SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE TRACKER CORPORATION OF AMERICA
(Exact name of registrant as specified in its character)
DELAWARE 86-0767918
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
1120 FINCH AVENUE WEST, SUITE #303
NORTH YORK, ONTARIO, CANADA M3J 3H8
(Address of Principal Executive Offices) (Zip Code)
-----------------------
2000 STOCK WAGE AND FEE PAYMENT PLAN
(Full title of the Plan)
-----------------------
BRUCE I. LEWIS, CEO
The Tracker Corporation of America
1120 Finch Avenue West, Suite #303
Toronto, Ontario, Canada M3J 3H8
(Name and address of agent for service)
(416) 663-8222
(Telephone number, including area code, of agent for service)
-----------------------
Approximate date of commencement of proposed sales pursuant to the plan: From
time to time after this registration statement becomes effective.
CALCULATION OF REGISTRATION FEE
Proposed
Maximum
Proposed Maximum Aggregate Amount Feel
Title of Securities Amount to Offering Price Offering of
to be Registered be Registered per Share Price Registration
- --------------------------------------------------------------------------------
Common Stock,
$.001 par value 3,500,000 $.49 $1,175,000 $452.76
- ----------------- --------- ---- ---------- -------
1.
Computed pursuant to Rules 457(h)(1) and 457(c) for the purpose of calculation
of the registration fee on the basis of the average of the bid and asked price
of a share of our common stock on March 21, 2000, as reported by the National
Quotation Bureau, Inc.
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Items 1 and 2 of
Part I of Form S-8 will be sent or given to employees as specified in Rule
428(b)(1). In accordance with the instructions to Part I, these documents are
not filed with the SEC as part of this registration statement.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
We previously filed the following documents with the SEC. They are
incorporated herein by reference and made a part hereof:
1. Our Annual Report on Form 10-K for the fiscal year ended March 31,
1999.
2. All other reports we filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since March 31, 1998.
All documents subsequently filed by us pursuant to sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this registration statement and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this registration statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this registration
statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to our bylaws, we may indemnify, purchase indemnity insurance, or
pay and advance expenses to our directors, officers and other persons who are
eligible or entitled to such indemnification, payments or advances. Any such
indemnification or payment must be expressly authorized by our board of
directors and in accordance with the provisions of the laws of Delaware. Our
right to indemnify such persons shall include our authority to enter into
written agreements for indemnification with such provisions.
Subject to the provisions of the laws of Delaware, our directors shall not
be liable to the company or our shareholders for monetary damages for an act or
omission in the director's capacity of a director, as long as the director acted
in good faith.
Indemnification of officers or persons controlling us for liabilities
arising under the Securities Act of 1933 is held to be against public policy by
the SEC and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
We issued the securities to be reoffered or resold pursuant to this
registration statement in reliance on 4(2) of the Securities Act of 1933 as an
isolated sale to our employees, not part of any public offering.
ITEM 8. EXHIBITS
Exhibit
4.1* Certificate of Incorporation, as corrected by Certificate of Correction
of Certificate of Incorporation dated March 27, 1995, and as
amended by Certificate of Amendment to the Certificate of
Incorporation dated November 1, 1995, and Certificate of Designation
of Rights, Preferences and Privileges of $1,000.00 6% Cumulative
Convertible Preferred Stock of the Registrant dated April 19, 1996,
and Certificate of Designation of Rights, Preferences and Privileges
of Series B $1,000.00 6% Cumulative onvertible Preferred Stock of
the Registrant dated June 5, 1996.
4.2* Bylaws
4.3 2000 Stock Wage and Fee Payment Plan
5.1 Opinion of Arkin Merolla LLP
23.1 Consent of Hirsch, Silberstein & Subelsky, P.C.
23.2 Consent of Arkin Merolla LLP (included in Exhibit 5.1)
24.1 Power of Attorney (see below signature page on page 6 of this
registration statement)
________
* Incorporated by reference from our registration statement on Form S-1
(No.33-99686 and amendments thereto)
ITEM 9. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs 1(i) and 1(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by its is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of North York, Province of Ontario, Canada on March 21,
2000.
THE TRACKER CORPORATION OF AMERICA
BY: /s/ Bruce I. Lewis
-----------------------------
BRUCE I. LEWIS
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the employee benefit plan) have duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of North York, Province of Ontario,
Canada on March 21, 2000.
2000 STOCK WAGE AND FEE PAYMENT PLAN
BY: /s/ Bruce I. Lewis
------------------------------
BRUCE I. LEWIS
CHIEF EXECUTIVE OFFICER
THE TRACKER CORPORATION OF AMERICA
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on
this Form S-8 registration statement hereby constitutes and appoints Bruce I.
Lewis and Jay S. Stulberg, or either of them, with full power to act without the
other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (unless revoked in writing) to sign any or all amendments
(including post-effective amendments thereto) to this Form S-8 registration
statement relating to the 2000 Stock Wage and Fee Payment Plan to which this
power of attorney is attached, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting to said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- ----------------------- ---------------------------- --------------
/s/ Bruce I. Lewis Chief Executive Officer March 21, 2000
- -----------------------
Bruce I. Lewis Principal Executive
Officer), Director
/s/ Jay S. Stulberg President, Chief Operating March 21, 2000
- -----------------------
Jay S. Stulberg Officer, Chief Financial
Officer (Principal Financial
Officer and Principal
Accounting Officer),
Secretary, Director
/s/ David G. R. Butler Director, Compensation March 21, 2000
- -----------------------
David G. R. Butler Committee
- ----------------------- Director, Compensation March 21, 2000
Carl J. Corcoran Committee
Director March 21, 2000
/s/ H. Joseph Greenberg
- -----------------------
H. Joseph Greenberg
</TABLE>
<PAGE>
EXHIBIT NUMBER EXHIBIT
-------------- -------
4.3 2000 Stock Wage and Fee Payment Plan
5.1 Opinion of Arkin Merolla LLP
23.1 Consent of Hirsch, Silberstein & Subelsky, P.C.
23.2 Consent of Arkin Merolla LLP
(included in Exhibit 5.1)
24.1 Power of Attorney (see below signature page on
page 7 of this registration statement)
Exhibit 4.3
2000 STOCK WAGE AND FEE PAYMENT PLAN
THIS PLAN is adopted as of this 31st day of December, 1999, for the benefit
of certain employees and directors of The Tracker Corporation of America, a
Delaware corporation (the "Company").
