U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
OMEGA DYNAMICS, INC.
(Name of Small Business Issuer in its charter)
Delaware 87-0400472
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1285 Avenue of the Americas, 35th Floor, New York, NY 10019
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (212) 554-4520
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
<S> <C> <C>
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of Operations 4
3. Description of Properties 5
4. Security Ownership of Certain Beneficial Owners and Management 6
5. Directors, Executive Officers, Promoters and Control Persons 7
6. Executive Compensation 8
7. Certain Relationships and Related Transactions 9
8. Description of Securities 9
Part II
1. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters 10
2. Legal Proceedings 10
3. Changes in and Disagreements with Accountants 10
4. Recent Sales of Unregistered Securities 11
5. Indemnification of Directors and Officers 13
Part F/S
Financial Statements 14
Part III
1. Index to Exhibits 14
</TABLE>
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was incorporated in the state of Delaware on August 12,
1983. The Company was formed for the purpose of acquiring the outstanding
capital stock of Medac Inc. and Financial Computer Services, Inc., companies
which had introduced and were promoting the MedMaster System. The MedMaster
System provided a computerized and manual health care financing and office
management system which permitted the financing and billing of health care
services provided to individuals and families by physicians, dentists,
pharmacists and other professionals.
Some services provided by the Company required substantial up front
capital outlays such as the factoring of accounts receivable generated by health
care and other professionals providing services to the public. Recurring losses
reduced working capital until services requiring up front capital were
discontinued in the first quarter of 1997.
The Company then attempted to become profitable by focusing on services
it provided which generated immediate fees such as reselling TRW credit reports
and providing various credit collection services. It also began marketing
computer software which for a time seemed somewhat promising. However, by the
end of 1997, the business of the Company as contemplated in the original
business plan had failed and business operations ceased.
Beginning in the early part of 1999, management created a new business
plan which focused on the development and/or acquisition of technology which
would allow the use of hydrogen as an energy source. Hydrogen is a clean
burning, recyclable, zero emission fuel especially when combined with an
electrical producing electrochemical engine or fuel cell. Management believed
the time was right to advance the research and development of hydrogen as a fuel
source to a commercial phase.
In December, 1999, the Company entered into an agreement to acquire
rights to a U.S. provisional patent application for a carbon dioxide free air
and hydrogen delivery system for a fuel cell. The Company is now seeking to
acquire additional technology synergistic with the proprietary technology of the
patent application. If the Company is unable to do so, management believes the
patent application will nevertheless become valuable to other developers of fuel
cells. If so, the patent rights could be sold. The Company would then seek other
products which it might acquire and/or services in which it might engage that
have potential for profit.
3
<PAGE>
Government Regulation
It is impossible to predict the government regulation, if any, to which
the Company may be subject. The use and development of high technology could
subject the Company to environmental, public health and safety, land use, trade,
or other governmental regulations and state or local taxation.
Competition
At the present time there is massive and intense research being
conducted in the area of using hydrogen as a fuel source and in the development
and use of fuel cells generally. Many competitors in this area will have a
competitive edge over the Company by virtue of their stronger financial
resources and prior experiences in technology development. There is no assurance
that the Company will be successful in developing technology that will become
commercially viable in the market place.
Employees
The Company is a development stage company and currently has no
employees. Executive officers, who are not compensated for their time
contributed to the Company, will devote only such time to the affairs of the
Company as they deem appropriate. Management of the Company expects to use
consultants, attorneys, and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
businesses and technologies.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
Results of Operations
Nine month period ended December 31, 1999
The Company had no revenue from continuing operations or from any other
source for the nine month period ended December 31, 1999.
General and administrative expenses for the nine month period ended
December 31, 1999, consisted of general corporate administration, legal and
professional expenses, accounting and auditing costs, and payment to other
corporate support entities such transfer agents. Many such expenses were past
due and required the making of large back payments. These expenses were
$161,787. Expenses incurred during the nine month period also reflect fees
incurred as part of the Company's preparation of its registration statement on
Form 10-SB under the Securities Act of 1934. The Company is making the filing to
become a reporting company based on management's belief that reporting company
status may help the Company to attract and acquire a more substantial technology
and/or business opportunity.
4
<PAGE>
As a result of the foregoing factors, the Company realized a net loss
of $161,787 for the nine months ended December 31, 1999, which is equal to the
expenses incurred the same period of time.
Calendar Years Ended March 31, 1999 and 1998
The Company had no revenue from continuing operations or from any other
source for the years ended March 31, 1999 and 1998. There were no general or
administrative expenses for the years ended March 31, 1999 and 1998 as business
operations had ceased and the corporation was allowed to lay dormant during that
period of time.
Liquidity and Capital Resources
At December 31, 1999, the Company had working capital of approximately
$55. The Company can only continue to exist by the continued sale of equity
capital. Management believes that funding sources will continue to be available
to meet the anticipated needs of the Company's operations through at least the
next 12 months. However, there can be no assurances to that effect, as the
Company has no revenues and the Company's need for capital may change
dramatically if it acquires an interest in a business opportunity or technology
during that period. The Company's current operating plan is to (i) handle the
administrative and reporting requirements of a public company; and (ii) search
for potential technologies and companies for acquisition. At present, the
Company has no understandings, commitments or agreements with respect to the
acquisition of any business, product, technology or company and there can be no
assurance that the Company will identify any such business, product, technology
or company and there can be no assurance that the Company will identify any such
business, product, technology or company suitable for acquisition in the future.
Further, there can be no assurance that the Company would be successful in
consummating any acquisition on favorable terms or that it will be able to
profitably manage the business, product, technology or company it acquires.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company utilizes shared office space at 1285 Avenue of the
Americas, 35th Floor, New York, NY 10019, on a month to month basis at a cost of
$310.00 per month. The Company may use as necessary office space, conference
rooms, reception areas and other common areas which total 5,400 square feet in
the aggregate. The Company has no other properties or facilities.
5
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of April 26, 2000, the number and
percentage of the outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each person
who is currently a director of the Company, (ii) each executive officer, (iii)
all current directors and executive officers of the Company as a group and (iv)
each person who, to the knowledge of the Company, is the beneficial owner of
more than 5% of the outstanding common stock. Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power with respect
to all shares beneficially owned, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
Common Percent of
Name and Address Shares Class
<S> <C> <C>
John Bergman 1,400,000 9.8%
89 North 400 West
Clearfield, Utah 84015
Thomas W. Bergman 1,500,000 10.4%
Mile 71/2Highway 30
Grouse Creek, P.O. Box 630
Montello, NV 89830
Scott Craw 2,200,000(1) 15.3%
340 West 1330 North
Logan, Utah 10019
Vickie Craw 2,200,000(2) 15.3%
340 West 1330 North
Logan, Utah 84341
Lynne Elliott 2,500,000(3) 17.4%
4960 West 9600 North
Elwood, Utah 84337
William Elliott 2,500,000(4) 17.4%
4960 West 9600 North
Elwood, Utah 84337
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Iota Foundation 870,000 6.1%
c/o Torre Swiss Bank
16th Floor, 53rd Street
Organization Obarrio
Panama City, Rep. of Panama
Malinka Intellectual Trust 1,000,000 7.0%
P.O. Box 163
Montello, Nevada 84341
Kathy Montgomery 1,000,000 7.0%
3025 South Morgan Valley Drive
Morgan, Utah 84050
Peter Venezia 850,000 5.9%
c/o Trimol Group, Inc.
410 W. 53rd Street, Suite 105
New York, NY 10019
All Executive officers and
Directors of a Group (3) 0 0%
</TABLE>
(1) Figure includes beneficial ownership of 500,000 shares owned by spouse.
(2) Figure includes beneficial ownership of 1,700,000 shares owned by
spouse.
(3) Figure includes beneficial ownership of 1,600,00 shares owned by
spouse.
(4) Figure includes beneficial ownership of 900,00 shares owned by spouse.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONAL
Directors and Officers
The following table sets forth the names, ages, and positions with the
Company for each of the directors and officers of the Company.
<TABLE>
<CAPTION>
Name Age Position (1) Since
<S> <C> <C> <C>
Lee A. Balak 45 President, CEO and Director 2000
Norman S. Elliot 60 Secretary and Director 2000
Hugo P. Ponrehn 61 Director 2000
</TABLE>
7
<PAGE>
All executive officers are elected by the Board and hold office until
the next Annual Meeting of stockholders and until their successors are elected
and qualify.
The following information on the business experience of each director
and officer.
Lee A. Balak is presently the CEO of Power Technologies, Inc., located
at 1000 West Bonanza Road, Las Vegas, Nevada 89106, a position he has held since
1996. He is also the CEO of No. 90 Corporate Ventures, a venture capital firm, a
position he has held since 1990.
Norman S. Elliot has spent his career in lending and financial
services. Since 1994 he has owned and operated Apel Financial which provides
consulting and strategic planning services to the business community.
Hugo P. Pomrehn has been affiliated with American Technology Group,
Inc., a technology development and marketing firm, since April, 1995. From
April, 1995 through April 1997, he served both on the board of directors and as
president. From April, 1997, through December, 1997, he served as vice chairman
and from January, 1998, through January, 2000, he served as executive vice
president. From January, 2000, thought the present he has been a consultant to
American Technology Group, Inc. He as serves on the board of directors of
Appropriate Health Services, Inc., an internet medical services company.
ITEM 6. EXECUTIVE COMPENSATION
The current officers and directors were serving as the officers and
directors of the Company at the end of the most recent fiscal year. The Company
has no agreement or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
employment with the Company for compensation for services. The Company has no
plan, agreement, or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the issuance to such persons of any shares of the Company's authorized and
unissued common stock. There is no understanding between the Company and any of
its present stockholders regarding the sale of a portion of all of the common
stock currently held by them in connection with any future participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers, directors, or principal stockholders, or
any of their affiliates or associates, would receive funds, stock, or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates. There is no
policy that prevents management from adopting a plan or agreement in the future
that would provide for cash or stock based compensation for services rendered to
the Company.
8
<PAGE>
The CEO who served during the most recent fiscal year received no
compensation for his services.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 30, 1999, the Company entered into an agreement whereby it
acquired full rights to a U.S. provisional patent application from Malinka
Intellectual Trust in exchange for 1,000,000 shares of common stock and a
royalty grant to the trust of 2% on the gross revenues generated by products
related to the intellectual property of the application. Mr. Tom Bergman, the
owner of 10.4% of the outstanding common shares of the Company is the grantor of
the trust. The Company will value the 1,000,000 shares at the predecessor cost
of $0.00. The shares were issued in January, 2000, when the technology was
transferred to the Company
On December 29, 1999, the Company decided to divest itself of
certain assets and liabilities and certain assets and liabilities of its
subsidiaries Ink, Inc., Sunrise Travel, Inc., and Financial Computer Services,
Inc. as at March 31, 1999, and assigned such assets and liabilities to Rerol,
Inc. a Utah Corporation. The principal owner of Rerol, Inc. is a former officer
and director of the Company.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 500,000 shares of preferred stock,
par value $0.01 per share, of which no shares are issued and outstanding. The
Company is authorized to issue 100,000,000 shares of common stock, par value
$0.001 per share, of which 14,354,341 shares are issued and outstanding as of
May 1, 2000. Holders of common stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of stockholders. Shares of common
stock do not carry cumulative voting rights and, therefore, holders of a
majority of the outstanding shares of common stock will be able to elect the
entire board of directors, and, if they do so, minority stockholders would not
be able to elect any members to the board of directors. The Company's board of
directors has authority, without action by the Company's stockholders, to issue
all or any portion of the authorized but unissued shares of common stock, which
would reduce the percentage ownership in the Company of its stockholders and
which may dilute the book value of the common stock. Stockholders of the Company
have no pre-emptive rights to acquire additional shares of common stock. The
common stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company, the shares of
common stock are entitled to share equally in corporate assets after
satisfaction of all liabilities. Holders of common stock are entitled to receive
such dividends as the board of directors may from time to time declare out of
funds legally available for the payment of dividends. The Company has not paid
dividends on its common stock and does not anticipate that it will pay dividends
in the foreseeable future.
