FIRST ENTERTAINMENT, INC.
1999 Broadway, Suite 3135
Denver, Colorado 80202
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON December 5, 1997
INTRODUCTORY STATEMENT
This Proxy Statement and accompanying Proxy are furnished in connection
with a solicitation of Proxies by the Board of First Entertainment,
Inc. (the Company) for use at the Special Meeting of Shareholders of
the Company, to be held at the Comedy Works, 1226 15th Street, Denver,
Colorado, on December 5, 1997, at 10:00 a.m., local time, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders.
Shareholders of record at the close of business on October 24, 1997 will be
entitled to receive notice of and to vote at the meeting. Each share of common
stock is entitled to one vote for each matter submitted to a vote at the
meeting. Shares represented by executed and unrevoked Proxies will be voted in
accordance with the specifications made thereon. If the enclosed form of Proxy
is executed and returned, it nevertheless may be revoked by giving another
Proxy
or by letter or telegram directed to the Company. Any such revocation must
show
the shareholder's name and must be received prior to the commencement of the
meeting in order to be effective. Additionally, any shareholder attending the
meeting in person, who wishes to do so, may vote by ballot at the meeting,
thereby canceling any Proxy previously given. Where no instructions are
indicated, Proxies will be voted "FOR" the nominees for directors indicated
below and "FOR" the proposals to be considered at the Special Meeting or any
adjournment thereof. Proxy materials will be mailed to shareholders of record
on or about November 3, 1997.
VOTING SECURITIES, PRINCIPAL HOLDERS AND SECURITY
OWNERSHIP OF MANAGEMENT
The approval of each of the proposals set forth in this Proxy Statement
requires the affirmative vote of a majority of the shares actually
voted on such proposal, except that the amendments to the Company's
Articles of Incorporation and the vote for change of state of
incorporation requires the affirmative vote of a majority of all
outstanding shares entitled to be voted at the Meeting.
All voting rights are vested exclusively in the holders of the Company's $.008
par value common stock, with each share entitled to one vote. Only
shareholders
of record at the close of business on October 24, 1997 are entitled to
notice of
and to vote at the meeting and any adjournment thereof. As of June 30, 1997,
the Company had 6,076,413 shares of common stock outstanding.
The following sets forth the number of shares of the Registrant's
$0.008 par value common stock beneficially owned by (I) each person
who, as of June 30, 1997, was known by the Company to own beneficially
more than five percent (5%) of its common stock, (ii) the individual
Directors of the Registrant, and (iii) the Officers and Directors of
the Registrant as a group.
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership(1)(2) Class
Balzac, Inc. 1,100,000 18.1%
200 Fifth Ave. Suite 617
New York, N.Y. 10010
A. B. Goldberg (3) 29,213 .4%
1999 Broadway, Suite 3135
Denver, CO 80202
Cindy Jones 2,500 .1%
1999 Broadway, Suite 3135
Denver, CO 80202
Nick Catalano 5,000 .1%
189-32 44th Avenue
Flushing, NY 11358
Dr. Theodore Jacobs 69,739 1.1%
1999 Broadway, Suite 3135
Denver, CO 80202
Burt Katz (4)195,089 3.2%
1999 Broadway, Suite 3135
Denver, CO 80202
Officers and Directors 301,541 5.0%
as a Group (6 persons)
(1) All ownership is beneficial and of record except as
specifically indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment
power with respect to the shares shown unless otherwise indicated.
(3) Include shares owned by Nannette Goldberg, wife of A.B. Goldberg,
a Director of the Company, and shares owned by his mother and two
children. There are no stock options issued or outstanding to A. B.
Goldberg.
(4) Includes shares owned by the wife and children of Burt Katz.
INFORMATION REGARDING THE COMPANY AND INCORPORATION BY REFERENCE
This proxy statement is accompanied by a copy of its latest Annual
Report and Form 10-QSB June 30, 1997, as amended. The Company hereby
incorporates by reference its latest annual report on Form 10-KSB and
all other reports since the end of the Company's fiscal year filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended.
ACTION TO BE TAKEN UNDER THE PROXY
Proxies in the accompanying form that are properly executed and returned
will be voted at the Special Meeting in accordance with the instructions
thereon. Any proxy upon which no instructions have been indicated with
respect to a specific matter will be voted as follows with respect to
such matter: (a) FOR the election of the three (3) persons named in
this Proxy Statement as Management's nominees for election to the Board
of Directors; (b) "FOR" the ratification and approval of the Company's
prior acquisition of Global Internet Corporation, a Delaware
corporation; (c) FOR amendment to the Company's Articles of
Incorporation to increase the number of authorized common shares from
6,250,000 shares at $.008 par value to 50,000,000shares at $.008 par
value; (d) FOR the approval of the change of state of incorporation of
the Company to Nevada and the change of the Company's name to First
Entertainment Holding Corp;(e) "FOR" the ratification of BDO Seidman, LLP as
the Company's independent public accountants; and (f) FOR the
transaction of any other business to come before the Meeting, in the
discretion of the holders of such Proxies.
If the shareholders reject either or both proposals for the ratification
and approval of the Company's prior acquisition of Global Internet
Corporation Delaware corporation and amendment to the Company's Article
of Incorporation to increase the number of authorized common shares from
6,250,000 at $.008 par value to 50,000,000 shares at $.008 pat value,
then the acquisition of Global Internet Corporation will not take place.
The Global acquisition will be rescinded in its entirety. The Company
will pay no fees to Global thereby but each side will be responsible for
its own expences in connection with the transaction. The Global
shareholders will return any and all securities which they have been
issued in the rescinded transaction. It should be noted that this
transaction has been completed subject to a condition subsequent, which
is shareholder approval. However, the shareholders of the Company may
still reject the transaction by refusing to ratify it. The Company
believes that, as a matter of Colorado law, a vote in favor of ratifying
the acquisition precludes a shareholder from bringing suit against the
Company for entering into a transaction prior to obtaining shareholder
approval.
Management knows of no other matters, other than those stated above, to
be presented for consideration at the Meeting. If, however, any other
matters properly come before the Meeting, the persons named in the
enclosed proxy intend to vote such proxy in accordance with their
judgement on such matters. The persons named in the enclosed proxy may
also, if they deem it advisable, vote such proxy to adjourn the Meeting
from time to time.
ELECTION OF DIRECTORS
It is proposed that three (3) Directors be elected to the Board of
Directors of the Company, each such Director to hold office until the
next annual meeting of shareholders or until their successors are
elected and qualified. All three of the nominees are current directors.
The nominees for the Board of Directors are as follows:
Abraham "A.B." Goldberg has been employed by First Films as Executive
Producer and Financial Consultant since January 1987. Mr. Goldberg
served as Executive Producer for "Almost Blue" and "The Amityville
Curse." In addition, he served as Executive Producer for "Mind Killer,"
"Night Vision" and "Lone Wolf." Mr. Goldberg has been an independent
consultant and has advised several film companies, beginning in 1977
with Innovations/ECA, which produced "The Buddy Holly Story" starring
Gary Busey and "Under The Rainbow" starring Chevy Chase and Carrie
Fisher. He also advised Robert Halmi Productions, a New York-based
production company which was merged with Hal Roach Studios and later
acquired by Quintex Entertainment. Mr. Goldberg served as President of
Harvard Financial Group, an independent investment consulting firm, from
November 1976 through April 1982. Since April 1982, Mr. Goldberg has
consulted with a variety of businesses, including First Films. Mr.
Goldberg earned a Bachelor's Degree in Finance from the University of
Colorado, Boulder, Colorado in 1969 and attended the University of
Denver College of Law. Mr. Goldberg was elected President and Chief
Executive Officer in February 1995.
Dr. Nick Catalano is presently serving in his twenty-fourth year as
professor of English Literature, Communications and music at Pace
University, New York City. He is also the University's director for the
Performing Arts. Over the past several years, he has been a
writer/producer for several television network shows, including The Bill
Cosby Show, PBS documentaries, Doug Hennings' The World of Illusion, and
TV specials for Richard Belzer on HBO. Dr. Catalano has produced
travelogue videos for Video Trips on Greece, the Greek Islands, Utah,
St. Martin and is currently completing the Hamptons. In addition, he is
the founder of "The Big Apple Comedy Showcase" at Pace University, now
in its 18th year. It is the oldest college comedy series in the
country.
Dr. Theodore Jacobs, M.D. graduated from New York Medical College in
1955 where he was honored by achieving the highest award to a graduating
medical student. Dr. Jacobs was Board Certified in Internal Medicine in
1962 and Re-Certified in 1977. Since 1963, Dr. Jacobs has worked in
private practice in Internal Medicine in an office in Las Vegas, Nevada.
Dr. Jacobs has served as a member of the Nevada State Board of Medical
Examiners, serving for fifteen years as president from 1980 to 1995.
Dr. Jacobs is currently a Clinical Professor of Medicine, University of
Nevada School of Medicine and Member, Advisory Board to the Dean of the
School of Medical Sciences, University of Nevada/Reno. Dr. Jacobs is a
member of the Board of Directors of Nevada Dance Theater, Las Vegas
Symphonic and Chamber Music Society and the Nevada Opera Theater. Dr.
Jacobs has received numerous awards for outstanding achievement and
contributions to his profession and community. Dr. Jacobs was a member
of the Board of Directors of Power Media Communications International,
Inc.
It is the intention of the persons named in the accompanying form of
Proxy to vote such Proxy for the election of the persons listed below,
unless shareholders specifically indicate in their Proxies that they
desire to abstain from voting for the electing of certain Directors to
office. The Board of Directors does not contemplate that any nominee
will be unable to serve as a Director for any reason, but if that should
occur prior to the meeting, the Board of Directors reserves the right to
substitute another person(s) of their choice as nominee(s). Each
nominee must be approved by an affirmative vote of a majority of the
quorum of the shares present and entitled to vote at the Special Meeting
of Shareholders. The Board of Directors recommends that shareholders
vote FOR the election of each nominee.
VOTING
Pursuant to the terms of the Company's Articles of Incorporation every
shareholder voting for the election of directors is entitled to one vote
for each share. A shareholder may vote each share once for one nominee
to each of the director positions being filled. A shareholder may not
accumulate votes.
The Board of Directors intends to vote the Proxies solicited by it
(other than Proxies in which the vote is withheld as to one or more
nominees) for the three candidates standing for election as directors
nominated by the Board of Directors. If any nominee is unable to serve,
the shares represented by all valid Proxies will be voted for the
election of such substitute as the Board of Directors may recommend. At
this time the Board of Directors knows of no reason why any nominee
might be unavailable to serve.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
With the exception of the Compensation Committees established solely to
administer its compensation plan to third parties (which does not
include Company executives) under its Forms S-8 registration, the
Company has no committees of the Board of Directors. All members of the
Board of Directors of the Company acted as the Executive Compensation
Committee, participated in deliberations and made decisions concerning
executive officer compensation during the course regular Board Meetings.
This Compensation Committee, which is composed of all of the members of
the Board of Directors, had fourteen meetings or consents in lieu of
meetings during the fiscal year ended December 31, 1996. No incumbent
director of the Company attended fewer then seventy-five percent (75%)
of total meetings of the Board of Directors. The Board of Directors
conducted fourteen meetings during the fiscal year ended December 31,
1996.