INTRODUCTION
------------
A. The Company wishes to preserve its operating capital and reduce its
monthly cash needs.
B. The Company wishes to retain and motivate eligible employees and
directors, and to provide them with incentives and rewards more directly
linked to the profitability of the Company's business and increases in
stockholder value.
C. The Company believes its best interests will be served by issuing shares
of the Company's $0.001 par value common stock (the "Common Stock"), where
possible, in lieu of otherwise payable wage payments or fees.\
AGREEMENT
---------
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual benefits to the Company and eligible employees and directors who so
elect, to be derived from their employment or directorship by the Company, the
parties hereby agree as follows:
1. 1999 Calendar Year.
--------------------
1.1. Any full-time employee and non-employee (outside) director who deferred
all or part of his or her wage payments or fees due from the Company during the
period from January 1, 1999 to December 31, 1999 (the "1999 Calendar Year") is
eligible to participate in the Plan.
1.2. Any eligible full-time employee or director may elect to receive his or
her compensation for the 1999 Calendar Year in the form of shares of Common
Stock issuable under the Plan (the "Shares"), in lieu of cash, based upon the
"Stock Price." For purposes hereof, "Stock Price" means the average quoted
closing bid of the last five business days in December 1999 during which the
Common Stock traded on the over the counter market.
1.3. Eligible full-time employees or directors electing to receive Common
Stock in lieu of cash compensation should complete and submit to the Company the
election form attached hereto as EXHIBIT A to denote those months during the
1999 Calendar Year for which he or she desires that Common Stock be issued. The
election is binding.
1.4. Participating employees or directors will receive that number of Shares
equal to his or her compensation (not including discretionary bonuses, overtime,
and other extra payments) for those months during Calendar Year 1999 denoted on
the election form.
2. 2000 Calendar Year.
--------------------
2.1. Full Election.
2.1.1. Any full-time employee and non-employee (outside) director who
intends to defer all or part of his or her wage payments or fees due from the
Company during the period from January 1, 2000 to December 31, 2000 (the "2000
Calendar Year") is eligible to participate in the Plan.
2.1.2. Any eligible full-time employee or director may elect to receive all
of his or her compensation for the 2000 Calendar Year in the form of Shares of
Common Stock, in lieu of cash, based upon the Stock Price. Employees or
directors so electing to receive Common Stock in lieu of 2000 cash compensation
(not including discretionary bonuses, overtime, and other extra payments) should
complete and submit to the Company the election form attached hereto as EXHIBIT
B. The election is binding.
2.1.3. Participating employees or directors will receive that number of
Shares equal to his or her 2000 compensation.
2.1.4. If an electing employee or director terminates service before the end
of the 2000 Calendar Year, he or she will return to the Company the portion of
Shares (or their then cash-value) that corresponds to the remainder of the 2000
Calendar Year. However, in the case of an employee who is laid off or otherwise
terminated by the Company (other than for cause) before the end of the 2000
Calendar Year, he or she will not be obligated to return such Shares or cash
value.
2.2. Partial Election.
2.2.1. Eligible employees or directors who do not make the election
described at Section 2.1 may elect to receive compensation for months the
Company may designate during the 2000 Calendar Year (the "Designated Months") as
follows: As cash ("Option A"); as 50% discounted stock ("Option B"); or as
Stock at market value, with a guaranteed three times future value ("Option C").
2.2.2. Any eligible employee or director may elect, by completing and
submitting the election form attached hereto as EXHIBIT C, to receive his or her
compensation for the Designated Months in any combination of Options A, B or C.
The election is binding with respect to compensation for the Designated Months.
2.2.3. Before the beginning of each calendar month in the period January 1,
2000 through December 31, 2000, the Company will notify each eligible employee
or director selecting Option B or C on an election form whether the month will
be a Designated Month. If it is, then the affected employee or director will
receive his or her compensation for the Designated Month in the manner set forth
in the election form.
2.2.4. An employee or director who elects Option B will receive on the first
business day of each Designated Month (or shortly thereafter) a number of Shares
equal to his or her compensation (not including discretionary bonuses, overtime,
and other extra payments) for the month, divided by one-half of the "Month's
Price." The "Month's Price" means the average quoted closing bid for the last
five business days of the preceding month.
2.2.5. An employee or director who elects Option C will receive on the first
business day of each Designated Month (or shortly thereafter) a number of Shares
equal to his or her compensation (not including discretionary bonuses, overtime,
and other extra payments) for the month, divided by the Month's Price.
2.2.6. If an employee or director who elects Option B or Option C terminates
service before the end of the Designated Month for which the Shares are
allocated, he or she will return to the Company the portion of Shares (or their
then cash value) that corresponds to the remainder of the Designated Month.
However, in the case of an employee who is laid off or otherwise terminated by
the Company (other than for cause) before the end of the Designated Month, he or
she will not be obligated to return such Shares or cash value.