9
<PAGE>
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Although quotations for the Company's common stock appeared on the OTC
Bulletin Board until April 20, 1999, and have appeared in the pink sheets since
that time, there is no established trading market for the common stock. The pink
sheets showed the following quotations on the last day of the four preceding
quarters. However, no trades were shown on those days.
March 31, 2000 $0.188
December 31, 1999 $0.10
September 30, 1999 $1.44
June 30, 1999 $1.44
From March 31, 1998 through April 20, 1999, a time during which the
shares were listed on the OTC Bulletin Board, the NASDAQ Stock Market reported
no quotations during that period of time and reported only three days during
which any trades were made. There are outstanding options to purchase 50,000
shares of common stock at a price of $2.00 per share. They were issued on April
9, 1999, and expire on April 9, 2001. There are no outstanding securities
convertible into common stock. Of the 14,354,341 common shares outstanding,
6,807,783 may be sold without restriction, 6,490,558l shares may be sold subject
to complying with all of the terms and conditions of Rule 144, except the
one-year holding period, and 1,056,000 shares may not be sold unless such shares
are registered or sold pursuant to an exemption from registration. The Company
has not agreed to register any common shares and is not planning a registered
offering at the present time.
Since its inception, no dividends have been paid on the Company's
common stock. The Company intends to retain any earnings for use in its business
activities, so it is not expected that any dividends on the common stock will be
declared and paid in the foreseeable future.
At April 26, 2000, there were approximately 186 holders of record of
the Company's Common Stock.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings,
and to the best of its knowledge, no such proceedings by or against the Company
have been threatened.
ITEM 3. CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with accountants in the
past three years.
10
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On May 28, 1997, the Company issued 196,250 shares of the Company's
common stock as payment of debt totaling $235,500. The transaction was an
isolated transaction with a person having a business affiliation with the
Company and was exempt from registration under Section 5 of the Securities Act
of 1933 (the "Act") pursuant to Section 4(2) of the Act because of not being
part of a public offering.
On March 29, 1999, the Company issued 50,000 shares of the Company's
common stock for cash at $0.50 per share, or $25,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On March 30, 1999, the Company issued 12,000,000 shares of the
Company's common stock to related parties, officers and directors for cash at
par value of $0.001 per share, or $12,000. The Company was not subject to the
reporting requirements of section 13 or 15(d) of the Securities and Exchange Act
of 1934. The Company was not an investment company. The Company was not a
development stage company that either had no specific business plan or purpose
or had indicated that its business plan was to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person. The
aggregate selling price for the Shares did not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering, in reliance on any exemption under the
section 3(b) of the Act, or in violation of section 5(a) of the Act. The Shares
were not registered with the Securities and Exchange Commission but were issued
pursuant to the exemption from registration allowed under Rule 504.
On March 30, 1999, the Company issued 64,000 shares of the Company's
common stock for cash at $0.50 per share, or $32,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On March 31, 1999, the Company issued 90,000 shares of the Company's
common stock for cash at $0.50 per share, or $45,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On April 6, 1999, the Company issued 20,000 shares of the Company's
common stock for cash at $0.50 per share, or $10,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
11
<PAGE>
On May 28, 1999, the Company issued 10,000 shares of the Company's
common stock for cash at $0.50 per share, or $5,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On September 1, 1999, the Company issued 20,000 shares of the Company's
common stock for cash at $0.50 per share, or $10,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On October 31, 1999, the Company issued 10,000 shares of the Company's
common stock for cash at $0.50 per share, or $5,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
In January, 2000, the Company issued 1,000,000 shares of the Company's
common stock in exchange for certain patent rights set forth in the Agreement
attached hereto as Exhibit 3. The transaction was an isolated transaction and
was exempt from registration under the Securities Act of 1933 (the "Act")
pursuant to Section 4(2) of the Act because of not being part of a public
offering.
On February 5, 2000, the Company issued 4,000 shares of the Company's
common stock for cash at $0.50 per share, or $2,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
On February 7, 2000, the Company issued 2,000 shares of the Company's
common stock for cash at $0.50 per share, or $1,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
In February, 2000, the Company issued 10,000 shares of the Company's
common stock for cash at $0.50 per share, or $5,000. The transaction was an
isolated transaction with a person having a close affiliation with either the
Company or with an officer of the Company and was exempt from registration under
the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act
because of not being part of a public offering.
12
<PAGE>
It should be noted that during the first calendar quarter of the year
2000, the transfer agent of the Company made a downward adjustment of 24,841 in
the number of outstanding shares of common stock of the Company to correct for
mistakes that had been made prior thereto in the transfer books of the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in
relevant part as follows:
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceed if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that he
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
of the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the cases,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
13
<PAGE>
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) and reasonably
incurred by such person in connection therewith.
The Company's bylaws provide that the Company shall indemnify pursuant
to Delaware law, all directors, officers, employees, and/or agents of the
Company for liabilities and expenses reasonably incurred in connection with any
action, suit, or proceeding to which such person may be a party by reason of
such person's position with the Company. Consequently, the Company intends to
indemnify its officers, directors, employees, and agents to the full extent
permitted by the statue noted above.
PART F/S
FINANCIAL STATEMENTS
See Exhibit 99.
PART III
ITEM 1. INDEX TO EXHIBITS
Copies of the following documents are included as exhibits to this
report pursuant to Item 601 of Regulation S-B.
Exhibits SEC Title of Document
No. Ref. No.
1 (3) Articles of Incorporation
2. (3) By-Laws
3. (10) Agreement
4. (23) Consent of Independent Auditors
5. (27) Financial Data Schedule
6. (99) Consolidated Financial Statements for the
nine-month period ended December 31, 1999
7. (99) Consolidated Financial Statements for the
years ended March 31, 1998, 1999
14
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
OMEGA DYNAMICS, INC.
Date: April 26, 2000 By:/s/ Lee A. Balak
Lee A. Balak, President
15
<PAGE>
Exhibit 1
Certificate Of Incorporation
Of
MedMaster Systems, Inc.
The undersigned, for the purpose of organizing a corporation pursuant
to the provisions of the General Corporation Law of the State of Delaware, does
make and file this Certificate of Incorporation and does hereby certify as
follows:
FIRST: The name of the corporation is MedMaster Systems, Inc.
(hereinafter referred to as the "Corporation").
SECOND: The address of the Corporation's registered office in Delaware
is 100 West Tenth Street, City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: To carry on the business of providing health care financing
services and to engage in any other lawful acts or activities for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: I. The aggregate number of shares which the Corporation shall
have authority to issue is five million five hundred thousand (5,500,000)
shares, of which five million (5,000,000) shares shall be Common Stock of the
par value of $.01 each, entitled to one vote per share, and five hundred
thousand (500,000) shares shall be Preferred Stock of the par value of $100
each.
II. The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance from time to time in one or more series of any number
of shares of Preferred Stock, and, by filing a certificate pursuant to the
Corporation Law of the State of Delaware, to establish the number of shares to
be included in each such series, and to fix the designation, relative rights,
preferences, qualifications and limitations of the shares of each such series.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
A. The number of shares constituting that series and the
distinctive designation of that series;
B. The dividend rate on the share of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and whether they shall be payable in preference to, or in another
relation to, the dividends payable on any other class or classes or
series of stock;
C. Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
D. Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or
exchange, including provision for adjustment of the conversion or
exchange rate in such events as the Board of Directors shall determine:
<PAGE>
E. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the manner of selecting shares for redemption if less than
all shares are to be redeemed, the date or dates upon or after which
they shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
F. Whether that series shall be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of
that series, and, if so, the terms and amounts of such sinking fund;
G. The right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the
Corporation or any subsidiary, upon the issue of any additional stock
(including additional shares of such series or of any other series) and
upon the payment of dividends or the making of other distributions on,
and the purchase, redemption or other acquisition by the Corporation or
any subsidiary of any outstanding stock of the Corporation;
H. The right of the shares of that series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and whether such rights shall be in preference to, or in
another relation to, the comparable rights of any other class or
classes or series of stock; and
I. Any other relative, participating, options or other special
rights, qualifications, limitations or restrictions of that series.
III. Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of sinking fund or otherwise) or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes shall have the status of authorized and
unissued shares of Preferred Stock of the same series and may be reissued as a
part of the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions and the restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock.
IV. Subject to the provisions of any applicable law, or except as
otherwise provided by the resolution or resolutions providing for the issue of
any series of Preferred Stock, the holders of outstanding shares of Common Stock
shall exclusively possess voting power for the election of directors and for all
other purposes, each holder of record of shares of Common Stock being entitled
to one vote for each share of Common Stock standing in his name on the books of
the Corporation.
V. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, after payment shall
have been made to the holders of Preferred Stock of the full amount of dividends
to which they shall be entitled pursuant to the resolution or resolutions
<PAGE>
providing for the issue of any series of Preferred Stock, the holders of Common
Stock shall be entitled, to the exclusion of the holders of Preferred Stock of
any and all series, to receive such dividends as from time to time May be
declared by the Board of Directors.
VI. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amount to which they shall be entitled pursuant to the
resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall be entitled, tot he exclusion of the
holders of Preferred Stock of any and all series, to share, ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution to its stockholders.
VII. The number of authorized shares of any class may be increased or
decreased by the affirmative vote of the holders of a majority of the stock of
the Corporation entitled to vote.
FIFTH: The name and mailing address of the incorporator is:
Name Mailing Address
---- ---------------
David C. Marx c/o MedMaster Systems, Inc.
2176 North Main
Logan, Utah 84321
SIXTH: All corporate powers shall be exercised by the Board of
Directors, except as otherwise provided by statute, or by this Certificate of
Incorporation, or any amendment thereof, or by the By-Laws. The By-Laws may be
adopted, amended or repealed by the Board of Directors of the Corporation,
except as otherwise provided by law, but any by-law made by the Board of
Directors shall be subject to amendment or repeal by the stockholders of the
Corporation, provided, however, that By-Laws relating to (i) the number of
directors, (ii) the classes of directors and (iii) removal of directors shall
not be amended, altered or repealed by the stockholders of the Corporation
except by the vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the Corporation issued and outstanding and entitled
to vote.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or an the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said Court directors. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
<PAGE>
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: Except as otherwise expressly provided in this Article EIGHTH,
the affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to effect or validate (i) any merger or consolidation
of the Corporation or any of its majority owned subsidiaries with or into any
other corporation, person or entity; (ii) any sale, lease, exchange or other
disposition of all or substantially all of the assets of the Corporation or any
of its majority owned subsidiaries to or with any other corporation, person or
other entity; or (iii) any sale or lease to the Corporation or any subsidiary
thereof of any assets (except assets having an aggregate fair market value of
less than $1,000,000) in exchange for voting securities or options, warrants, or
rights to acquire securities convertible into voting securities) of the
Corporation of any subsidiary by any other corporation, person or entity.
The Board of Directors shall have the power and duty to determine for
the purposes of this Article EIGHT, on the basis of information known to the
Corporation, whether (i) the assets being acquired by the Corporation, or any
subsidiary thereof, have an aggregate fair market value of less than $1,000,000
or (ii) the memorandum of understanding referred to in (i) below is
substantially consistent with the transaction covered thereby. Any such
determination shall be conclusive and binding for all purposes of this Article
EIGHTH.
The provisions of this Article EIGHTH shall not apply to (i) any merger
or consolidation or similar transaction of the Corporation or any of its
majority owned subsidiaries with or into any corporation, person or entity if
the Board of Directors of the Corporation has approved, by the affirmative vote
of 75% of the entire Board of Directors, a memorandum of understanding with such
other corporation with respect to such transaction or (ii) any merger or
consolidation of the Corporation with, or any sale or lease tot he Corporation
or any subsidiary thereof of any assets of, or any sale or lease by the
Corporation or any subsidiary thereof of any assets to, any corporation of which
a majority of the outstanding shares of all classes or stock entitled to vote in
elections of Directors is owned of record or beneficially by the Corporation and
its subsidiaries.