The Directors and Executive Officers of the Company, their ages and
present positions held in the Company are as follows:
Name Age Position Held
A. B. Goldberg 50 Director April 1993 to present
President and Commencing February 1995
Chief Executive
Officer
Dr. Theodore Jacobs 66 Director November 1996 to present
Dr. Nick Catalano 56 Director March 1992 to present
Burt Katz 72 Director December 1994 to June
1997
Cindy Jones 42 Secretary and April 1994 to present
Treasurer
The Company's Directors will serve in such capacity until the next
annual meeting of the Company's shareholders and until their successors
have been elected and qualified. The officers serve at the discretion of
the Company's Directors. There are no familial relationships among the
Company's officers and directors, nor are there any arrangements or
understanding between any of the directors or officers of the Company or
any other person pursuant to which any officer or director was or is to
be selected as an officer or director.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors and persons owning more
than ten percent of the Company's Common Stock, to file initial reports
of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Additionally, Item 405 of Regulation S-K under the
34 Act requires the Company to identify in its Form 10-KSB and proxy
statement those individuals for whom one of the above referenced reports
was not filed on a timely basis during the most recent fiscal year or
prior fiscal years. Given these requirements, the Company has the
following report to make under this section: None of the current
officers and directors who were required to file Forms 3,4, or 5 during
the last fiscal year filed such forms on a timely basis. All such
persons have now filed the appropriate forms and have been counseled as
to their responsibilities for such filings. The Company has implemented
a program to ensure timely future filing of such forms.
EXECUTIVE ENUMERATION
Summary Compensation Table
Only one executive officer received cash compensation in excess of
$100,000 during the fiscal year ended December 31, 1996 and 1995.
Compensation does not include minor business-related and other expenses
paid by the Company for its officers during fiscal year 1996 and 1995,
nor the personal usage of a Company automobile. Such amounts in the
aggregate do not exceed $10,000.
The following table shows all cash compensation paid or to be paid by
the Company or any of its subsidiaries, as well as other compensation
paid or accrued during the fiscal years indicated to the Chief Executive
Officer. There are no other executive officers of the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term
Compensation
Name and Other Annual Restricted Options/ All Other
Pricipal
Position Year Salary Bonus Compensation Stock Awards SAR's
Compensation
<S> <C> <C> <C> <C> <C> <C>
<C>
A.B. Goldberg 1996 $96,000 - - - - -
President and 1995 $53,800 - - - - -
Chief Executive 1994 $16,100 - - - - -
</TABLE>
From time to time, the Company has granted shares of its common stock as
additional compensation to its offices and key employees for their
services, as determined by the Company's Board of Directors. During
1996 and 1995, no shares were granted to officers or key employees.
As of December 31, 1996, the Company had no group life, health,
hospitalization, medical reimbursement or relocation plans in effect
which discriminates, in scope, terms, or operation, in favor of officers
or directors of the Company and that are not generally available to all
salaried employees. Further, the Company has no pension plans or plans
or agreements which provide compensation on the event of termination of
employment or change in control of the Company.
The Company does not pay members of its board of Directors any fees for
attendance or similar remuneration, but reimburses them for any out-of-pocket
expenses incurred by them in connection with Company business.
SHAREHOLDER RATIFICATION AND APPROVAL OF ACQUISITION
Summary of the Acquisition
The following is a brief summary of certain information concerning the
Acquisition. If the shareholders reject either or both proposals for the
ratification and approval of the Company's prior acquisition of Global
Internet Corporation, a Delaware corporation and amendment to the
Company's Article of Incorporation to increase the number of authorized
common shares from 6,250,000 at $.008 par value to 50,000,000 shares at
$.008 pat value, then the acquisition of Global Internet Corporation
will not take place. By an Addendum to the original agreement for acquisition,
Global agreed that the acquisition will be rescinded in its entirety in such
event. The Company will pay no fees to Global thereby but each side
will be responsible for its own expenses in connection with the
transaction. The Global shareholders will return any and all securities
which they have been issued in the rescinded transaction. It should be
noted that this transaction has been completed subject to a condition
subsequent, which is shareholder approval. However, the shareholders of
the Company may still reject the transaction by refusing to ratify it.
The Company believes that, as a matter of Colorado law, a vote in favor
of ratifying the acquisition precludes a shareholder of the Company from
bringing suit against the Company for entering into a transaction prior to
obtaining shareholder approval. In such event, the Company believes that none
of its officers or directors will have any liability for their exercise of
discretion in this transaction. If the transaction is not approved and must be
rescinded, the Company believes that the contractual terms of the Addendum to
the original agreement for acquisition precludes Global or its shareholders
from successfully prevailing in an action against the Company or its
officers and
directors. However, it should be noted that the Company has no liability
insurance to cover any shareholder actions by either its own or Global or its
shareholders, should any be brought in this matter. Further, there can be no
guarantee that a court may not find liability on the part of the Company, its
officers, directors, or all of them under the terms of the Acquisition,
including the Addendum thereto.
The Parties.
First Entertainment, Inc., a Colorado corporation (the Company), and
Global Internet Corporation., a Delaware corporation (Internet), and its
principal shareholder, Global Casinos, Inc., a public Utah corporation,
are the parties to the transaction. The Company is a multi-media
entertainment conglomerate, holding controlling interests in the
following segments: video, radio, live entertainment, and retail
operations. The Company also presently has an inactive film production
segment. Internet is a development stage corporation which plans to
develop a virtual casino to provide gambling on the Internet. Internet's
operations will eventually be based offshore and Internet will focus its
attention on creating a worldwide market Internet principal offices are
located at 295 Clayton Street, Suite 208, Denver, Colorado 80206. The
phone number is (303)-377-2278.
General
The Board of Directors had previously decided that the Company should
look at the Internet gaming industry as a potential area of development. . The
Board of Directors felt that this industry, while new and subject to potential
risk and uncertainty, particularly in the regulatory area, offered unique
opportunities for substantial profits over a relatively short period of time
with minimal investment. The Board of Directors exercised its discretion under
the Business Judgement Rule as adopted in the State of Colorado to seek to
place the Company into the Internet gaming industry and believes that such
a move is the most appropriate action for the Company at this time.
It was the feeling of the Board of Directors of the Company that the
Company should look to acquire a company already in that business, even if only
on a development stage or preliminary basis, to accelerate the Company's
ability
to become operational in this industry. The Company looked at two companies in
this industry, including Internet. The other company was called OnLine Casinos,
Inc, a private company. No other companies were considered because these were
the only companies which the Company could find that could be potentially
acquired and were of a size which the Company believed it could absorb into its
operations.
The Company performed due diligence on each company. After conducting its due
diligence, the Company chose Internet over OnLine Casinos, Inc. because the
Internet transaction was less dilutive to shareholders, was less complex to
complete, and did not involve a substantial assumption of debt, which would
have
been required in the other transaction. The transaction with OnLine Casinos,
Inc. would have required the Company issuing approximately $10 Million worth of
its own securities and assuming approximately $15 Million in debt. In addition,
OnLine Casinos, Inc. did not have software development contracts in place to
the
extent that Internet did. The transaction was negotiated with Internet on an
arms-length basis. The Company's due diligence and prior negotiation with
OnLine
Casinos, Inc. had given the Board of Directors an indication of the prevailing
values in this industry.
The Company has decided to engage in the transaction with to broaden the
asset base and increase the value of the Company's shares as a result of
acquiring a business which plans to be in an industry which the Company
believes can be a source of profit in a short period of time. None of
the rights of any securities holders will be affected by this transaction. The
securities of the Companny issued in this transaction are preferred shares,
which have the same rights and privileges as all other preferred shares of the
same class and are restricted securities under the Securities Act of 1933, as
amended. The Company is acquiring Internet for its preexisting debt, as
measured in the securities of the Company, with no premium attached to the
price of the acquisition. Representatives of the Company's accounting firm
for the most recent fiscal year are expected to be present at the
shareholders' meeting, will have the opportunity to make a statement if
they so desire, and are expected to be available to respond to appropriate
questions.
As far as the Company's common share are concerned, both the high and low bid
prices as of the date preceding public announcement of the transaction were
$1.06.
The Terms.
This transaction was planned as a purchase such that Internet became a
subsidiary of the Company and the former shareholders of Internet would
thereby own approximately 4.7%of the Company. This transaction has been
accounted for as a purchase. At the present time, approximately 50% of
the shares of Internet has been exchanged for approximately 30,000
shares of Class B Convertible Preferred stock of the Company that is
convertible into 375,000 common shares. This percentage will be the total
ownership of the Company in Global and will require the authorization of
approximately 350,000 additional common shares by the shareholders to
complete the transaction.
The present exchange has given the Company effective control of Internet, and
the current control shareholders of Internet are now affiliates of the Company.
However, at the present time, Internet is in the development stage and has not
commenced operations. Internet is expected to commence operations only after
the Company has completed a private placement to fund its efforts.
The Company has decided to engage in the transaction with Internet to
broaden the asset base and increase the value of the Company's shares as
a result of acquiring a potentially profitable business. At the present
time, Global, as well as the Company, has a going concern qualification
to its financial statements. In addition, Global will need substantial
capital and must overcome potentially significant regulatory hurdles to
begin business. However, the Company believes that the combination of
the two companies will create a potential which neither company
presently has to raise additional capital to carry out the Global
business plan.
None of the rights of any securities holders will be affected by this
transaction. The securities of the Company which have been issued in
this transaction are Class B preferred shares. It is probable that the
Class B shareholders will elect to convert their shares into common
shares of the Company, which will have the same rights and privileges as
all other common shares but will be restricted securities under the
Securities Act of 1933, as amended. To obtain conversion of the Class B
preferred shares into common shares, the Company must obtain the
approval of the shareholders to increase its authorized common shares
and must file Articles of Amendment with the Secretary of State of
Colorado. While the Class B preferred shares have been issued, the
filing for additional common shares must await the approval of the
shareholders to the increase in authorized common shares.
Representatives of the Company's accounting firm for the most recent
fiscal year are expected to be present at the shareholders' meeting,
will have the opportunity to make a statement if they so desire, and are
expected to be available to respond to appropriate questions.
Global Internet Corporation
Global Internet Corporation (Internet) was incorporated in June 1996,
for the purpose of developing a virtual casino to provide gambling on
the Internet. Internet's operations will eventually be based offshore
and Internet will focus its attention on creating a worldwide market.
Internet is a development stage company which has not yet commenced
operations. Internet has no material inventories or accounts receivable.
No independent market surveys have ever been conducted to determine
demand for the Internet's products and services. Internet has never
generated any revenues. At the present time, Internet's principal
assets are the software contracts which it possesses to develop a
virtual casino.
Narrative Description of the Business
In June 1996, Internet entered into a Web Site Development and
Maintenance Agreement with DDB Needham Interactive Communications
("DDB"), whereby DDB, with the assistance of Electronic Data Systems
Corporation ("EDS") as a subcontractor, agreed to develop a Virtual
Internet Casino. As of March 1997, the June Agreement was superseded
with a new agreement.
The agreement outlines a two-phase Web Site development program. Under
Phase 1, the agreement calls for the development of five gaming sites:
black jack, poker, roulette, slot machines and keno. At these sites,
players would be able to use money to play against the house or to enter
tournaments in which top place finishers would win prizes. The purpose
of Phase 1 is to have a fully operational site where the application can
gain acceptance while a customer base is being developed. In Phase 2,
Internet intends to expand the complexity of the games to include multi-
player games site that will generate additional revenue as a percentage
of the money gambled.
Internet has to date paid DDB a total of $282,509 for the work which has
already been completed. The new agreement provides that DDB will resume
work on Phase 1 once Internet places the remaining balance due of
$1,143,824.80 into escrow.