2.2.7. If an electing employee or director does not dispose of any Option C
Shares for 30 months after the Shares are allocated and remains an employee or
director of the Company for such period, then the Company will make a payment to
the employee or director equal to the excess, if any, of the following equation:
(i) Three-times the amount of cash compensation that the employee or director
elected to receive in the form of Option C Shares for all the Designated Months
(or for such shorter period if an employee was laid off or otherwise terminated
by the Company (other than for cause) before December 31, 2002) (the "Guaranty
Price"), minus (ii) the product of (A) the average quoted bid price for the five
business days before the conclusion of the 30-month period (the "30 Month
Price"), multiplied by (B) the number of Option C Shares. (However, an employee
or director an employee who is laid off or otherwise terminated by the Company
(other than for cause) before the end of the 30-month period is nonetheless
entitled to receive the payment specified in the first sentence of this
section.) The Company has the option to pay the excess in the form of cash,
additional stock, or both. In the alternative, the Company may purchase the
Option C Shares for the Guaranty Price.
3. Form S-8 Registration.
-----------------------
3.1. The Company will register 3,500,000 Shares for the Plan on Form S-8.
Upon the effectiveness of the Form S-8 registration statement, the Shares issued
under the plan may be freely traded, subject to the applicable resale
limitations set forth in General Instruction C to Form S-8. Shares issued to
participants may be authorized but unissued Shares or treasury shares.
3.2. If for any reason the number of remaining authorized, but unissued,
Shares under the Plan is less than the number of Shares that eligible employees
and directors would otherwise be entitled to receive, each eligible employee or
director who elected to receive Shares under Option B or Option C (an "Electing
Participant") shall receive the following number of Option B or Option C Shares:
(A/B) x C, where A is the number of remaining authorized but unissued Shares
under the Plan; B is the total number of Shares (Option B and Option C) which
the Electing Participant would otherwise be entitled to receive, and C is the
number or Option B or Option C Shares that the Electing Participant would
otherwise be entitled to receive.
4. Fees and Commissions. No fees, commissions or other charges will be paid
--------------------
by the electing participants in connection with the grants of Shares to such
persons under the Plan.
5. Taxes. No later than the dates of which the value of any Shares granted
-----
pursuant to this Plan first becomes includible in the gross income of an
electing participant for US federal income tax purposes, he or she will pay to
the Company, or make arrangements satisfactory to the Company, regarding payment
of, any federal, state or local taxes of any kind required by law to be withheld
with respect to the Shares. The obligations of the Company under this Agreement
shall be conditioned upon such payment or arrangements, and the Company shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to any electing participant.
6. Securities Laws. Any future sale of any Shares granted pursuant to this
----------------
Plan will be regulated by the Securities Act of 1933 Act, as amended, and any
applicable state or provincial law, rule or regulation. The transfer of any
such Shares by an electing participant will be permitted only if the request for
transfer is accompanied by evidence satisfactory to the Company and its counsel
that such transfer will not result in a violation of any applicable federal,
state or provincial law, rule or regulation.
7. Market Risk. The risk of an increase in the market price of the Shares
------------
shall be borne solely by the Company. The risk of a decrease in the market
price of the Shares shall be borne solely by the electing participants.
8. Conflicting Agreements. In the event of any conflict or inconsistency
-----------------------
between the terms of this Agreement and the employment or directorship
agreements of the electing participants, the terms of this Agreement shall
prevail.
9. Assignment. Participants in the Plan may unconditionally assign their
----------
interests under the Plan.
10. Governing Law. The terms of this Agreement shall be governed by Georgia
-------------
law, without regard to its conflicts of law principles.
11. Counterparts. This Agreement may be executed in several counterparts,
-------------
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
12. Entire Agreement. This Agreement, together with the election form
-----------------
completed by an electing participant, constitutes the entire agreement between
the Company and the electing participant.
13. Amendments. This Agreement shall not be altered, amended or modified
----------
except by written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the undersigned, being duly authorized, hereby executes
this Agreement on behalf of the Company as of the date first above written.
THE TRACKER CORPORATION OF AMERICA
By: /s/ Bruce I. Lewis
---------------------
Bruce I. Lewis
Its: Chief Executive Officer
EXHIBIT A
---------
ELECTION UNDER 2000 STOCK WAGE AND FEE PAYMENT PLAN
This election is made by the undersigned eligible employee or director
under the 2000 Stock Wage and Fee Payment Plan adopted by The Tracker
Corporation of America, a Delaware corporation. Capitalized terms not otherwise
defined herein have the meaning ascribed in the Plan.
1. The undersigned hereby elects to receive his or her compensation (not
including discretionary bonuses, overtime, and other extra payments) for each of
the months of the 1999 Calendar Year denoted below in the form of Common Stock:
__________ January 1999
__________ February 1999
__________ March 1999
__________ April 1999
__________ May 1999
__________ June 1999
__________ July 1999
__________ August 1999
__________ September 1999
__________ October 1999
__________ November 1999
__________ December 1999
2. The undersigned has read the Plan and the prospectus for the Shares to be
issued pursuant to the Plan, and, for and in consideration of the benefits to be
derived from the undersigned by this election, hereby agrees to be bound by all
of the terms and conditions, and agreements in the Plan, which is hereby
incorporated by reference.
ACKNOWLEDGED AND AGREED:
Signature:_____________________________
Name:__________________________________
Date:__________________________________
<PAGE>
EXHIBIT B
---------
ELECTION UNDER 2000 STOCK WAGE AND FEE PAYMENT PLAN
This election is made by the undersigned eligible employee or director
under the 2000 Stock Wage and Fee Payment Plan adopted by The Tracker
Corporation of America, a Delaware corporation. Capitalized terms not otherwise
defined herein have the meaning ascribed in the Plan.
2. The undersigned hereby elects to receive his or her compensation (not
including discretionary bonuses, overtime, and other extra payments) for each of
the months of the 2000 Calendar Year denoted below in the form of Common Stock:
__________ January 2000
__________ February 2000
__________ March 2000
__________ April 2000
__________ May 2000
__________ June 2000
__________ July 2000
__________ August 2000
__________ September 2000
__________ October 2000
__________ November 2000
__________ December 2000
2. The undersigned has read the Plan and the prospectus for the Shares to be
issued pursuant to the Plan, and, for and in consideration of the benefits to be
derived from the undersigned by this election, hereby agrees to be bound by all
of the terms and conditions, and agreements in the Plan, which is hereby
incorporated by reference.
