of the board, if one has been elected, shall, if present,
preside at all meetings of the board of directors and perform such other powers
and duties as may be from time to time assigned to the chairman by the board of
directors or prescribed by the by-laws.
-9-
<PAGE>
4.7 THE PRESIDENT
The president 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. The president shall preside at all meetings
of the stockholders and shall implement policies and strategies for the conduct
of the business of the corporation. The president shall sign stock certificates,
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors or the president to some other
officer or agent of the corporation.
4.8 THE VICE-PRESIDENTS
In the event the board of directors elects to appoint one or more
vice-presidents, and in the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
4.9 THE SECRETARY AND ASSISTANT SECRETARY
The secretary, or in his absence the person appointed to act as secretary
of the meeting, shall at all meetings of the board of directors and all meetings
of the stockholders record all, the proceedings of the meetings of the
corporation and of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when required. The
secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or president,
under whose supervision he shall be. He shall have custody of the corporate seal
of the corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the board of directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
-10-
<PAGE>
4.10 THE TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories as
may be designated by the board of directors.
The treasurer shall disburse the funds of the corporation as may be ordered
by the board of directors, taking proper vouchers for such disbursements, and
shall render to the chairman of the board, the president and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation.
If required by the board of directors, the treasurer shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books) papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
The assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the treasurer or in the event of his inability or refusal to act, perform the
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE 5
STOCK
5.1 CERTIFICATES
Every holder of stock shall be entitled to have a certificate signed by or
in the name of the corporation by the chairman or vice chairman of the board of
directors, if any, or the president or vice president, and by the treasurer or
an assistant treasurer, or the secretary or an assistant secretary, of the
corporation, certifying the number of shares owned by him in the corporation.
Any of or all the signatures on the certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. No certificates may be issued
without the written consent of the board of directors.
-11-
<PAGE>
5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES
The corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner the fact of the lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
5.3 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the corporate laws of the State
of Delaware.
ARTICLE 6
INDEMNIFICATION
6.1 RIGHT TO INDEMINIFICATION
The corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as presently exists or may hereafter be amended, any
person who was or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding") by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director or officer of another corporation or of a partnership,
joint venture, trust, enterprise or non-profit entity, including service with
respect to employee benefit plans, against all liability and loss suffered and
expenses reasonably incurred by such person. The corporation shall be required
to indemnify a person in connection with a proceeding initiated by such person
only if the proceeding was authorized by the board of directors of the
corporation.
6.2 PREPAYMENT OF EXPENSES
The corporation shall pay the expenses incurred in defending any proceeding
in advance of its final disposition, provided, however, that the payment of
expenses incurred by a director or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by the
director or officer to repay all
-12-
<PAGE>
amounts advanced if it should be ultimately determined that the director or
officer is not entitled to be indemnified under this Article or otherwise.
6.3 CLAIMS
If a claim for indemnification or payment of expenses under this Article is
not paid in full within sixty days after a written claim therefor has been
received by the corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action the
corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification or payment of expenses under applicable law.
6.4 NON-EXCLUSIVITY OF RIGHTS
The rights conferred on any person by this Article 6 shall not be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, provision of the certificate of incorporation, these by-laws,
agreement, vote of stockholders or disinterested directors or otherwise.
6.5 OTHER INDEMNIFICATION
The corporation's obligation, if any, to indemnify any person who was or is
serving at its request as a director or officer of another corporation,
partnership, joint venture, trust, enterprise or non-profit entity shall be
reduced by any amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or non-profit
enterprise.
6.6 AMENDMENT OR REPEAL
Any repeal or modification of the foregoing provisions of this Article 6
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
ARTICLE 7
MISCELLANEOUS
7.1 DIVIDENDS
Dividends upon the capital stock of the corporation, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to applicable
law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of
-13-
<PAGE>
incorporation.
Before payment of any dividend, there may be set aside out of arty funds of
the corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
7.2 ANNUAL STATEMENT
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.3 CHECKS
All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
7.4 FISCAL YEAR
The fiscal year of the corporation shall begin on January 1 and end on
December 31 of each year.
7.5 SEAL
The corporate seal shall have the name of the corporation inscribed thereon
and shall be in such form as may be approved from time to time by the board of
directors.
7.6 WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES
Any written waiver of notice, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of any regular or special meeting
of the stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
-14-
<PAGE>
7.7 INTERESTED DIRECTORS; QUORUM
No contract or transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other corporations
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board of
directors or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (1) the
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified, by the board of directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transactions.
7.8 FORM OF RECORDS
Any records maintained by the corporation in the regular course of its
business, including its stock ledger, books of account and minute books, may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
microphotographs, or any other information storage device, provided that the
records so kept can be converted into clearly legible form within a reasonable
time. The corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same and any record shall at any time be made
available to the board of directors or an individual appointed by the board of
directors.
7.9 AMENDMENT OF BY-LAWS
Unless otherwise provided in the certificate of incorporation, these
by-laws may be altered, amended or repealed or new by-laws may be adopted by the
stockholders or by the board of directors, when such power is conferred upon the
board of directors by the certificate of incorporation, at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the board of directors if notice of such alteration,
amendment, repeal or adoption of new by-laws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal by-laws is conferred
upon the board of directors by the certificate of incorporation it
-15-
<PAGE>
shall not divest or limit the power of the stockholders to adopt, amend or
repeal by-laws.
7.10 NOTICE
All notices and other communications required or permitted hereunder shall
be in writing and shall be effective (a) the next business day after deposited
with the U.S. Postal Service or other applicable postal service, if delivered by
first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c)
one business day after the business day of deposit with Federal Express or
similar overnight courier, freight prepaid, or (d) one business day after the
business day of delivery by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed, if to a director or stockholder,
to the director or stockholder's address as it appears on the records of the
Company, and, if to the Company, at the address of its principal corporate
offices (attention: Secretary) or at such other address as designated by the
addressee.
Whenever any notice is required to be given under the provisions of the
statutes or of the certificate or incorporation or of these by-laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
-16-
ASSET PURCHASE AND SALE AGREEMENT
By and Among
Alpha Mark, Inc.,
a Utah corporation,
and
Omega-Med Corporation,
a Delaware corporation.
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into in
duplicate this 30th day of September, 1999, by and among Omega-Med Corporation,
a Delaware corporation ("Purchaser") and Alpha Mark, Inc., a Utah corporation
("Seller") and provides for the Purchaser to acquire substantially all of the
business assets of the Seller subject to the provisions of this Agreement,
subject to the liabilities assumed pursuant to the provisions of this Agreement
by the Purchaser and no other liabilities.
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the business of the Seller insofar as
the same is conducted by the use of the Acquired Assets (as that term is defined
later in this Agreement).
B. The Seller believes that it is in the best interests of the Seller, and,
therefore, it desires to, sell the Acquired Assets to the Purchaser, on the
terms and subject to the conditions specified in this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms specified in this
Agreement shall have the
1
<PAGE>
meanings and definitions specified and indicated by the provisions of this
Article I, unless a different and common meaning of such a term is clearly
indicated by the context, and variants and derivatives of the those terms shall
have correlative meanings. To the extent that certain of the definitions
specified in this Article I suggest, indicate, or express agreements between or
among parties to this Agreement, or contain representations or warranties or
covenants of a party, the parties agree to the same, by execution of this
Agreement. Agreements, representations, warranties and covenants specified in
any part or provision of this Agreement shall for all purposes of this Agreement
be treated in the same manner as other such agreements, representations,
warranties and covenants specified elsewhere in this Agreement, and the article,
section or paragraph of this Agreement within which such an agreement,
representation, warranty, or covenant appears shall have no separate meaning or
effect on the same.