The Company intends to do an equity financing raising approximately $2.2
million exclusive of commissions and expenses to complete the funding
obligation to DDB and ongoing expenses necessary for the operations of
Internet through 1998. DDB has agreed to extend the escrow requirement
until financing is completed. This equity financing will be for common
shares of the Company and is expected to be priced at $.75 per common
share and thus is not expected to be substantially dilutive to existing
Company shareholders.
The Company has a letter of intent from Commerce Capital Corp., and Four
Seasons Partners, Inc., a financing firm, to provide the financing in a private
placement. If the Company is unable to finance the private placement
transaction, the Company will seek alternative financing, none of which it
presently possesses. The Company will look at additional equity financings or
at debt financings, if such can be arranged on terms beneficial to the
Company. At the present time, the Company has no definite financing plans
other than the letter of intent for a private financing.
Under Phase 1, there will be development of a virtual Internet casino. Internet
intends to engage in Internet commerce in countries other than the U.S.
completely through a foreign subsidiary, and therefore does not plan to obtain
any federal, state or local permits. The decision to not obtain any such
federal, state, or local permits is based upon an opinion from the law firm of
Graham, Bright & Smith, P.C., Dallas, Texas, which stated that neither the
Company, Internet, nor the Dominica corporation will be required to file or
obtain any U.S. federal, state or local permits to engage in the activities
conducted on Internet's web site. It should be noted that the laws in the
United States are unclear as to the extent of federal, state, or local
jurisdiction. There is a potential risk for the foreseeable future that
regulatory authorities in the United States may attempt to assert jurisdiction
in this industry, including over US domiciled corporations who have their off
shore operations in foreign subsidiaries. There can be no guarantee that
Internet will be free of such attempts to assert jurisdiction. Any such
attempts to assert jurisdiction on Internet could have a materially adverse
effect on Internet's and the Company's operations. The successful assertion of
U.S. jurisdiction would also have a materially adverse impact on both
Internet's and the Company's operations. At the present time, the Company
cannot assess the likelihood of such attempts to assert jurisdiction
occurring.
Internet intends to obtain licenses to operate in countries where Internet
gaming is regulated and legal. To date, Internet has made application for a
license to operate a virtual casino on the island of Dominica, which is a
country in the West Indies with a population of approximately seventy thousand
residents. None are expected to be involved as customers of the virtual casino.
Internet expects to be granted such license promptly, which is the primary
reason for seeking to do business in Dominica.
The Terms of the proposed license are as follows. The term of the
initial license will be for five years. No renewal provisions are
contained in the proposed license. The license is granted upon the
payment of a $15,000US fee. The license would be non-exclusive,
although no other licensee may have more favorable terms than Internet.
Internet must commence operations within one year of the grant of the
license and maintain constant operations during the term thereof. Any
third party advertising placed on the Internet must be approved by the
appropriate Dominica governmental authority. Internet must agree to pay
the government of Dominica per annum 5% of the net win/loss wagered or
$25,000US, whichever is greater. This provision is subject to audit by
the Government of Dominica. In addition Internet must agree to hire a
minimum of six persons at a rate of not less than $3.00 per hour to
assist in the operation of the business in Dominica. Internet must pay
all charges, costs, levies, and other expenses in connection with the
use and access to the Internet. Any breach of the license must be
remedied within sixty days of notice or the license is revoked. On its
behalf, Dominica would agree to provide to Internet access under the
most favorable terms available to international telecommunications
services, to give Internet the right to import all of its equipment for
Internet gaming on a duty free basis, to provide all work permits for
such technical and managerial personnel as may be necessary to operate
Internet's business, to exempt from income, withholding, sales and
other taxes Internet's revenues and those of its subsidiary and to
exempt from such taxes all non-resident employees of Internet or its
subsidiary and all winnings of non-Dominican customers of Internet.
Disputes under the license are subject to arbitration under Dominica
law. The license, which Internet plans to obtain, is contains all of
the requirements for Internet to operate in Dominica.
No independent market surveys have ever been conducted to determine
demand for the Internet's products and services on Dominica. Internet
plans to use Dominica essentially as a base for its world wide virtual
casino. At the present time, Internet has not selected which countries
it intends to target to develop a customer base nor has it conducted
any independent market surveys to determine demand for the Internet's
products and services elsewhere in the world. Internet plans to select
the countries it intends to target after the Company has completed the
private placement for Internet. Internet will retain local counsel for
each proposed principal jurisdiction, will review the laws of each
potential jurisdiction abroad and will select only those jurisdictions
in which it believes that its activities will not contravene local
laws. In the Company's opinion, such activities could be completed
within six months of commencement and could cost approximately
$50,000US, which has already been included in the planned budget. As
of the date hereof, no advertisers have agreed to furnish prizes or
otherwise be associated with Internet's efforts.
Internet intends, however, to exclude U.S. residents from being able to
play commercially on its virtual casino system. Internet will use a
variety of methods to do so, such as addresses and questionnaires.
However, the primary basis will be origin of funds as the determinant
of eligibility. In addition to posting a warning on the site that
persons resident in the United States are not eligible to play on the
site, Internet intends to verify origin of funds. If the funds
originate from a banking source located in the Continental U.S. or U.S.
administered territory, the transaction will not be completed. In case
of electronically transferred funds such as Visa or Mastercard,
Internet will check country of origin as part of the initial funds
verification. If the source comes back to the United States, the
transaction will be denied. In cases where funds are transferred by
wire or remitted by check, if found to be originating in the United
States, the funds will be returned to the sender on receipt. THIS
METHOD OF EXCLUDING U.S. RESIDENTS IS NOT WITHOUT RISK BECAUSE NO ONE
CAN OFFER COMPLETE CERTAINTY THAT SUCH RESIDENTS SHALL BE EXCLUDED. The
decision to principally rely upon this method of exclusion is based
solely upon the Board of Directors belief that such is the best option
available at the present time. Principal reliance upon this method may
be subject to actions from governmental regulators. It should be noted
again that the laws in the United States are unclear as to the extent
of federal, state, or local jurisdiction. At this time, it is not
possible to obtain clear and definitive legal advice as to the limits
of U.S. jurisdiction in this matter. Therefore, the Company is taking a
risk in going forward in this industry. There is a potential risk for
the foreseeablefuture that regulatory authorities in the United States
may attempt to assert jurisdiction in this industry, including over US
domiciled corporations who have their off shore operations in foreign
subsidiaries. There can be no guarantee that Internet will be free of
such attempts to assert jurisdiction. Any such attempts to assert
jurisdiction on Internet could have a materially adverse effect on
Internet's and the Company's operations. The successful assertion of
U.S. jurisdiction would also have a materially adverse impact on both
Internet's and the Company's operations. At the present time, the
Company cannot assess the likelihood of such attempts to assert
jurisdiction occurring. Internet plans to continually refine its
operations to achieve certainty that US residents will be completely
excluded. The ultimate success of such plans cannot be determined at
this time. Internet plans to use the most current technology available
to exclude U.S. residents from its virtual casino.
Phase 1 will require DDB to develop a proprietary connection on the Internet.
This will enable players to have a continuous interactive connection with the
Server. The rapid response time and percentage decrease in inadvertent
disconnections between the User and the Server will be a deciding factor in the
success of this Phase.
The agreement with DDB provides that Internet will own all proprietary rights
to the software and the underlying technology.
Prior to the virtual casino site becoming operational the Company expects to
incur the following costs.
*As previously stated, a payment to DDB in the amount of $1,143,825 due under
the terms of the Web Site Development and Maintenance Agreement is to be paid
into escrow for DDB to resume work on Phase 1. This amount includes test
service and all other associated costs. There are no other costs involved.
*Executive Salaries of $17,000 per month.
*Consulting fees of $14,000 per month
*Other general and administrative expenses such as rent, advertising,
telephone, legal, accounting, marketing, travel and entertainment, office
supplies and all other expenses, estimated to be approximately $9,000 per
month.
Phase 1 will be hosted in the Plano WebRANCH (an existing high
visibility web site) for four (4) months to do BETA testing of the
games. Phase I is expected to take five months to complete. During this time
Internet will allow players to "gamble" with "fun money." Internet plans to
promote the Web Site to advertisers based on the number of hits at the Web Site
During this period, Internet plans to conduct tournaments that will offer
prizes from advertisers based on criteria such as highest number of points,
top fifty players, or most wins. Because an advertiser is interested in
capturing demographic information about the user and certain users are
unwilling to enter this information, it is anticipated that the games will
be run under two different levels in Phase 1. Level one will allow anybody
to play for free and will not require the user to enter any demographic
information. Level 2 will
allow players to compete in "tournaments" and against the house. This Phase
will require the user to enter all the appropriate demographic information.
Internet will focus its attention on gaining a customer base in Europe and Asia
and believes that by offering this multi-level virtual casino experience it
will be able to gain a better penetration into the marketplace.
Phase 2 will include the development of multi-player games. Under
Phase 2 it will be possible for players to reserve a table and play
against the dealer with their own friends. Internets revenue for
multi-player games will be a percentage of the actual money gambled. In
addition, Internet will seek advertising revenue by selling the
demographic information obtained from its players or by offering
advertising space on the Web Site. Internet envisions designing
advertising space that would be similar to the shops at the forum at
Caesar's Palace Hotel and Casino.
During this Phase, the user will be playing directly against the dealer.
The Web Site will be very visual and will simulate as many aspects
associated with a live casino experience as possible. Once the user is
connected to the Game Server, the Game Server will tell the user which
card, number and suit, or symbol to display. Based on this interplay,
the user will win, lose or draw.
Markets
Internet's marketing plan will be focused solely on international
markets for its virtual casino. This plan will be the primary focus for
Internet's marketing efforts during the coming fiscal year.
During the past fiscal year, Internet has focused soley on development
stage activities. At the present time, Internet has not selected which
countries it intends to target to develop a customer base nor has it
conducted any independent market surveys to determine demand for the
Internet's products and services elsewhere in the world. Internet plans
to select the countries it intends to target after the Company has
completed the private placement for Internet.
Raw Materials
Internet plans to use no material raw materials in its operations
Customers and Competition
The principal customers of Internet are planned to be individuals from
countries outside the U.S. There are a number of companies which now or
in the future plan to market similar competing products and services as
those of Internet. At the present time, Internet is aware of no major
competitor in its proposed market. Internet believe that the market is
divided up among very small operations, none of whom have a significant
share of the market on an individual basis.
To the extent that Internet is unable to interest consumers to accept
its proposed products and services, Internet could have difficulty in
achieving its goals and objectives, of ever becoming profitable, or of
even continuing as a viable entity. Internet believes that it can
develop a viable segment of its proposed market, although Internet has
not yet started to compete. In any case, Internet expects competition to
be intense. The market for all of Internet's proposed products and
services probably has limited barriers to entry for other competing
operations, so that the competitive picture could change at any time.
Consequently, the number of competitors could be substantial, although
such is not the case at this point.
Proprietary Information
Internet plans to use copyrighted software, trade secrets, and other
proprietary information in connection with its proposed operations. At
the present time, Internet, as a development stage company, owns no
material proprietary information.
Government Regulation
Internet's proposed operations are expected to involve potentially
significant governmental oversight and regulation. In order to begin
operations, Internet's foreign subsidiary must obtain a license from the
government of Dominica, which is expected to exercise a continuing role
in the oversight of Internet's foreign subsidiary's operations. Other
jurisdictions may also exercise oversight of Internet's foreign
subsidiary's operations. Internet believes that, while such oversight
and regulation will have a significant impact on the Companys ability
to operate, Internet will make every effort to become adequately staffed
to deal with this impact. The complete impact of such govenmental
regulation cannot be foreseen at this time.