ACKNOWLEDGED AND AGREED:
Signature:_____________________________
Name:__________________________________
Date:__________________________________
<PAGE>
EXHIBIT C
---------
ELECTION UNDER 2000 STOCK WAGE AND FEE PAYMENT PLAN
This election is made by the undersigned eligible employee or director
under the 2000 Stock Wage and Fee Payment Plan adopted by The Tracker
Corporation of America, a Delaware corporation. Capitalized terms not otherwise
defined herein have the meaning ascribed in the Plan.
3. The undersigned hereby elects to receive his or her compensation (not
including discretionary bonuses, overtime, and other extra payments) in the
following forms during each Designated Month of the 2000 Calendar Year denoted
below in the form of Common Stock:
Percentage Options
---------- -------
_________% Option A - Cash
_________% Option B - 50% Discounted Stock
_________% Option C - Stock at market
value, with guaranteed
three times future
value
Total _________%
2. The undersigned has read the Plan and the prospectus for the Shares to be
issued pursuant to the Plan, and, for and in consideration of the benefits to be
derived from the undersigned by this election, hereby agrees to be bound by all
of the terms and conditions, and agreements in the Plan, which is hereby
incorporated by reference.
ACKNOWLEDGED AND AGREED:
Signature:_____________________________
Name:__________________________________
Date:__________________________________
OPINION & CONSENT OF ARKIN MEROLLA LLP EXHIBIT 5.1
[ARKIN MEROLLA LLP LETTERHEAD]
March 21, 2000
The Tracker Corporation of America
1120 Finch Avenue West, Suite 303
North York, Ontario, Canada M3J 3H8
Re: The Tracker Corporation of America Registration
Statement on Form S-8
Gentlemen:
We have acted as special counsel to The Tracker Corporation of America, a
Delaware corporation (the "Company"), in connection with the Registration
Statement on Form S-8 (the "Registration Statement"), to be filed by the Company
with the Securities and Exchange Commission (the "Commission"). The Registration
Statement relates to the registration under the Securities Act of 1933, as
amended (the "Act"), of 3,500,000 shares (the "Shares") of the Company's Common
Stock, par value $.001 per share, to be issued under the Company's 2000 Stock
Wage and Fee Payment Option Plan (the "Plan").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Plan, (ii) the
Certificate of Incorporation and the Bylaws of the Company, (iii) certain
resolutions of the Board of Directors of the Company relating to the Plan, (iv)
the form of Registration Statement proposed to be filed with the Commission, and
such other documents as we have deemed necessary or appropriate as a basis for
the opinions set forth below. In such examination, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to any
facts material to this opinion, which we did not independently establish or
verify, we have relied upon statements and representations of officers and other
representatives of the Company and others.
Based upon and subject to the foregoing and the limitations set forth
below, we are of the opinion that the Shares have been duly authorized and,
after the Registration Statement becomes effective and when the Shares are
issued and sold in accordance with the Plan and the Form S-8 prospectus to be
delivered to the Plan participants, the Shares will be duly issued, fully paid
and nonassessable.
We are qualified to practice law only in the State of Georgia and we do not
purport to express any opinion herein concerning any law other than the Delaware
General Corporation law. With respect to such law, our opinions are as to what
the law is or, in circumstances where the status of the law is uncertain, what
the law might reasonably be expected to be at the date hereof, and we assume no
obligation to revise or supplement this opinion due to any change in the law by
legislative action, judicial decision or otherwise. We do not render any opinion
with respect to any matters than those expressly set forth in the immediately
preceding paragraph. Without limiting the generality of the immediately
preceding sentence, we express no opinion as to the applicability or effect of
any securities or Blue Sky laws of any state.
This opinion is furnished to you solely for your benefit in connection with
the filing of the Registration Statement and is not to be used, circulated,
quoted or otherwise referred to for any other purpose without our prior written
consent. Notwithstanding the foregoing, we hereby consent to the filing of this
opinion with the Commission as Exhibit 5.1 to the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
- -----------------------------
ARKIN MEROLLA LLP
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
/s/ Hirsch Silberstein & Subelsky, P.C.
- --------------------------------------------
Hirsch Silberstein & Subelsky, P.C
Detroit, Michigan
March 28, 2000
Exhibit 99.1
MARCH 28, 2000 REOFFER PROSPECTUS
THE TRACKER CORPORATION
OF AMERICA
UP TO 3,500,000 SHARES OF COMMON STOCK
The selling stockholders pursuant to the 2000 Stock Wage and Fee Payment
Plan of The Tracker Corporation of America may offer up to 3,500,000 shares of
our common stock.
The security holders may sell their shares of common stock after delivery
of this prospectus to purchasers, from time to time, through broker-dealers or
underwriters at the prevailing market price as listed on the OTC Bulletin Board
under the symbol "TRKR." We will not receive any of the proceeds from the
secondary offering and sale of the common stock by the security holders.
See, RISK FACTORS on page 1.
Our principal offices are located at 1120 Finch Avenue West, Suite 303,
North York, Ontario, Canada M3J 3H7. For more information, contact Bruce Lewis
at 1-800-822-8757.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
----------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . .1
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . .7
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . .7
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . .8
INTEREST OF NAMED EXPERTS AND COUNSEL. . . . . . . . . .8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . .9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES . . . . . . . . . . . . .10
</TABLE>
RISK FACTORS
The securities offered in this prospectus involve a high degree of risk.
