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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 31, 2000
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to ____
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Commission File Number 0-15362
NAVTECH, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2883366
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2340 Garden Road
Monterey, California 93940
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (519) 747-9883
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of the issuer's common stock as of August 31,
2000 was 2,886,980 shares.
================================================================================
<PAGE>
NAVTECH, INC.
FORM 10-QSB
For the Quarter Ended July 31, 2000
INDEX
Part I. Financial Information
Item 1. Financial Statements Page
a) Consolidated Statements of Operations (Unaudited)
for the Nine Months and Three Months Ended
July 31, 2000 and 1999...................................1
b) Consolidated Balance Sheet (Unaudited)
as of July 31, 2000......................................2
c) Consolidated Condensed Statements of Cash Flow
(Unaudited)for the Nine Months Ended
July 31, 2000 and 1999...................................3
d) Notes to Consolidated Financial Statements...............4
Item 2. Management's Discussion and Analysis or Plan of Operation....8
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds...................12
Item 4. Submission of Matters to a Vote of Security Holders.........12
Item 6. Exhibits and Reports on Form 8-K............................12
Signatures....................................................................13
<PAGE>
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Part I. Financial Information
Item 1. Consolidated Financial Statements
NAVTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
=====================================================================================================================
Nine Months Ended Three Months Ended
July 31 July 31
2000 1999 2000 1999
=====================================================================================================================
Revenue
Service fees $ 4,344,337 $ 3,369,987 $ 1,486,678 $ 1,137,836
Hardware, software and license sales 953,768 314,706 175,000 -
---------------------------------------------------------------------------------------------------------------------
Total revenue 5,298,105 3,684,693 1,661,678 1,137,836
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Costs and Expenses
Operating 3,416,030 2,809,745 1,269,819 931,855
Research and development 174,772 55,431 36,504 18,846
Selling, general and administrative 1,038,015 564,058 287,350 167,210
Depreciation and amortization 86,293 63,124 32,264 20,647
---------------------------------------------------------------------------------------------------------------------
Total costs and expenses 4,715,110 3,492,358 1,625,937 1,138,558
---------------------------------------------------------------------------------------------------------------------
Operating income (loss) 582,995 192,335 35,741 (722)
Other income (expense)
Gain on sale of fixed assets 500 - 500 -
Interest income 51,441 78,799 21,874 52,958
Interest expense - related parties (77,805) (29,739) (25,017) (4,886)
Interest expense - other (133,229) (234,002) (24,963) (73,582)
Provision for bad debt - related party (18,921) (106,233) - (26,253)
Realized foreign exchange loss (15,679) (15,993) (856) 14,382
---------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 389,302 (114,833) 7,279 (38,103)
Provision for income taxes 78,813 (37,956) (64,205) (12,905)
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Net earnings (loss) $ 310,489 $ (76,877) $ 71,484 $ (25,198)
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Earnings (loss) per share:
Basic $ 0.13 $ (0.04) $ 0.03 $ (0.01)
---------------------------------------------------------------------------------------------------------------------
Diluted $ 0.10 $ (0.04) $ 0.02 $ (0.01)
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</TABLE>
See accompanying notes.
-1-
<PAGE>
NAVTECH, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<S> <C>
===============================================================================================================
July 31
===============================================================================================================
Assets
Current assets:
Cash and cash equivalents $ 84,618
Accounts receivable, net of allowance for doubtful accounts of $151,040 861,556
Prepaid expenses and other 91,312
---------------------------------------------------------------------------------------------------------------
Total current assets 1,037,486
Investment tax credits receivable, net of allowance 203,978
Fixed assets, net 475,364
Due from related party 320,104
Other assets 118,026
---------------------------------------------------------------------------------------------------------------
Total assets $ 2,154,958
---------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' deficiency Current liabilities:
Accounts payable and accrued liabilities $ 1,044,703
Deferred revenue 52,219
Income taxes payable 169,967
Due to related parties - current portion 289,932
Long term debt - current portion 109,718
Deferred lease inducements - current portion 14,707
---------------------------------------------------------------------------------------------------------------
Total current liabilities 1,681,246
Due to related parties 355,217
Long term debt 35,723
Deferred lease inducements 77,212
Minority interests 242,304
---------------------------------------------------------------------------------------------------------------
Total liabilities 2,391,702
---------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' deficiency
Capital stock, par value $.001 per share, authorized 10,000,000
shares; issued and outstanding 2,676,980 shares 2,677
Additional paid-in capital 2,282,895
Accumulated other comprehensive income 49,939
Accumulated deficit (2,572,255)
---------------------------------------------------------------------------------------------------------------
Total shareholders' deficiency (236,744)
---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' deficiency 2,154,958
---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- 2 -
<PAGE>
NAVTECH, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<S> <C> <C>