NINTH: The first Board of Directors of the Corporation shall consist of
four directors. Thereafter, the number of Directors of the Corporation shall be
determined by the affirmative vote of the Board at a regular or special meeting.
The Directors shall be elected at the annual meeting of the shareholders by a
majority of the vote cast at such meeting. The Board shall be divided into three
classes which are designated as Class A, Class B and Class C. Each class shall
be as nearly equal in number as possible. The term of office of the initial
Class A directors shall expire at the next annual meeting, the term of office of
the initial Class B Directors shall expire at he second succeeding annual
meeting of stockholders and the term of office of the initial Class C directors
shall expire at the third succeeding annual meeting of stockholders. At each
annual meeting after the initial classification of directors, directors to
replace those whose terms expire at such annual meeting shall be elected to hold
office until the third succeeding annual meeting. Notwithstanding any of the
foregoing provisions of this Article, each director shall serve until the
<PAGE>
election and qualifications of his successor or until his death, resignation,
retirement or removal.
TENTH: Any Director of the Board of Directors of the Corporation may be
removed at any time with or without cause but only by the affirmative vote of 66
2/3% or more of the outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors cast at a meeting called
for that purpose.
ELEVENTH: Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and in addition to any other
vote that may be required by law, this Certificate of Incorporation or the
By-Laws) (i) the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of the capital stock of the Corporation entitled to vote
thereon shall be required to amend, alter or repeal any provision of this
Article ELEVENTH of this Certificate of Incorporation and (ii) the affirmative
vote of the holders of at least 66 2/3% of the outstanding shares of the capital
stock of the Corporation entitled to vote thereon shall be required to amend,
alter or repeal any provision of Article SIXTH, EIGHTH, NINTH or TENTH of this
Certificate of Incorporation.
IN WITNESS WHEREOF, the undersigned being the incorporator of the above
named corporation, has hereunto signed this Certificate of Incorporation on the
17th day of August, 1983.
(Signature)
David C. Marx
State of New York )
: ss.:
County of New York )
On this 17th day of August, 1983, before me personally came David C.
Marx, to me known to be the person described in and who executed the foregoing
certificate, and he duly acknowledged to me that he executed the same and that
he facts therein stated are truly set forth.
(Signature)
Notary Public
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MEDMASTER SYSTEMS, INC.
(A DELAWARE CORPORATION)
It is certified that:
1. The name of the Corporation is MEDMASTER SYSTEMS, INC.
<PAGE>
2. The Certificate of Incorporation of the Corporation is amended to
(a) decrease the par value of the Preferred Stock of the Corporation, none of
which is issued or outstanding, from $100.00 per share to $.01 per share, and
(b) increase the aggregate number of shares which the Corporation shall have
authority to issue from 5,500,000 shares, consisting of 5,000,000 shares of
Common Stock of a par value of $.01 each, and 500,000 shares of such Preferred
Stock to 10,500,000 shares, consisting of 10,000,000 shares of Common Stock of a
par value of $.01 each, and 500,000 shares of Preferred Stock of a par value of
$.01 each.
3. To accomplish the foregoing amendment, the Certificate of
Incorporation of the Corporation is hereby amended by deleting paragraph I of
Article FOURTH in its entirety and by substituting therefor the following new
paragraph I of Article FOURTH:
"FOURTH: I. The aggregate number of shares which the
Corporation shall have authority to issue is ten million five
hundred thousand (10,500,000) shares of which ten million
(10,000,000) shares shall be Common Stock of the par value of
$.01 each, entitled to one vote per share, and five hundred
thousand (500,000) shares shall be Preferred Stock of the par
value of $.01 each.
4. The amendment of the Certificate of Incorporation herein has been
duly adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware and unanimously consented to in writing
by the holders of all of the outstanding stock of the Corporation in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware.
Signed and attested to on this 30th day of April, 1986.
MEDMASTER SYSTEMS, INC.
By: (Signature)
David C. Marx, President
Attest:
By: (Signature)
Frank E. Ashcroft, Secretary
STATE OF UTAH )
) ss:
COUNTY OF )
BE IT REMEMBERED that on the 30th day of April, 1986, personally
appeared before me, the undersigned, a Notary Public authorized to take
acknowledgment of deeds by the laws of the place where the foregoing Certificate
of Amendment was signed, DAVID C. MARX, known to me personally as such, and I
have made known to him the contents of said Certificate of Amendment, he
acknowledged that he is the President of MedMaster Systems, Inc., a Delaware
<PAGE>
corporation, the corporation described in and which executed the foregoing
Certificate of Amendment; that he signed the Certificate of Amendment as the act
and deed of MedMaster Systems, Inc., a Delaware corporation, pursuant to a
resolution adopted by the Board of Directors and unanimously consented to in
writing by all of the stockholders of such corporation; and that the facts
stated in said Certificate of Amendment are true.
(Signature)
Notary Public
Certificate of Correction of the Certificate of Incorporation
of
MedMaster Systems, Inc.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation")
is MedMaster Systems, Inc.
2. The Certificate of Incorporation of the corporation, which was filed
by the Secretary of State of Delaware on August 12, 1983, is hereby corrected.
3. The inaccuracy to be corrected in said Certificate of Incorporation
is as follows:
The statement in Paragraph I of Article Fourth that the par
value of the Preferred Stock is $100 each.
4. The portion of the Certificate of Incorporation in corrected form is
as follows:
Fourth: I. The aggregate number of shares which the
Corporation shall have authority to issue is five million five
hundred thousand (5,500,000) shares of which give million
(5,000,000) shares shall be Common Stock of the par value of
$.01 each, entitled to one vote per share, and five hundred
thousand (500,000) shares shall be Preferred Stock of the par
value of $.01 each."
Signed and attested to on December 5, 1986.
(Signature)
President
Attest:
(Signature)
Secretary
<PAGE>
STATE OF UTAH )
) SS.:
COUNTY OF CACHE )
BE IT REMEMBERED that, on December 5, 1986, before, a Notary Public
duly authorized by law to take acknowledgement of deeds, personally came David C
Marx, President of MedMaster Systems, Inc., who duly signed the foregoing
instrument before me and acknowledged that such signing in his act and deed,
that such instrument as executed is the act and deed of said corporation, and
that he facts stated therein are true.
GIVEN under my hand on December 5, 1986.
(Signature)
Notary Public
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MEDMASTER SYSTEMS, INC.
(A DELAWARE CORPORATION)
It is certified that:
1. The name of the Corporation is MedMaster Systems, Inc. (the
"Corporation").
2. The Certificate of Incorporation of the Corporation is amended to
(a) increase the aggregate number of shares which the Corporation shall have
authority to issue from 10,500,000 shares, consisting of 10,000,000 shares of
Common Stock of par value of $.01 each and 500,000 shares of Preferred Stock of
a par value of $.01 each, to 30,500,000 consisting of 30,000,000 shares of
Common Stock of a par value of $.01 each and 500,000 shares of Preferred Stock
of a par value of $.01 each, and (b) and provisions limiting in certain respects
the personal liability of the directors and officers of the Corporation.
3. To accomplish the foregoing amendments, the Certificate of
Incorporation is hereby amended as follows: (a) by deleting paragraph I of
Article FOURTH in its entirely and by substituting therefor the following new
paragraph I of Article FOURTH:
"FOURTH: I. The aggregate number of shares which the
Corporation shall have authority to issue is thirty million
five hundred thousand (30,500,000) shares of which thirty
million (30,000,000) shares shall be Common Stock of the par
value of $.01 each, entitled to one vote per share, and five
hundred thousand (500,000) shares shall be Preferred Stock of
the par value of $.01 each;" and
<PAGE>
(b) By adding in Article TWELFTH:
"TWELFTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided
that this Article TWELFTH shall not eliminate or limit the
liability of a director (i) for any breach of such director's
duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omission of such director not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware Corporation Law,
or (iv) for any transaction from which such director derived
an improper personal benefit; nor shall this Article TWELFTH
eliminate or limit the liability of a director for any act or
omission occurring to the date this TWELFTH becomes
effective."
4. The amendments of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware and consented to at the annual
meeting of stockholders by the affirmative vote of the majority of the shares of
outstanding stock of the Corporation in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Signed and attested to on this 29th day of December 1987.
MEDMASTER SYSTEMS, INC.
By: (Signature)
David C. Marx, President
ATTEST:
By: (Signature)
Frank F. Ashcroft, Secretary
STATE OF UTAH )
) ss
COUNTY OF CACHE )
BE IT REMEMBERED that on the 29th day of December, 1987, personally
appearing before me, the undersigned, a Notary Public authorized to take
acknowledgment of deeds by the laws of the place where the foregoing Certificate
of Amendment was signed, DAVID C. MARX, known to me personally as such, and I
having made known to him the contents of said Certificate of Amendment, he
<PAGE>
acknowledged that he is the President of MedMaster Systems, Inc., a Delaware
corporation, the corporation described in and which executed the foregoing
Certificate of Amendment; that he signed the Certificate of Amendment as the act
and deed of MedMaster Systems, Inc., a Delaware corporation, pursuant to a
resolution adopted by the Board of Directors and consented to at the annual
meeting of stockholders by a majority of the stockholders of such corporation;
and that he facts stated in said Certificate of Amendment are true.
(Signature)
Notary Public
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MEDMASTER SYSTEMS, INC.
(a Delaware Corporation)
It is hereby certified that:
1. The name of the corporation is MEDMASTER SYSTEMS, INC.
2. The Certificate of Incorporation of the Corporation is amended to
(a) decrease the par value of the Common Stock of the Corporation from $0.01 per
share to $0.001 per share, and (b) increase the aggregate number of shares which
the Corporation shall have authority to issue from 30,500,000 shares,
constituting of 30,000,000 shares of Common Stock and 500,000 shares of
Preferred Stock to a total of 100,500,000 shares, consisting of 100,000,000
shares of Common Stock of a par value of $0.001 each, and 500,000 shares of
Preferred Stock of a par value of $0.01 each.
3. To accomplish the foregoing amendment, the Certificate of
Incorporation of the Corporation is hereby amended by deleting paragraph 1 of
Article FOURTH in its entirety and by substituting therefor the following new
paragraph I of Article FOURTH:
FOURTH: I. The aggregate number of shares which the
Corporation shall have authority to issue is one hundred
million five hundred thousand (100,500,000) shares shall be
Common Stock of the par value of $0.001 each, entitled to one
vote per share, and five hundred thousand (500,000) shares
shall be Preferred Stock of the par value of $0.001 each.
4. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
Delaware General Corporation Laws and consented to in writing by holders of a
majority of the outstanding shares of the stock of the Corporation in accordance
<PAGE>
with the provisions of the Corporation Bylaws and Certificate of Incorporation
and in accordance with Section 228 of the Delaware General Corporations Laws.
Signed and attested to on this 29th day of March 1999.
MEDMASTER SYSTEMS, INC.
By: (Signature)
William Elliot, President
Attest:
(Signature)
Secretary
ACKNOWLEDGMENT
State of Utah )
) ss:
County of Cache )
BE IT REMEMBERD that on the 29th day of March 1999, personally appeared
before me, the undersigned, a Notary Public authorized to take acknowledgment of
deeds by the laws of the place where the foregoing Certificate of Amendment was
signed, WILLIAM ELLIOTT, known to me personally as such (or proved to me on the
basis of sufficient evidence), and I having made known to him the contents of
said Certificate of Amendment, he acknowledged that he is the President of
MedMaster Systems, Inc., a Delaware corporation, the corporation described in
and which executed the foregoing Certificate of Amendment; that he signed the
Certificate of Amendment as the act and deed of MedMaster Systems, Inc. pursuant
to a resolution adopted by the Board of Directed and Consented to in writing by
holders of a majority of the shares of stock of said corporation; and that the
facts stated in said Certificate of Amendment are true.