Internet will otherwise also be governed by federal and state laws of
general applicability, none of which are expected to be material to
Internet's planned operations. Such regulation is not considered to be
burdensome on Internet or to have a material effect on Internet's
ability to operate or to make a profit. Otherwise, Internet is not
subject to any material governmental regulation or approvals.
Research and Development
Internet has not made any expenditures as of the six months ended June
30, 1997 for research and development.
Environmental Compliance
Internet is not expected to be subject to any material costs for
compliance with any environmental laws in any jurisdiction in which it
proposes to operate.
Employees
Internet has two employess. They are Anthony Kay, President, CEO and
Treasurer and Steven E. Bright Vice-President and Secretary.Internet's
employees are not represented by any unioin or collective bargaining
group, and there is no history of any labor problems, or disputes.
Internet has the human resources at present time to fulfill it current
business plan but expects to hire additional emplyees in the future for
expansion of its operations in the ordinary course of business.
Mr. Kay has served as President, CEO and Treasurer of Global since
September, 1996. From December 1978 to September 1996, Mr. Kay served as
President and CEO of Secutron Corp. where he was successful in leading
the Company from a one man operation to a corporation with 40 employees
and annual revenues in excess of $5 million. Utilizing the technical
training offered by IBM, including IBM's campus program at the
University of Pennsylvania's Wharton School, he became a recognized
expert in the design and development of software systems for the
securities industry. In addition, he designed and built systems for the
manufacturing and distribution, oil and gas and trucking industries.
Mr. Kay is a founding member and former treasurer of the Colorado
Software Association. Mr. Kay also founded Midrange Solutions
Corporation, a wholly owned subsidiary of Secutron Corp., which
specializes as a systems integrator and third party solution provider.
Midrange became on of the regions largest resellers of IBM's equipment
and has won IBM's business partner of the year award. Midrange was also
selected by JD Edwards Company to market and sell its newly announced
Genesis Product in a six state area.
Mr. Steven Bright has served as President and Director of Global since
its inception until September 1996 when he resigned as President and
became Vice President. Mr. Bright is engaged full time in the practice
of law and currently serves as an officer, director and principal
shareholder of Graham, Bright & Smith, P.C. in Dallas, Texas. Mr.
Bright's practice emphasizes international law, commercial, financial
and business planning. Mr. Bright attended the University of Texas and
received his Juris Doctorate Degree Cum Laude from Baylor School of Law
in 1975.
Internet's employees are not represented by any union or collective
bargaining group, and there is no history of any labor problems, or
disputes. Internet has the human resources at present to fulfill its
current business plan but expects to hire additional employees in the
future for expansion of its operations in the ordinary course of
business.
Internet has not been subject to any bankruptcy, receivership or similar
proceedings.
Backlog
At June 30, 1997, Internet had no backlogs.
Financial Statements, Global Internet
Enclosed are the audited financial statements of Global Internet
Corporation for the period ended December 31, 1996 and unaudited
financial statements for the period ended April 30, 1997.
To the Board of Directors
Global Internet Corporation
Denver, Colorado
Independent Auditor's Report
I have audited the accompanying balance sheet of Global Internet
Corporation (A Development Stage Company) as of December 31, 1996, and
the related statements of operations, changes in stockholders
deficiency, and cash flows for the period June 4, 1996 (Inception)
through December 31, 1996. These financial statements are the
responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Global
Internet Corporation (A Development Stage Company) as of December 31,
1996, and the results of its operations and its cash flow for the period
June 4, 1996 (inception) through December 31, 1996 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has suffered losses from
operations and has a net capital deficiency, which raise substantial
doubt about its ability to continue as a going concern. Additionally,
the Company has entered into a Web Site and Development and Maintenance
Agreement with an unaffiliated third party which requires the Company to
place into escrow approximately $1,040,000 to fund the development of
the software necessary for the Company to commence its business plan. Should
the Company be unsuccessful in obtaining the funds necessary to meet he escrow
requirements by September 15, 1997, the Web Site Development and Maintenance
Agreement shall terminate and the contractual relationship between the parties
will end. Accordingly, the Company would have to explore other avenues of
developing its business plan.
As further discussed in Note 1, the financial statement, the Company's
business plan encompasses creating software aimed at developing a
virtual casino to provide gambling on the Internet. There are no
assurances that the Company will receive the necessary permits and or
licenses form the various federal, state, local or international
authorities that will allow the Company to commence and implement its
business plan. Management's plans regarding these matters also are
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
Gerald R. Hendricks & Company. P.C.
May 21, 1997
Westminster, Colorado
<TABLE>
<CAPTION>
GOBAL INTERNET COPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
December 31, April 30,
1996 1997
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 68,918 $ 4
Total current assets 68,918 4
- ----------------------------------------------------------------------
PROPERTY AND EQUIPMENT, net 607 2,670
$ 69,525 $ 2,674
=======================================================================
LIABILITIES AND STOCKHOLDERS DEFICIENCY
CURRENT LIABILITIES:
Convertible note-related party $ 325,000 $357,000
Accounts payable-
Third part 83,648 5,383
Related party 48,849 40,056
Accrued expenses-related parties
Salaries 68,000 136,000
Interest 6,000 17,000
- -----------------------------------------------------------------------
Total current liabilities 531,497 555,439
COMMITMENT AND CONTINGENCY
STOCKHOLDERS DEFICIENCY:
Preferred stock, $.01 par value,
5,000,000 shares authorized, none is
Common stock, $.001 par value,
10,000,000 shares authorized,
2,985,000
issued and outstanding 2,985 2,985
Additional paid-in capital 11,940 11,940
Deficit accumulated during the
development stage (476,897) (567,690)
- ------------------------------------------------------------------------
(461,972) (552,765)
- ------------------------------------------------------------------------
$ 69,525 $ 2,674
========================================================================
<CAPTION>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
<CAPTION>
GLOBAL INTERNET COPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Cumulative
Inception
Inception For the Four (June 4, 1996)
(June 4, 1996) To Months Ended To
December 31, April 30, April 30,
1996 1997 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C>
INTEREST INCOME $ 1,132 $ 90 $ 1,222
- ----------------------------------------------------------------------
OPERATING EXPENSES:
Research and development 292,507 292,507
Professional fees-
Third party 860 860
Related parties 96,103 688 96,791
Salaries - related
parties 68,000 68,000 136,000
Interest - related
parties 6,000 11,000 17,000
Marketing 4,030 75 4,105
Travel and entertainment 3,983 2,437 6,420
Telephone and
communications 2,935 2,755 5,690
Deprecation 250 250
Other 3,611 5,678 9,289
- ----------------------------------------------------------------------
478,029 90,883 568,912
- ----------------------------------------------------------------------
NET LOSS $ (476,897) $ (90,793) $ (567,690)
=======================================================================
NET LOSS PER COMMON
SHARE $ (.16) $ (.03) $ (.19)
======================================================================
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 2,985,000 2,985,000 2,985,000
======================================================================
</TABLE>
[CAPTION]
The accompanying notes are an integral part of these financial
statements.
<TABLE>
<CAPTION>
GLOBAL INTERNET COPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIENCY
Deficit
Accumulated
Additional During the
Class A Common Stock Paid-in Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
BALANCE, June 4,
1996, (Inception) $ $ $ $
Shares issued for
cash at $.005 per
share 2,985,000 2,985 11,940 14,925
Net loss for
the period - (476,897) (476,897)
- ------------------------------------------------------------------------
BALANCE, December
31, 1996 2,985,000 2,985 11,940 (476,897) (461,972)
Net loss for
the period (90,793) (90,793)
- ------------------------------------------------------------------------
BALANCE, April
30, 1997
(Unaudited) 2,985,000 $ 2,985 $11,940 $(567,690)$(552,765)
========================================================================
<CAPTION>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
<CAPTION>
GLOBAL INTERNET COPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Cumulative
For the Four Inception
Inception Months (June 4, 1997)
(June 4, 1996) to Ended To
December 31, April 30, April 30,
1996 1997 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES:
Net loss $ (476,897) $ (90,793) $ (567,690)
- ------------------------------------------------------------------------
Adjustments to reconcile
net loss to net cash
used in
operating activities:
Deprecation - 250 250
Change in liabilities:
Increase (decrease)
in accounts payable 132,497 (87,058) 45,439
Increase in accrued
expenses 74,000 79,000 153,000
- ------------------------------------------------------------------------
206,497 (7,808) 198,689
- ------------------------------------------------------------------------
NET CASH USED IN OPERATING
ACTIVITIES (270,400) (98,601) (369,001)
- ------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property
and equipment (607) (2,313) (2,920)
- ------------------------------------------------------------------------
NET CASH USED IN
INVESTING ACTIVITIES (607) (2,313) (2,920)
- ------------------------------------------------------------------------
CASH FLOW FROM FINANCING
ACTIVITIES:
Proceeds from
convertible note 325,000 32,000 357,000
Issuance of common
stock for cash 14,925 14,925
NET CASH PROVIDED BY
FINANCING ACTIVITIES 339,925 32,000 371,925
- ------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN CASH 68,918 (68,914) 4
CASH AND CASH EQUIVALENTS,
Beginning - 68,918 -
- ------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
Ending $ 68,918 $ 4 $ 4
========================================================================
<CAPTION>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
[CAPTION]
GLOBAL INTERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(Financial data at April 30, 1997 and for the four month
period ended April 30, 1997 is unaudited)
1. Organization and Business Activity
The Company
Global Internet Corporation (the Company) was incorporated in the State
of Delaware on June 4, 1996. The Company is in the development stage and
development stage activities have consisted of raising equity and debt
capital and research and development activities aimed at developing a
virtual casino to provide gambling on the Internet. Global Casinos,
Inc. (Global) owns 58.6% of the Company's outstanding common stock.
During the period ended December 31, 1996, the Company received $14,925
of equity financing in cash and $325,000 in debt financing from Global
through the issuance of a 10% note, due October, 1997. In February 1997,
the Company received an additional $32,000 in debt financing from
Global. The Company is attempting to raise additional equity capital.
As further discussed in Note 6, the Company has entered into a Web Site
Development and Maintenance Agreement with an unaffiliated third party
which requires the Company to place into escrow approximately $1,040,000
to fund the development of the software necessary for the Company to
commence its business plan. Should the Company be unsuccessful in obtaining
the funds necessary to meet the escrow requirements, the Web Site Development
and Maintenance Agreement shall terminate and the contractural relationship
between the parties will end. Accordingly, the Company would have to
explore other avenues of developing its business plan.
The Company's business plan encompasses creating software aimed at
developing a virtual casino to provide gambling on the Internet. There
are no assurances that the Company will receive the necessary permits
and or licenses from the various federal, state, local or international
authorities that will allow the Company to commence and implement its
business plan. (See Note 9)
There can be no assurance that the Company's business will develop as
anticipated by management or that additional financing will be
available. Management is attempting to raise additional equity capital
to meet the requirements of the Web Site Development and Maintenance
Agreement, and to provide working capital. Additionally, the Company is
attempting to identify and comply with necessary permits and licenses
necessary to develop and implement a virtual casino to provide gambling
on the Internet. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities
that might result if the Company is unable to continue as a going
concern.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or
less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost and are depreciated using the
straight line method over the estimated useful lives of five years.
Expenditures for maintenance and repairs are charged directly to the
appropriate operating account at the time the expense is incurred.
Expenditures determined to represent additions and betterments are
capitalized.