=======================================================================================================================
Nine Months Ended
July 31
2000 1999
=======================================================================================================================
Operations
Net income (loss) $ 310,489 $ (76,877)
Depreciation and amortization 86,293 63,124
Provision for uncollectable accounts (35,186) 3,491
Provision for bad debt - related party (18,921) 106,233
Gain on sale of fixed assets (500) -
(Increase) decrease in operating assets - net (140,628) 175,386
(Decrease) increase in operating liabilities - net (331,917) 59,128
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Net cash (used in) provided by operating activities (130,370) 330,485
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Financing
Cash overdraft - (1,263)
Proceeds from issuance of common stock 603,125 -
Payment of long term debt (180,799) (33,314)
Proceeds from long term debt 27,098 20,914
Payment of notes (37,404) (74,785)
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Net cash provided by (used in) financing activities 412,020 (88,448)
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Investing
Purchase of fixed assets (216,556) (58,582)
Proceeds from sale of fixed assets 500 -
Repayments from (advances to) parent company 16,846 (163,837)
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Net cash used in investing activities (199,210) (222,419)
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Net increase in cash and equivalents 82,440 19,618
Effect of exchange rates on cash and equivalents (2,326) (19,618)
Cash and equivalents, beginning of period 4,504 -
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Cash and equivalents, end of period $ 84,618 $ -
------------------------------------------------------------------------------------------------------------------------
Supplemental cash flow information:
Income taxes paid $ - $ -
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Interest paid $ 227,404 $ 240,101
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</TABLE>
See accompanying notes.
-3-
<PAGE>
NAVTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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DESCRIPTION OF BUSINESS AND ORGANIZATION
Navtech, Inc. ("Navtech") and subsidiaries, Navtech Systems Support Inc.
("Navtech-Canada"), Navtech Systems (UK) Limited ("Navtech-UK") and Efficient
Aviation Systems Inc. ("EAS") (herein referred to collectively as the
"Company"), are engaged in the business of developing, marketing, licensing, and
supporting computerized flight operations management systems to the commercial
aviation industry. Navtech was originally incorporated in the State of New York
in 1981 and then reincorporated in the State of Delaware in 1987.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet as of July 31, 2000, the consolidated statements
of operations for the three and nine months ended July 31, 2000 and 1999, and
the consolidated statements of cash flow for the nine months ended July 31, 2000
and 1999 have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring accrual
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for all periods presented have been made.
The consolidated financial statements include the accounts of Navtech and its
wholly owned subsidiaries, Navtech-Canada, Navtech-UK and EAS. All material
intercompany balances and transactions have been eliminated. In accordance with
Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translations," assets and liabilities of foreign operations are translated at
current rates of exchange while results of operations are translated at average
rates in effect for that period. Unrealized translation gains or losses are
shown as a separate component of shareholders' equity.
For information concerning the Company's significant accounting policies,
reference is made to the Company's Annual Report on Form 10-KSB for the year
ended October 31, 1999. Results of operations for the nine months ended July 31,
2000 are not necessarily indicative of the operating results for the full year.
NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin 101 (SAB 101), "Revenue Recognition in Financial
Statements," which summarizes the SEC's views in applying generally accepted
accounting principles to revenue recognition. Implementation of SAB 101 is
required no later than the fourth fiscal quarter of fiscal years beginning after
December 15, 1999. In the Company's case this would be the Company's fiscal year
commencing November 1, 2000. The Company has not completed its assessment of the
impact of SAB 101 on its revenue recognition policies.
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Financial
Instruments and Hedging Activities," in June 1998. SFAS No. 133 requires an
entity to recognize all derivatives and measure those instruments at fair value.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133." In June 2000, the FASB issued SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," an amendment of
SFAS No. 133. Based on the revised effective date, the Company will adopt SFAS
No. 133, as amended by SFAS No. 138, on November 1, 2000, and is currently
assessing the impact of adoption on its consolidated financial statements.
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
Opinion No. 25" (FIN 44). FIN 44 clarifies the application of APB Opinion No. 25
to certain issues including: the definition of an employee for purposes of
applying APB Opinion No. 25; the criteria for determining whether a plan
qualifies as a noncompensatory plan; the accounting consequence of various
modifications to the terms of previously fixed stock options or awards; and the
accounting for the exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44
are applicable retroactively to specific events occurring after either December
15, 1999 or January 12, 2000. The Company has determined that the application of
FIN 44 has no material impact on the Company's financial position or results of
operations.
-4-
<PAGE>
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed on the basis of the weighted average
number of common shares outstanding. Diluted earnings per share is computed on
the weighted average number of common shares outstanding plus the effect of
outstanding stock options and warrants using the "treasury stock" method.
