SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 30, 2000
THE VIOLA GROUP, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 0-12493 13-3134389
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1653 Haight Avenue, Bronx, New York 10461-1503
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 409-6599
(Former name or former address, if changed since last report)
The Exhibit Index appears on Page 7.
Item 1. Changes in Control of Registrant.
At the special meeting of the stockholders held on June 5, 2000, the
stockholders voted to amend and restate to the Viola Group, Inc.'s
Certificate of Incorporation (the "Amended and Restated Certificate").
Among other things, the Amended and Restated Certificate (i) increases
the authorized number of shares of Viola common stock from Two-Million
(2,000,000) to Seventy-five Million (75,000,000); (ii) authorizes the
issuance of Five Million (5,000,0000) shares of preferred stock whose
designations, preferences and rights are to be determined by the
Board of Directors of Viola; and (iii) eliminates stockholders' preemptive
rights. Upon a majority vote of all outstanding shares entitled to vote
thereon, Viola's stockholders authorized adoption of the Amended and
Restated Certificate. The amendment became effective on August 4, 2000.
A primary purpose of amending Viola's Certificate of Incorporation was to
provide Viola with a capital structure flexible enough to accommodate a
proposed share exchange whereby all of the issued and outstanding shares
of DataMEG Corporation, a Virginia corporation ("DataMEG") were to be
exchanged for shares of Viola's common stock, equaling upon completion of
the share exchange, ninety percent (90%) of the issued and outstanding
voting capital stock of Viola (the "Share Exchange"). The Share Exchange
is more fully described below.
The Agreement and Plan of Share Exchange
On April 24, 2000, the sole director of Viola approved an Agreement
and Plan of Share Exchange between Viola and DataMEG pursuant to which all
of the issued and outstanding shares of DataMEG were to be exchanged for
shares of Viola's common stock equaling, upon completion of the share
exchange, 90% of the issued and outstanding voting capital stock of Viola.
As a result of such transaction, the stockholders of Viola would then own
10% of the issued and outstanding shares of Viola common stock totaling, in
the aggregate, 3,300,000 shares, after giving effect to the Common Stock
Dividend. The stockholders of DataMEG would, as a consequence of the Share
Exchange, then own 90% of the issued and outstanding shares of common stock
of Viola, equally approximately 29,700,000 shares of Viola common stock.
Under New York Law, the vote of the stockholders of Viola, as the acquiring
corporation, was not required to approve a share exchange, however, such
share exchange could not be effected without the increase in the number of
shares of authorized Common Stock contemplated in the Amended and Restated
Certificate which, as noted above, was subject the approval of the
stockholders.
On April 24, 2000, the Board of Directors of DataMEG approved the
contemplated Share Exchange and recommended that the stockholders of DataMEG
approve the contemplated Share Exchange. By unanimous written consent of
the DataMEG stockholders, effective May 5, 2000, the stockholders of DataMEG
approved, adopted and consented to the proposed Agreement and Plan of Share
Exchange with Viola. With the approvals of all necessary parties obtained,
the Shares Exchange was consummated on August 18, 2000.
The Parties to the Share Exchange
Viola
Viola is a corporation organized under the laws of the state of
New York on October 14, 1982. Prior to the Share Exchange, Viola conducted
a limited financial consulting business; its annual revenues for the last
four fiscal years ending June 30, 2000 totaled, in the aggregate $6,500.
As reported in Viola's Annual Report on Form 10-K for the fiscal year ending
June 30, 2000, Viola had $0 in total assets. On June 30, 2000 the total
deficit stockholders equity on such date was -$36,139. Viola's business had
been to pursue a business combination transactions with other companies in
order to establish value and a potential for long term growth for the
company's stock. Copies of Viola's Annual Reports on Form 10-K for the last
three fiscal years ending June 30, 1998, June 30, 1999 and June 30, 2000 and
are incorporated by reference herein. Viola is quoted on the OTC Bulletin
Board under the symbol "VIOL:BB". Except as described below under "Legal
Proceedings", neither Viola, its Directors, Officers, affiliates or
beneficial owner of more than 5% of its common stock is a party to, nor is
its property subject to, any pending legal proceeding. Approximately $25,000
was required to be paid to the State of New York to reinstate Viola to
active status before Viola's Amended and Restated Certificate of
Incorporation became effective. DataMEG paid these expenses as part of
the Share Exchange.
DataMEG
DataMEG is a research and development stage company focused
primarily on developing new technologies related to the internet and
information access. DataMEG was incorporated in Virginia in 1999 and has
its principal place of business at 3148 Dumbarton Street, NW.,
Washington, D.C. 20007. Telephone (202) 965-2448.
DataMEG has no material properties. Other than office supplies,
furniture and equipment incidental to the development to the of its
technology products, its primary assets are the technology it has and is
developing for high speed data transmission over ordinary telephone lines
referred to by Viola as a Communications Acceleration Systems (CAS).
DataMEG reports to have filed patents pertinent to this technology
development and its proprietary tone, frequency, modulation technology.
DataMEG's core strategy is to obtain business partners in specific market
sectors that its feels will enhance its ability to introduce a working CAS
network. As with all start-up companies, the success of its business plan,
the viability of its technology, market acceptance of its products, when
and if developed from such technology, and DataMEG's ability to obtain the
necessary capital to implement such plan are speculative.