(Signature)
Notary Public
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MEDMASTER SYSTEMS, INC.
(a Delaware Corporation)
NEW NAME OF CORPORATION (after Amendment):
OMEGA DYNAMICS, INC.
It is hereby certified that:
<PAGE>
1. The name of the corporation is MEDMASTER SYSTEMS, INC.
2. The Certificate of Incorporation is amended to change the name of
the corporation from "MedMaster Systems, Inc." to "Omega Dynamics, Inc."
3. To accomplish the foregoing amendment, the Certificate of
Incorporation of the Corporation is hereby amended by deleting Article FIRST in
its entirety and by substituting therefor the following new Article FIRST:
FIRST: The name of the corporation is Omega Dynamics, Inc.
(hereinafter referred to as the "Corporation").
4. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
Delaware General Corporation. Laws and consented to in writing by holders of the
a majority of the outstanding shares of the stock of the Corporation in
accordance with the provisions of the Corporation's Bylaws and Certificate of
Incorporation and in accordance with Section 228 of the Delaware General
Corporation Laws.
Signed and attested to this 9th day of April, 1999.
MEDMASTER SYSTEMS, INC.
By: (Signature)
William Elliot, President
Attest:
(Signature)
Secretary
ACKNOWLEDGMENT
State of Utah )
) ss:
County of Box Elder )
BE IT REMEMBERED that on the 9th day of April 1999, personally appeared
before me, the undersigned, a Notary Public authorized to take acknowledgements
of deeds by the laws of the place where the foregoing Certificate of Amendment
was signed, WILLIAM ELLIOTT, known to me personally as such (or proved to me on
the basis of sufficient evidence), and I having made known to him the contents
of said Certificate of Amendment, he acknowledged that he is the President of
<PAGE>
MedMaster, Inc., a Delaware corporation, the corporation described in and which
executed the foregoing Certificate of Amendment; that he signed the Certificate
of Amendment as the act and deed of MedMaster Systems, Inc., pursuant to a
resolution adopted by the Board of Directors and consented to in writing by
holders of a majority of the shares of stock of said corporation; and that he
facts stated in said Certificate of Amendment are true.
(Signature)
Notary Public
BY-LAWS OF
MEDMASTER SYTEMS, INC.
(a Delaware Corporation)
ARTICLE I
Meetings of Stockholders
------------------------
SECTION 1. Annual Meeting. The annual meeting of the stockholders of
MEDMASTER SYSTEMS, INC. (Hereinafter referred to as the "Corporation) for the
election of the directors and for the transaction of such other business as may
properly come before the meeting, commencing with the year 1984, shall be held
during the third week of July of each year, at the office of the Corporation or
at such other place and at such hour as shall be designated by the Board of
Directors (hereinafter referred to as the "Board"), or, if no such time be
fixed, then at 10:00 o'clock in the forenoon. If the annual meeting shall not be
held on the day hereinabove provided for, the Board shall call a special meeting
for the election of the directors, which meeting shall be held within two months
after said day.
SECTION 2. Special Meetings. Special meetings of the stockholders,
unless otherwise prescribed by statute, may be called at any time by the Board.
SECTION 3. Notice of Meetings. Notice of the place date and hour of
holding each annual and special meeting of the stockholders and the purpose or
purposes thereof shall be given personally or by mail in a postage prepaid
envelope, not less than ten nor more than fifty days before the date of such
meeting, to each stockholder entitled to vote at such meeting, and, if mailed,
it shall be directed to such stockholder at his address as it appears on the
record of stockholders, unless he shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address. Any such notice for any meeting other than the annual meeting shall
indicate that it is being issued at the direction of the Board. Notice of any
meeting of stockholders shall not be required to be given to any stockholder who
shall attend such meeting in person or by proxy and shall not, prior to the
conclusion of such meeting, protest the lack of notice thereof or who shall,
either before or after the meeting, submit a signed waiver of notice, in person
or by proxy. Unless the Board shall fix a new record date for an adjourned
meeting, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.
SECTION 4. Quorum. At all meetings of the stockholders the holders of
the majority of the shares of Common Stock of the Corporation, issue and
outstanding and entitled to vote, shall be present in person or by proxy to
constitute a quorum for the transaction of business. In the absence of a quorum,
the holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote may adjourn the meeting from time to time. At any
such adjourned meeting at which a quorum may be present any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 5. Organization. At each meeting of the stockholders, the
Chairman of the Board or the President, or if none are present, a Vice
<PAGE>
President, shall act as chairman of the meeting or, if no one of the foregoing
officers is present, a chairman shall be chosen at the meeting by the
stockholders. The Secretary, or in his absence or inability to act, the person
whom the chairman of the meeting shall appoint secretary of the meeting, shall
act as secretary of the meeting and keep the minutes thereof.
SECTION 6. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
SECTION 7. Voting. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of such stock standing in his name on
the record of stockholders of the corporation:
(a) on the date fixed pursuant to the provisions of
Section 5 of Article V of these By-Laws as the record date for
the determination of the stockholders who shall be entitled to
notice of and to vote at such meeting; or
(b) if such record date shall not have been so fixed,
then at the close of business on the date next preceding the
day on which notice thereof shall be given.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him by a proxy signed by such stockholder
or his attorney-in-fact. Any such proxy shall be delivered to the secretary of
such meeting at or prior to the time designated in the order of business for so
delivering such proxies. Except as otherwise required by statute or by the
Certificate of Incorporation, any corporate action to be taken by vote of the
stockholders shall require the vote of a majority of the votes cast at a meeting
of the holders of the Common Stock of the Corporation entitled to vote thereon.
Unless required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or by his proxy, if there
be such proxy, and shall state the number of shares voted.
SECTION 8. List of Stockholders. A list of stockholders as of the
record date, certified by the Secretary of the Corporation or by the transfer
agent for the Corporation, shall be produced at any meeting of the stockholders
upon the request of any stockholder made at or prior to such meeting.
SECTION 9. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting shall appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the chairman
of the meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
<PAGE>
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as an inspector of an election of
directors. Inspectors need not be stockholders.
SECTION 10. Consent of Stockholders in Lieu of Meeting. Any action
required or permitted to be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon where present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders, if
any, who have not consented in writing.
ARTICLE II
Board of Directors
------------------
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board. The Board may exercise all
such authority and powers of the Corporation and do all such lawful acts and
things as are not by statute or the Certificate of Incorporation directed or
required to be exercised or done by the stockholders.
SECTION 2. Number, Classes, Election and Term of Office. The number,
classes, election and term of office of the directors of the Board of Directors
of the Corporation shall be determined in accordance with the provisions of the
Corporation's Certificate of Incorporation.
SECTION 3. Place of Meeting. Meetings of the Board shall be held at the
principal office of the Corporation in the State of Delaware or at such other
place, within or without such state, as the Board may from time to time
determine or as shall be specified in the notice of any such meeting.
SECTION 4. Annual Meeting. The Board shall meet for the purpose of
organization, the election of the officers and the transaction of other
business, as soon as practicable after each annual meeting of the stockholders,
on the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. Such meeting may be held at any other
time or place (within or without the State of Delaware) which shall be specified
in a notice thereof given as hereinafter in Section 7 of this Article II.
SECTION 5. Regular Meeting. Regular meetings of the Board shall be held
at such time as the Board may fix. If any day fixed for a regular meeting shall
be a legal holiday at the place where the meeting is to be held, then the
meeting which would otherwise be held on that day shall be held at the same hour
on the next succeeding business day. Notice of regular meetings of the Board
need not be given except as otherwise required by statute or these By-Laws.
SECTION 6. Special Meetings. Special meetings of the Board may be
called by the Chairman, the President, or by a majority of the entire board.
SECTION 7. Notice of Meetings. Notice of each special meeting of the
Board (and of each regular meeting for which notice shall be required) shall be
given by the Secretary as hereinafter provided in this Section 7, in which
<PAGE>
notice shall be stated the time and place of the meeting. Except as otherwise
required by these By-laws, such notice need not state the purposes of such
meeting. Notice of each such meeting shall be mailed, postage prepaid, to each
director, addressed to him at his residence or usual place of business, by
first-class mail, at least two days before the day on which such meeting is to
be held, or shall be sent addressed to him at such place be telegraph, telex,
cable or wireless, or be delivered to him personally or by telephone, at least
24 hours before the time at which such meeting is to be held. A written waiver
of notice, signed by the director entitled to notice, whether before or after
the time stated therein shall be deemed equivalent to notice. Notice of any such
meeting need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of notice to him.
SECTION 8. Quorum and Manner of Acting. Except as hereinafter provided,
a majority of the entire Board shall be present in person or by means of a
conference telephone or similar communications equipment which allows all
persons participating in the meting to hear each other at the same time at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting; and, except as otherwise required by statute or the
Certificate of Incorporation, the act of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the directors
present thereat may adjourn such meeting to another time and place. Notice of
the time and place of any such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and, unless such time and
place were announced at the meeting at which the adjournment was taken, to the
other directors. At any adjournment meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called. The directors shall act only as a Board and the individual
directors shall have no power as such.
SECTION 9. Action Without a Meeting. Any action required or permitted
to be taken by the Board at a meeting may be taken without a meeting if all
members of the Board consent in writing to the adoption of the resolutions
authorizing such action. The resolutions and written consents thereto shall be
filed with the minutes of the Board.
SECTION 10. Telephonic Participation. One or more members of the Board
may participate in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 11. Organization. At each meeting of the Board, the Chairman of
the Board, or, in this absence, the President or, in his absence, another
director chosen by a majority of the directors present shall act as chairman of
the meeting and preside thereat. The Secretary (or, in his absence, any person -
who shall be an Assistant Secretary, if any of them shall be present at such
meeting - appointed by the chairman) shall act as secretary of the meeting and
keep the minutes thereof.
SECTION 12. Resignations. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board or the
President or the Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt, and, unless, otherwise
<PAGE>
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 13. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorship number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director. If there are no directors in office, then a
special meeting of stockholders for the election of directors may be called and
held in the manner provided by statute. If, at the time of filling any vacancy
or nay newly created directorship, the directors then in office shall constitute
less than a majority of the whole Board (as constituted immediately prior to any
such increase), the Court of Chancery may, upon application of any stockholder
or stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office, in the manner provided by statute. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office until the next election of directors and until their successors shall be
elected and qualified.
SECTION 14. Removal of Directors. Any director may be removed in
accordance with the provisions of the Corporation's Certificate of
Incorporation.
SECTION 15. Compensation. The Board shall have authority to fix the
compensation, including fees and reimbursement of expenses, of directors for
services to the Corporation in any capacity.
ARTICLE III
Executive and Other Committees
------------------------------
Section 1. Executive and Other Committees. The Board may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation. The
Board 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. Any such committee, to the extent provided in the resolution shall
have and may exercise the powers of the Board 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; provided, however, that in the
absence or disqualifications of any member of such committee or committees, 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 to act at the meeting in the place of any such
absent or disqualified member. Each committee shall keep written minutes of its
proceedings and shall report such minutes to the Board when required. All such
proceedings shall be subject to revision or alteration by the Board; provided,
however, that third parties shall not be prejudiced by such revision or
alternation.
SECTION 2. General. A majority of any committee may determine its
action and fix the time and place of its meetings, unless the Board shall
otherwise provide. Notice of such meetings shall be given to each member of the
committee in the manner provided for in Article II, Section 7. The Board shall
<PAGE>
have any power at any time to fill vacancies in, to change the membership of, or
to dissolve any such committee. Nothing herein shall be deemed to prevent the
Board from appointing one or more committees consisting in whole or in part of
persons who are not directors of the Corporation; provided, however, that no
such committee shall have or may exercise any authority of the Board.
SECTION 3. Action Without a Meeting. Any action required or permitted
to be taken by any committee at a meeting may be taken without a meeting if all
of the members of the committee consent in writing to the adoption of the
resolution authorizing such action. The resolutions and written consents thereto
shall be filed with the minutes of the committee.