Outstanding stock options and warrants whose inclusion is anti-dilutive are
excluded from this calculation.
The components of basic and diluted earnings (loss) per share were as follows:
EARNINGS (LOSS) PER SHARE
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
July 31 July 31
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------
Net earnings (loss) (A) $ 310,489 $ (76,877) $ 71,484 $ (25,198)
---------------------------------------------------------------------------------------------------------------------
Weighted average outstanding shares of common stock (B) 2,371,424 2,001,980 2,676,980 2,001,980
Dilutive effect of:
Stock options 789,414 - 937,387 -
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Common stock and common stock equivalents (C) 3,160,838 2,001,980 3,614,367 2,001,980
---------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share:
Basic (A/B) $ 0.13 $ (0.04) $ 0.03 $ (0.01)
---------------------------------------------------------------------------------------------------------------------
Diluted (A/C) $ 0.10 $ (0.04) $ 0.02 $ (0.01)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
Options to purchase 626,376 shares of the Company's common stock have been
excluded from the computation of diluted loss per share for the nine and three
months ended July 31, 1999, as their inclusion would be antidilutive.
-5-
<PAGE>
COMPREHENSIVE INCOME (LOSS)
The components of the Company's total comprehensive income (loss) were as
follows:
<TABLE>
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
July 31 July 31
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 310,489 $ (76,877) $ 71,484 $ (25,198)
Currency translation adjustments (1,236) (6,708) (998) (6,745)
---------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) $ 309,253 $ (83,585) $ 70,486 $ (31,943)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
COMMITMENTS AND CONTINGENCIES
Legal Proceedings
On September 13, 1999, the Company received a demand from the attorneys for the
Chapter 11 Creditors Committee of Southern Air Transport, Inc. for alleged
preferential payments of $88,850 made to Navtech-Canada within 90 days of the
filing of the bankruptcy petition of the Debtor in the United States Bankruptcy
Court for the Southern District of Ohio on October 1, 1998. The Company is of
the view that the payments received were for contemporaneous consideration and
were therefore not preferential payments. The Company has further determined
that the matter is still under review and no adversary proceedings have been
initiated as of July 31, 2000. At this time no determination of the eventual
outcome of potential loss can be made, and accordingly, no provision for this
matter has been provided for in the accompanying financial statements.
The Company is subject to various other legal proceedings, claims and
liabilities which arise in the ordinary course of its business. In the opinion
of management, the amount of any ultimate liability with respect to these
actions will not have a material adverse effect on the Company's consolidated
results of operations, cash flow or financial position.
COMPARATIVE AMOUNTS
During the fourth quarter of fiscal 1999, the Company took an additional
allowance against amounts owed by a related party in the amount of $316,453,
portions of which amount should have been provided for during each of the
quarters in fiscal 1999. The comparative statements of operations and cash flows
have been restated to reflect an allowance of $106,233 related to the nine
months ended July 31, 1999.
RECLASSIFICATION
In previous quarters, the Company has reflected Scientific Research and
Experimental Development Investmest Tax Credits as a reduction of the Company's
research and development expenses. These credits, offered in Canada for research
and development that meets certain criteria, can be used to offset income taxes
payable, and to the extent no such taxes are payable, will be refunded. During
the third quarter of fiscal 2000, the Company has reflected these credits as a
reduction in the Company's provision for income taxes. Accordingly, the
comparative statement of operations has been restated to reflect this treatment
across all periods presented.
-6-
<PAGE>
ACQUISITION OF NAVTECH (UK) LIMITED
On October 1, 1999, the Company, through its subsidiary, Navtech-Canada,
acquired all of the outstanding shares of Skyplan Services (UK) Limited for an
aggregate cost of $150,000. The purchase agreement contained a covenant not to
solicit the former employees or customers for a period of two years. Subsequent
to the acquisition, the name of the UK company was changed to Navtech (UK)
Limited.
The Company accounted for the acquisition as a purchase, and as such, the fair
values of the assets acquired and liabilities assumed have been recorded on the
date of acquisition. The excess of the consideration paid and the related costs
of acquisition over the estimated fair value of the net assets acquired,
totaling $108,000, has been recorded as goodwill and is being amortized on a
straight-line basis over ten years.
The historical operating results for the three and nine months ended July 31,
1999 include only those of Navtech, Navtech-Canada and EAS. Navtech-UK's
operating results have been included from the effective date of the acquisition
(October 1, 1999). Presented below are the unaudited pro forma condensed
operating results for the nine months ended July 31, 1999, as if the transaction
had been consummated on November 1, 1998.