In addition to the other information contained in this prospectus, you should
consider the following risk factors before making an investment. The
occurrence of any the following risks could materially adversely affect our
business, financial condition and results of operations. Additional risks and
uncertainties not presently known to us or that we currently view as immaterial
might also materially adversely affect our business, financial condition or
results of operations. In such a case, the value of your investment could
decline and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in such forward-looking statements as a result of a variety of
factors, including those set forth in the following risk factors and elsewhere
in this prospectus.
THE CONVERSION OF THE BRIDGE FINANCING NOTES AND THE EXERCISE OF THE WARRANTS
MAY CREATE IMMEDIATE AND SUBSTANTIAL DILUTION TO THE EXISTING SHAREHOLDERS.
As of December 31, 1999, we had 53,988,579 shares of common stock
outstanding, with a book value of $-0.04 per share. By a previous registration
statement, we have reserved shares of common stock for future issuance pursuant
to the conversion of notes and the exercise of certain warrants. We cannot
assure that the issuance of the common stock reserved for future issuance will
not materially adversely affect the prevailing market price of the common stock.
Furthermore, issuance of the shares of common stock as described below could
result in significant dilution to our stockholders.
We issued $1,700,000 in principal amount of bridge financing notes. The
notes are convertible into shares of common stock by the holders at a conversion
price dependent on the market price as of the date of issue and the date of
redemption. The notes also carry an attached repricing warrant that entitled
the holder to additional shares of common stock if the price drops below certain
levels. The conversion of the notes and the exercise of the repricing warrants
will not result in the receipt of any additional funds, but will eliminate
approximately $1,700,000 in debt. We estimate the dilution to the book value of
our common stock, which may have an accretive affect, resulting from the
conversion of the notes and attached repricing warrants as follows:
<TABLE>
<CAPTION>
Low conversion price High conversion price
(.15/share) (.40/share)
--------------------- ------------
<S> <C> <C> <C> <C>
Book value before $.-0.04 $-0.04
Shares converted/exercised 15,000,000 8,500,000
Book value after $ -0.00 $-0.00
</TABLE>
We also reserved additional shares of common stock for issuance pursuant to the
callable warrants, purchase warrants, and warrants issued to Sovereign Capital
Advisors, LLC as our placement agent, in the amount and up to the following
expirations from the original issue date, should we choose to call the warrants:
Warrant Amount Expiration Date
------- ------ ----------------
Callable up to 12,575,000 shares ($1,700,000 worth) 1 year
Purchase 340,000 shares 5 years
Sovereign 85,000 shares 3 years
<PAGE>
Any proceeds we may receive upon the exercise of these warrants will be
used for general corporate purposes and for working capital, which may include
payment of salaries, research and development, and marketing expenses. Assuming
the conversion of the notes and exercise of the repricing warrants result in
65,000,000 shares of common stock issued and outstanding, we estimate the
dilution to the book value of our common stock, which may have an accretive
affect, resulting from the exercise of the remaining warrants as follows:
<TABLE>
<CAPTION>
Low call price High call price
(.15/share) (.40/share)
---------------- -----------------
<S> <C> <C> <C> <C>
Book value before $ -0.00 $ -0.00
Additional shares, if exercised 11,750,000 4,650,000
Total receipts $ 1,400,000 $1,550,000
Book value after $ 0.01 $ 0.02
</TABLE>
Should we convert the notes and the warrants be exercised, the number of
shares of common stock will substantially increase. This could adversely affect
our stock price and other shareholders' ownership interests. Should the
exercise and/or call price be even lower than $0.15 per share, or if we issue
additional shares in the future, the book value of our common stock may
experience further dilution.
BECAUSE THE CONVERSION AND/OR EXERCISE PRICE IS TIED TO THE MARKET PRICE, THE
NUMBER OF SHARES THAT MAY BE ISSUED WILL INCREASE AS OUR STOCK PRICE DECREASES.
A potentially unlimited number of shares can be issued under the conversion
terms of the notes and related warrants since the exercise price of the warrants
is tied to the market price of our common stock. As such, the number of shares
that can be issued will increase as the price decreases. These registered
shares should be sufficient to cover the conversion of the notes and exercise of
the warrants down to a low price of $.15 per share. Should the conversion
and/or exercise price drop below $.15 per share, we may need to register
additional shares to complete the transaction.
RESALE RESTRICTIONS
We are registering restricted securities that were issued under an employee
benefit plan. Consequently, certain limitations apply to the resale of these
securities. Any sale of the securities subject to this registration statement
by the selling shareholders may not exceed, during any three-month period,
greater than the greater of:
- - 1% of our outstanding common stock; or
- - the average weekly reported trading volume of the common stock during the
four calendar weeks preceding the sale
BECAUSE NO CLEARLY IDENTIFIED MARKET EXISTS FOR OUR PRODUCTS AND SERVICES, WE
MAY LACK THE FINANCIAL RESOURCES TO DEVELOP ANY MARKET ACCEPTANCE.
Our future success entirely depends on the successful development,
commercialization and market acceptance of our personal property marking and
monitoring system. Our initial marketing efforts, which focused primarily on
consumer applications of our technology, were not successful. Identifying
markets that will respond favorably to our products and services will present
marketing and financial challenges to us. We are experimenting with new
business models that are speculative and untested to date. We cannot assure
that we will gain a significant level of commercial acceptance for our products
and services in any commercial market.
We have a large number of competitors across a variety of industries that
have substantially greater financial, technical, marketing, and management
resources. For example, we currently offer a pet registration service using our
technology. However, Pets.com and Petopia.com have recently launched web pages
as a lead in to the sale of pet related products. These marketing efforts may
hinder our success in the pet registration market. Similarly, we recently
launched a business asset management system in certain niche markets. One of
our competitors, Tangram Enterprise Solutions, has over twenty times greater
assets than us and ten times the work force. Should we compete directly with
them, their financial and personnel strength could prevent us from capturing
those markets. As a result, demand and market acceptance for our products and
services are subject to a high level of uncertainty.