1.1"Acquired Assets". The assets of the Seller being acquired by the
Purchaser pursuant to the provisions of this Agreement, as specified on Schedule
2.1 of this Agreement, and all other assets of the Seller, tangible or
intangible, including contractual, warranty, and other rights, the use or value
of which will come under the Control (as that term is defined in Section 1.13 of
this Agreement) by the Purchaser when the Transaction contemplated by this
Agreement is consummated.
1.2 "Acquired Business". The business conducted by the Seller in which the
Seller utilized the Acquired Assets, as described on Schedule 2.1 to this
Agreement.
1.3 "Acquired Facilities". All office space, warehouses, stores, plants,
production facilities, manufacturing facilities, fixtures, furniture, office
equipment, computer equipment, common areas, storage facilities, rights of way,
driveways, and improvements owned or leased by the Seller or otherwise used by
the Seller in connection with the operation of its business or leased or
subleased by the Seller to others, but only to the extent that the same consist
of Acquired Assets.
1.4 "Affiliate". When used with respect to a person, an "affiliate" of that
person is a person controlling, controlled by, or under common control with that
person.
1.5 "Agreement". This Asset Purchase and Sale Agreement, including all of
its schedules and exhibits and all other documents specifically referred to in
this Agreement that have been or are to be delivered by a party to this
Agreement to another such party in connection with the Transaction or this
Agreement, and including all duly adopted amendments, modifications, and
supplements to or of this Agreement and such schedules, exhibits and other
documents.
1.6 "Assumed Liabilities". The Liabilities of the Seller being assumed by
the Purchaser pursuant to the provisions of this Agreement as specifically
identified in Schedule 2.1 to this Agreement, and no other Liabilities to the
Seller.
2
<PAGE>
1.7 "Business Day". Any day that is not a Saturday, Sunday or day on which
banks in Los Angeles, California are authorized to close.
1.8 "Closing". The completion of the Transaction, to occur as contemplated
in Article II of this Agreement.
1.9 "Closing Date". The date on which the Closing actually occurs, which
shall be no later than September 30, 1999, unless otherwise agreed by the
parties, but shall not in any event be prior to satisfaction or waiver of the
conditions to Closing specified in Article VII of this Agreement.
1.10 "Closing Time". The time at which the Closing actually occurs. All
events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.11 "Code". The Internal Revenue Code of 1986, as amended and in effect on
the date the parties sign this Agreement.
1.12 "Consideration". Ten million five hundred thousand (10,500,000) shares
of $.001 par value common stock of the Purchaser to be issued by the Purchaser
to the Seller at the Closing for the Acquired Assets ("Subject Shares").
1.13 "Control". Generally, the power to direct the management or affairs of
an Entity.
1.14 "Entity". A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a business,
whether active or passive.
1.15 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended and in effect at the time of execution of this Agreement.
1.16 "GAAP". Generally Accepted Accounting Principles, as in effect on the
date of any statement, report or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references in this
Agreement to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.
1.17 "Inventories". The stock of raw materials, work-in-process and
finished goods, including, but not limited to, finished goods purchased for
resale, held by the Seller for manufacturing, assembly, processing, finishing,
sale, or resale to others from time to time in the ordinary course of the
business of the Seller, in the form in which such inventories then are held or
after manufacturing, assembling, finishing, processing, incorporating with other
goods or items, refining, or similar processes.
3
<PAGE>
1.18 "IRS". The Internal Revenue Service.
1.19 "Liabilities". At any time ("Determination Time"), the obligations of
a person or Entity, whether known or unknown, contingent or absolute, recorded
on its books or not, resulting in any way from facts, events, agreements,
obligations or occurrences that existed, occurred or transpired at a prior point
in time, or resulted from the passage of time to the Determination Time, but not
including obligations accruing or payable after the Determination Time to the
extent (but only to the extent) that such obligations (a) result from previously
existing agreements for services, benefits, or other considerations, and (b)
accrue or become payable with respect to services, benefits, or other
considerations received by the person or Entity after the Determination Time.
1.20 "Multiemployer Plan". A "multiemployer plan," as defined in Section
3(37) of ERISA or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, of the
Code, or of other law, and regulations adopted pursuant to ERISA, or the Code,
or such other law, modifying, amending, interpreting, or otherwise affecting the
application of such provisions, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
1.21 "Payables". Liabilities of a party resulting from the borrowing of
money or the incurring of obligations for merchandise or goods purchased.
1.22 "Pension Plan". A "pension plan" or "employee pension benefit plan,"
as defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
1.23 "Proprietary Rights". Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created or owned by the Seller, or used by the Seller in connection
with its business, whether or not the same are entitled to legal protection.
1.24 "Purchaser". Omega-Med Corporation, a Delaware corporation, which,
pursuant to the provisions of this Agreement, is purchasing the Acquired Assets.
1.25 "Receivables". Accounts receivable, notes receivable, and other
obligations
4
<PAGE>
presented as assets on the books, records and financial statements of the
Entity, in accordance with GAAP, indicating moneys owed, due and payable to the
Entity or person on whose financial statements such receivables are presented.
1.26 "SEC". The Securities and Exchange Commission.
1.27 "Seller". Alpha Mark, Inc., a Utah corporation, which, pursuant to the
provisions of this Agreement, is selling the Acquired Assets.
1.28 "Subsidiary". With respect to any Entity, another Entity of which
fifty percent (50%) or more of the effective voting power, or the effective
power to elect a majority of the board of directors or similar governing body,
or fifty percent (50%) or more of the true equity interest, is owned by such
first Entity, directly or indirectly.
1.29 "Transaction". The sale of the Acquired Assets, subject to the Assumed
Liabilities, for the consideration as contemplated by, and on the terms and
subject to the conditions of, this Agreement.
1.30 "Welfare Plan". A "welfare plan" or an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, on, and
in all instances subject to, each of the terms, conditions, provisions and
limitations specified in this Agreement, the Seller shall sell, transfer,
convey, assign, deliver and set over to the Purchaser, by instruments
satisfactory in form and substance to the Purchaser, and the Purchaser shall
acquire from the Seller, the Acquired Assets, subject to the Assumed
Liabilities, and only those Liabilities and no others, in exchange for the
Consideration. The Seller represents that the assets specified on Schedule 2.1
to this Agreement, the provisions of which, by this reference, are made a part
of this Agreement as though specified completely and specifically at length in
this Section 2.1 are all the assets reasonably necessary for the conduct of the
Acquired Business in the ordinary course in the same manner as that in which
such business has been conducted in the immediate past, including, without
limitation, all Proprietary Rights of the Seller so used in the ordinary conduct
of the Acquired Business and all contract, warranty, and other intangible rights
relating to or arising out
5
<PAGE>
of such Acquired Business. Neither the Purchaser nor any of its Affiliates is
assuming, becoming liable for, agreeing to discharge or in any manner becoming
in any way responsible for, any of the Liabilities of the Seller other than
those expressly specified on Schedule 2.1 and accepted by the Purchaser in this
Section 2.1.
2.2 Delivery of Consideration. The certificates evidencing and
representing the Consideration shall be issued and delivered by the Purchaser to
the Seller on the Closing Date.
2.3 Closing. The Closing of the Transaction shall occur at the offices of
Stepp & Beauchamp LLP, 1301 Dove Street, Suite 460, Newport Beach, California,
at 10:00 A.M. on ____________, or at such other place as the Purchaser and the
Seller may agree, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.1 Organization and Qualification. The Purchaser is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Purchaser is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned
or leased by it, or the nature of its activities, is such that qualification as
a foreign corporation in that jurisdiction is required by law.