Revenue $ 3,945,484
------------------------------------------
Net loss $ (104,549)
------------------------------------------
Earnings per share - basic $ (0.05)
------------------------------------------
-7-
<PAGE>
NAVTECH, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
--------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis or Plan of Operation
FORWARD-LOOKING STATEMENTS
This section and other parts of this Form 10-QSB contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. The following discussion should be read in conjunction with the
financial statements and notes thereto included in Item 1 of Part I of this Form
10-QSB. All financial information is based on the Company's fiscal calendar.
Results of operations
The following discussion compares the results of operation for the three and
nine months ended July 31, 2000 for the Company.
Revenue
Revenue from service fees was approximately $4.3 million in the nine months
ended July 31, 2000, as compared with approximately $3.4 million for the nine
months ended July 31, 1999, an increase of approximately 29%, or approximately
$974,000. This increase is primarily due to an increase in fees from existing
customers of approximately $166,000 and fees from new customers of approximately
$712,000. These increases were offset by the loss of revenue of approximately
$207,000 from one-time customers in 1999 and the loss in fees of approximately
$188,000 from customers who ceased operations in prior quarters. Navtech-UK
generated revenue of approximately $491,000 in the nine months ended July 31,
2000.
Revenue from software, hardware and license sales was approximately $954,000 in
the nine months ended July 31, 2000 as compared to approximately $315,000 in the
nine months ended July 31, 1999. During the nine months ended July 31, 2000, the
Company has installed one complete AURORA system and provided two existing
customers with upgrades for their existing system to the AURORA system. AURORA
is the Company's premier flight operations management system software offering.
Costs and expenses
Operating expenses as a percent of revenue were approximately 76% in the third
quarter, down from approximately 82% in the third quarter of the prior year. For
the first nine months of fiscal 2000, the percentage was approximately 65%, down
from approximately 76% for the first nine months of fiscal 1999.
Operating expenses increased approximately 22%, or approximately $606,000, from
approximately $2.8 million for the nine months ended July 31, 1999, to
approximately $3.4 million for the nine months ended July 31, 2000. This change
is primarily attributable to the inclusion of operating costs for Navtech-UK for
the nine months ended July 31, 2000 (as discussed below), which were not
incurred during fiscal 1999 (since the effective date of the acquisition was
October 1, 1999), an increase in communications costs of approximately $172,000
and an increase in other operating expenses of approximately $2,000. The
increase in communications costs is reflective of the growth of the Company's
customer base and the addition of a new location in the United Kingdom.
Navtech-UK contributed $280,000 in incremental salary costs. In the third
quarter, Navtech-UK incurred approximately $98,000 in fuel and other costs
associated with a series of ferry flights organized for Lufthansa. In addition
to the impact on agency costs and salaries and benefits, Navtech-UK also added
approximately $54,000 in other operating expenses.
-8-
<PAGE>
Research and development expenditures as a percent of revenue was approximately
2% in the third quarter of both 2000 and 1999. For the first nine months of
fiscal 2000 and 1999, research and development expenditures were approximately
3% and approximately 2%, respectively, of revenue. Expenditures increased
approximately 215%, or approximately $119,000, during the nine months ended July
31, 2000 over the same period in fiscal 1999, mainly due to increased activity
in new product development.
Selling, general and administrative expenses as a percent of revenue was
approximately 17% in the third quarter, up from 15% in the third quarter of the
prior year. For the nine months of fiscal 2000, the percentage was approximately
20%, up from approximately 15% for the first nine months of fiscal 1999.
Selling, general and administrative expenses increased approximately 84%, or
approximately $474,000, from approximately $564,000 for the nine months ended
July 31, 1999, to approximately $1.0 million for the nine months ended July 31,
2000. This increase is attributable to an increase in travel costs of
approximately $167,000, an increase in professional fees of approximately
$92,000, an increase in shareholder relations costs of approximately $28,000 and
an increase in bad debt expense of approximately $67,000. In addition, there was
a net increase in trade show expenses of approximately $23,000 and other
selling, general and administrative expenses of approximately $40,000. The
addition of Navtech-UK contributed approximately $57,000 in additional
administration costs. The increase in professional fees relates to increases in
the use of both legal and accounting advisors in the amendment of the Company's
by-laws, the review of the Company's stock option plan and the assistance
required to hold the Company's Annual Meeting of Stockholders during the first
quarter and third quarters. The increase in travel costs is primarily
attributable to increased travel between the Company's three facilities, as well
as increased travel for customer and sales visits in North America. The increase
in bad debt expense primarily relates to one customer who filed for Chapter 11
bankruptcy protection during the period ended July 31, 2000.
Other income (expense)
The Company incurred interest costs of approximately $211,000 for the nine
months ended July 31, 2000 compared to approximately $264,000 for the same
period in 1999. This decrease is due primarily to the Company discontinuing its
practice of factoring receivables in the third quarter of this year. The Company
recorded a loss of approximately $16,000 on realized foreign exchange
transactions for both the nine months ended July 31, 2000 and 1999. Gains and
losses in foreign exchange are attributable to the difference in rates between
the transaction date and the settlement date and cannot readily be compared
between periods.