Capitalized Software Costs
Pursuant to Statement of Financial Accounting Standards No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed, issued by the Financial Accounting Standards Board,
the Company is required to capitalized certain software development and
production costs once technological feasibility has been achieved; that
is, when the product design and a working model of the software have
been completed and the working model and its consistency with the
product design have been confirmed by testing. The cost of purchased
software is capitalized when related to a product which has achieved
technological feasibility or that has an alternative future use. The
Company records all costs incurred to establish the technological
feasibility of computer software to be sold, leased or otherwise
marketed as research and development costs. For the periods ended
December 31, 1996 and April 30, 1997, the Company did not capitalized
any software development costs.
Impairment of Long-Lived Assets
Management of the Company periodically reviews the carrying value of
long-lived assets for potential impairment by comparing the carrying
value of those assets with their related, expected future net cash
flows. Should the sum of the related, expected future net cash flows be
less than the carrying value, management would determine whether an
impairment loss should be recognized. An impairment loss would be
measured by the amount by which the carrying value of the asset exceeds
the future discounted cash flows.
Income Taxes
Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary differences
and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred
tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
Net Loss Per Common Share
The net loss per common share is based on the weighed average number of
common shares outstanding during the periods, including the common stock
equivalents resulting from dilutive stock options. No common stock
equivalents are included in the computation of net loss per share as
these equivalents are antidilutive.
Stock Options
In October 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation. This new standard defines a fair value
based method for accounting for an employee stock option or similar
equity instrument. This statement gives entities a choice of
recognizing related compensation expense by adopting the new fair value
method or to continue to measure compensation using the intrinsic value
approach under Accounting Principles Board (APB) Opinion No. 25, the
former standard. If the former standard for measurement
is elected, SFAS No. 123 requires supplemental disclosure to show the
effects of using the new measurement criteria. The Company intends to
use the measurement prescribed by APB Opinion No. 25, and accordingly,
this pronouncement will not affect the Company's financial position or
results of operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial Statements
The carrying amounts of financial instruments, consisting of cash and
cash equivalents, approximates fair value as of December 31, 1996 and
April 30, 1997, because of the relatively short maturity of these
instruments. The carrying value of the convertible note payable
approximates fair value as of December 31, 1996 and April 30, 1997,
based upon market prices for the same or similar debt issues.
3. Property and Equipment
Property and equipment, consisting solely of office equipment, had a
net book value of $607 and $2,670 at December 31, 1996 and April 30,
1997, respectively.
Depreciation expense for the periods ended December 31, 1996 and April
30, 1997 was $0 and $250, respectively.
4. Convertible Note
During the period ended December 31, 1996, the Company received, from
time to time, advances from Global amounting to $325,000. Subsequently
in February 1997, the Company executed a Convertible Promissory Note
(the Convertible Note) with Global. The Convertible Note bears interest
at 10%, is due October 31, 1997 and is without collateral. Global can
elect to convert the principal and any accrued and unpaid interest into
common stock of the Company at the greater of the current market price
of the Company's stock or $.25.
In February 1997, the Company received an additional $32,000 from
Global and added this amount to the outstanding balance of the
convertible note with the same terms and conditions.
Interest expense charged to operations for the periods ended December
31, 1996 and April 30, 1997, was $6,000 and $11,000, respectively.
5. Related Parties
During the period ended December 31, 1996, the Company paid $6,125 in
consulting fees to an entity in which an officer, director and
stockholder is a principal.
During the periods ended December 31, 1996 and April 30, 1997, the
Company incurred legal fees to two individuals, one who is a stockholder
and or who is an officer and stockholder totaling $89,978 and $688,
respectively.
The Company has entered into employment agreements with two individuals
one who is an officer, director and stockholder and one who is an
officer and stockholder. The employment agreement with the President and
Chief Executive Officer is for a period of ten years from September 1,
1996, and calls for monthly payments in the amount of $10,000 until the
Company achieves profitability, at which point his compensation shall be
increased to $15,000. In the event that his salary is deferred, he is
entitled to receive additional compensation equal to 5% interest on the
deferred amount. In connection with the execution of this agreement,
this individual received 50,000 stock options to acquire shares of the
Company's common stock at an exercise price of $.25 per share.
The other employment agreement with the Vice President and Secretary is
for a period of three years from September 1, 1996, and calls for
monthly payments in the amount of $7,000. In the event that his salary
is deferred, he is entitled to receive additional compensation equal to
5% interest on the deferred amount. In connection with the execution of
this agreement, this individual received 50,000 stock options to acquire
shares of the Company's common stock at an exercise price of $.25 per
share.
The Company has not paid any amounts to these individuals pursuant to
their employment contracts. At December 31, 1996 and April 30, 1997,
the Company recorded salary expense, and a corresponding liability
totaling, $68,000 and $136,000, respectively.
Commitment and Contingency
Commitment
The Company has entered into a Web Site Development and Maintenance
Agreement with an unaffiliated third party to develop a virtual Internet
casino. The Web Site Development and Maintenance Agreement was amended
in November 1996 and subsequently in March 1997.
The March 1997 amendment requires escrow payments to be made in the
amount of $1,039,840 payable as follows: $346,613 at the execution of
the March 1997 amendment, $346,613 upon the commencement of work as
evidenced by written notice from the unaffiliated third party that work
has commenced; and, $346,613 at the completion of the initial phase. If
the escrow is funded after March 25, 1997 but before June 16, 1997, the
cost of the initial phase will be increased 5%. If the escrow is funded
after June 16, 1997 but before September 15, 1997, the cost of the
initial phase will be increased 10%. If the escrow is not funded on or
before September 15, 1997, the Web Site Development and Maintenance
Agreement shall terminate and the contractual relationship between the
parties will end.
Contingency
During 1995 and 1996, Global and certain officers and directors of
Global received requests for information from the U.S. Securities and
Exchange Commission (SEC) related to an investigation begun by the SEC
during 1994 into various matters, including certain transactions in
securities by Global and one of its officers and directors. On January
13, 1997, Global was notified that the SEC staff intends to recommend
that the Commission bring an action against Global and two of its former
officers and directors for alleged violations of securities laws.
Global has begun informal negotiations with the SEC staff but there can
be no assurance as to the final outcome of the investigation or the
impact, if any, on the operations of the Company.
7. Stockholders Deficiency
Preferred stock
The Company is authorized to issue 5,000,000 shares of its $.01 par
value preferred stock. The shares may be issued in such series and with
such preferences as may be determined by the Board of Directors. No
preferred shares have been issued by the Company.
Common stock
During the period ended December 31, 1996, the Company received $14,925
in cash and issued 2,985,000 shares ($.005 per share) of its common
stock.
Stock Option Plan
The Company established the 1996 Stock Option Plan (the Plan) and
reserved up to 750,000 shares to be issued pursuant to the Plan. Under
the Plan, stock option can be granted at prices not less than 100% of
the fair market value of the Company's stock at the date of grant.
Options are exercisable for a period of five years.
Stockholders Deficiency, continued
Stock Option Plan, continued
Option information is as follows:
<TABLE>
<S> <C>
Options outstanding, June 4, 1996 (inception) -
Granted 450,000
Options outstanding, December 31, 1996
and April 30, 1997 450,000
===========================================================
Option exercise prices $ .25
===========================================================
Exercisable options 450,000
===========================================================
Weighted average exercise price $ .25
===========================================================
Options available for future grant 300,000
============================================================
</TABLE>
8. Income Taxes
At April 30, 1997, the Company has net operating loss carryforwards, for
federal income tax purposes of approximately $432,000 expiring in 2012.
When more than a 50% change in ownership occurs, over a three year period, as
defined, the Tax Reform Act of 1986 limits the utilization of net operating
loss (NOL) carryforwards in the year following the change in ownership.
Therefore, it is possible that the Company's utilization of its NOL
carryforwards may be partially reduced as a result of future changes in
stock ownership due to the proposed Agreement and Plan of Reorganization
discussed in Note 9. No determination has been made as of April 30, 1997 as
to what implications, if any, there will be in net operating loss
carryforwards of the Company.
9. Subsequent Event
In May 1997, Global entered into an Agreement and Plan of Reorganization with
First Entertainment whereby Global would exchange 1,500,000 (86%) shares of the
Company's commons stock that it owns and the $357,000 convertible note that
Global holds for 30,000 shares of First Entertainment Class B Convertible
Preferred Stock and 1,500,000 warrants. The warrants shall be for a period of
five years from the date of issuance and will be exercisable at $1.25 per share
.
The Agreement and Plan of Reorganization allows other stockholders of the
Company to exchange their shares at a different exchange rate. Each share
tendered by stockholders other than Global, shall be exchanged for one warrant
that is exerciable for a five year period at $1.25 per share.
The Agreement and Plan of Reorganization is subject to the approval of the
stockholders of the Company and First Entertainment.
Management's Discussion and Analysis or Plan of Operation
Internet incurred a loss of $477,000 for the period ended December 31,
1996 whose activities consisted of raising debt and equity financing and
research and development activities aimed at developing a virtual casino
to provide gambling on the Internet. Internet's activities in 1997 are
limited due to the lack of working capital and consist primarily of
capital raising activities.
Internet had essentially no revenues, deriving interest income of $1,100
from the investment of idle cash. Total costs and expenses were $478,000
of which $292,000 represented research and development costs, $97,000 in
legal fees, $68,000 in accrued salaries and other general and
administrative expenses of $21,000. Internet accrues salaries of $17,000
a month for its president and vice-president under the terms of
employment agreements which commenced September, 1996. Internet has not
paid any amounts to these individuals pursuant to their employment
contracts.
Of the total of $292,000 in research and development costs, $283,000
represents payments to DDB Needham Interactive Communications to develop
a virtual internet casino.
At December 31, 1996 Internet had a working capital deficit of $462,000
and at April 30, 1997 the working capital deficit increased to $555,000.
The accompanying financial statements have been prepared assuming
Internet will continue as a going concern. As discussed in Note 1 to
the financial statements Internet has incurred losses form operations,
has a working capital deficit. Internet has a Web Site Development and
Maintenance Agreement with an unaffiliated third party which requires the
payment of $1,040,000. Further software development is on hold until such time
as the payment is made under the Agreement. Once the monies have been escrowed
Internet expects the software to be completed 140 days after commencement. It
is imperative that Internet raise the financing required, approximately $2.2
million, to develop the internet gaming site and to provide working capital
through the end of 1998. There can be no assurance that Internet will be
successful in raising the financing necessary. If Internet is unsuccessful it
will have to explore other avenues of developing its business plan.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Consolidated Financial Statements of the
Company are based on the Consolidated Financial Statements of the Company
included elsewhere in this Proxy, adjusted to give effect of the acquisition of
Global Internet Corporation
The unaudited pro forma combined balance sheet at June 30, 1997 presents
adjustments for the acquisition of Global Internet Corporation as if the
transaction had occurred on June 30, 1997.
The unaudited pro forma combined statement of operations data for the year
ended December 31, 1996 and for the six months ended June 30, 1997 presents
adjustments for the acquisition of Global Internet Corporation as if the
transaction had occurred on January 1, 1996.
In the opinion of management, all adjustments have been made that are necessary
to present fairly the pro forma data.
The unaudited pro forma combined financial statements should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto, and the Financial Statements and Notes thereto of Global Internet
Corporation. The unaudited pro forma combined financial statements of
operations data are not necessarily indicative of the results that would have
been reported had such events actually occurred on the date specified, nor are
they indicative of the Company's future results. There can be no assurance
that the pending acquisition of Global Internet Company will be consummated.