3.2 Authority Relative to This Agreement. The Purchaser has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Purchaser and no other corporate
proceedings on the part of the Purchaser are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and delivery of the Consideration. The Purchaser has, and any officer,
director or representative executing this Agreement for and on behalf of the
Purchaser has, the legal capacity and authority to enter into and deliver this
Agreement. This Agreement is a valid and legally binding obligation of the
Purchaser and is enforceable completely against the Purchaser in accordance with
its terms, except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors' rights generally, and subject to approval of any and all governmental
regulatory agencies and authorities having jurisdiction of the relationship
between the parties contemplated by the provisions of this Agreement and the
Transaction.
3.3 Absence of Breach; No Consents. The execution, delivery and performance
of this
6
<PAGE>
Agreement, and the performance by the Purchaser of its obligations specified by
the provisions of this Agreement (except for compliance with any regulatory or
licensing laws applicable to the business of the Purchaser, all of which, to the
extent applicable to the Purchaser (and to the extent within its Control), will
be satisfied in all material respects prior to the Closing) do not (a) conflict
with, and will not result in a breach of, any of the provisions of the
Certificate of Incorporation or Bylaws of the Purchaser; (b) contravene any law,
rule or regulation of any state or commonwealth, the United States itself,
(except for compliance with regulatory or licensing laws, all of which, to the
extent applicable to the Purchaser (and to the extent within the control of the
Purchaser), will be satisfied in all material respects prior to the Closing), or
any applicable foreign jurisdiction, or contravene any order, writ, judgment,
injunction, decree, determination, or award affecting or obligating the
Purchaser, in such a manner as to provide a basis for enjoining or otherwise
preventing consummation of the Transaction; (c) conflict with or result in a
material breach of or default pursuant to any material indenture or loan or
credit agreement or any other material agreement or instrument to which the
Purchaser is a party, in such a manner as to provide a basis for enjoining or
otherwise preventing consummation of the Transaction; or (d) require the
authorization, consent, approval or license of any third party of such a nature
that the failure to obtain the same would provide a basis for enjoining or
otherwise preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of Purchaser or any of its Subsidiaries.
3.5 No Undisclosed Liabilities. The Purchaser has no Liabilities which have
not been disclosed to the Seller in writing.
3.6 Taxes. The Purchaser has properly filed or caused to be filed all
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by it and has paid,
or made full and adequate provision for the payment of, all federal, state,
local, and foreign income and other taxes properly due for the periods covered
by such returns, reports, and declarations.
3.7 Litigation. No investigation or review by any governmental entity with
respect to the Purchaser is pending or threatened (other than inspections and
reviews customarily made of businesses such similar to that the Purchaser), nor
has any governmental entity indicated to the Purchaser an intention to conduct
the same. There is no action, suit or proceeding pending or threatened against
or affecting the Purchaser at law or in equity, or before any federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality.
3.8 Employees, Etc. There are no collective bargaining, bonus, profit
sharing,
7
<PAGE>
compensation, or other plans, agreements, trusts, funds, or arrangements
maintained by the Purchaser for the benefit of directors, officers or employees
of, and there are no employment, consulting, severance, or indemnification
arrangements, agreements, or understandings between the Purchaser, on the one
hand, and any current or former directors, officers or other employees (or
Affiliates thereof) of on the other hand. The Purchaser is not, and following
the Closing will not be, obligated by any express or implied contract or
agreement to employ, directly or as consultant or otherwise, any person for any
specific period of time or until any specific age.
3.9 Compliance With Laws. The Purchaser is in compliance with all, and has
received no notice of any violation of any, laws or regulations applicable to
its operations, including, without limitation, the laws and regulations relevant
to the use or utilization of premises, or with respect to which compliance is a
condition of engaging in any aspect of the business of the Purchaser and the
Purchaser has all permits, licenses, zoning rights, and other governmental
authorizations necessary to conduct its business as presently conducted.
3.10 Ownership of Assets. The Purchaser has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by it in such a
manner as to create the appearance or reasonable expectation that the same is
owned or leased by it; such ownership is free and clear of all liens, claims,
encumbrances and charges, except liens for taxes not yet due and minor
imperfections of title and encumbrances, if any, which, singly and in the
aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or materially impair the use thereof; no
other person has any ownership or similar right in, or contractual or other
right to acquire any such right in, any of such assets. The Purchaser does not
know of any potential action by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which the Purchaser has
notice, that would materially affect the Purchaser's ability to use and to
utilize each of its assets. The Purchaser has received no notices from any
mortgagee regarding any of its leased properties.
3.11 Proprietary Rights. The Purchaser possesses full and complete
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all of its Proprietary Rights; the Purchaser has not
received any notice of conflict which asserts the rights of others with respect
thereto; and the Purchaser has in all material respects performed all of the
obligations required to be performed by it, and is not in default in any
material respect, pursuant to any agreement relating to any such Proprietary
Right.
3.12 Subsidiaries. The Purchaser has no Subsidiaries.
3.13 Trade Names. The Purchaser has not utilized any fictitious business
names or similar name in the conduct of its business or in the utilization of
its assets.
8
<PAGE>
3.14 Employee Benefit Plans. The Purchaser does not maintain or contribute
to any Pension Plan or any Welfare Plan, nor is the Purchaser presently, nor has
it been within the last six (6) years, a participating employer in any
Multiemployer Plan, affecting, in any case, employees of the Purchaser.
3.15 Facilities. The Purchaser's facilities are (as to physical plant and
structure) structurally sound and none of the Purchaser's facilities, nor any of
the vehicles or other equipment used by the Purchaser in connection with its
business, has any material defects and all of them are in all material respects
in good operating condition and repair and are adequate for the uses to which
they are being put; none of Purchaser facilities, vehicles or other equipment is
in need of maintenance or repairs except for ordinary, routine maintenance and
repairs which are not material in nature or cost. The Purchaser is not in
breach, violation or default of any lease affecting the Purchaser's assets with
respect to, or as a result of, which the other party (whether lessor, lessee,
sublessor, or sublessee) thereto has the right to terminate the same, and the
Purchaser has not received notice of any claim or assertion that it is or may be
in any such breach, violation or default.
3.16 Accounts Receivable. All accounts receivable of the Purchaser
represent transactions in the ordinary course of business, and are current and
collectible.
3.17 Inventories. All Inventories of the Purchaser are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
carried on the books of the Purchaser at the lower of cost or market and, in any
event, at not greater than their net realizable value, on an item by item basis,
after appropriate deduction for costs of completion, marketing costs,
transportation expense and allocation of overhead.
3.18 Contracts. The Purchaser is not a party to or affected by any
contracts, agreements or understandings, whether express or implied, written or
verbal; provided, however, that the Purchaser, may be a party to or affected by
any such contracts, agreements, or understandings that fall into one of the
following categories: (1) those that are terminable on notice of less than
thirty-two (32) days and do not involve payments or obligations of more than One
Thousand Dollars ($1,000.00) in any period of thirty-one (31) days or less (on
termination or otherwise); or (2) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than Five
Thousand Dollars ($5,000.00). The Purchaser is not a party to any executory
contract to sell or transfer any part of any leasehold interest in any asset
utilized by the Purchaser. True and accurate copies of all such leases, and of
all amendments, supplements, extensions and modifications thereof, have
heretofore been delivered to the Seller by the Purchaser.
3.19 Accounts Payable. The accounts payable of the Purchaser at the time of
the Closing will be all amounts owed by the Purchaser in respect of trade
accounts due and other Payables of the Purchaser.
9
<PAGE>
3.20 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Purchaser, threatened, affecting employees of the
Purchaser.
3.21 Insurance. The Purchaser has insurance policies in full force and
effect insuring the assets of the Purchaser and such insurance policies provide
for coverages which are usual and customary in the business of the Purchaser as
to amount and scope, and are adequate to protect the assets of the Purchaser
against any reasonably foreseeable risk of loss, including business
interruption. The Purchaser has not within the past three (3) years received any
notice of cancellation of any insurance agreement affecting the assets of the
Purchaser.