Pursuant to the Share Exchange, Andrew Benson, Reggie Phillips, and John
Cairns, the President, Chief Operating Officer and Vice President of
Development of DataMEG, respectively, collectively acquired 25,977,341
shares (or 78.7%) of Viola Common Stock. Mr. Benson obtained 10,823,892
Viola shares in exchange for 5,437500 DataMEG shares. Mr. Phillips
obtained 10,823,892 Viola shares in exchange for 5,437,500 DataMEG shares.
Mr. Cairns obtained 4,329,557 Viola shares in exchange for 2,175,000 DataMEG
shares. Mr. Benson and Mr. Phillips' holding each represent 33% of Viola
issued and outstanding common stock. Mr. Cairns' holding represents 12.7%
of Viola's issued and outstanding common stock.
Legal Proceedings
On February 15, 2000 a complaint was filed by Quantum Advanced
Technologies, Inc. in the Superior Court for the District of Columbia,
Civil Division, Civil Action No. 00-0001066, against DataMEG, its three
founders and principal stockholders, Reggie L. Phillips, DataMEG's
Chief Operating Officer, Andrew Benson, Viola's President and John P. Cairns,
and against other entities affiliated with Messrs. Benson and Phillips.
The Complaint alleges: in Count I, that Benson, Phillips, DataMEG and other
entities with whom Benson and Phillips were affiliated breached a
nondisclosure and confidentiality agreement with the Plaintiff by inducing
Cairns to leave the Plaintiff's employment and to bring with him to DataMEG,
disclose and use proprietary, confidential and trade secret information
relating to a new modulation technology with enormous potential commercial
value in the field of data transmission technology allegedly developed by
Cairns at the end of 1996 while an employee of Plaintiff; Count II alleges
that the same conduct by Benson, Phillips, DataMEG, and other entities with
whom Benson and Phillips are affiliated, is in violation of the Uniform Trade
Secrets Act. Count III alleges that Benson, Phillips, DataMEG and other
affiliates with whom Benson and Phillips are affiliated, tortiuously
interfered with the Plaintiff's contractual relationship with Cairns.
Count IV alleges that Benson, Phillips, DataMEG, and other entities with
whom Benson and Phillips are affiliated, tortiuously interfered with
Plaintiff's prospective business expectancy by misappropriating the
Plaintiff's proprietary, confidential and trade secret information and by
attempting to develop, market and sale products, services and applications
which use the claimed proprietary technology. Count V alleges that Cairns
breached his employment agreement with the Plaintiff by disclosing the
aforesaid proprietary, confidential and trade secret information to Benson,
Phillips, DataMEG and other entities with whom Benson and Phillips are
affiliated. Count VI alleges that Cairns breached a fiduciary duty of
confidentiality owed by virtue of his employment with the Plaintiff
with respect to its proprietary confidential and trade secret information.
And Count VII alleges that Cairns has violated the Uniform Trade Secrets Act
of the District of Columbia by virtue of his disclosure of the Plaintiff's
alleged proprietary confidential and trade secret information
relating to the technology and conduct constituting his misappropriation
of the Plaintiff's trade secrets in violation of the Uniform Trade Secrets
Act. The Complaint seeks declaratory and injunctive relief, compensatory
and punitive damages in unspecified amounts and a decree directing that all
inventions, improvements, developments conceived, produced or developed by
the Defendants or any of them relating to the Plaintiff's claim of
proprietary, confidential and trade secret information be assigned to the
Plaintiff. The Complaint also seeks costs and attorneys fees as provided
in the alleged nondisclosure and confidentiality agreement to which
the Defendants are allegedly parties.
Both DataMEG and Messrs. Phillips, Benson and Cairns dispute the
allegations of the Complaint. DataMEG contends that the Tone Frequency
Technology that DataMEG is developing is unrelated to the Waveform
Technology owned by Quantum Advanced Technologies and therefore, believes
that it has not violated any rights of Quantum Advanced Technologies.
The ultimate outcome of the litigation which may extend over a substantial
period of time is uncertain. At a minimum, such litigation may distract
the management of DataMEG from expending time and efforts on behalf of
the business of that company.
Agreement regarding control of the Viola Board of Directors
The Agreement and Plan of Share Exchange provides that promptly
upon compliance with the requirements of Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14(f)-1 promulgated thereunder, two designees
of DataMEG shall be appointed to serve the vacant unexpired terms of office
of former Directors of Viola's Board of Directors. The effect of the
forgoing would be to put designees of DataMEG, the acquired corporation, in
control of Viola's Board of Directors, without a vote of the stockholders.
Rule 14(f)-1 requires the dissemination of certain information regarding
the director designees who will take control of the Viola Board to all
Viola stockholders ten (10) days prior to their taking office, however, it
does not empower stockholders to vote on such matter. DataMEG has not yet
determined who its designees to the Viola Board of Directors will be.
Item 2. See Item 1 (incorporated by reference).
Item 5. See Item 1 (incorporated by reference).
Item 7. Financial Statements and Exhibits.
Consolidated financial statements of Viola and DataMEG will be filed by
amendment to this Form 8-K not later than 60 days from the filing of this
Initial Form 8-K.
Exhibit 2.1 Share Exchange Agreement between DataMEG, Corp. and The
Viola Group Inc. dated April 24, 2000.
Exhibit 3.1 Amended and Restated Certificate of Incorporation of The
Viola Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: August 18, 2000 THE VIOLA GROUP, INC.
(Registrant)
By: /s/ Arthur Viola
_____________________
Arthur Viola
President
List of Exhibits
Exhibit 2.1 Share Exchange Agreement between DataMEG, Corp. and
The Viola Group Inc. dated April 24, 2000.
Exhibit 3.1 Amended and Restated Certificate of Incorporation of
The Viola Group, Inc.