SECTION 4. Telephone Participation. One or more members of a committee
may participate in a meeting by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
ARTICLE IV
Officers.
---------
SECTION 1. Number and Qualifications. The officers of the Corporation
shall include the Chairman of the Board (who shall also be a director of the
Corporation), the President, an Executive Vice President, one or more Vice
Presidents, the Treasurer, and the Secretary. Any two or more offices may be
held by the same person; except the offices of President and Secretary; provided
that when all of the issued and outstanding stock of the Corporation is held by
one person, such person may hold all or any combination of offices. Such
officers shall be elected from time to time by the Board, each to hold office
until the meeting of the Board following the next annual meeting of the
shareholders, or until his successor shall have been duly elected and shall have
qualified or until his deed or until he shall have resigned, or have been
removed, as hereinafter provided in these By-laws. The Board may from time to
time elect, or delegate to the President the power to appoint, such other
officers (including one or more Assistant Treasurers and one or more Assistant
Secretaries) such agents, as may be necessary or desirable for the business of
the Corporation. Such other officers and agents shall have such duties and shall
hold their officers for such terms as may be prescribed by the Board or by the
appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the Chairman
of the Board, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediate upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 3. Removal. Any officer or agent of the Corporation may be
removed, either with or without cause, at any time, by the Board at any meeting
of the Board, or, except in the case of an officer or agent elected or appointed
by the Board, by the President.
<PAGE>
SECTION 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant, in the manner
prescribed in these By-laws for the regular election or appointment to such
office.
SECTION 5. The Chairman of the Board. The Chairman of the Board shall,
if present, preside at each meeting of the stockholders and of the Board and
shall be an ex officio member of all committees of the Board. He shall perform
all duties incident to the office of Chairman of the Board and such other duties
as may from time to time be assigned to him by the Board.
SECTION 6. The President. The President shall be the chief executive
officer of the Corporation and shall have general and active management of the
business and affairs of the Corporation and general and active supervision and
direction over the other officers, agents and employees and shall see that their
duties are properly performed subject, however, to the control of the Board. At
the request of the Chairman of the Board, or in the case of the absence or
inability to act by the Chairmen of the Board, the President shall perform the
duties of the Chairman of the Board and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the Chairman of the Board. He
shall perform all duties incident to the office of President and such other
duties as from time to time may be assigned to him by the Board or these
By-laws.
SECTION 7. Vice Presidents. Each Vice President, including any
Executive Vice President, shall perform all such duties as from time to time may
be assigned to by the Board.
SECTION 8. The Treasurer. The Treasurer shall
(a) have charge and custody of, and be responsible for,
all the funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belong to the Corporation;
(c) deposit all moneys and other valuables to the credit of
the Corporation in such depositaries as may be designated by the Board;
(d) receive, and give receipts for, moneys due and payable to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board, taking
proper vouchers therefor; and
(f) in general, perform all the duties incident to the office
of Treasurer and such other duties as from time to time may be assigned
to him by the Board or the President.
SECTION 9. The Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board, the committees
of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of
the Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided) and affix
<PAGE>
and attest the seal to all other documents to be executed on behalf of
the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are
properly kept and filed; and
(e) in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time may be assigned
to him by the Board or the President.
SECTION 10. Officer' Bonds or Other Security. If required by the Board,
any officer of the Corporation shall give a bond or other security for the
faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
SECTION 11. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board; provided, however, that the Board may delegate to the President
the power to fix the compensation of officers and agents appointed by him. An
officer of the Corporation shall not be prevented from receiving compensation by
reason of the fact that he is also a director of the Corporation, but any such
officer who shall also be a director (except in the event that there is only one
director of the Corporation) shall not have any vote in the determination of the
amount of compensation paid to him.
ARTICLE V
Shares, etc.
------------
SECTION 1. Stock Certificates. Each owner of stock of the Corporation
shall be entitled to have a certificate, in such form as shall be approved by
the Board, certifying the number of shares of stock of the Corporation owned by
him. The certificates representing shares of stock shall be signed in the name
of the Corporation by the Chairman of the Board, the President or Vice President
and by the Secretary, Treasurer or an Assistant Secretary and sealed with the
seal of the Corporation (which seal may be a facsimile, engraved or printed). In
case any officer who shall have signed such certificates shall have ceased to be
such officer before such certificates shall be issued, they may nevertheless be
issued by the Corporation with the same effect as if such officer were still in
office at the date of their issue.
SECTION 2. Books of Account and Record of Shareholders. There shall be
kept correct and complete books and records of account of all the business and
transactions of the Corporation. There shall also be kept, at the office of the
Corporation in the State of Delaware or at the office of its transfer agent in
said State, a record containing the names and addresses of all stockholders of
the Corporation, the number of shares of stock held by each, and the dates when
they became the owners of record thereof.
SECTION 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary or
with a transfer agent or transfer clerk, and on surrender of the certificate or
certificates for such shares properly endorsed or accomplished by a duly
executed stock transfer power and the payment of all taxes thereon. The person
in whose name shares of stock shall stand on the record of stockholders of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation. Whenever any transfers of shares shall be made for collateral
security and not absolutely and written notice thereof shall be given to the
<PAGE>
Secretary or to such transfer gent or transfer clerk, such fact shall be stated
in the entry of the transfer.
SECTION 4. Regulations. The Board may such additional rules and
regulations, not inconsistent with these By-laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signature of any of them.
SECTION 5. Fixing of Record Date. The Board may fix, in advance, a date
not more than fifty nor less than ten days before the date then fixed for the
holding of any meeting of the stockholders or before the last day on which the
consent or dissent of the stockholders may be effectively expressed for any
purpose without a meeting, as the time as of which the stockholders entitled to
notice of and to vote at such meeting or whose consent or dissent is required or
may be expressed for any purpose, as the case may be, shall be determined, and
all persons who were shareholders of record of voting stock at such time, and no
others, shall be entitled to notice of and to vote at such meeting or to express
their consent or dissent, as the case may be. The Board may fix, in advance, a
date not more than fifty nor less than ten days preceding the date fixed for the
payment of any dividend or the making of any distribution or the allotment of
rights to subscribe for securities of the Corporation, or for the delivery of
evidence of rights or evidence of interest arising out of any change, conversion
or exchange of capital stock or other securities, as the record date for the
determination of the stockholders entitled to receive any such dividend,
distribution, allotment rights or interests, and in such case only the
stockholders or record at the time so fixed shall be entitled to receive such
dividend, distribution, allotment, rights or interests.
SECTION 6. Lost, Destroyed or Mutilated Certificate. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal representative
to give to the Corporation a bond in such sum, limited or unlimited, and in such
form and with such surety or sureties a the Board in its absolute discretion
shall determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of such new certificate. Anything herein to the
contrary notwithstanding, the Board, in its absolute discretion, may refuse to
issue any such new certificate, except pursuant to legal proceedings under the
laws of the State of New York.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
----------------------------------------------
SECTION 1. Execution of Contracts. Except as otherwise required by
statute, the Certificate of Incorporation or these By-Laws, any contract or
other instrument may be executed and delivered in the name and on behalf of the
Corporation by such officer or officers (including any assistant officer) of the
Corporation as the Board may from time to time direct. Such authority may be
<PAGE>
general or confined to specific instances as the Board may determine. Unless
authorized by the Board or expressly permitted by these By-Laws, no officer or
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render its pecuniarily
liable for any purpose or to any amount.
SECTION 2. Loans. Unless the Board shall otherwise determine, the
Chairman of the Board or the President or any Vice-President, acting together
with the Treasurer, may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any firm,
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or evidence or
indebtedness of the Corporation, but not officer or officers shall mortgage,
pledge, hypothecate or transfer any securities or other property of the
Corporation other than in connection with the purchase of chattels for use in
the Corporation's operations, except when authorized by the Board.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills or exchange
or other orders for the payment of money out of the funds of the Corporation,
and all notes or other evidence of indebtedness of the Corporation, shall be
signed in the name and on behalf of the Corporation by such persons and in such
manner as shall from time to time be authorized by the Board.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may from time
to time designate or as may be designated by any officer or officers of the
Corporation to whim such power of designation may from time to time be delegated
by the Board. For the purpose of deposit and for the purpose of collection for
the account of the Corporation, checks, drafts and other orders for the payment
of money which are payable to the order of the Corporation may be endorsed,
assigned and delivered by any officer or agent of the Corporation.
SECTION 5. General and Special Bank Accounts. The Board may from time
authorize the opening and keeping of general and special bank accounts with such
banks, trust companies or other depositaries as the Board may designate or as
may be designated by any officer or officers of the Corporation to whom such
power of designation may from time to time be delegated by the Board. The Board
may make such special rules and regulations with respect to such bank accounts,
not inconsistent with the provisions of these By-Laws, as it may deem expedient.
ARTICLE VII
Offices
-------
SECTION 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the registered agent of the Corporation shall be The Corporation Trust Company,
whose address is 100 West 10th Street, Wilmington, Delaware.
SECTION 2. Other Offices. The Corporation may also have such offices,
both within or without the State of Delaware as the Board of Directors may from
time to time determine or the business of the Corporation may require.
<PAGE>
ARTICLE VIII
Fiscal Year
-----------
The Fiscal year of the Corporation shall be determined by the Board.
ARTICLE IX
Seal
----
The seal of the Corporation shall be circular in form shall bear the
name of the Corporation and shall include the words and numbers "Corporate
Seal", "Delaware" and the year of incorporation.
ARTICLE X
Indemnification
---------------
Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceedings by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that he person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee or another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit of he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjusted to be liable for negligence or misconduct in the performance of
this duty to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
<PAGE>
Section 3. To the extent that a director, officer or employee of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1 and 2 of this Article X, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
Section 4. Any indemnification under Section 1 and of this Article X
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer or employee is proper in the circumstances because he has met the
applicable standard of conduct set forth in said Section 1 and 2. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such quorum is not obtainable, or, even if obtainable a
quorum disinterested directors so directors, by independent legal counsel in a
written opinion, or (3) by the stockholders.
Section 5. Expenses incurred in defending a civil, criminal,
administrative or investigative action, suit or proceeding, or threat thereof,
may be paid by the Corporation in advance of he final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer or employee to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article x.
Section 6. The indemnification provided by this Article x shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under my By-Law, agreement, vote of stockholders or disinterested
directors, statute, court decision, insurance policy or otherwise, now or
hereafter in effect, and shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article x or of the General
Corporation Law of the State of Delaware.
Section 8. For purposes of this Article X, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer or employee of the Corporation
which imposes duties on, or involve services by, such director officer or
employee with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
X.
<PAGE>
ARTICLE XI
Amendment
---------
The By-Laws may be amended, repealed or altered by vote of the holders
of a majority of the shares of stock at the time entitled to vote in the
election or directors, except as otherwise provided in the Certificate of
Incorporation. The By-Laws may also be amended, repealed or altered by the Board
of Directors, buy any By-Law adopted by the Board of Directors may be amended,
repealed or altered by the shareholders entitled to vote thereon as herein
provided.
Exhibit 3
AGREEMENT
By and Between,
Omega Dynamics, Inc., at P.O. Box 6243, North Logan, Utah 84341, represented by
William Elliot, chairman of the board of directors and Scott Craw, Secretary
Treasurer hereinafter, Omega.
And
Malinka Intellectual Trust, at P.O. Box 163, Montello, Nevada 89830, represented
by Thomas W. Bergman, legal representative, hereinafter, Malinka.
RECITALS:
Malinka has by assignment the full rights to a U.S. Provisional Patent
Application Serial Number 60/152,445 "Carbon Dioxide Free Air and Hydrogen
Delivery System for An Electrochemical Engine", (the Device) filed on September
3, 1999 with the office of U.S. Patents and Trademarks. Omega is desirous of
obtaining certain rights tot he U.S. Provisional Patent Application. Malinka
will grant to Omega certain rights to the U.S. Provisional Patent Application.