OUR FUTURE SUCCESS DEPENDS ON THE EXPERIENCE AND RETENTION OF KEY PERSONNEL.
Our success is largely dependent on our ability to attract and retain key
management and operating personnel. We particularly depend on the efforts and
skills of Bruce I. Lewis, Jay S. Stulberg, Christopher Creed, and Tizio Panara.
We have entered into employment agreements with Mr. Lewis and Mr. Stulberg and
are planning to enter into agreements with Mr. Creed and Mr. Panara. The loss,
incapacity, or unavailability of any of these individuals could materially
adversely affect our business, financial condition or results of operation.
It may also be necessary for us to attract and retain additional
individuals to support our growth or to replace key personnel in the event of
their termination of employment. Because qualified individuals are in high
demand and are often subject to competing offers, we cannot assure that we can
attract and retain qualified personnel needed for our business.
BECAUSE OF OUR HISTORY OF OPERATING LOSSES AND EXPECTATION OF FUTURE LOSSES, OUR
INDEPENDENT AUDITORS EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR FUTURE VIABILITY AS A
GOING CONCERN IN THEIR MOST RECENT AUDIT REPORT.
We have generated only modest revenue and have sustained significant
operating losses each year since our inception. In fact, we have not generated
any significant revenue since September 1997. We have accumulated a deficit of
$18,383,736 as of December 31, 1999. Our ability to generate revenue from
operations and achieve profitability is largely dependent upon a successful
transition from a development stage company to a fully operating company. In
order to achieve that, we will require significant additional financing to
penetrate new markets for our products and services. If we are unable to
attract such financing or achieve profitable operations, we may be forced to
cease or significantly limit our operations. As a result of the foregoing
conditions, our independent public accountants expressed doubt about our future
viability as a going concern in their audit report dated July 8, 1999.
OUR STOCK MAY EXPERIENCE SEVERE VOLATILITY BECAUSE OF THE LIMITED TRADING MARKET
AVAILABLE.
Our common stock is traded in the over-the-counter market and is quoted on
the OTC Bulletin Board. The market for the common stock must be characterized
as extremely limited due to the low trading volume and the small number of
brokerage firms acting as market makers. Because stocks traded on the OTC
Bulletin Board generally have limited brokerage and news coverage, the market
price of our common stock may not reflect our true value. As a result, you may
find it difficult to dispose of our common stock or to obtain accurate
quotations as to our value. Over the past eighteen months our stock has traded
at a price as low as $.05 per share and as high as $.41 per share. We cannot
assure that the over-the-counter market for our securities will continue, that a
more active market will develop, or that the prices in any such market will be
maintained at their current levels or otherwise. Furthermore, technological
innovations, new product developments, general trends in our industry and
quarterly variations in our results of operations may cause the market price of
the common stock to fluctuate significantly.
PENNY STOCK RULES
Our common stock is subject to the penny stock rules promulgated under the
Exchange Act of 1934. The penny stock rules regulate broker-dealer practices in
connection with transactions in equity securities with a price of less than
$5.00. This does not include securities registered on certain national
securities exchanges or quoted on the NASDAQ system as long as exchange or
system provides current price and value information with respect to transactions
in such securities. The penny stock rules require a broker-dealer to deliver a
standardized risk disclosure document prepared by the SEC that provides
information about penny stocks and the nature and level of risks in the penny
stock market. This must occur prior to a transaction involving a penny stock
not otherwise exempt from the rules. The broker-dealer must provide the
customer with current bid and offer quotation for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid/offer quotations and the broker-dealer and
salesperson compensation information must be given to the customer orally or in
writing prior to effectuating the transaction. It also must be given to the
customer in writing before or with the customer's confirmation. In addition,
the penny stock rules require that he broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for our common stock. As such, you may find it
more difficult to sell our common stock in the over-the-counter market.
OUR CURRENT OWNERSHIP STRUCTURE AND THE PROVISIONS OF OUR ARTICLES OF
INCORPORATION AND BYLAWS MAY HINDER ANY MATERIAL CHANGE IN CONTROL.
Our directors, officers, principal stockholders and their affiliates will
continue to beneficially own approximately 13% of the common stock immediately
following this registration. This assumes the full exercise of currently
exercisable options and warrants and the conversion of outstanding convertible
debentures. As a result of such ownership, our directors, officers, principal
stockholders and their affiliates will effectively have the ability to maintain,
control and direct our business and affairs. Such concentration of ownership
may have the effect of delaying, deferring or preventing a change in control.
In addition, our articles of incorporation and bylaws contain provisions that
have the effect of retaining the control of current management and may
discourage any acquisition bids. Such provisions could limit the price that
investors might be willing to pay in the future for shares of the common stock.
It may also impede the ability of stockholders to replace management should
factors warrant such a change.
OUR FUTURE SUCCESS DEPENDS ON THE ACCEPTANCE OF OUR TECHNOLOGY IN THE
MARKETPLACE AND OUR FINANCIAL ABILITY TO KEEP UP WITH TECHNOLOGICAL CHANGES IN
OUR INDUSTRY.
We cannot assure that our competitors and potential competitors will not
succeed in developing or marketing technologies and products that will be more
accepted in the marketplace or render our technology obsolete or noncompetitive.
Most of our competitors and potential competitors have substantially greater
capital resources, research and development staffs and facilities than us.
Products based on new technologies such as radio frequency or new industry
standards may render our existing products obsolete and unmarketable. Over the
past two years we have invested minimal capital to maintain and update our
technology. Any delay in developing, testing and releasing enhanced or new
products could materially adversely affect our business, operating results and
financial condition.