3.22 Title to and Utilization of Real Properties. The Purchaser owns fee,
simple, insured title to all real property utilized and has the unbridled right
to use the same, and is not aware of any claim, notice or threat to the effect
that its right to own and use such property is subject in any way to any
challenge, claim, assertion of rights, proceedings toward condemnation or
confiscation, in whole or in part, or is otherwise subject to challenge. Each
parcel of real property by the Purchaser in its business is free of any and all
hazardous wastes, toxic substances, or other types of contamination or matters
of environmental concern, and the Purchaser is not subject to any Liability
resulting from or related to any such wastes, substances, contaminants, or
matters of environmental concern in connection with any such property. The
Purchaser has, in conjunction with acquiring ownership of, or property any
leasehold interest in, each parcel of real property by the Purchaser in its
business assets, (1) caused an audit and examination to be made as to the
existence of any hazardous wastes, toxic substances or other types of
contamination or matters of environmental concern affecting each such property,
which examination indicated that such property was free of any such wastes,
substances, contaminants or other matters of environmental concern, and the
Purchaser has delivered a copy of the report of such audit and examination to
the Seller; and (2) obtained an appropriate policy of title insurance insuring
the interest of the Purchaser in such property, which insurance policy was not
subject to any exceptions not reasonably acceptable in the ordinary course of
business, and a copy of which has been delivered to the Seller.
3.23 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Purchaser to the Seller
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
3.24 Capitalization; the Subject Stock; Related Matters. The authorized
capital stock of
10
<PAGE>
the Purchaser consists of thirty million (30,000,000) shares of $.001 par value
common stock. There is no other capital stock authorized for issuance. As of the
date of this Agreement, there are zero (0) shares of such common stock issued
and outstanding. The Subject Shares, when issued, will be duly, legally and
validly issued and will be non-assessable.
3.25 Options, Warrants and Other Rights and Agreements Affecting the
Purchaser's Capital Stock. The Purchaser has no authorized or outstanding
options, warrants, calls, subscriptions, rights, convertible securities or other
securities, as defined by the provisions of the Securities Act of 1933 ("Act")
("Securities"), or any commitments, agreements, arrangement or understandings of
any manner or nature whatsoever obligating the Purchaser, in any such case, to
issue shares of the Purchaser's capital stock or other securities or securities
convertible into or evidencing the right to purchase shares of the Purchaser's
capital stock or other Securities. Neither the Purchaser nor any officer,
director, or shareholder of the Purchaser is a party to any agreement,
understanding, arrangement or commitment, or obligated by an provision which
creates any rights in any person with respect to the authorization, issuance,
voting, sale or transfer of any shares of the Purchaser's capital stock or other
Securities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
4.1 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Seller is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned or
leased by it, or the nature of its activities, is such that qualification as a
foreign corporation in that jurisdiction is required by law.
4.2 Authority Relative to This Agreement. The Seller has the requisite
corporate power and authority to carry out its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Seller and no other corporate
proceedings on the part of the Seller are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and delivery of the Consideration, except for shareholder approval
specified elsewhere in this Agreement. The Seller has, and any officer, director
or representative executing this Agreement for and on behalf of the Seller has,
the legal capacity and authority to enter into and deliver this Agreement. This
Agreement is a valid and legally binding obligation of the Seller and is
enforceable completely against the Seller in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to
11
<PAGE>
creditors' rights generally, and subject to approval of any and all governmental
regulatory agencies and authorities having jurisdiction of the relationship
between the parties contemplated by the provisions of this Agreement and the
Transaction.
4.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement, and the performance by the Seller of its
obligations hereunder, do not (1) contravene any law, ordinance, rule, or
regulation of any State or Commonwealth or political subdivision of the United
States except for and compliance with regulatory or licensing laws all of which,
to the extent applicable to the Seller (and to the extent within the control of
the Seller), will be satisfied in all material respects prior to the Closing),
or of any applicable foreign jurisdiction, or contravene any order, writ,
judgment, injunction, decree, determination, or award of any court or other
authority having jurisdiction, or cause the suspension or revocation of any
authorization, consent, approval, or license, presently in effect, which affects
or obligates, the Seller or all or any part of the Acquired Business or any
material properties of the Acquired Business, except in any such case where such
contravention will not have a material adverse effect on the business, condition
(financial or otherwise), operations or prospects of the Acquired Business and
will not have a material adverse effect on the validity of this Agreement or on
the validity of the consummation the Transaction; (2) conflict with or result in
a material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which the Seller or
any of part of the Acquired Business is a party or by which any of the material
properties of the Acquired Business may be affected or obligated; (3) require
the authorization, consent, approval, or license of any third party; or (4)
constitute grounds for the loss or suspension of any permits, licenses, or other
authorizations used in the Acquired Business.
4.4 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Seller or any of its
Subsidiaries. The Seller does not have any obligation to pay finder's or
broker's fees or commissions in connection with the exercise of options to renew
or extend real estate leases to which the Seller is a party.
4.5 No Undisclosed Liabilities. The Seller has no Liabilities relating to
or affecting the Acquired Business or the Acquired Assets which have not been
disclosed to the Purchaser in writing. Without limiting the foregoing, (a) there
are no unpaid leasehold improvements at any of the Acquired Facilities for which
the Acquired Business is or will be responsible, and (b) there are no deferred
rents due to lessors at or with respect to any of such Acquired Facilities.
4.6 Taxes. The Seller has properly filed or caused to be filed all federal.
state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by them and that
relate to or in any way affect the Acquired Business or the Acquired Assets, and
have paid, or made full and adequate provision for the payment of, all federal,
state, local, and foreign income and other taxes properly due for the periods
covered by such returns, reports, and declarations.
12
<PAGE>
4.7 Litigation. No investigation or review by any governmental entity with
respect to the Acquired Business or any of the Acquired Assets or the use
thereof is pending or threatened (other than inspections and reviews customarily
made of businesses such as the Acquired Business), nor has any governmental
entity indicated to the Seller an intention to conduct the same. There is no
action, suit or proceeding pending or threatened against or affecting the
Acquired Business or the Acquired Assets at law or in equity, or before any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality.
4.8 Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Seller, and there are no employment, consulting,
severance, or indemnification arrangements, agreements, or understandings
between the Seller, on the one hand, and any current or former employees of the
Seller (or Affiliates thereof) on the other hand. The Seller is not, and
following the Closing will not be, obligated by any express or implied contract
or agreement to employ, directly or as consultant or otherwise, any person for
any specific period of time or until any specific age.
4.9 Compliance With Laws. The Acquired Business and each of the Acquired
Assets is in compliance with all, and has received no notice of any violation of
any, laws or regulations applicable to its operations, including, without
limitation, the laws and regulations relevant to the use or utilization of
premises, or with respect to which compliance is a condition of engaging in any
aspect of the business of the Acquired Business, and the Acquired Business has
all permits, licenses, zoning rights, and other governmental authorizations
necessary to conduct its business as presently conducted. All such permits,
licenses, zoning rights, and other governmental authorizations will, as a part
and consequence of the Transaction, be transferred to the Purchaser at the
Closing.