<TABLE>
<CAPTION>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
Company
Company Global Pro Forma Pro Forma
As Reported As Reported(1) Adjustments Combined
<S> <C> <C> <C> <C>
Revenues $ 2,139,451 $2,139,451
Cost of goods
Sold 1,617,365 1,617,365
Depreciation and
amortization 326,522 49,400(2) 375,922
Management fees,
Affiliate 408,000 408,000
Selling, general
and
administrative 1,394,683 472,029 1,866,712
Total cost and
Expenses 3,746,570 472,029 4,267,999
Operating loss
from continuing
operations (1,607,119) (472,029) (2,128,548)
Other Income
(Expense)
Interest expense (102,791) (6,000) 6,000(3) (102,791)
Interest income 1,132 1,132
Other, net 22,961 22,961
Loss from
Continuing
operations
before minority
interest (1,686,949) (476,897) (2,207,246)
Minority interst
In net loss of
Subsidiaries 39,655 238,448(4) 278,103
Loss from
Continuing
Operations (1,647,294) (1,929,143)
Net Loss Per
Share Continuing
Operations $(.39) $(.46)
Weighted Average
Shares
Outstanding 4,168,661 4,168,661
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(1) Reflects the historical operating results of Global Internet Corporation as
though the acquisition had been consummated on January 1, 1996.
(2) Reflects the amortization of the goodwill on a straight line basis over ten
years.
(3) Consolidation elimination entry to eliminated related party interest income
with related party interest expense.
(4) Reflects minority interest in net loss of Global Internet Corporation.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
June 30, 1997
Company
Company Global Pro Forma Pro Forma
As Reported As Reported Adjustments Combined
<S> <C> <C> <C> <C>
Assets
Current assets $ 412,664 $ 68,918 $ 325,000 (1) $ 481,582
(325,000)(2)
Property and
equipment, net 601,670 607 602,277
License, net of
Amortization 798,662 798,662
License held for
sale, net 800,000 800,000
Goodwill, net 484,780 32,000 (1) 978,753
461,973 (3)
Total assets $3,097,776 $ 69,525 $ 3,661,274
Liabilities and
Stockholders
Equity Current
portion of
long term
debt $ 835,012 325,000 (325,000)(2) $ 835,012
Other current
Liabilities 490,749 206,497 697,246
Total current
Liabilities 1,325,761 531,497 1,532,258
Long term debt 200,938 200,938
Minority interest 239,478 239,478
Preferred stock 135 30 (1) 165
Common stock 48,508 2,985 (2,984)(3) 48,509
Additional paid
in capital 14,132,951 11,940 (11,940)(3) 14,489,921
356,970 (1)
Accumulated
Deficit (12,365,171) (476,897) 476,897 (3) (12,365,171)
Deferred
compensation
Treasury stock (484,824) (484,824)
Stockholders'
equity (deficit) 1,331,599 (461,972) 1,688,600
Total Liabilities
And Stockholders'
Equity $ 3,097,776 $ 69,525 $ 3,661,274
</TABLE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(1) Reflects the issuance of 30,000 shares of the Company's convertible
preferred stock to acquire 1,500,000 shares of Global Internet Corporation and
a convertible note receivable from Global Casinos Inc. on June 30, 1997.
(2) Consolidation elimination entry to eliminate the convertible note
receivable against the convertible note payable.
(3) Consolidation elimination entry to eliminate the stockholders equity of
Global Internet Corporation (the acquiree) and to record the excess of purchase
price over net assets acquired as goodwill.
<TABLE>
<CAPTION>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1997
Company
Company Global Pro Forma Pro Forma
As Reported As Reported(1) Adjustments Combined
<S> <C> <C> <C> <C>
Revenues $ 1,273,354 $1,273,354
Cost of goods
Sold 996,854 996,854
Depreciation and
amortization 120,021 24,700(2) 144,721
Selling, general
and
administrative 668,740 124,883 793,623
Total cost and
Expenses 1,785,615 124,883 1,910,498
Operating loss
from continuing
operations ( 512,261) (124,883) (637,144)
Other Income\
(Expense)
Interest expense (47,713) (17,000) 17,000(3) (47,713)
Interest income 90 90
Other, net 848 848
Loss before
minority
interest (559,126) (141,793) (683,919)
Minority interest
In Net Loss 23,662 70,895(4) 94,557
Net Loss $ (535,464) $(141,793) $ (589,362)
Net Loss Per
Share $(.09) $(.10)
Weighted Average
Shares
Outstanding 5,794,585 5,794,585
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(1) Reflects the historical operating results of Global Internet Corporation as
though the acquisition had been consummated on January 1, 1996.
(2) Reflects the amortization of the goodwill on a straight line basis over ten
years.
(3) Consolidation elimination entry to eliminated related party interest income
with related party interest expense.
(4) Reflects minority interest in net loss of Global Internet Corporation.
Closing of the Transaction.
The transaction was closed on May 3, 1997, with the approval of the
Boards of Directors of both the Company and Internet. The Board of the
Company has submitted this transaction to the shareholders of the
Company for ratification and approval of the completed transaction.
Votes Required.
The Board of Directors of the Company is proposing that the
shareholders of the Company ratify and approve the transaction which
closed on May 3, 1997. This vote must be approved by the affirmative
vote of the record holders of a majority of the outstanding shares of
the Company's quorum present in person or by proxy at the Meeting. All
common shareholders of record as of October 24, 1997, which does not
include the new shareholders from the acquisition, will be authorized
to vote. The Acquisition has been approved by the holders of a majority
of the outstanding capital shares of Internet.
Board of Director Recommendations.
The Company' s Board of Directors believes that the transaction and price for
the transaction are fair to the Company shareholders. As stated above, the
Company is acquiring Internet for its preexisting debts, as measured in the
securities of the Company, with no premium attached to the price of the
acquisition. This preexisting debts represents the initial investment of the
original investors in Internet. Further, the Board of Directors believes that
the Web Site Development and Maintenance Agreement with DDB (using EDS as a
subcontractor) to develop a Virtual Internet Casino provides a substantial
advantage to the Company in the Internet gaming business. For all of these
reasons, the Company's Board of Directors recommends that the shareholders vote
FOR the ratification and approval of the acquisition.
INCREASE IN AUTHORIZED COMMON SHARES
The Company proposes to amend its Articles of Incorporation to
authorize the issuance of up to 50,000,000 Common Shares, all with
$0.008 par value. This amendment is required to have enough shares
available for the shareholders of Internet to convert their Class B
preferred shares, if they so chose, under the definitive agreement of
May 3, 1997.
The present Articles of Incorporation of the Company only provide for
the issuance of up to 6,250,000 Common Shares. No specific classes or
preferences of the Common Shares are authorized nor are any
contemplated by this proposed amendment. All newly authorized Common
Shares will be of the same class as the present Common Shares. This
Amendment will have no effect on the number of authorized Preferred
Shares, which will remain the same under the Company's Articles of
Incorporation. The issuance of these Common Shares could be used as an
anti-takeover measure and could have the effect of preventing those who
will not control the Company from mounting an effort to do so.
Although the issuance of Common Shares could be used for this purpose,
this is not the intention of the Company in proposing the authorization
of Common Shares.
At the present time, the Company's primary purpose to authorize the
increase in the number of Common Shares is to have additional
securities for equity offerings or acquisitions. As the Company
expands, there will be need for additional capital, and the management
of the Company believes that it is in the best interests of the Company
and its shareholders to have the option to issue additional Common
Shares as an added avenue to raise capital. The Company has an ongoing
need for additional capital and wants to have as much flexibility as
possible in creating programs for raising such capital. The Company's
management believes that the additional Common Shares will be an
important step in developing that flexibility. This is an added but
only secondary reason for the proposal to authorize an increase in the
number of Common Shares to 50,000,000 shares. In addition, the Company
would have common shares available for potential acquisitions. This
resolution requires the affirmative vote of a majority of the issued
and outstanding shares of the Company. The Board of Directors
recommends that shareholders vote FOR the resolution.
CHANGE OF STATE OF INCORPORATION
The Company seeks to change its state of incorporation to Nevada. At
the present time, the Company is a Colorado corporation and was
originally incorporated as such. It is the belief of management that
changing the state of incorporation form Colorado to Nevada would be in
the best interests of all of the shareholders of the Company. Many
issues of corporate governance, including those regarding officer and
director indemnification, are more clearly defined under Nevada law
than under Colorado law.
Specifically, the State of Nevada has more liberal provisions concerning
the internal elements for the operation of the Company than does the
State of Colorado, particularly as they relate to shareholder and
director meetings. Further, Nevada has no state corporate income tax,
while Colorado has such a tax to which the Company is subject. Finally,
and most importantly, issues regarding officer and director
indemnification are more clearly settled under Nevada law than under
Colorado law.
The Company plans to expand its Board of Directors in the future to add
several more outside directors, although the Company, at this time, has
not identified specific individuals. If the Company is to attract and
keep outside directors of the highest caliber, it must become eligible
to purchase Directors and Officers Insurance, which, in part, involves
being incorporated in a state with such well-established precedents
concerning indemnification, as well as corporate governance.
None of the shareholders' capital positions in the Company will be
effected by the change of state of incorporation. This change will have
no effect on the number of authorized or issued securities of the
Company which will remain the same under the Nevada corporation. As to
the additional common shares as are approved by the shareholders at
this Shareholders Meeting, there will also be no change. In addition,
the Company plans to do this transaction as a tax-free reorganization
under the Internal Revenue Code of 1986, as amended. This resolution
requires the affirmative vote of a majority of the issued and
outstanding shares of the Company. The Board of Directors recommends
that shareholders vote FOR the resolution.
CHANGE OF THE NAME OF THE COMPANY
The Company seeks to change its name to First Entertainment Holding
Corp. The Company wishes to operate as a Nevada corporation. The
proposed name is the closest name to the Company's present name which
the State of Nevada will approve for use. The Company also believes
that the name change will better emphasize the relationship of the
Company to its operational entities. This resolution requires the
affirmative vote of a majority of the issued and outstanding shares of
the Company. The Board of Directors recommends that shareholders vote
FOR the resolution.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed the Company's present independent public
accountants, BDO Seidman, LLP for the fiscal year ended December 31,
1997. This appointment will be submitted to the shareholders for
ratification at the Meeting.
The submission of the appointment of BDO Seidman, LLP is not required
by law or the bylaws of the Company. The Board of Directors is
nevertheless submitting it to the shareholders to ascertain their
views. If the shareholders do not ratify the appointment, the
selection of other independent public accountants will be considered by
the Board of Directors. To be adopted, the resolution requires the
affirmative vote of a majority of the shares voting at the meeting. The
Board of Directors recommends a vote FOR the resolution.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's management has no
knowledge of any business, other than previously described herein,
which should be presented for consideration at the meeting. In the
event that any other business is presented at the meeting, it is
intended that the persons named in the enclosed Proxy will have
authority to vote such Proxy in accordance with
their best judgment on such business.
SHAREHOLDER PROPOSALS
According to Rule 14a-8 under the Securities Exchange Act of 1934, a
shareholder may require that certain proposals suggested by
shareholders be voted on at a shareholders meeting. Information
concerning such proposals must be submitted to the Company for
inclusion in its proxy statement. Such proposals for inclusion in the
Company's proxy materials relating to the next Annual Meeting of the
Company must be received by the Company not later than December 31,
1997.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders, including financial
statements, has been mailed with these materials to all shareholders of
record. Any shareholder who has not received a copy of such Annual
Report may obtain a copy by writing to the Company. Such Annual Report
is not to be treated as part of the proxy solicitation material, nor as
having been incorporated by reference.