OUR LACK OF SIGNED AGREEMENTS WITH SUPPLIERS MAY PREVENT US FROM EFFECTIVELY
DISTRIBUTING OUR PRODUCTS AND SERVICES TO THE MARKET.
The ability to market, sell and operate our products and services depends
on the procurement of necessary goods and services. Although we have
preliminary understandings with suppliers, these may be difficult to enforce.
We cannot assure that we will achieve and maintain product quality and
reliability in the quantities required for commercial operations or within a
period that will permit us to introduce our products in a timely fashion. We
also cannot assure that we will be able to assemble and manufacture our products
at an acceptable cost.
OUR FUTURE RELATIONSHIP WITH SYMBOL TECHNOLOGIES IS DEPENDENT ON OUR SALE OF A
MINIMUM NUMBER OF THEIR SCANNERS, WHICH WE PRESENTLY CANNOT FULFILL.
We procure scanning equipment from Symbol Technologies,
particularly the PDF 1000 laser scanner. This is the first laser scanner to
read two-dimensional bar code. On May 18, 1999 we entered into an agreement
with Symbol whereby we were granted the exclusive right to use the PDF 1000
laser scanners in the United States, Canada, and Europe for personal property
identification and recovery purposes. This contract is subject to a minimum
annual purchase requirement of 5000 laser scanner units having a purchasing
effect of at least $10,000,000. We will likely not meet this requirement and
Symbol will be permitted to terminate the contract should it so choose. Should
Symbol terminate the agreement, our business may be harmed in two ways:
(1) we may no longer be capable of securing future orders due to a lack of
supply; and
(2) we may not be able to honor existing service agreements with current
customers using the Symbol scanners
Consequently, the termination of the Symbol Contract would directly affect our
general viability as a going concern.
BECAUSE OUR PRODUCTS AND SERVICES ARE SUBJECT TO LENGTHY SALES CYCLES, WE MAY
LACK THE FINANCIAL RESOURCES TO MAINTAIN OPERATIONS.
We typically experience long sales cycles that generally vary from
three to six months. Because the implementation of our products and services
involves significant capital expenditures by the customer, our sales are subject
to lengthy approval processes and delays. We often devote significant time and
resources to a prospective customer, including costs associated with multiple
site visits, product demonstrations, and feasibility studies without any
assurance that the prospective customer will decide to purchase our products.
OUR FUTURE SUCCESS IS DEPENDANT ON PATENTS AND PROPRIETARY TECHNOLOGY. WE
CURRENTLY DO NOT HAVE ANY PATIENTS, REGISTERED TRADEMARKS OR SERVICE MARKS.
Our success partly depends on our ability to obtain patent protection for
our proposed products and processes, to preserve our trade secrets and to
operate without infringing the proprietary rights of third parties. We rely on
a combination of trade secret, nondisclosure and other contractual agreements,
and technical measures to protect the confidential information, know-how and
proprietary rights relating to our personal property identification and recovery
system. In addition, we have an exclusive license with Global Tracker to use
the technology associated with an international patent application filed
pursuant to the Patent Cooperation Treaty for our personal property
identification and recovery system. We cannot assure, however, that this will
mature into an issued patent or that any patent, trademark or service mark
obtained or licensed by us will be held valid and enforceable if asserted by us
against another party. In addition, these protections may not preclude third
parties from asserting infringement claims against us. The successful assertion
of such claims could materially adversely affect our business, operating results
and financial condition.
We do not have any registered trademarks or service marks. Furthermore, we
do not have any active trademark or service mark applications pending before the
U.S. Patent and Trademark Office or with any other regulatory authorities.
Even if our pending patent is ultimately issued, other parties may hold or
receive patents that contain claims covering our technology. Should this occur,
it may delay or prevent the sale of our products and services. It may also
require licenses resulting in the payment of fees or royalties by us in order to
continue operations. We cannot assure that needed or potentially useful
licenses will be available to us in the future on acceptable terms. An adverse
determination in any litigation with respect to proprietary infringement could
subject us to significant liabilities to third parties. In such a case, we may
be required to seek licenses from, or pay royalties to, third parties. We could
also be prevented from manufacturing, selling or using our proposed products.
WE WILL REQUIRE SIGNIFICANT FUTURE CAPITAL IN ORDER TO CONTINUE OPERATIONS. WE
CANNOT ASSURE THAT FUTURE CAPITAL WILL BE AVAILABLE.
We will require additional funds in the amount of $1,000,000 over the next
six months to successfully market and operate our business. We estimate
needing an additional $700,000 over the following twelve months. Our inability
to obtain financing or to raise additional capital when needed on favorable
terms could prevent or delay the marketing, sale and operation of our products
and services. Insufficient funds may require us to delay, scale back or
eliminate some or all of our programs designed to facilitate the commercial
introduction of our products and services or prevent such commercial
introduction altogether.
<PAGE>
USE OF PROCEEDS
We will not receive any part of the proceeds from the sale of the shares of
common stock offered by or for the account of the selling security holders.
SELLING SECURITY HOLDERS
We are registering up to 8,000,000 shares of our common stock issued, or to
be issued, pursuant to the 1994 Amended and Restated Stock Option Plan. The
following table describes the number of securities issued under this Plan and
the total number of securities available to be sold if the vested options are
exercised.
As of March 14, 2000, there were approximately 352 record holders of common
stock. Percentage of ownership is based upon 56,109,109 issued and outstanding
shares of common stock beneficially owned on March 14, 2000, including currently
exercisable warrants to purchase 1,250,000 shares of common stock, currently
exercisable options to purchase 40,000 shares of common stock, currently
exercisable options to purchase 2,498,578 shares of common stock, and currently
exercisable options to purchase 200,000 shares reserved under an option issued
to Toda Corporation Limited for financial consulting services.