Subject to the following terms and conditions;
1. Malinka hereby grants to Omega limited rights subject to the terms of
this agreement to the U.S. Provisional Patent Application while
retaining two percent (2%) of the gross in a gross overriding royalty
of any and all sales of the corporation concerning any thing that is
any way related to the Intellectual Property as outlined in the U.S.
Provisional Patent Application and in addition, retains sole rights of
developing, researching, and improving the device as outlined in the
U.S. Provisional Patent Application.
2. Omega will issue one million shares of its common stock to Malinka as
further compensation for the limited rights of the intellectual
property contained in the U.S. Provisional Patent Application within 20
business days of the signing of this agreement.
3. Omega will pay all costs Malinka may incur for development, research,
and improvements in the device contained in the U.S. Provisional Patent
Application.
4. Omega agrees to pay all costs required in the process required for
obtaining a patent or patents to protect Malinka's rights to the device
as contained in the U.S. Provisional Patent Application. Omega also
agrees that Malinka will direct the effort to obtain whatever patents
are required to protect Malinka's rights under the terms of this
agreement.
<PAGE>
Agreement Continued Omega/Malinka
Page two of two
5. The parties agree that time is of the essence in all particulars of
this agreement.
6. The parties agree that the jurisdiction for any disputes between the
parties shall be the State of Utah.
7. This agreement and the rights to the Device and Intellectual Property
as outlined in the Provisional Patent Application cannot be assigned,
sold, leased, used as collateral or in any way transferred without the
express written permission of Malinka.
8. In the event that Omega should declare bankruptcy, or have a reverse
split of it's common stock all rights to the Device and the
Intellectual Property described within the Provisional Patent
Application under this agreement would cease and revert back to
Malinka.
Signed and Agreed this 30th day of December, 1999.
(Signature)
William Elliott
President and Chairman of the Board of Directors
(Signature)
Scott Craw
Omega Secretary and Treasurer
(Signature)
Thomas W. Bergman
Malinka Legal Representative
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our audit report dated December 29, 1999 in this
Form 10-SB of Omega Dynamics, Inc. and Subsidiaries (formerly MedMaster Systems,
Inc. and Subsidiaries) for the year ended March 31, 1999, which is part of this
Form 10-SB and all references to our firm included in this Form 10-SB.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
May 4, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1999 MAR-31-1999
<PERIOD-START> APR-01-1998 APR-01-1998
<PERIOD-END> MAR-31-1999 DEC-31-1999
<CASH> 208,660 55
<SECURITIES> 0 0
<RECEIVABLES> 793 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 224,477 55
<PP&E> 131,976 0
<DEPRECIATION> 128,487 0
<TOTAL-ASSETS> 227,966 55
<CURRENT-LIABILITIES> 1,234,618 27,553
<BONDS> 0 0
0 0
0 0
<COMMON> 13,303 13,303
<OTHER-SE> (1,019,955) (40,861)
<TOTAL-LIABILITY-AND-EQUITY> 227,966 55
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 161,787
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 904
<INCOME-PRETAX> 0 (162,691)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 (162,691)
<DISCONTINUED> (6,138,056) 1,111,845
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,138,056) 949,154
<EPS-BASIC> (5.26) 0.07
<EPS-DILUTED> (5.26) 0.07
</TABLE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and March 31, 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report...................................................3
Consolidated Balance Sheets....................................................4
Consolidated Statements of Operations..........................................5
Consolidated Statements of Stockholders' Equity (Deficit)......................6
Consolidated Statements of Cash Flows..........................................7
Notes to the Consolidated Financial Statements.................................9
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Omega Dynamics, Inc. and Subsidiaries
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
North Logan, Utah
We have audited the accompanying consolidated balance sheet of Omega Dynamics,
Inc. and Subsidiaries (a development stage company) (formerly MedMaster Systems,
Inc. and Subsidiaries) as of March 31, 1999 and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended March 31, 1999 and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Omega Dynamics, Inc.
and Subsidiaries (a development stage company) (formerly MedMaster Systems, Inc.
and Subsidiaries) as of March 31, 1999 and the results of their operations and
their cash flows for the years ended March 31, 1999 and 1998 in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has significant operating losses to date and a
working capital deficit, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
December 29, 1999
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------ ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 55 $ 208,660
Accounts receivable, net - 793
Prepaid expenses - 15,024
------------------ ---------------
Total Current Assets 55 224,477
------------------ ---------------
PROPERTY AND EQUIPMENT (Notes 1 and 3) - 3,489
------------------ ------------------
TOTAL ASSETS $ 55 $ 227,966
================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ - $ 59,756
Accrued expenses - 756,614
Notes payable - related parties (Note 4) 27,553 418,248
------------------ ---------------
Total Current Liabilities 27,553 1,234,618
------------------ ---------------
LONG-TERM LIABILITIES - -
------------------ ---------------
Total Liabilities 27,553 1,234,618
------------------ ---------------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 500,000 shares authorized at $0.01
par value; no shares issued or outstanding - -
Common stock, 100,000,000 shares authorized at $0.001
par value; 13,363,182 and 13,303,182 shares
issued and outstanding, respectively 13,363 13,303
Additional paid-in capital 9,603,403 9,573,463
Accumulated deficit prior to April 1, 1999 (9,481,573) (10,593,418)
Deficit accumulated during the development stage (162,691) -
------------------ ---------------
Total Stockholders' Equity (Deficit) (27,498) (1,006,652)
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 55 $ 227,966
================== ===============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Operations
From the
Beginning
of
the
Development
For the For the Stage on
Nine Months Ended Years Ended April 1, 1999
December 31, March 31, through
------------------------------------------------------------------- December 31,
1999 1998 1999 1998 1999
----------------- -------------- ---------------- --------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
SALES $ - $ - $ - $ - $ -
COST OF SALES - - - - -
------------- -------------- ---------------- --------------- -----------------
GROSS MARGIN - - - - -
------------- -------------- ---------------- --------------- -----------------
EXPENSES
Depreciation and amortization - - - - -
General and administrative 161,787 - - - 161,787
------------- -------------- ---------------- --------------- -----------------
Total Expenses 161,787 - - - 161,787
------------- -------------- ---------------- --------------- -----------------
Loss from Operations (161,787) - - - (161,787)
OTHER INCOME (EXPENSE)
Interest income - - - - -
Interest expense (904) - - - (904)
------------- -------------- ---------------- --------------- -----------------
Total Other Income (Expense) (904) - - - (904)
------------- -------------- ---------------- --------------- -----------------
LOSS ON DISCONTINUED
OPERATIONS
Gain on disposal of discontinued
operations 1,111,845 - - - -
Loss from operations of
discontinued operations (Note 8) - (110,041) (6,138,056) (111,845) -
------------- -------------- ---------------- --------------- -----------------
NET INCOME (LOSS) $ 949,154 $ (110,041) $ (6,138,056) $ (111,845) $ (162,691)
============= ============== ================ =============== =================
BASIC EARNINGS (LOSS)
PER SHARE $ 0.07 $ (0.10) $ (5,26) $ (0.10)
============= ============== ================ ===============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -=---------
<S> <C> <C> <C> <C>
Balance, March 31, 1997 902,932 $ 903 $ 3,248,363 $ (4,343,517)
Common stock issued for
payment of debt at $1.20
per share 196,250 196 235,304 -
Net loss for the year ended
March 31, 1998 - - - (111,845)
---------- --------------- ---------------- -----------------
Balance, March 31, 1998 1,099,182 1,099 3,483,667 (4,455,362)
Common stock issued for
cash and services at $0.50
per share 12,000,000 12,000 5,988,000 -
Common stock issued for
cash at $0.50 per share 204,000 204 101,796 -
Net loss for the year ended
March 31, 1999 - - - (6,138,056)
---------- --------------- ---------------- -----------------
Balance, March 31, 1999 13,303,182 13,303 9,573,463 (10,593,418)
Common stock issued for
cash at $0.50 per share
(unaudited) 60,000 60 29,940 -
Net income for the nine months
ended December 31, 1999
(unaudited) - - - 949,154
---------- --------------- ---------------- -----------------
Balance, December 31, 1999
(unaudited) 13,363,182 $ 13,363 $ 9,603,403 $ (9,644,264)
========== =============== ================ =================
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
From the
Beginning
of
the
Development
For the For the Stage on
Nine Months Ended Years Ended April 1, 1999
December 31, March 31, through
-------------------------------------------------------------------- December 31,
1999 1998 1999 1998 1999
----------------- -------------- ---------------- --------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ 949,154 $ (110,041) $ (6,138,056) $ (111,845) $ (162,691)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization - 6,910 9,214 12,429 -
Common stock issued for services - - 5,988,000 - -
Gain on disposal of subsidiaries (1,111,845) - - - -
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable - 43,268 44,767 30,757 -
(Increase) decrease in prepaids 3,193 (4,301) (7,493) 50,028 3,193
Increase (decrease) in bad debt
allowance - (3,959) (3,959) (24,988) -
Increase (decrease) in bank
overdraft - (7,637) (7,637) 2,418 -
Increase (decrease) in notes
payable - related 14,353 33,252 41,003 37,042 14,353
Increase (decrease) in accounts
payable - 804 14,431 (108,330) -
Increase in accrued expenses - 62,779 86,642 77,647 -
--------------- -------------- ---------------- --------------- ----------------
Net Cash Flows Provided (Used)
by Operating Activities (145,145) 21,075 26,912 (34,842) (145,145)
--------------- -------------- ---------------- --------------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets - (457) (457) (5,499) -
Disposal of subsidiaries (93,460) - - - (93,460)
--------------- -------------- ---------------- --------------- ----------------
Net Cash Flows (Used) by
Operating Activities $ (93,460) $ (457) $ (457) $ (5,499) $ (93,460)
--------------- -------------- ---------------- --------------- ----------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows (Continued)
From the
Beginning
of
the
Development
For the For the Stage on
Nine Months Ended Years Ended April 1, 1999
December 31, March 31, through
-------------------------------------------------------------------- December 31,
1999 1998 1999 1998 1999
----------------- -------------- ---------------- --------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes payable $ - $ - $ 13,200 $ - $ -
Issuance of common stock for cash 30,000 - 114,000 - 30,000
--------------- -------------- ---------------- --------------- ----------------
Net Cash Flows Provided by
Financing Activities 30,000 - 127,200 - 30,000
--------------- -------------- ---------------- --------------- ----------------
NET INCREASE (DECREASE) IN
CASH (208,605) 20,618 153,655 (40,341) (208,605)
CASH AT BEGINNING OF PERIOD 208,660 55,005 55,005 95,346 208,660
--------------- -------------- ---------------- --------------- ----------------
CASH AT END OF PERIOD $ 55 $ 75,623 $ 208,660 $ 55,005 $ 55
=============== ============== ================ =============== ================
CASH PAID DURING THE YEAR FOR:
Interest $ - $ - $ 74 $ - $ -
Income taxes $ - $ - $ - $ - $ -
NON-CASH FINANCING TRANSACTIONS
Common stock issued for services $ - $ - $ 5,988,000 $ - $ -
Common stock issued for debt $ - $ - $ - $ 235,500 $ -
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
8
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company was incorporated as MedMaster Systems, Inc.
(MedMaster) to provide an accounts receivable factoring service to
health care providers. The Company granted credit to customers who
were located primarily in the western part of the United States.