4.10 Ownership of Assets. The Seller has good, marketable and insurable
title, or valid, effective and continuing leasehold rights in the case of leased
property, to all real property (as to which, in the case of owned property, such
title is fee simple) and all personal property owned or leased by it and
comprising a part of the Acquired Assets or the Acquired Business, or used by it
in the conduct of the Acquired Business in such a manner as to create the
appearance or reasonable expectation that the same is owned or leased by it;
such ownership is free and clear of all liens, claims, encumbrances and charges,
except liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which, singly and in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially impair the use thereof; no other person has any ownership
or similar right in, or contractual or other right to acquire any such right in,
any of such assets; and such ownership will be conveyed to the Purchaser at the
Closing pursuant to the Transaction. The Seller does not know of any potential
action by any party, governmental or other, and no proceedings with respect
thereto have been
13
<PAGE>
instituted of which the Seller has notice, that would materially affect the
Seller's ability to use and to utilize each of such assets in the business of
the Acquired Business. The Seller has received no notices from any mortgagee
regarding any leased properties of the Acquired Business or the leasehold
interest in which comprises any part of the Acquired Assets.
4.11 Proprietary Rights. The Seller possesses full and complete ownership
of, or adequate and enforceable long-term licenses or other rights to use
(without payment), all Proprietary Rights used in the Acquired Business or
utilized in conjunction with the Acquired Assets, and all such ownership,
license or other rights shall be conveyed to the Purchaser at the Closing
pursuant to the Transaction; the Seller has not received any notice of conflict
which asserts the rights of others with respect thereto; and the Seller has in
all material respects performed all of the obligations required to be performed
by it, and is not in default in any material respect, pursuant to any agreement
relating to any such Proprietary Right.
4.12 Trade Names. The Seller has not utilized any trade name, fictitious
business name, or other similar name to conduct any part of the Acquired
Business or to utilize any of the Acquired Assets during the ten (10) years
preceding the date of this Agreement.
4.13 Employee Benefit Plans. The Seller does not maintain or contribute to
any Pension Plan or Welfare Plan, nor is the Seller presently, nor has it been
within the last six (6) years, a participating employer in any Multiemployer
Plan, affecting, in any case, employees of the Acquired Business or employees of
the Sellers.
4.14 Facilities. The Acquired Facilities are (as to physical plant and
structure) structurally sound and none of the Acquired Facilities, nor any of
the vehicles or other equipment used by the Acquired Business in connection with
its business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate for the uses to
which they are being put; none of such Acquired Facilities, vehicles or other
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. The Seller is
not in breach, violation or default of any lease affecting the Acquired Business
or the Acquired Assets with respect to, or as a result of, which the other party
(whether lessor, lessee, sublessor, or sublessee) thereto has the right to
terminate the same, and the Seller has not received notice of any claim or
assertion that it is or may be in any such breach, violation or default.
4.15 Accounts Receivable. All accounts receivable of the Seller represent
transactions in the ordinary course of business, and are current and
collectible.
4.16 Inventories. All Inventories of the Seller are of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
carried on the books of the Seller at the lower of cost or market and, in any
event,
14
<PAGE>
at not greater than their net realizable value, on an item by item basis, after
appropriate deduction for costs of completion, marketing costs, transportation
expense and allocation of overhead.
4.17 Contracts. The Acquired Assets and the Acquired Business are not
parties to or affected by any contracts, agreements or understandings, whether
express or implied, written or verbal; provided, however, that the Acquired
Assets or the Acquired Business may be parties to or affected by any such
contracts, agreements, or understandings that fall into one of the following
categories: (1) those that are terminable on notice of less than thirty-two (32)
days and do not involve payments or obligations of more than One Thousand
Dollars ($1,000.00) in any period of thirty-one (31) days or less (on
termination or otherwise); or (2) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than Five
Thousand Dollars ($5,000.00). The Seller is not a party to any executory
contract to sell or transfer any part of any leasehold interest included in the
Acquired Assets or utilized by the Acquired Business. True and accurate copies
of all such leases, and of all amendments, supplements, extensions and
modifications thereof, have heretofore been delivered to the Purchaser by the
Seller.
4.18 Accounts Payable. The accounts payable of the Seller at the time of
the Closing will be all amounts owed by the Seller in respect of trade accounts
due and other Payables of the Acquired Business or relating to the Acquired
Assets.
4.19 Labor Matters. There are no activities or controversies, including,
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the best
of the knowledge of the Seller, threatened, affecting employees of the Seller.
4.20 Insurance. The Seller has insurance policies in full force and effect
insuring the Acquired Assets and the Acquired Business, and such insurance
policies provide for coverages which are usual and customary in the business of
the Acquired Business as to amount and scope, and are adequate to protect the
Acquired Business against any reasonably foreseeable risk of loss, including
business interruption. The Seller has not within the past three (3) years
received any notice of cancellation of any insurance agreement affecting the
Acquired Assets or the Acquired Business.
4.21 Title to and Utilization of Real Properties. The Seller owns fee,
simple, insured title to all real property included in the Acquired Assets and
has the unbridled right to use the same, and is not aware of any claim, notice
or threat to the effect that its right to own and use such property is subject
in any way to any challenge, claim, assertion of rights, proceedings toward
condemnation or confiscation, in whole or in part, or is otherwise subject to
challenge. Each parcel of real property the ownership of, or leasehold interest
in, which is included among the Acquired Assets is free of any and all hazardous
wastes, toxic substances, or other types of
15
<PAGE>
contamination or matters of environmental concern, and the Seller is not subject
to any Liability resulting from or related to any such wastes, substances,
contaminants, or matters of environmental concern in connection with any such
property. The Seller has, in conjunction with acquiring ownership of, or any
leasehold interest in, each parcel of real property the ownership of, or
leasehold interest in, which is included among the Acquired Assets, (1) caused
an audit and examination to be made as to the existence of any hazardous wastes,
toxic substances or other types of contamination or matters of environmental
concern affecting each such property, which examination indicated that such
property was free of any such wastes, substances, contaminants or other matters
of environmental concern, and the Seller has delivered a copy of the report of
such audit and examination to the Purchaser; and (2) obtained an appropriate
policy of title insurance insuring the interest of the Seller in such property,
which insurance policy was not subject to any exceptions not reasonably
acceptable in the ordinary course of business, and a copy of which has been
delivered to the Purchaser.
4.22 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of the Seller to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
4.23 The Seller's Acquisition Intention. The Subject Shares will be
acquired by the Seller (i) for the Seller's own account as a principal and not
as a nominee or as an agent; (ii) for investment purposes only; and (iii) with
no contemplation of, or for resale regarding, any distribution or public
offering of all or any portion of the Subject Shares within the meaning of the
Act. The Seller has no intention, agreement or arrangement to divide the Subject
Shares, or any of them, with any other person or to resell, assign, transfer,
convey or otherwise dispose of all or any part of the Subject Shares, unless and
until the Seller determines, at some future date, changed circumstances, not in
contemplation at the time of the acquisition of the Subject Shares, make such
disposition available.
4.24 Exemption from Registration. The Subject Shares (i) are "securities"
as that term is defined by the provisions of the Act and the California
Corporate Securities Law of 1968 ("Blue Sky Law") and (ii) have not been (a)
registered pursuant to the provisions of the Act or (b) qualified or registered
pursuant to the requirements of the Blue Sky Law, by reason of the delivery of
such Subject Shares in a transaction exempt from the (1) registration
requirements of the Act pursuant to the provisions of Section 4(2) of the Act
and (2) qualification requirements of the Blue Sky Law pursuant to the
provisions of Section 25102 subdivision (f) of the Blue Sky Law and the rules
and regulations promulgated pursuant thereto. The Seller also understands that
the Subject Shares (1) are "restricted securities" as that term is defined by
the provisions of Rule 144 promulgated pursuant to the Act; and (2) must be held
by the Seller indefinitely, unless a subsequent disposition of the Subject
Shares is registered pursuant to the provisions of the Act or is exempt from
such registration.
16
<PAGE>
4.25 Evaluation of Risks. The Seller has such knowledge and experience in
business and financial matters that the Seller is capable of evaluating the
Purchaser and the proposed activities thereof, the risks and merits of the
Subject Shares and of making an informed decision thereon, and the Seller is not
utilizing any other person regarding the evaluation of those risks and merits.
