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Exhibit 12
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
RISK FACTORS
FINANCIAL DATA
Although formed in 1983, the Company's activities have been limited to
the design, manufacturing, and marketing of a full line of high-performance fax
processing systems that use the fax machine as a terminal to increase the
productivity and effectiveness of business fax users. The Company's sales for
the year ended December 31, 1999 and six months ended June 30, 2000 were
$2,501,084 and $390,391, respectively. The Company also incurred a loss for such
periods of $(447,175) and $(1,056,108), respectively. The Company also incurred
a loss for such periods of ($447,175) and ($1,056,108), respectively. The
Company has also incurred a negative cash flow from operating activities of
($446,519), and ($828,537) for such periods. At June 30, 2000 the Company had a
negative working capital of ($671,293) and a negative shareholders equity of
($651,066). Future operating results will depend on many factors, including the
ability of the Company to raise adequate working capital, demand for the
Company's products, the level of competition and the Company's ability to
manufacture its products in a production environment while maintaining quality
and controlling costs. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business -- Competition."
COMPETITION
The Company competes with numerous other fax-based industry suppliers.
Many of these competitors have substantially greater resources than the
Company. The Company has been successful in finding a niche in the market,
through research and subsequent patenting of various composite technologies.
Should a larger and better financed company decide to directly compete with the
Company, and be successful in its competitive efforts, the Company's business
could be adversely affected. See "Business -- Competition."
DEVELOPING AND CHANGING MARKET
The market for Fax Services and related services is continually
evolving, and is highly dependent upon changes in the fax-based industry.
Changes in technology and regulatory licensing permitting may cause the demand
for Fax Services related services and products within the industry to create
such a demand for these products that substantially existing companies in other
product lines may shift their emphasis to the fax-based industry, thus
increasing the competition. There can be no assurance that the Company's
products will continue to be accepted. See "Business -- Competition."
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon Thomas J. Conwell, President and
founder of the Company, key man life insurance on the life of Thomas J. Conwell
in the amount of $500,000. The Company's future success also depends on its
ability to attract and retain qualified personnel, for which competition is
intense. The loss of Mr. Conwell or the Company's inability to attract and
retain other qualified employees could have a material adverse effect on the
Company. See "Management."
LACK OF DIVIDENDS
The Company has not paid cash dividends and does not anticipate
paying cash dividends on the Common Stock in the foreseeable future.