On March 29, 1999, the Company changed its name to Omega Dynamics,
Inc. and discontinued the MedMaster operations. Accordingly, it
was reclassified as a development stage company as of April 1,
1999. The Company is seeking to merge with or acquire a business
opportunity.
b. Principles of Consolidation
Through March 31, 1999, the consolidated financial statements
include the accounts of Omega Dynamics, Inc. and its wholly-owned
subsidiaries, Financial Computer Services, Inc., Medac, Inc., Ink,
Inc., and Sunrise Travel, Inc. All material intercompany accounts
and transactions have been eliminated in consolidation. As of
December 31, 1999, only the accounts of Omega Dynamics, Inc.
are included.
c. Revenue Recognition
Revenue recognition policies will be determined when planned
principle operations commences.
d. Property and Equipment
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and
repairs that do not increase the useful life of the assets are
expensed as incurred. Depreciation of property and equipment is
determined using the straight-line method over the expected useful
lives of the underlying assets, ranging from three to seven years.
e. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
9
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Basic Net Loss Per Share
<TABLE>
<CAPTION>
For the Nine Months Ended
December 31,
1999 (unaudited)
---------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of Earnings Per
Amounts Shares Share
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net income $ 949,154 13,341,655 $ 0.07
------------------ ------------------ ------------------
$ 949,154 13,341,655 $ 0.07
================== ================== ==================
For the Nine Months Ended
December 31,
1998 (unaudited)
---------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
------------------ ------------------ ------------------
Net loss $ (110,041) 1,099,182 $ (0.10)
------------------ ------------------ ------------------
$ (110,041) 1,099,182 $ (0.10)
================== ================== ==================
For the Year Ended
March 31,
1999
---------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
------------------ ------------------ ------------------
Net loss $ (6,138,056) 1,165,944 $ (5.26)
------------------ ------------------ ------------------
$ (6,138,056) 1,165,944 $ (5.26)
================== ================== ==================
</TABLE>
10
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Basic Net Loss Per Share (Continued)
<TABLE>
<CAPTION>
For the Year Ended
March 31,
1998
----------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net loss $ (111,845) 1,068,535 $ (0.10)
------------------ ------------------ ------------------
$ (111,845) 1,068,535 $ (0.10)
================== ================== ==================
</TABLE>
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding at the date
of the financial statements. Stock warrants and stock options have
not been included as they are antidilutive.
g. Provision for Income Taxes (Unaudited)
No provision for federal income taxes have been recorded due to
net operating losses. The Company accounts for income taxes
pursuant to FASB Statement No. 109. The Internal Revenue Code
contains provisions which may limit the loss carryforwards
available should certain events occur, including significant
changes in stockholder ownership interests. Accordingly, the tax
benefit of the loss carryovers is offset by a valuation allowance
of the same amount. The loss carryforwards of approximately
$4,760,000 (unaudited) will expire by the year 2019.
h. Concentrations of Credit Risk
The Company maintains cash balances in excess of federally insured
limits at certain financial institutions.
i. Cash and Cash Equivalents
For purposes of financial statement presentation, the Company
considers all highly liquid investments with a maturity of three
months or less, from the date of purchase to be cash equivalents.
11
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
j. New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial
statements.
k. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for
a fair presentation. Such adjustments are of a normal recurring
nature.
NOTE 2 - CONTINUED OPERATIONS - GOING CONCERN
The Company has suffered recurring losses from operations, and as
of December 31, 1999, the Company had a working capital deficiency
of $27,498 (unaudited), which is funded by shareholders of the
Company. Cash currently generated from operations and the
Company's current cash position are not adequate to retire its
current liabilities, thus raising substantial doubt about the
Company's ability to continue as a going concern. Management is
considering all options and sources of revenue available to the
Company and believes that a redirection of the Company focus is
imperative to provide a viable future. Management is seeking a
merger with an existing operating company. There can be no
assurance that the Company will be successful in these endeavors.
The accompanying financial statements do not include any
adjustments relating to this uncertainty.
12
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
Equipment $ - $ 131,976
Accumulated depreciation - (128,487)
------------------ -----------------
$ - $ 3,489
================== =================
</TABLE>
Total depreciation expense for the nine months ended December 31,
1999 and for the year ended March 31, 1999 was $-0- (unaudited)
and $9,214, respectively.
NOTE 4 - NOTE PAYABLE - RELATED PARTIES
At December 31, 1999 and March 31, 1999, the Company owed related
parties amounts totaling $27,553 (unaudited) and $418,248 of
principal and accrued interest, and late fees, respectively. The
notes are unsecured, accrue interest on the outstanding principal
balance at rates of 8% to 10% per annum, and are due upon demand.
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
Note payable
Principal $ - $ 220,000
Interest - 117,150
Late fees - 67,898
------------------ -----------------
Total - 405,048
------------------ -----------------
Note payable - shareholders 24,149 13,000
Note payable - officer 2,500 200
Interest - shareholders and officer notes 904 -
------------------ -----------------
$ 27,553 $ 418,248
================== =================
</TABLE>
Interest expense on the above notes for the nine months and for
the year ended December 31, 1999 and March 31, 1999 was $904
(unaudited) and $19,800, respectively. Late fees incurred on the
past due interest payable for the nine months ended December 31,
1999 and for the year ended March 31, 1999 was $-0- (unaudited)
and $21,203, respectively.
The former officer noted above was employed by the Company until
March 3, 1999, when he tendered his resignation to the Company.
13
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 5 - COMMON STOCK TRANSACTIONS
On May 28, 1997, the Company issued 196,250 shares of the
Company's common stock as payment of debt totaling $235,500.
On March 29, 1999, the Company issued 50,000 shares of the
Company's common stock for cash at $0.50 per share, or $25,000.
On March 30, 1999, the Company issued 12,000,000 shares of the
Company's common stock to related parties, officers and directors
for cash at par value of $0.001 per share, or $12,000. This
issuance was valued at $0.50 per share to reflect the prevailing
issuance price of $0.50 per share received from unrelated third
parties in arms-length transactions.
On March 30, 1999, the Company issued 64,000 shares of the
Company's common stock for cash at $0.50 per share, or $32,000.
On March 31, 1999, the Company issued 90,000 shares of the
Company's common stock for cash at $0.50 per share, or $45,000.
Between April 1, 1999 and December 31, 1999, the Company issued
60,000 shares of the Company's common stock for cash at $0.50 per
share, or $30,000 (unaudited).
NOTE 6 - OBLIGATIONS UNDER LEASES
On January 1, 1986, the Company entered into a lease agreement for
its operating facilities with the DARO Group, a partnership owned
by certain former officers and directors of the Company. This
lease expires on December 31, 2000.
Due to a dispute between the Company and a certain former officer,
who is a partner in the DARO Group, the Company is treating the
lease as a month-to-month lease. Rent expense to this partnership
for the nine months ended December 31, 1999 and for the year ended
March 31, 1999 was approximately $-0- (unaudited) and $15,000,
respectively.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Employment Agreement
--------------------
Effective April 1, 1994, an officer an director of the Company
entered into a three year employment agreement, whereby the
officer is entitled to receive approximately $110,000 per year
through the fiscal year ending March 31, 1997. On November 5,
1997, the Company extended that contract through March 31, 2000.
Due to the financial condition of the Company, certain amounts due
under these employment agreements have been foregone by the
officer and accrued by the Company. The total amounts due under
the employment agreements at December 3,1 1999 and March 31, 1999
was $-0- (unaudited) and $734,762, respectively. The officer
resigned his position on March 3, 1999, effectively terminating
the employment agreement as of that date.
14
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(A Development Stage Company)
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
December 31, 1999 and March 31, 1999
NOTE 8 - DISCONTINUED OPERATIONS
On December 29, 1999, the Company decided to divest of certain
assets and liabilities of the Company and certain assets and
liabilities held in the names of its subsidiaries Ink, Inc.,
Sunrise Travel, Inc., and Financial Computer Services, Inc. as at
March 31, 1999 and assigned such assets and liabilities to Rerol,
Inc., a Utah corporation.
<TABLE>
<CAPTION>
For the
Nine Months
Ended For the Years Ended
December 31, March 31,
1998 1999 1998
------------------ ------------------ -----------------
(Unaudited)
<S> <C> <C> <C>
SALES $ 280,768 $ 374,358 $ 1,174,735
COST OF SALES 227,335 303,113 948,653
------------------ ------------------ -----------------
GROSS MARGIN 53,433 71,245 226,082
------------------ ------------------ -----------------
EXPENSES
Depreciation and amortization 6,910 9,214 12,429
General and administration 135,439 6,171,920 351,908
------------------ ------------------ -----------------
Total Expenses 142,349 6,181,134 364,337
------------------ ------------------ -----------------
Loss from Operations (88,916) (6,109,889) (138,255)
------------------ ------------------ -----------------
OTHER INCOME (EXPENSE)
Interest income 9,626 12,835 63,452
Interest expense (30,751) (41,002) (37,042)
------------------ ------------------ -----------------
Total Other Income (Expense) (21,125) (28,167) 26,410
------------------ ------------------ -----------------
LOSS FROM DISCONTINUED
OPERATIONS $ (110,041) $ (6,138,056) $ (111,845)
================== ================== =================
</TABLE>
The Company realized a gain on the disposal of discontinued
operations of $1,111,845 due to the assumption of the accumulated
deficit of the former subsidiaries by Rerol, Inc.
15
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
Independent Auditors' Report............................................................................. 3
Consolidated Balance Sheet............................................................................... 4
Consolidated Statements of Operations.................................................................... 5
Consolidated Statements of Stockholders' Equity (Deficit)................................................ 6
Consolidated Statements of Cash Flows.................................................................... 7
Notes to the Consolidated Financial Statements........................................................... 9
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Omega Dynamics, Inc. and Subsidiaries
(Formerly MedMaster Systems, Inc. and Subsidiaries)
North Logan, Utah
We have audited the accompanying consolidated balance sheet of Omega Dynamics,
Inc. and Subsidiaries (formerly MedMaster Systems, Inc. and Subsidiaries) as of
March 31, 1999 and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the years ended March 31,
1999 and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Omega Dynamics, Inc.