ARTICLE V
COVENANTS OF THE PURCHASER
5.1 Affirmative Covenants. From the date of this Agreement through the
Closing Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated; provided, however, in all
instances that the representations and warranties of the Seller in this
Agreement are and remain true and accurate and that the covenants and agreements
of the Seller in this Agreement are honored and that the conditions to the
obligations of the Purchaser set forth in this Agreement are not incapable of
satisfaction.
5.2 Cooperation. The Purchaser shall cooperate with the Seller and its
counsel, accountants and agents in every way in carrying out the Transaction,
and in delivering all documents and instruments deemed reasonably necessary or
useful by counsel to the Seller.
5.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser, except as otherwise provided
(directly or indirectly) herein.
5.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Seller for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Seller; provided, however, that (1)
such approval shall not be unreasonably withheld, and (2) such review and
approval shall not be required of releases by the Purchaser if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
5.5 Access and Information. The Purchaser shall afford to the Seller and to
the Seller's accountants, counsel, and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to all
of its properties, books, contracts, commitments, records (including, but not
limited to, tax returns), and personnel relating to the Purchaser and, during
such period, the Purchaser shall furnish promptly to the Seller (1) all written
communications relating to the business of the Purchaser, (2) internal monthly
financial statements of the Purchaser when and as available, and (3) all other
information relating to the business of the Purchaser as the Seller may
reasonably request, but no investigation pursuant to this Section 5.5
17
<PAGE>
shall affect any representations or warranties of the Purchaser or the
conditions to the obligations of the Seller to consummate the Transaction. In
the event of the termination of this Agreement, the Seller will, and will cause
its representatives to, deliver to the Purchaser or destroy all documents, work
papers, and other material, and all copies thereof, obtained by it or on its
behalf from the Purchaser as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof, and will
hold in confidence all confidential information that has been designated as such
by the Purchaser in writing or by appropriate and obvious notation, and will not
use any such confidential information except in connection with the Transaction,
until such time as such information is otherwise publicly available. Seller and
its representatives shall assert their rights hereunder in such manner as to
minimize interference with the business of the Purchaser.
5.6 Conduct of Business Pending the Transaction. Prior to the consummation
of the Transaction or the termination of this Agreement pursuant to its terms,
unless the Seller shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed, and except as otherwise contemplated by this
Agreement, the Purchaser will comply with each of the following:
(1) The business of the Purchaser will be conducted only in the ordinary
and usual course, the Purchaser shall keep intact the business
organization and goodwill of the its business, keep available the
services of the employees of the Purchaser and maintain good
relationships with suppliers, lenders, creditors, distributors,
employees, customers and others having business or financial
relationships with the Purchaser, and the Purchaser shall immediately
notify the Seller of any event or occurrence or emergency material to,
and not in the ordinary and usual course of business of, the
Purchaser.
(2) The Purchaser shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
business of the Purchaser.
(3) The Purchaser shall not (a) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement, trust fund, or arrangement
for the benefit or welfare of any employees of the Purchaser or (b)
agree to any material (in relation to historical compensation)
increase in the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such employee.
(4) The Purchaser shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of its assets.
(5) The Purchaser shall not enter into, or terminate, any material
contract, agreement,
18
<PAGE>
commitment, or understanding relating to or affecting the business of
the Purchaser.
(6) The Purchaser shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (5) above.
(7) The Purchaser will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it, and will pay, or make full
and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it.
(8) The Purchaser will comply with all laws and regulations applicable to
the operations of the Purchaser.
(9) The Purchaser will maintain in full force and effect insurance
coverage relating to its business of a type and amount customary in
the business of the Purchaser (but not less than that presently in
effect).
5.7 Updating of Exhibits. The Purchaser shall notify the Seller of any
changes, additions or events which may cause any change in or addition or events
to any schedules or exhibits delivered by the Purchaser pursuant to this
Agreement, promptly after the occurrence of the same and at the Closing by the
delivery of updates of all schedules and exhibits. No notification made pursuant
to this section shall be deemed to cure any breach of any representation or
warranty made in this Agreement, unless the Seller specifically agrees thereto
in writing nor shall any such notification be considered to constitute or give
rise to a waiver by the Seller of any condition set forth in this Agreement.
5.8 Issuance and delivery of the Consideration. On the Closing, the
Purchaser shall issue or caused to be issued to the Seller a certificate
evidencing ten million five hundred thousand (10,500,000) shares of the
Purchaser's $.001 par value common stock; which certificates shall specify
appropriate legends regarding the restricted nature of those shares.
ARTICLE VI
COVENANTS OF THE SELLER
6.1 Affirmative Covenants. From the date hereof through the Closing Date,
the Seller will take every action reasonably required of it to satisfy the
conditions to closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction substantially as
contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated; provided, however, in all instances that the
representations and warranties of the Purchaser in this Agreement are and remain
true and accurate and that the covenants
19
<PAGE>
and agreements of the Purchaser in this Agreement are correct and that the
conditions to the obligations of the Seller set forth in this Agreement are not
incapable of satisfaction.
6.2 Name. The Seller agrees that following consummation of the Transaction,
neither it nor any Entity under its control or Affiliated with it shall make any
attempt to make any use of any name under which the Acquired Business has
conducted business, or authorize others to do so, without the consent of the
Purchaser.
6.3 Access and Information. The Seller shall afford to the Purchaser and to
the Purchaser's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of its properties, books, contracts, commitments, records (including, but
not limited to, tax returns), and personnel relating to the Acquired Assets or
the Acquired Business and, during such period, the Seller shall furnish promptly
to the Purchaser (1) all written communications relating to the Acquired Assets
or the Acquired Business, (2) internal monthly financial statements of the
Acquired Business when and as available, and (3) all other information relating
to the Acquired Assets or the Acquired Business as the Purchaser may reasonably
request, but no investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the Seller, or the conditions to the
obligations of the Purchaser to consummate the Transaction. In the event of the
termination of this Agreement, the Purchaser will, and will cause its
representatives to, deliver to the Seller or destroy all documents, work papers,
and other material, and all copies thereof, obtained by it or on its behalf from
the Seller as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof, and will hold in confidence all
confidential information that has been designated as such by the Seller in
writing or by appropriate and obvious notation, and will not use any such
confidential information except in connection with the Transaction, until such
time as such information is otherwise publicly available. Purchaser and its
representatives shall assert their rights hereunder in such manner as to
minimize interference with the business of the Seller.
6.4 No Solicitation. The Seller and those acting on behalf of the Seller
will not, and the Seller will use its best efforts to cause its employees,
agents, and representatives (including any investment banker) not, directly or
indirectly, to solicit, encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any information to, any person or
Entity other than the Purchaser and its officers, employees, and agents,
relating to the Acquired Assets or the Acquired Business. The Seller will notify
the Purchaser immediately upon receipt of any inquiry, offer or proposal
relating to any of the foregoing. None of the foregoing shall prohibit providing
information to others in a manner in keeping with the ordinary conduct of the
Seller's business, or providing information to government authorities.
6.5 Conduct of Business Pending the Transaction. The Seller covenants and
agrees with the Purchaser that, prior to the consummation of the Transaction or
the termination of this Agreement pursuant to its terms, unless the Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, and except as otherwise contemplated by
20
<PAGE>
this Agreement, the Seller's will comply with each of the following:
(1) The Acquired Business, and the other businesses of the Seller that
relate to, use or affect the Acquired Assets, if any, will be
conducted only in the ordinary and usual course, the Seller shall keep
intact the business organization and goodwill of the Acquired
Business, keep available the services of the employees of the Seller
and maintain good relationships with suppliers, lenders, creditors,
distributors, employees, customers and others having business or
financial relationships with the Acquired Business, and it shall
immediately notify the Purchaser of any event or occurrence or
emergency material to, and not in the ordinary and usual course of
business of, the Acquired Business or affecting any material part of
the Acquired Assets.