Provision for Income Taxes
The Company recorded a provision for income taxes of $79,000 for the nine months
ended July 31, 2000. This provision relates to the Company's Canadian profitable
operations for which the Company has previously utilized all of its net
operating and tax credit carryforwards. The Company nets any Scientific Research
and Experimental Development Investment Tax Credits against its gross income tax
provision. In those years where no income taxes are payable, the Company can
obtain a 100% refund of these credits.
-9-
<PAGE>
FINANCIAL CONDITION
As at July 31, 2000, the Company had deficiencies in working capital and
shareholders' equity of $643,760 and $236,744, respectively, as compared to
deficiencies of $1,333,728 and $1,149,122, respectively, as of October 31, 1999.
The Company's liquidity at July 31, 2000 was insufficient to meet operating
requirements. In order to further reduce its working capital deficiency and
alleviate cash flow demands, the Company intends to expand its product line,
leverage its existing customer base, enhance its technology capabilities and
increase its sales and marketing efforts with a view to increasing revenue and
maximizing profitability. In addition, the Company has sought both external
financing and outside investment, where appropriate. Specific initiatives during
the nine months ended July 31, 2000 include:
Existing Customers
The Company intends to continue leveraging its existing base of customers to add
new revenue through added functionality and product upgrades.
Expanded Sales and Marketing
The Company currently utilizes a direct sales approach for both AURORA and its
service bureau offerings. The direct channel provides the Company with direct
feedback from the customer and permits the sales force the ability to offer an
appropriate solution to meet the customer's requirements. To increase revenue
the Company must expand the direct sales force in North America and compliment
the current sales efforts in the Gatwick office. To this end, the Company has
recently hired an Executive Vice President - Sales & Marketing whose job it will
be to define and coordinate the Company's sales and marketing activities. In
addition, Navtech-UK has employed a Director of Sales who will focus on the
European, African and Middle Eastern marketplace. Both those individuals bring
years of experience in the flight operations area with them.
Trade Creditors
The Company's objective is to be current with all of its trade creditors. As an
interim step, the Company has renegotiated payment terms with several larger
trade creditors including its key suppliers of communication services. The
Company is continuing to actively pursue additional extensions and / or equity
conversions with its creditors.
Renegotiation of Demand Loans
During the past year, the Company has been successful in renegotiating two of
its demand loans, resulting in payment terms that reflect reduced interest rates
and fixed payment dates. The management team will continue to pursue discussions
with its lenders on the possible conversion of further debt.
Additional Financing
As of July 31, 2000, the Company had commenced an expansion of its Waterloo,
Canada office to adjoining space. This move was necessitated by an increase in
staff in operational, development and administrative areas of the business. It
is estimated that the total cost of this expansion will be approximately
$78,000, of which approximately $34,000 had already been accrued in the period
ended July 31, 2000. To finance this expansion, as well as the purchase of
additional computers and marketing assets, Navtech-Canada obtained a term loan
from its Canadian bank in the total amount of Canadian $153,000. The funds are
being advanced against specific invoices related to the above capital purchases.
There were no other significant capital commitments as of July 31, 2000.
-10-
<PAGE>
Summary
There can be no assurance that sufficient cash flows will be generated by the
Company to continue the reduction of its working capital deficiency.
Additionally there can be no assurance that additional debt or equity financing
will be available, if and when needed, or that if available, such financing
could be completed on commercially favorable terms.
-11-
<PAGE>
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds:
On May 24, 2000, effective January 12, 2000, the Company issued to Michael J.
Day 25,000 shares of Common Stock in consideration of services rendered. The
offering of shares was exempt from the registration requirements of the
Securities Act of 1933 pursuant to Regulation S promulgated thereunder. The
Company determined that Mr. Day was either an "accredited investor," or was
otherwise sophisticated. The certificate representing the shares of Common Stock
bears a restrictive legend permitting the transfer thereof only upon the
registration of such securities or pursuant to an exemption under the Securities
Act.
Item 4. Submission of Matters to a Vote of Security Holders:
At the Annual Meeting of Shareholders held on July 13, 2000, the following
persons were elected as directors of the Company, such persons to hold office
until their successors are elected or qualified:
VOTES PROXIES
FOR WITHHELD
Thomas D. Beynon 2,286,246 18,226
Prashant Gupta 2,286,246 18,226
Martin J. Hamrogue 2,286,246 18,226
Duncan Macdonald 2,286,246 18,226
James McGinty 2,286,246 18,226
Denis L. Metherell 2,286,246 18,226
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
3(A) Certificate of Incorporation, as amended
3(B) By-Laws (1)
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended July
31, 2000.