and Subsidiaries (formerly MedMaster Systems, Inc. and Subsidiaries) as of March
31, 1999 and the results of their operations and their cash flows for the years
ended March 31, 1999 and 1998 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has significant operating losses to date and a
working capital deficit, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
December 29, 1999
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Balance Sheet
ASSETS
------
March 31,
1999
-----------------
<S> <C>
CURRENT ASSETS
Cash $ 208,660
Accounts receivable, net 793
Prepaid expenses 15,024
-----------------
Total Current Assets 224,477
PROPERTY AND EQUIPMENT (Notes 1 and 3) 3,489
-----------------
TOTAL ASSETS $ 227,966
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 59,756
Accrued expenses 756,614
Notes payable - related parties (Note 4) 418,248
-----------------
Total Current Liabilities 1,234,618
LONG-TERM LIABILITIES -
Total Liabilities 1,234,618
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 500,000 shares authorized at $0.01
par value; no shares issued or outstanding -
Common stock, 100,000,000 shares authorized at $0.001
par value; 13,303,182 shares issued 13,303
Additional paid-in capital 9,573,463
Accumulated deficit (10,593,418)
-----------------
Total Stockholders' Equity (Deficit) (1,006,652)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 227,966
=================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Operations
For the Years Ended
March 31,
-------------------------------------
1999 1998
------------------ -----------------
<S> <C> <C>
SALES $ 374,358 $ 1,174,735
COST OF SALES 303,113 948,653
------------------ -----------------
GROSS MARGIN 71,245 226,082
------------------ -----------------
EXPENSES
Depreciation and amortization 9,214 12,429
General and administrative 6,171,920 351,908
------------------ -----------------
Total Expenses 6,181,134 364,337
------------------ -----------------
Loss from Operation (6,109,889) (138,255)
------------------ -----------------
OTHER INCOME (EXPENSE)
Interest income 12,835 63,452
Interest expense (41,002) (37,042)
------------------ -----------------
Total Other Income (Expense) (28,167) 26,410
------------------ -----------------
NET LOSS $ (6,138,056) $ (111,845)
================== =================
BASIC LOSS PER SHARE $ (5.26) $ (0.10)
================== =================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit
---------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance, March 31, 1997 902,932 $ 903 $ 3,248,363 $ (4,343,517)
Common stock issued for
payment of debt at $1.20
per share 196,250 196 235,304 -
Net loss for the year ended
March 31, 1998 - - - (111,845)
---------- --------------- ---------------- ----------------
Balance, March 31, 1998 1,099,182 1,099 3,483,667 (4,455,362)
Common stock issued for
cash and services at $0.50
per share 12,000,000 12,000 5,988,000 -
Common stock issued for
cash at $0.50 per share 204,000 204 101,796 -
Net loss for the year ended
March 31, 1999 - - - (6,138,056)
---------- --------------- ---------------- ----------------
Balance, March 31, 1999 13,303,182 $ 13,303 $ 9,573,463 $ (10,593,418)
========== =============== ================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows
For the Years Ended
March 31,
-------------------------------------
1999 1998
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,138,056) $ (111,845)
Adjustments to reconcile net loss to net cash flows
used by operating activities:
Depreciation and amortization 9,214 12,429
Common stock issued for services 5,988,000 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 44,767 30,757
(Increase) decrease in prepaids (7,493) 50,028
Increase (decrease) in bad debt allowance (3,959) (24,988)
Increase (decrease) in bank overdraft (7,637) 2,418
Increase (decrease) in notes payable - related 41,003 37,042
Increased (decrease) in accounts payable 14,431 (108,330)
Increase in accrued expenses 86,642 77,647
------------------ -----------------
Net Cash Flows Provided (Used) by Operating Activities 26,912 (34,842)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (457) (5,499)
------------------ -----------------
Net Cash Flows (Used) by Investing Activities (457) (5,499)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 13,200 -
Issuance of common stock for cash 114,000 -
------------------ -----------------
Net Cash Flows Provided by Financing Activities 127,200 -
----------------- ----------------
NET INCREASE (DECREASE) IN CASH 153,655 (40,341)
CASH AT BEGINNING OF YEAR 55,005 95,346
------------------ -----------------
CASH AT END OF YEAR $ 208,660 $ 55,005
================== =================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
March 31,
-------------------------------------
1999 1998
------------------ -----------------
<S> <C> <C>
CASH PAID DURING THE YEAR FOR:
Interest $ 74 $ -
Income taxes $ - $ -
NON-CASH FINANCING TRANSACTIONS
Common stock issued for services $ 5,988,000 $ -
Common stock issued for debt $ - $ 235,500
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
8
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
MedMaster Systems, Inc. provides an accounts receivable factoring
service to health care providers participating in the MedMaster
System. The Company grants credit to customers who are located
primarily in the western part of the United States.
On March 29, 1999, the Company changed its name to Omega Dynamics,
Inc.
b. Principles of Consolidation
The consolidated financial statements include the accounts of
MedMaster Systems, Inc. and its wholly-owned subsidiaries;
Financial Computer Services, Inc., Medac, Inc., Ink, Inc., and
Sunrise Travel, Inc. All material intercompany accounts and
transactions have been eliminated in consolidation.
c. Revenue Recognition
The Company charges a average commission of 8% on factored
receivables it collects on behalf of its subscribers. The Company
classifies receivables as either Type 1 or Type 2 based on the
assessed credit worthiness of the customer. Commissions on Type 1
nonrecourse receivables are nonrefundable and are immediately
recognized as income. Collections on Type 2 receivables are
remitted to subscribers as collected, net of the Company's
commission, which is recognized as income when collected. The
factoring commissions are recognized when purchased rather than
over the period of service because the differences between the
effects of such allocations and the effects of immediate
recognition is immaterial. Printing, credit reporting and travel
service revenues are recognized as income when earned.
d. Property and Equipment
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and
repairs that do not increase the useful life of the assets are
expensed as incurred. Depreciation of property and equipment is
determined using the straight-line method over the expected useful
lives of the underlying assets, ranging from three to seven years.
e. Use of Estimates
the preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
9
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Basic Net Loss Per Share
<TABLE>
<CAPTION>
For the Year Ended
March 31,
1999
-----------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net loss $ (6,138,056) 1,165,944 $ (5.26)
------------------ ------------------ ------------------
$ (6,138,056) 1,165,944 $ (5.26)
================== ================== ==================
For the Year Ended
March 31,
1998
-----------------------------------------------------------
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
------------------ ------------------ ------------------
Net loss $ (111,845) 1,068,535 $ (0.10)
------------------ ------------------ ------------------
$ (111,845) 1,068,535 $ (0.10)
================== ================== ==================
</TABLE>
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding at the date
of the financial statements. Stock warrants and stock options have
not been included as they are antidilutive.
g. Provision for Income Taxes
No provision for federal income taxes have been recorded due to
net operating losses. The Company accounts for income taxes
pursuant to FASB Statement No. 109. The Internal Revenue Code
contains provisions which may limit the loss carryforwards
available should certain events occur, including significant
changes in stockholder ownership interests. Accordingly, the tax
benefit of the loss carryovers is offset by a valuation allowance
of the same amount. The loss carryforwards of approximately
$4,602,000 will expire by the year 2019.
10
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Concentrations of Credit Risk
The Company maintains cash balances in excess of federally insured
limits at certain financial institutions.
i. Cash and Cash Equivalents
For purposes of financial statement presentation, the Company
considers all highly liquid investments with a maturity of three
months or less, from the date of purchase to be cash equivalents.
j. New Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than was previously used in accordance with APB Opinion
No. 15, "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic
earnings per share includes no dilution and is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, similar
to fully diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's capital
structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15,
1997. In fiscal 1998, the Company adopted SFAS No. 128, which did
not have a material impact on the Company's financial statements.
The implementation of SFAS No. 129 did not have a material effect
on the Company's financial statements.
11
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
j. New Accounting Pronouncements (Continued)
The Financial Accounting Standards Board has also issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. Because of the
recent issuance of the standard, management has been unable to
fully evaluate the impact, if any, the standard may have on future
financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation
of these standards.
In February 1998, the Financial Accounting Standards Board has
issued Statement of Financial Accounting Standard ("SFAS") No 132.
"Employers' Disclosures about Pensions and other Postretirement
Benefits" which standardizes the disclosure requirements for
pensions and other Postretirement benefits and requires additional
information on changes in the benefit obligations and fair values
of plan assets that will facilitate financial analysis. SFAS No.
132 is effective for years beginning after December 15, 1997 and
requires comparative information for earlier years to be restated,
unless such information is not readily available. The adoption of
this statement had no material impact on the Company's financial
statement.
12
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
j. New Accounting Pronouncements (Continued)
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial
statements.
NOTE 2 - CONTINUED OPERATIONS - GOING CONCERN
The Company has suffered recurring losses from operations, and as
of March 31, 1999, the Company had a working capital deficiency of
$1,010,141, which is funded through participating health care
providers and related parties. Cash currently generated from
operations and the Company's current cash position are not
adequate to retire its current liabilities, thus raising
substantial doubt about the Company's ability to continue as a
going concern. Management is considering all options and sources
of revenue available to the Company and believes that a
redirection of the Company focus is imperative to provide a viable
future. Management is in the process of developing a plan to
expand fee for service activities such as providing credit reports
and to reduce factoring services due to the up-front cash flow
required. In addition, the Company plans to expand operations of
its printing and travel segments. There can be no assurance that
the Company will be successful in these endeavors. The
accompanying financial statements do not include any adjustments
relating to this uncertainty.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
March 31,
1999
-----------------
<S> <C>
Equipment $ 131,976
Accumulated depreciation (128,487)
-----------------
$ 3,489
=================
</TABLE>
Total depreciation expense for the years ended March 31, 1999 and
1998 was $9,214 and $12,429, respectively.
13
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 4 - NOTE PAYABLE - RELATED PARTIES
At March 31, 1999, the Company owed related parties amounts
totaling $418,248 of principal and accrued interest, and late
fees. The notes are unsecured, accrue interest on the outstanding
principal balance at rates of 8% to 9% per annum, and are due upon
demand.
<TABLE>
<CAPTION>
March 31,
1999
-----------------
<S> <C>
Note payable - former officer
Principal $ 220,000
Interest 117,150
Late fees 67,898
-----------------
Total 405,048
Note payable - shareholder 13,000
Note payable - officer 200
-----------------
$ 418,248
=================
</TABLE>
Interest expense on the above notes for the years ended March 31,
1999 and 1998 was $19,800 and $19,800, respectively. Late fees
incurred on the past due interest payable for the years ended
March 31, 1999 and 1998 was $21,203 and $17,242, respectively.
The former officer noted above was employed by the Company until
March 3, 1999, when he tendered his resignation to the Company.
NOTE 5 - COMMON STOCK TRANSACTIONS
On May 28, 1997, the Company issued 196,250 shares of the
Company's common stock as payment of debt totaling $235,500.
On March 29, 1999, the Company issued 50,000 shares of the
Company's common stock for cash at $0.50 per share, or $25,000.
On March 30, 1999, the Company issued 12,000,000 shares of the
Company's common stock to related parties, officers and directors
for cash at par value of $0.001 per share, or $12,000. This
issuance was valued at $0.50 per share to reflect the prevailing
issuance price of $0.50 per share received from unrelated third
parties in arms-length transactions.
On March 30, 1999, the Company issued 64,000 shares of the
Company's common stock for cash at $0.50 per share, or $32,000.
On March 31, 1999, the Company issued 90,000 shares of the
Company's common stock for cash at $0.50 per share, or $45,000.
14
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 6 - OBLIGATIONS UNDER LEASES
On January 1, 1986, the Company entered into a lease agreement for
its operating facilities with the DARO Group, a partnership owned
by certain former officers and directors of the Company. This
lease expires on December 31, 2000.
Due to a dispute between the Company and a certain former officer,
who is a partner in the DARO Group, the Company is treating the
lease as a month-to-month lease. Rent expense to this partnership
for the years ended March 31, 1999 and 1998 was approximately
$15,000 and $27,000, respectively.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Employment Agreement
--------------------
Effective April 1, 1994, an officer an director of the Company
entered into a three year employment agreement, whereby the
officer is entitled to receive approximately $110,000 per year
through the fiscal year ending March 31, 1997. On November 5,
1997, the Company extended that contract through March 31, 2000.
Due to the financial condition of the Company, certain amounts due
under these employment agreements have been foregone by the
officer and accrued by the Company. The total amounts due under
the employment agreements at March 31, 1999 and 1998 was $734,762
and $650,762, respectively. The officer resigned his position on
March 3, 1999, effectively terminating the employment agreement as
of that date.
NOTE 8 - SUBSEQUENT EVENTS
On December 29, 1999, the Company decided to divest of certain
assets and liabilities of the Company and certain assets and
liabilities held in the names of its subsidiaries Ink, Inc.,
Sunrise Travel, Inc., and Financial Computer Services, Inc. as at
March 31, 1999 and assign such assets and liabilities to Rerol,
Inc., a Utah corporation.
The following is the proforma balance sheet of the Company at
March 31, 1999 with the assets and liabilities noted above removed
from the accounts:
<TABLE>
<CAPTION>
ASSETS
------ March 31,
1999
-----------------
<S> <C>
CURRENT ASSETS
Cash $ 117,516
Prepaid expenses 4,379
-----------------
Total Current Assets 121,895
PROPERTY AND EQUIPMENT 2,045
TOTAL ASSETS $ 123,940
=================
</TABLE>
<PAGE>
OMEGA DYNAMICS, INC. AND SUBSIDIARIES
(Formerly MedMaster Systems, Inc. and Subsidiaries)
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
NOTE 8 - SUBSEQUENT EVENTS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
March 31,
1999
---------
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 1,728
Notes payable, related parties 13,200
-----------------
Total Current Liabilities 14,928
TOTAL LIABILITIES 14,928
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares authorized at $0.001
par value; no shares issued or outstanding -
Common stock, 50,000,000 shares authorized at $0.001
par value; 13,303,182 shares issued 13,303
Additional paid-in capital 10,689,127
Deficit accumulated during the development stage (10,593,418)
-----------------
Total Stockholders' Equity 109,012
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 123,940
=================
</TABLE>
15
<PAGE>