SOLICITATION OF PROXIES
The cost of solicitation will be borne by the Company. The Company will
reimburse brokerage firms and other custodians, nominees, and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of common stock. In addition to solicitation by mail, directors,
officers, and regular employees of the Company may solicit Proxies personally or
by telegraph or telephone, without additional compensation.
NOTICE TO BANKS, BROKERS/DEALERS, VOTING TRUSTEES, AND THEIR NOMINEES
Please advise the Company, in care of its corporate address, whether any other
persons are the beneficial owners of the shares of common stock for which
Proxies are being solicited from you, and, if so, the number of copies of the
Proxy Statement, and other soliciting materials, you wish to receive in order to
supply copies to the beneficial owners of shares.
FIRST ENTERTAINMENT, INC.
By: A.B. Goldberg
President
Dated: November 3, 1997
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
May 1, 1997
FIRST ENTERTAINMENT, INCORPORATED.
ACQUISITION OF
GLOBAL INTERNET, INC.
AGREEMENT AND PLAN OF REORGANIZATION
THIS Agreement and Plan of Reorganization is entered into this 1st
day of May, 1997, by and between FIRST ENTERTAINMENT, INCORPORATED, a
Colorado corporation, (hereinafter "Acquiror"); GLOBAL INTERNET, INC. a
Delaware corporation; (hereinafter referred to as "Acquiree"); and
GLOBAL CASINOS, INC. the majority stockholder of Acquiree, (hereinafter
referred to as "Stockholder).
RECITALS
Stockholder of Acquiree owns 1,750,000 of the issued and
outstanding common stock of Acquiree and a Note Receivable in the amount
of $375,000. Acquiror desires to acquire 1,500,000 of Stockholder
shares of Acquiree, as well as the Note Receivable, making Acquiree a
subsidiary of Acquiror, and Stockholder desire to make an exchange of
its shares in Acquiree for shares of Acquirer's Class B Convertible
Preferred Stock and warrants to be exchanged as set out herein with said
Stockholder.
NOW, THEREFORE, for the mutual consideration set out herein, the parties
agree as follows:
AGREEMENT
1. Plan of Reorganization. Stockholder of Acquiree is the owner of
1,750,000 shares of the issued and outstanding common stock of said
Acquiree. It is the intention of the parties hereto that 1,500,000 of
the issued and outstanding common shares of Acquiree and the Note
Receivable shall be acquired by Acquiror in exchange solely for
Acquirer's Class B Convertible Preferred Stock and warrants.
2. Exchange of Securities. Acquiror and Stockholder agree that
1,500,000 of the issued and outstanding shares of common stock of
Acquiree and a Note Receivable in the amount of $375,000 shall be
exchanged with Acquiror for a total of 30,000 shares of Class B
Convertible Preferred Stock of Acquiror, and 1,500,000 warrants of
Acquirer's stock.
The Acquirer further agrees to exchange one warrant to purchase common
shares of the Acquiror for every additional share of Acquiree stock
offered to Acquiror by any of its stockholders. The warrants shall be
for a period of five years from the date of issuance and will be
exercisable at $1.25 per share.
It is agreed and understood by the parties hereto that the
Acquiror currently does not have enough authorized shares reserved to
issue upon exercise any of the aforementioned warrants and Convertible
Preferred Shares. Acquiror agrees to call a shareholder's meeting to
increase the number of common shares at least sufficient to permit the
reservation of authorized common stock issuable upon exercise of the
said warrants.
The Acquiror shares will, on the Closing Date, as hereafter defined, be
delivered to the Stockholder in exchange for their shares in Acquiree.
Stockholder represents and warrants that he will hold such shares of
Acquiror for investment purposes and not for further public
distribution.
Global Casino, Inc. agrees to use its best efforts in assisting Global
Internet in securing an Internet Casino Gaming License in one of the
venues it operates outside of the United States.
3.Terms of Class B Convertible Preferred Shares. The Class B Preferred
Stock (Preferred Stock) of Acquiror is to be issued to Stockholder
hereunder shall be issued at a face value of $12.50 per share. The face
value of the Preferred Stock shall be convertible at the option of the
holder, into shares of the Acquiror's common stock at a conversion value
of $1.25 per share, subject to adjustment under certain circumstances.
At any regular or special meeting of Acquiror's shareholders, holders of
Preferred Stock shall be entitled to 12.5 votes for every share of
Preferred Stock owned on the record date of such meeting. Holders of
Preferred Stock shall be entitled to preferences in the event Acquiror
declares a dividend or undertakes a corporate liquidation which
preference shall be senior to all other equity holders of Acquiror
except for holders of Class A Preferred Stock.
Acquiror agrees to file an amendment to its currently contemplated S-3
registration statement, ninety days after its effective date,
registering the Preferred Stock's underlying common shares. Stockholder
agrees to enter into a lock-up agreement with Acquiror for one year from
the Preferred Stock's issuance date.
4.Terms of Warrants. Each of the 1,500,000 warrants issuable to
Stockholder shall be exercisable by the holder thereof to purchase one
share of Acquiror's common stock at an exercise price of $1.25 per
share. However, in the event a Registration Statement registering for
sale under the Securities Act (i) the re-offer of the warrants and (ii)
the issuance of the common stock of Acquiror upon exercise of the
warrant is not effective (the Warrant Stock) within 12 months from the
date of issue, the exercise price shall be reduced to $1.00 per share.
Stockholder agrees to pay for the costs of listing the warrants on the
NASDAQ small cap exchange, as well as legal fees and offering costs of
up to $10,000.
After twelve months from the date of issuance of warrants, if Acquiror's
stock trades above $3.00 for at least 30 days, Acquiror shall have the
right, with a thirty day notice, to call said warrants for $.05 a share.
5.Nasdaq Listing. For so long as there is outstanding any shares of
Preferred Stock and unexercised warrants which have not otherwise
expired, Acquiror shall use its best efforts to maintain the listing of
its common stock and warrants on the Nasdaq Stock Market and shall take
all action necessary or advisable to maintain such listing.
6. Delivery of Shares. On or before the Closing Date, Stockholder will
deliver certificates for the shares of Acquiree duly endorsed so as to
make Acquiror the holder thereof; free and clear of all claims and
encumbrances; and on such Closing Date, delivery of the Acquiror shares,
which will have certain restrictions as to transfer, will be made to the
Stockholder as set forth herein. A list of the shares of Acquiree, the
owner thereof, and shares of Acquiror to be received by said Stockholder
is attached hereto as Exhibit "A" and by this reference is incorporated
herein.
7. Representations of Stockholder and Acquiree. The Stockholder and
Acquiree, hereby represent and warrant that, with respect to his own
shares and as to the Acquiree, effective this date and the Closing Date,
the representations listed below are true and correct. Said
representations are meant and intended by all parties to apply to the
Acquiree.
(a) The outstanding shares of common stock of Acquiree; are free from
claims, liens, or other encumbrances; and Stockholder has the
unqualified right to transfer and dispose of such shares.
(b) The shares constitute validly issued shares of Acquiree fully-paid
and nonassessable.
(c) To deliver audited financial statements of Global Internet, Inc.
prior to May 15, 1997.
8. Representations of Acquiring Corporation. Acquiror hereby represents
and warrants as follows:
(a) As of the Closing Date, the Acquiror shares to be delivered to the
Stockholder will constitute valid and legally issued shares of Acquiror,
fully-paid and nonassessable, and will be legally equivalent in all
respects to the Acquirer's Class B Convertible Preferred Stock of
Acquiror issued and outstanding as of the date thereof.
(b) The officers of Acquiror are duly authorized to execute this
Agreement and have taken all actions required by law and agreements,
charters, and bylaws, to properly and legally execute this Agreement.
(c) Acquiror has delivered to Acquiree current unaudited financial
statements and at Closing shall deliver all of its financial records,
which shall be true, complete and accurate; there are and shall be no
substantial liabilities, either fixed or contingent, not reflected in
such financial statements and records or to which the Acquiree has not
been made aware. Said financial statements fairly and accurately reflect
the financial condition of the Acquiror as of the date thereof and the
results of operations for the period reflected therein. Such statements
shall have been prepared in accordance with generally accepted
accounting principles, consistently applied, except as otherwise stated
therein.
(d) Since the date of the financial statements there will have been, but
as of the Closing Date there will not be, any material changes in the
financial position of Acquiror, except changes arising in the ordinary
course of business, which changes will in no event adversely affect the
financial condition of the Company.
(e) Acquiror is not involved in any pending litigation, claims, not
reflected in such financial statements or otherwise disclosed in writing
to the Stockholder and there are no lawsuits, claims, assessments, or
similar matters, to the best knowledge of management, threatened or
contemplated against Acquiror, its management or properties.
(f) As of the Closing Date and date hereof Acquiror is duly organized,
validly existing and in good standing under the laws of the State of
Colorado; it has the corporate power to own its property and to carry on
its business as now being conducted and is duly qualified to do business
in any jurisdiction where so required.
(g) Acquiror has filed all federal, state, county and local income,
excise, property and other tax returns, forms, or reports, which are due
or required to be filed by it prior to the date hereof and has paid or
made adequate provision for the payment of all taxes, fees, or
assessments which have or may become due pursuant to such returns or
pursuant to any assessments received.
(h) Acquiror has not breached, nor is there any pending or threatened
claims or any legal basis for a claim that Acquiror has breached, any
of the terms or conditions of any agreements, contracts or commitments
to which it is a party or is bound and the execution and performance
hereof will not violate any provisions of applicable law of any
agreement to which Acquiror is subject. (i) The present capitalization
of Acquiror comprises authorized common stock of 6,250,000 shares, $.008
par value, of which approximately 6,000,000 shares are issued and
outstanding as of the date hereof. The Acquiror has 5,000,000
authorized preferred shares, $0.001 par value, to have such preferences
as the Board of Directors may determine from time to time. As of the
Date hereof, the Acquiror has issued and outstanding a total of
10,869 Class A Preferred convertible into one share of common shares; no
shares of Class B Preferred; and 275,000 shares of Class C Preferred.
All outstanding shares, have been duly authorized, validly issued, and
fully paid, and there are no outstanding or presently authorized
securities, warrants, options or related commitments of any nature not
reflected in the current financial statements of Acquiror or otherwise
known to Acquiree.
(j) The shares of Class B voting preferred stock of Acquiror to be
issued to Stockholder at Closing will be validly issued, nonassessable
and fully-paid under Colorado corporation law and will be issued in a
non-public offering and exempted transaction under federal and state
securities laws.
(k) At the date of this Agreement Acquiror has, and at the Closing Date
it will have, disclosed all events, conditions and facts materially
affecting the business and prospects of Acquiror. Acquiror has not now
and will not have, at the Closing Date, withheld disclosure of any such
events, conditions, and facts which it, through management has knowledge
of, or has reasonable grounds to know, may materially affect the
business and prospects
of Acquiror.
9. Closing Date. The Closing Date herein referred to shall be upon such
date as the parties hereto may mutually agree upon but is expected to be
on or about May 1, 1997. This Agreement is executed by the parties as
ofthe date hereof subject only to ratification by the Acquiror Board of
Directors. As of the said ratification, the Stockholder will be deemed
to have accepted delivery of the certificates of stock to be issued in
their respective names, and in connection therewith will make delivery
of their stock in Acquiree to Acquiror. Certain exhibits, etc. may be
delivered subsequent to the Closing Date upon the mutual agreement of
the parties hereto.