Items 1, 3 and 5 are not applicable and have been omitted.
(1) The Company hereby incorporates the footnoted Exhibit by reference in
accordance with Rule 12b-32, as such Exhibit was originally filed as an
Exhibit to the Company's Annual Report on Form 10-KSB for the fiscal year
ended October 31, 1999.
-12-
<PAGE>
Signatures
Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
Navtech, Inc.
Date: September 13, 2000 By: /s/ Duncan Macdonald
----------------------
Duncan Macdonald
Chairman of the Board and
Chief Executive Officer
By: /s/ David Strucke
----------------------
David Strucke
Chief Financial Officer
-13-
<PAGE>
EXHIBIT 3A
CERTIFICATE OF INCORPORATION
OF
NAVTECH, INC.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware
Code and the acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is NAVTECH, INC.
SECOND: The address, including street, number, city, and
county, of the registered office of the corporation in the State of Delaware is
15 East North Street, City of Dover, County of Kent, 19901; and the name of the
registered agent of the corporation in the State of Delaware at such address is
United Corporate Services, Inc.
THIRD: The nature of the business and the purposes to be
conducted and promoted by the corporation, which shall be in addition to the
authority of the corporation to conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware, are as follows:
To purchase, receive, take by grant, gift, devise, bequest,
or otherwise, lease, or otherwise acquire, own, hold, improve,
employ, use, and otherwise deal in and with real or personal
property, or any interest therein, wherever situated, and to sell,
convey, lease, exchange, transfer, or otherwise dispose of, or
mortgage or pledge, all or any of its property and assets, or any
interest therein, wherever situated.
To engage generally in the real estate business as
principal, agent, broker, and in any lawful capacity, and generally
to take, lease, purchase, or otherwise acquire, and to own, use,
hold, sell, convey, exchange, lease, mortgage, work, clear, improve,
develop, divide, and otherwise handle, manage, operate, deal in, and
dispose of real estate, real property, lands, multiple-dwelling
structures, houses, buildings, and other works, and any interest or
right therein; to take, lease, purchase, or otherwise acquire, and to
own, use, hold, sell, convey, exchange, hire, lease, pledge,
mortgage, and otherwise handle, and deal in and dispose of, as
principal, agent, broker, and in any lawful capacity, such personal
property, chattels, chattels real, rights, easements, privileges,
choses in action, notes, bonds, mortgages, and securities as may
lawfully be acquired, held, or disposed of; and to acquire, purchase,
sell, assign, transfer, dispose of, and generally deal in and with as
principal, agent, broker, and in any lawful capacity, mortgages and
other interests in real, personal, and mixed properties; to carry on
a general construction, contracting, building, and realty management
business as principal, agent, representative, contractor,
subcontractor, and in any other lawful capacity.
To carry on a general mercantile, industrial, investing, and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell,
import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in
respect of, and generally deal in and with, at wholesale and retail,
as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber,
advisor, and in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed, and other
real, personal, and mixed property of any and all kinds, together
with the components, resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take
licenses in respect of or otherwise acquire, and to hold, own, use,
operate, develop, enjoy, turn to account, grant licenses and
immunities in respect of, manufacture under and to introduce, sell,
assign, mortgage, pledge, or otherwise dispose of, and, in any manner
deal with and contract with reference to:
(a) inventions, devices, formulae, processes, and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trade-marks, trade
names, trade symbols, and other indications of origin and
ownership granted by or recognized under the laws of the
United States of America, the District of Columbia, any state
or subdivision thereof, and any commonwealth, territory,
possession, dependency, colony, agency or instrumentality of
the United States of America and of any foreign country, and
all rights connected therewith or appertaining thereunto;
(c) franchises, licenses, grants, and concessions.
To guarantee, purchase, take, receive, subscribe for, and
otherwise acquire, own, hold, use, and otherwise employ, sell, lease,
exchange, transfer, and otherwise dispose of, mortgage, lend, pledge,
and otherwise deal in and with, securities (which term, for the
purpose of this Article THIRD, includes, without limitation of the
generality thereof, any shares of stock, bonds, debentures, notes,
mortgages, other obligations, and any certificates, receipts, or
other instruments representing rights to receive, purchase, or
subscribe for the same, or representing any other rights or interests
therein or in any property or assets) of any persons, domestic and
foreign firms, associations, and corporations, and of any government
or agency or instrumentality thereof; to make payment therefor in any
lawful manner; and, while owner of any such securities, to exercise
any and all rights, powers, and privileges in respect thereof,
including the right to vote.
To make, enter into, perform, and carry out contracts of
every kind and description with any person, firm, association,
corporation, or government or agency or instrumentality thereof.