(2) The Seller shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
Acquired Business or any of the Acquired Assets, except in the
ordinary course of business and consistent with past practice.
(3) The Seller shall not (a) adopt, enter into, or amend any bonus, profit
sharing, compensation, stock option, warrant, pension, retirement,
deferred compensation, employment, severance, termination, or other
employee benefit plan, agreement, trust fund, or arrangement for the
benefit or welfare of any employees of the Seller, or (b) agree to any
material (in relation to historical compensation) increase in the
compensation payable or to become payable to, or any increase in the
contractual term of employment of, any such employee.
(4) The Seller shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of the Acquired Assets except
for sales, encumbrances and other dispositions or grants in the
ordinary course of business of the Acquired Business and consistent
with past practice and except for liens for taxes not yet due or liens
or encumbrances that are not material in amount or effect and do not
impair the use of the property, or as specifically provided for or
permitted in this Agreement.
(5) The Seller shall not enter into, or terminate, any material contract,
agreement, commitment, or understanding relating to or affecting the
Acquired Assets or the Acquired Business.
(6) The Seller shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (5) above.
21
<PAGE>
(7) The Seller will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it relating to the Acquired
Assets or the Acquired Business, and will pay, or make full and
adequate provision for the payment of, all taxes and governmental
charges due from or payable by it relating to the Acquired Assets or
the Acquired Business.
(8) The Seller will comply with all laws and regulations applicable to the
operations of the Acquired Business and the utilization of the
Acquired Assets.
(9) The Seller will maintain in full force and effect insurance coverage
relating to the Acquired Assets or the Acquired Business of a type and
amount customary in the business of the Acquired Business (but not
less than that presently in effect).
6.6 Cooperation. The Seller will cooperate with the Purchaser and its
counsel, accountants, and agents in every way in consummating and closing the
Transaction and in delivering all documents and instruments deemed reasonably
necessary or useful by the Purchaser.
6.7 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller except as otherwise provided (directly
or indirectly) herein.
6.8 Publicity. Prior to the Closing any written news releases by the Seller
relating to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by the Seller, and shall be
released only in a form approved by the Purchaser.
6.9 Updating of Exhibits and Disclosure Documents. The Seller shall notify
the Purchaser of any changes, additions, or events which may cause any change in
or addition to any schedules or exhibits delivered by it pursuant to this
Agreement promptly after the occurrence of the same and again at the Closing by
delivery of appropriate updates to all such schedules and exhibits. No such
notification made pursuant to this section shall be deemed to cure any breach of
any representation or warranty made in this Agreement, unless the Purchaser
specifically agrees thereto in writing nor shall any such notification be
considered to constitute or give rise to a waiver by the Purchaser of any
condition set forth in this Agreement.
6.10 Payment of Unassumed Liabilities. The Seller agrees promptly to pay
when due, or otherwise to discharge, without cost or expense to the Purchaser,
each and every Liability of the Seller that is not specifically assumed by the
Purchaser pursuant to this Agreement, as described in Section 2.1 above.
6.11 Continued Action Regarding Exemption. The Seller shall take any and
all additional action which is necessary or appropriate to maintain the
exemptions from registration
22
<PAGE>
and qualification provided by Section 4(2) of the Act and Section 25102
subdivision (f) of the Blue Sky Law and the rules and regulations promulgated
pursuant thereto.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Purchaser shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state court which prohibits the
consummation of the Transaction.
(3) The Seller shall have performed in all material respects each of its
agreements and obligations specified in this Agreement and required to
be performed on or prior to the Closing and shall have complied with
all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the Transaction.
(4) No material adverse change shall, in the judgment of the Purchaser,
have taken place in the business condition (financial or otherwise),
operations, or prospects of the Acquired Business or the Acquired
Assets since the date of this Agreement other than those, if any, that
result from the changes permitted by this Agreement.
(5) The representations and warranties of the Seller set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the judgment of the
Purchaser, do not materially and adversely affect the business,
condition (financial or otherwise), operations, or prospects of the
Acquired Business or the Acquired Assets, as of the Closing, as if
made as of the Closing.
(6) The Purchaser shall have received from the Seller an officers'
certificate, executed by the Chief Executive Officer and Chief
Financial Officer of the Seller (in their capacities as such), dated
the Closing Date, as to the satisfaction of the conditions in
Paragraphs (3), (4), and (5) of this section.
7.2 Conditions to Obligation of the Seller. The obligation of the Seller to
effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Seller shall waive such
fulfillment in writing:
23
<PAGE>
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors required by law to consummate
the Transaction.
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Purchaser shall have performed in all material respects its
agreements and obligations specified in this Agreement required to be
performed on or prior to the Closing.
(4) The representations and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as do not materially and
adversely affect the business of the Purchaser, as of the Closing Date
as if made as of the Closing Date.
(5) The Seller shall have received from the Purchaser an officers'
certificate, executed by the Chief Financial Officer and the Chief
Executive Officer of the Purchaser (in their capacities as such),
dated the Closing Date, as to the satisfaction of the conditions of
Paragraphs (3) and (4) of this section (to the best of their
knowledge).
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AND INSTRUMENTS AT CLOSING
8.1 The Purchaser to the Seller. On the Closing, the Purchaser shall
deliver or cause to be delivered the following instruments and documents to the
Seller:
(1) A certificate evidencing and representing ten million five hundred
thousand (10,500,000) shares of the Purchaser's $.001 par value common
stock, which certificates shall specify appropriate legends regarding
the restricted nature of those shares; and
(2) The Officers' Certificate contemplated by the provisions of Paragraph
(5) of Section 7.2 of this Agreement.
8.2 The Seller to the Purchaser. On the Closing, the Seller shall deliver
or cause to be delivered the following instruments and documents to the
Purchaser:
(1) A Bill of Sale, executed by the President and the Secretary of the
Seller, pursuant to which title to the Acquired Assets are transferred
and vested in the Purchaser; and
24
<PAGE>
(2) The Officers' Certificate contemplated by the provisions of Paragraph
(6) of Section 7.1 of this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT WAIVER
9.1 Termination. This Agreement and the Transaction may be terminated at
any time prior to the Closing:
(1) By mutual consent of the Purchaser and the Seller; or
(2) By either Purchaser or the Seller, upon written notice to the other,
if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 7.1 of
this Agreement, or, in the case of the Seller, as provided in Section
7.2 of this Agreement, were not, or cannot reasonably be, satisfied on
or before September 30, 1999, unless the failure of condition is the
result of the material breach of this Agreement by the party seeking
to terminate this Agreement.
9.2 Amendment. This Agreement may be amended by the Purchaser and the
Seller by action taken at any time. This Agreement may not be amended, except by
an instrument in writing signed on behalf of the Purchaser and the Seller.
9.3 Waiver. At any time prior to the Closing, the Purchaser or the Seller
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties specified in this Agreement or in any document delivered pursuant to
this Agreement, or (iii) waive compliance with any of the agreements or
conditions specified in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1. Notices. Any notice, direction or instrument required or permitted to
be given pursuant to this Agreement shall be given in writing by (a) telegram,
facsimile transmission or similar method, if confirmed by mail as herein
provided, by mail; (b) if mailed postage prepaid, by certified mail, return
receipt requested; or (iii) hand delivery to any party at the addresses of the
parties specified, below. If given by telegram or facsimile transmission or
similar method or by hand delivery, such notice, direction or instrument shall
be deemed to have been given or made on the day on which it was given, and if
mailed, shall be deemed to have been given or made on the second (2nd) business
day following the day after which it was mailed. Any party may, from time
25
<PAGE>
to time by similar notice, give notice of any change of address, and in such
event, the address of such party shall be deemed to be changed accordingly. The
address, telephone number and facsimile transmission number for the notice of
each party are:
If to Seller: Alpha Mark, Inc.