<TABLE>
<CAPTION>
Options Issued Options Vested Shares Owned
Percentage
Name and Position Under Plan As of 3/14/00 As of 3/14/00 (if >1%)
- ------------------------- ---------- ------------- -------------- --------
<S> <C> <C> <C> <C>
BRUCE I. LEWIS 4,288,578 1,244,289 3,394,289(1) 6.56
Chief Executive Officer
JAY S. STULBERG 3,088,576 1,244,289 1,494,289(2) 2.49
Chief Financial Officer
JOSEPH GREENBERG 20,000 3,333 210,455(3) N/A
Outside Director
DAVID BUTLER 20,000 3,333 3,333(3) N/A
Outside Director
CARL CORCORAN 20,000 3,333 3,3333 N/A
Outside Director
CHRISTOPHER CREED 825,000 0 344,578 N/A
VP - Operations
TIZIO PANARA 500,000 0 314,615 N/A
VP - Business Development
TODA CORPORATION 200,000 200,000 0 N/A
Consultant
<FN>
________
(1) Number of shares includes the currently exercisable option to purchase
1,244,289 shares of common stock. Furthermore, Mr. Lewis has pledged 600,000
shares of common stock and the option to purchase an additional 1,244,289 shares
of common stock as security to the bridge financing notes.
(2) Number of shares includes the currently exercisable option to purchase
1,244,289 shares of common stock. Furthermore, Mr. Stulberg has pledged 250,000
shares of common stock and the option to purchase an additional 1,244,289 shares
of common stock as security to the bridge financing notes.
(3) Number of shares includes the currently exercisable option to purchase
3,333 shares of common stock
</TABLE>
10
PLAN OF DISTRIBUTION
We will not receive any of the proceeds from the sale of the common stock
by the selling security holders. We anticipate the selling security holders
will offer the shares of common stock for sale either directly or through
broker-dealers or underwriters. The broker-dealers or underwriters may act
solely as agents or may acquire the shares of common stock as principals. They
may receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the selling
security holders or the secondary purchasers of the shares of common stock
registered in this prospectus for whom they may act as agent.
The net proceeds to the selling security holders from the sale of common
stock will be the purchase price of the common stock sold less the aggregate
agents' commissions and underwriters' discounts, if any. The selling security
holders and any dealers or agents that participate in the distribution of the
common stock may be deemed to be an underwriter within the meaning of the
Securities Act of 1933.
The shares of common stock being offered by the selling security holders
will be sold in one or more transactions on the OTC Bulletin Board or on any
other market on which our common stock may be trading. The sale price to the
public may be the market price prevailing at the time of sale, or a different
price negotiated by the selling security holders. The selling security holders
shall have the sole and absolute discretion not to accept any purchase offer or
make any sale of shares of common stock if they deem the purchase price to be
unsatisfactory.
Certain limitations apply to the resale of these securities. Any sale of
the securities subject to this registration statement by the selling
shareholders may not exceed, during any three-month period, greater than the
greater of:
- - 1% of our outstanding common stock; or
- - the average weekly reported trading volume of the common stock during the
four calendar weeks preceding the sale
The selling security holders participating in the sale or distribution of
the shares of common stock will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations passed by the SEC.
This may limit the timing of purchases and sales of any of the shares of the
common stock by the selling security holders. It may also affect the
marketability of the shares of common stock.
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We filed the following documents with the SEC which are hereby incorporated
herein by reference:
(1) Our annual report on Form 10-K for the year ended March 31, 1999; and
(2) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since March 31, 1999.
In addition, all documents subsequently filed by us pursuant to sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed incorporated by reference in this registration statement and to be a
part hereof from the date of filing such documents.
We will provide to each person, including any beneficial owner, to whom a
prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in the prospectus but not delivered with the
prospectus. We will provide this information upon written or oral request at no
cost to the requester. Any such request should be made in writing to 1120 Finch
Avenue West, Suite 303, North York, Ontario, Canada M3J 3H7 or by telephone to
Bruce I. Lewis at 1-800-822-8757.
We are required to file reports with the SEC. These reports include: (1)
an annual report on Form 10-K containing financial information examined and
reported upon by our certified public accountants; (2) quarterly reports on Form
10-Q containing unaudited financial statements for each of the first three
quarters of the fiscal year; and (3) additional information on Form 8-K
concerning our business and operations deemed appropriate by our board of
directors.
You may read and copy any materials we file with the SEC by visiting the
public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549
or by calling the SEC at 1-800-SEC-0330. Since we are an electronic filer, you
may also receive information about us through the SEC's internet website that
contains reports, proxy and information statements, and other information at
http://www.sec.gov.
---------------
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
We shall indemnify to the fullest extent permitted by the laws of Delaware
any person made or threatened to be made, a party to any legal action or
proceeding by reason of the fact the individual is or was our director, officer
or employee, or served as an agent for any other enterprise at our request. The
board of directors shall have the power to indemnify any person, other than a
director or officer, made a party to any legal action, suit or proceeding by
reason of the fact the individual was our employee.
Pursuant to our bylaws, we may indemnify and/or purchase indemnity
insurance for our directors, officers or other employees. We may also pay
and/or advance expenses to our directors, officers and other employees who are
eligible for or entitled to such payments or advances. The extent of any such
indemnification, payment or advance shall be expressly authorized by the board
of directors. Our right to indemnify such persons shall include, but not be
limited to, our authority to enter into written agreements for indemnification.
Subject to the laws of Delaware, our directors shall not be liable to the
company or our shareholders for monetary damages for an act or omission in the
director's capacity of a director, as long as the director acted in good faith.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore unenforceable. In the
event that a claim for indemnification against such is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
such issue. This excludes any payment of expenses incurred or paid by a
director, officer or controlling person in the successful defense of any action,
suit or proceeding.
Indemnification of officers or persons controlling us for liabilities arising
under the Securities Act of 1933 is held to be against public policy by the SEC,
and is therefore unenforceable.