To acquire by purchase, exchange, or otherwise, all, or any
part of, or any interest in, the properties, assets, business, and
good will of any one or more persons, firms, associations, or
corporations heretofore or hereafter engaged in any business for
which a corporation may now or hereafter be organized under the laws
of the State of Delaware; to pay for the same in cash, property, or
its own or other securities; to hold, operate, reorganize, liquidate,
sell, or in any manner dispose of the whole or any part thereof; and
in connection therewith, to assume or guarantee performance of any
liabilities, obligations, or contracts of such persons, firms,
associations, or corporations, and to conduct the whole or any part
of any business thus acquired.
To lend money in furtherance of its corporate purposes and
to invest and reinvest its funds from time to time to such extent, to
such persons, firms, associations, corporations, governments or
agencies or instrumentalities thereof, and on such terms and on such
security, if any, as the Board of Directors of the corporation may
determine.
To make contracts of guaranty and suretyship of all kinds
and endorse or guarantee the payment of principal, interest, or
dividends upon, and to guarantee the performance of sinking fund or
other obligations of, any securities, and to guarantee in any way
permitted by law the performance of any of the contracts or other
undertakings in which the corporation may otherwise be or become
interested, of any person, firm, association, corporation, government
or agency or instrumentality thereof, or of any other combination,
organization, or entity whatsoever.
To borrow money without limit as to amount and at such rates
of interest as it may determine; from time to time to issue and sell
its own securities, including its shares of stock, notes, bonds,
debentures, and other obligations, in such amounts, on such terms and
conditions, for such purposes and for such prices, now or hereafter
permitted by the laws of the State of Delaware and by this
certificate of incorporation, as the Board of Directors of the
corporation may determine; and to secure any of its obligations by
mortgage, pledge, or other encumbrance of all or any of its property,
franchises, and income.
To be a promoter or manager of other corporations of any
type or kind; and to participate with others in any corporation,
partnership, limited partnership, joint venture, or other association
of any kind, or in any transaction, undertaking, or arrangement which
the corporation would have power to conduct by itself, whether or not
such participation involves sharing or delegation of control with or
to others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable instruments and
evidences of indebtedness whether secured by mortgage or otherwise,
as well as to secure the same by mortgage or otherwise, so far as may
be permitted by the laws of the State of Delaware.
To purchase, receive, take, reacquire, or otherwise acquire,
own and hold, sell, lend, exchange, reissue, transfer, or otherwise
dispose of, pledge, use, cancel, and otherwise deal in and with its
own shares and its other securities from time to time to such an
extent and in such manner and upon such terms as the Board of
Directors of the corporation shall determine; provided that the
corporation shall not use its funds or property for the purchase of
its own shares of capital stock when its capital is impaired or when
such use would cause any impairment of its capital, except to the
extent permitted by law.
To organize, as an incorporator, or cause to be organized
under the laws of the State of Delaware, or of any other State of the
United States of America, or of the District of Columbia, or of any
commonwealth, territory, dependency, colony, possession, agency, or
instrumentality of the United States of America, or of any foreign
country, a corporation or corporations for the purpose of conducting
and promoting any business or purpose for which corporations may be
organized, and to dissolve, wind up, liquidate, merge, or consolidate
any such corporation or corporations or to cause the same to be
dissolved, wound up, liquidated, merged, or consolidated.
To conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices
both within and without the State of Delaware, in any and all States
of the United States of America, in the District of Columbia, and in
any or all commonwealths, territories, dependencies, colonies,
possessions, agencies, or instrumentalities of the United States of
America and of foreign governments.
To promote and exercise all or any part of the foregoing
purposes and powers in any and all parts of the world, and to conduct
its business in all or any of its branches as principal, agent,
broker, factor, contractor, and in any other lawful capacity, either
alone or through or in conjunction with any corporations,
associations, partnerships, firms, trustees, syndicates, individuals,
organizations, and other entities in any part of the world, and, in
conducting its business and promoting any of its purposes, to
maintain offices, branches, and agencies in any part of the world, to
make and perform any contracts and to do any acts and things, and to
carry on any business, and to exercise any powers and privileges
suitable, convenient, or proper for the conduct, promotion, and
attainment of any of the business and purposes herein specified or
which at any time may be incidental thereto or may appear conducive
to or expedient for the accomplishment of any of such business and
purposes and which might be engaged in or carried on by a corporation
incorporated or organized under the General Corporation Law of the
State of Delaware, and to have and exercise all of the powers
conferred by the laws of the State of Delaware upon corporations
incorporated or organized under the General Corporation Law of the
State of Delaware.