3901 Oregon Street, Suite 112
San Diego, California 92104
If to Purchaser: Omega-Med Corporation
4907 Morena Boulevard, Suite 1402
San Diego, California 92117
10.2. Recovery of Enforcement Costs. In the event any party shall institute
any action or proceeding to enforce any provision of this Agreement to seek
relief from any violation of this Agreement, or to otherwise obtain any judgment
or order relating to or arising from the subject matter of this Agreement, each
prevailing party shall be entitled to receive from each losing party such
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
10.3. Assignment. No party shall have the right, without the consent of the
other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
10.4. Captions and Interpretations. Captions of the articles, sections and
paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
10.5 Entire Agreement. This Agreement and the exhibits to this Agreement
are the final written expression and the complete and exclusive statement of all
the agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings and discussions by and
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. No
provision of any exhibit or schedule to this Agreement shall supersede or annul
the terms and provisions of this Agreement, unless the
26
<PAGE>
matter specified in such exhibit or schedule shall explicitly so provide to the
contrary, in the event of ambiguity in meaning or understanding between the
provisions of this Agreement proper and the appended exhibits or schedules, the
provisions of this Agreement shall prevail and control in all instances.
10.6 Choice of Law and Consent to Jurisdiction. This Agreement shall be
deemed to have been entered into in the State of Delaware. All questions
concerning the validity, interpretation, or performance of any of the terms,
conditions and provisions of this Agreement or of any of the rights or
obligations of the parties shall be governed by, and resolved in accordance
with, the laws of the State of Delaware without regard to conflicts of law
principles.
10.7 Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa.
10.8 Successors and Assigns. This Agreement and each of its provisions
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this article, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
10.9 Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
10.10 Severability. In the event any part of this Agreement, for any
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
10.11 Governmental Rules and Regulations. The transactions contemplated by
the provisions of this Agreement are and shall remain subject to any and all
present and future orders, rules and regulations of any duly constituted
authority having jurisdiction of that transaction.
10.12 Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution. All of the signatures
of the parties may be affixed to one copy or to separate copies of this
Agreement and when all such copies are received and signed by all the parties,
those copies shall constitute one agreement which is not otherwise separable or
divisible. Counsel for the Purchaser shall keep all of such signed copies and
shall
27
<PAGE>
conform one copy to show all of those signatures and the dates thereof and shall
mail a copy of such conformed copy to each of the parties within thirty (30)
days after the receipt by such counsel of the last signed copy, and such counsel
shall cause one such conformed copy to be filed in the principal office of such
counsel.
10.13 Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
each party reserves such party's rights to insist upon strict compliance
herewith at all times.
10.14 Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other party to enter into and
execute this Agreement. The representations, warranties, and covenants specified
in this Agreement shall survive the Closing and shall survive any investigation
by either party whether before or after the execution of this Agreement. The
covenants, representations, and warranties of the Seller and the Purchaser are
made only to and for the benefit of the other and shall not create or vest
rights in other persons.
10.15 Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. The termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
10.17 Force Majeure. If any party is rendered unable, completely or
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the
28
<PAGE>
continuance of the event of "force majeure." The party affected by such event of
"force majeure" shall use all reasonable diligence to resolve, eliminate and
terminate the event of "force majeure" as quickly as practicable. The
requirement that an event of "force majeure" shall be remedied with all
reasonable dispatch as hereinabove specified, shall not require the settlement
of strikes, lockouts or other labor difficulties by the party involved, contrary
to such party's wishes, and the resolution of any and all such difficulties
shall be handled entirely within the discretion of the party concerned. The term
"force majeure" as used herein shall be defined as and mean any act of God,
strike, civil disturbance, lockout or other industrial disturbance, act of the
public enemy, war, blockage, public riot, earthquake, tornado, hurricane,
lightening, fire, epidemics, quarantine restrictions, public demonstration,
storm, flood, explosion, freight embargoes, governmental action, governmental
delay, restraint or inaction, unavailability of equipment, default of a party's
subcontractors or suppliers, and any other cause or event, whether of the kind
enumerated specifically herein, or otherwise, which is not reasonably within the
control of the party claiming such suspension.
10.18 Consent to Agreement. By executing this Agreement, each party, for
itself represents such party has read or caused to be read this Agreement in all
particulars, and consents to the rights, conditions, duties and responsibilities
imposed upon such party as specified in this Agreement. Each party represents,
warrants and covenants that such party executes and delivers this Agreement of
its own free will and with no threat, undue influence, menace, coercion or
duress, whether economic or physical. Moreover, each party represents, warrants,
and covenants that such party executes this Agreement acting on such party's own
independent judgment.
10.19 Waiver and Modification. No modification, supplement or amendment of
this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
10.20 Further Assurances. The parties shall from time to time sign and
deliver any further instruments and take any further actions as may be necessary
to effectuate the intent and purposes of this Agreement.
29
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in
duplicate on the date first written above by their respective officers thereunto
duly authorized.
Omega-Med Corporation,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------
Its: President
By: /s/ [ILLEGIBLE]
-----------------------------
Its: Secretary
Alpha Mark, Inc.,
a Utah corporation
By: /s/ [ILLEGIBLE]
-----------------------------
Its: President
By: /s/ [ILLEGIBLE]
-----------------------------
Its: Secretary
30
<PAGE>
SCHEDULE 2.1
Assets Description
- ------ -----------
1. Cash All operating cash and cash equivalents.
2. Inventories R & D inventories relating to the infusion pump
including the following:
inner cans
outer cans
valves
annular rings
packing cans
keys
syringe reservoirs
pistons
Decoria inventory of body jewelry
3. Capital Assets Furniture fixtures and equipment
4 desks
4 executive chairs
3 conference chairs
1 Compaq 2240 Presario computer and monitor
1 Brother MFC 4350 printer
Plant equipment
1 compressor
1 pump filling machine
1 clausing lathe
2 vacuum pumps miscellaneous and sundry shop tools
2 tumblers
Molds
syringe mold
valve mold
annular ring mold
key mold
piston mold
4. Intangible Assets Licensing agreement with Ulrich Cochran dated
May 15, 1998
Strategic Alliance agreement with Angel Ear
Piercing Co. dated October 20, 1998
All patent applications relating to ear piercing owned
by Omega Med, a Utah corporation
Trade names: "Angel's Touch", "Rites of Passage",
"Flexy", "Decoria"
23.1 CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 24, 2000 in the Registration Statement on Form
SB-2 and related Prospectus of Omega Med Corporation for the registration of
1,200,000 shares of its common stock.
____________/s/________________
By:
For: Kelly and Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PERIOD
ENDING DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-15-1999
<PERIOD-END> DEC-31-1999
<CASH> 123,582
<SECURITIES> 0
<RECEIVABLES> 570
<ALLOWANCES> 0
<INVENTORY> 17,113
<CURRENT-ASSETS> 144,788
<PP&E> 110,090
<DEPRECIATION> 0
<TOTAL-ASSETS> 452,127
<CURRENT-LIABILITIES> 17,582
<BONDS> 0
0
0
<COMMON> 10,500
<OTHER-SE> 424,046
<TOTAL-LIABILITY-AND-EQUITY> 452,127
<SALES> 931
<TOTAL-REVENUES> 931
<CGS> 450
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 110,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (110,452)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110,452)
<EPS-BASIC> 0
<EPS-DILUTED> (0.01)
</TABLE>