The foregoing provisions of this Article THIRD shall be
construed both as purposes and powers and each as an independent
purpose and power. The foregoing enumeration of specific purposes and
powers shall not be held to limit or restrict in any manner the
purposes and powers of the corporation, and the purposes and powers
herein specified shall, except when otherwise provided in this
Article THIRD, be in no wise limited or restricted by reference to,
or inference from, the terms of any provision of this or any other
Article of this certificate of incorporation; provided, that the
corporation shall not conduct any business, promote any purpose, or
exercise any power or privilege within or without the State of
Delaware which, under the laws thereof, the corporation may not
lawfully conduct, promote, or exercise.
FOURTH:
1. The aggregate number of shares which the corporation shall
have the authority to issue is TWELVE MILLION (12,000,000),
of which TEN MILLION (10,000,000) shares shall be common
stock with a par value of $.001 per share and TWO MILLION
(2,000,000) shall be Preferred Stock with a par value of
$.01 per share.
2. The 2,000,000 shares of Preferred Stock may be issued in
series. The Board of Directors is vested with the authority
to establish and designate series, to fix the number of
shares therein, and to fix the variations in the relative
rights, preferences and limitations as between series.
3. [Deleted]
4. Each outstanding share of Common Stock shall be entitle to
one vote on each matter submitted to a vote at a meeting of
stockholders.
5. Each forty (40) shares of the Common Stock, $.001 par
value per share, of the Corporation (the "Old Common Stock")
issued and outstanding or held in treasury as of 5:00 P.M.
N.Y. time on April 24, 1990 (the "Effective Time") shall be
reclassified as and changed into one (l) new share of Common
Stock, $.001 par value per share, of the Corporation (the
"New Common Stock"), without any action by the holder
thereof. Stockholders who, immediately prior to the
Effective Time, own a number of shares of Old Common Stock
which is not evenly divisible by forty (40) shall, with
respect to such fractional interest, be entitled to receive
from the Corporation, in lieu of fractions of shares of New
Common Stock, an amount in cash equal to the product
obtained by multiplying the market price of a share of Old
Common Stock as of the Effective Time by the number of
shares of Old Common Stock held by such stockholder
immediately prior to the Effective Time which is not evenly
divisible by forty (40). Each certificate that theretofore
represented shares of Old Common Stock shall thereafter
represent that number of shares of New Common Stock into
which the shares of Old Common Stock represented by such
certificate shall have been reclassified; provided, however,
that each person holding of record a stock certificate or
certificates that represented shares of Old Common Stock
shall receive, upon surrender of such certificate or
certificates, a new certificate or certificates evidencing
and representing the number of shares of New Common Stock to
which such person is entitled.
6. Each four (4) shares of the Common Stock, $.001 par value
per share, of the Corporation (the "Old Common Stock")
issued and outstanding or held in treasury as of 5:00 P.M.
NY Time on the date on which this Certificate of Amendment
is filed by the Secretary of State of the State of Delaware
[April 18, 1993] (the "Effective Time") shall be
reclassified as and changed into one (1) new share of Common
Stock, $.001 par value per share, of the Corporation (the
"New Common Stock"), without any action by the holder
thereof. Stockholders who, immediately prior to the
Effective Time, own a number of shares of Old Common Stock
which is not evenly divisible by four (4) shall, with
respect to such fractional interest, be entitled to receive
from the Corporation, in lieu of fractions of shares of New
Common Stock, an amount in cash equal to the product
obtained by multiplying the market price of a share of Old
Common Stock as of the Effective Time by the number of
shares of Old Common Stock held by such stockholder
immediately prior to the Effective Time which is not evenly
divisible by four (4).
FIFTH: The name and the mailing address of the incorporator
are as follows:
NAME MAILING ADDRESS
Monica Ferguson 1 Gulf & Western Plaza
New York, N.Y. 10023-7773
SIXTH: The corporation is to have perpetual existence.
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 on
the application of any receiver or receivers appointed for this corporation
under 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
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
directs. 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 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, 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: For the management of the business and for the conduct
of the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of 109 of the General Corporation Law of the State
of Delaware, and, after the corporation has received any payment for
any of its stock, the power to adopt, amend, or repeal the Bylaws of
the corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of 141 of the General
Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification shall
be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (2) of subsection (b) of 242 of the General Corporation
Law of the State of Delaware shall otherwise require; provided, that no
share of any such class which is otherwise denied voting power shall
entitle the holder thereof to vote upon the increase or decrease in the
number of authorized shares of said class.
NINTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted
by Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
TWELFTH: If action is to be taken by the stockholders of the
corporation without a meeting, then the written consent of the holders of all of
the shares of capital stock entitled to vote on such action shall be required to
take such action, unless the action has been authorized by the Board of
Directors of the corporation, in which case the written consent of the holders
of not less than a majority of the shares of capital stock entitled to vote on
such action shall be required to take such action.
Originally signed on March 16, 1987.
/s/ Monica Ferguson
---------------------------------
Incorporator