10. Conditions Precedent to the Obligations of Acquiree. All obligations
of Acquiree and Stockholder under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
(a) The representations and warranties by or on behalf of Acquiror
contained in this Agreement or in any certificate or document delivered
to Acquiree pursuant to the provisions hereof shall be true in all
material respects at and as of the time of Closing as though such
representations and warranties were made at and as of such time.
(b) Acquiror shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing on the Closing Date.
(c) The Directors of Acquiror shall have approved this transaction and
such other reasonable matters as requested by Acquiree as pertaining to
this transaction.
(d) All instruments and documents delivered to Stockholder pursuant to
the provisions hereof shall be reasonably satisfactory to Stockholder.
8. Conditions Precedent to the Obligations of Acquiror. All obligations
of the Acquiror under this Agreement are subject to the fulfillment,
prior to or at the Closing on the Closing Date, of each of the following
conditions:
(a) The representations and warranties by Acquiree and Stockholder
contained in this Agreement or in any certificate or document delivered
to Acquiror pursuant to the provisions hereof shall be true at and as of
the time of Closing as though such representations and warranties were
made at and as of such time.
(b) Acquiree and Stockholder shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing; including
the delivery of all of the outstanding stock of Acquiree.
(c) Stockholder shall deliver to Acquiror a letter commonly known as an
"investment letter" agreeing that the shares of stock in Acquiror are
being acquired for investment purposes, and not with a view to resale.
(d) Stockholder hereby states that the materials, including, current
financial statements, prepared and delivered by Acquiror to Stockholder,
have been read and understood by Stockholder, that he is familiar with
the business of Acquiror, that the shares are subject to such
restrictions as may be required under said Act and may not be resold,
except in reliance on an exemption under the Act, and that the
Stockholder will thereby be taking control of Acquiror.
11. Indemnification. Within the period provided in paragraph 10 herein
and in accordance with the terms of that paragraph, each party to this
Agreement, shall indemnify and hold harmless each other party at all
times after the date of this Agreement against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses including attorney's
fees incident to any of the foregoing, resulting from any
misrepresentations, breach of covenant or warranty or non-fulfillment of
any agreement on the part of such party under this Agreement or from any
misrepresentation in or omission from any certificate furnished or to be
furnished to a party hereunder. Subject to the terms of this Agreement,
the defaulting party shall reimburse the other party or parties on
demand, for any reasonable payment made by said parties at any time
after the Closing, in respect of any liability or claim to which the
foregoing indemnity relates, if such payment is made after reasonable
notice to the other party to defend or satisfy the same and such party
failed to defend or satisfy the same.
12. Nature and Survival of Representations. All representations,
warrantiesand covenants made by any party in this Agreement shall
survive the Closing hereunder and the consummation of the transactions
contemplated hereby for three years from the date hereof. All of the
parties hereto are executing and carrying out the provisions of this
Agreement in reliance solely on the representations, warranties and
covenants and agreements contained in this Agreement or at the Closing
of the transactions herein provided for and not upon any investigation
upon which it might have made or any representations, warranty,
agreement, promise or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
13. Documents at Closing. Between the date hereof and the date of
ratification by the shareholders of Acquiror, the following transactions
shalloccur, all of such transactions being deemed to occur
simultaneously:
(a) Stockholder will deliver, or cause to be delivered, to Acquiror the
following:
(1) stock certificates for the stock of Acquiree being tendered
hereunder, duly endorsed in blank,
(2) all corporate records of Acquiree, including without limitation
corporate minute books (which shall contain copies of the Articles of
Incorporation and Bylaws, as amended to the Closing), stock books, stock
transfer books, corporate seals, and such other corporate books and
records as may reasonably requested for review by Acquiror and its
counsel;
(3) a certificate executed by Stockholder to the effect that all
representations and warranties made by Acquiree under this Agreement are
true and correct as of the Closing, the same as though originally given
to Acquiror on said date;
(4) such other instruments, documents and certificates, if any, as are
required to be delivered pursuant to the provisions of this Agreement or
which may be reasonably requested in furtherance of the provisions of
this Agreement;
(b) Acquiror will deliver or cause to be delivered to Stockholder and
Acquiree:
( 1 ) stock certificates for Class B Convertible Preferred Stock to be
issued as a part of the exchange as listed on Exhibit "A";
(2) certificates representing 1,500,000 warrants
(3) a certificate of the President and Secretary of Acquiror to the
effect that all representations and warranties of Acquiror made under
this Agreement are reaffirmed on the Closing Date, the same as though
originally given to Stockholder on said date;
(4) certified copies of resolutions by Acquirer's Board of Directors
authorizing this transaction;
(5) such other instruments and documents as are required to be delivered
pursuant to the provisions of this Agreement.
14. Miscellaneous .
(a) Further Assurances. At any time, and from time to time, after the
effective date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to
confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or
sent by prepaid first class registered or certified mail, return receipt
requested.
(d) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) Governing Law. This Agreement was negotiated and is being
contracted for in the State of Colorado, and shall be governed by the
laws of the State of Colorado, and the securities being issued herein
are being issued and delivered in the State of Colorado in accordance
with the isolated transaction and non public offering exemption.
(g) Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(h) Entire Agreement. This Agreement is the entire agreement of the
parties covering everything agreed upon or understood in the
transaction. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind of condition or
inducements to the execution hereof.
(i) Time. Time is of the essence.
(j) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
(k) Default Costs. In the event any party hereto has to resort to legal
action to enforce any of the terms hereof, such party shall be entitled
to collect attorneys fees and other costs from the party in default.
IN WlTNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
FIRST ENTERTAINMENT, INCORPORATED.
By: A.B. Goldberg
President
GLOBAL CASINO, INC. SHAREHOLDER
By: Tony Kay
President
FIRST ENTERTAINMENT, INCORPORATED.
OFFICER'S CERTIFICATE
The undersigned, President and Secretary of FIRST ENTERTAINMENT,
INCORPORATED. ("Acquiror"), do hereby certify that they are duly elected,
qualified and acting officers of Acquiror, a Colorado corporation, and as such
are familiar with the business affairs of said corporation, and are familiar
with and have read that certain Agreement and Plan of Reorganization between
Acquiror and Acquiree, dated May 1, 1997.
The undersigned do hereby state that the representations and warranties
made by Acquiror contained in said Agreement, to the best of their knowledge,
are true and correct at and as of the time of closing. In addition, the
undersigned hereby state that to the best of their knowledge, Acquiror has
performed and complied with all covenants, agreements and conditions required by
the Agreement to be performed or complied with by Acquiror prior to or at the
closing on the closing date.
IN WITNESS WHEREOF, the undersigned, has hereunto duly executed this
certificate this first day of May, 1997.
FIRST ENTERTAINMENT, INCORPORATED
By: A.B. Goldberg
President
By: Cynthia Jones
Secretary
Exhibit B
Addendum to the Agreement and Plan of Reorganization, entered into the
1st day of May, 1997 between FIRST ENTERTAINMENT, Inc., GLOBAL INTERNET,
INC. and GLOBAL CASINOS, INC.
It is agreed between the parties, that in the event that the First
Entertainment, Inc. shareholders do not agree to increase the auhtorized
number of shares at the upcoming shareholders meeting that the Agreement
and Plan of Reorganization, entered into the 1st day of May, 1997,
between First Entertainment, Inc. and Global Casinos,Inc. is rescinded.
Accepted and Agreed
/s/Steve Callendrella /s/A.B. Goldberg
Global Casinos, Inc. First Entertainment, Inc.
Steve Callendrella, President A.B. Goldberg, President
9/24/97 9/22/97
FIRST ENTERTAINMENT, INC.
1999 Broadway, Suite 3135
Denver, Colorado 80202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON December 5, 1997
TO OUR SHAREHOLDERS:
Notice is hereby given that a Special Meeting of Shareholders (the
Meeting) of FIRST ENTERTAINMENT, INC. (the Company), a Colorado
corporation, will be held at the Comedy Works, 1226 15th Street,
Denver, Colorado, on December 5, 1997, at 10:00 a.m., local time, for
the purposes set forth herein. A Proxy Card and a Proxy Statement for
the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three (3) directors to the Board of Directors of the
Company, to serve until their resignation or removal from office, or
until their respective successors are elected and qualified;
2. The ratification and approval of the Company's prior acquisition of
Global Internet Corporation, a Delaware corporation;
3. Approval to amend the Company's Articles of Incorporation to increase
the number of authorized common shares from 6,250,000 shares at $.008
par value to 50,000,000 shares at $.008 par value
4. Approval of the change of state of incorporation of the Companys to
Nevada and its name to First Entertainment Holding Corp.;
5. The ratification of BDO Seidman, LLP as the Company's auditors for
the fiscal year ended December 31, 1997; and
6. Consideration of any matters which may properly come before the
Meeting, or any adjournment thereof. At this time, the Board of
Directors is not aware of any other business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above or on any date or dates to which the
Meeting may be adjourned. Only shareholders of record as of the close of
business on October 24, 1997 are entitled to notice of and to vote at
the Meeting. The stock transfer books of the Company will remain open.
There is printed on the following pages a Proxy Statement to which your
attention is invited. Please read it carefully.
You are requested to fill in and sign the enclosed form of Proxy which
is solicited by the Board of Directors and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at
the Meeting in person.
By Order of the Board of Directors
A.B. Goldberg
President
Denver, Colorado
November 3, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU
OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PREPAID, ADDRESSED ENVELOPE. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
PROXY
FIRST ENTERTAINMENT, INC.
1999 Broadway, Suite 3135
Denver, Colorado 80202
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF FIRST ENTERTAINMENT, INC.
THE UNDERSIGNED hereby appoints and constitutes A.B. Goldberg as his true and
lawful agents and proxy, with full power of substitution and revocation, to
attend, represent and to vote the shares of common stock of the undersigned at
the Special Meeting of Shareholders, to be held at the Comedy Works, 1226 15th
Street, Denver, Colorado, on December 5, 1997, at 10:00 a.m., local time, for
the purposes set forth in the accompanying Notice of Special Meeting of
Shareholders and at any adjournment thereof, and on all matters coming before
said meeting.
Management recommends a vote FOR items 1, 2, 3, 4, and 5, and 6 and SHARES WILL
BE SO VOTED UNLESS YOU INDICATE OTHERWISE:
1. Approval of the following individuals to serve on the Board of
Directors:
A.B. Goldberg FOR AGAINST ABSTAIN
Dr. Nick Catalano FOR AGAINST ABSTAIN
Dr. Theodore Jacobs, M.D. FOR AGAINST ABSTAIN
2. The ratification and approval of the Company's prior acquisition of Global
Internet Corporation, a Delaware corporation;
FOR AGAINST ABSTAIN
3. Approval to amend the Company's Articles of Incorporation to increase
the number of authorized common shares from 6,250,000 shares at $.008
par value to 50,000,000 shares at $.008 par value
FOR AGAINST ABSTAIN
4. Approval of the change of state of incorporation of the Companys to
Nevada and its name to First Entertainment Holding Corp.
FOR AGAINST ABSTAIN
5. The ratification of BDO Seidman, LLP as the Company's auditors for
the fiscal year ended December 31, 1997; and
FOR AGAINST ABSTAIN
6. Consideration of any matters which may properly come before the
Meeting, or any adjournment thereof. At this time, the Board of
Directors is not aware of any other business to come before the Meeting.
FOR AGAINST ABSTAIN
Dated: , 1997
(Printed Name of Shareholder)
(Signature of Shareholder)
This Proxy Must Be Signed Exactly As Your Name Appears On Your Stock
Certificate. Executors, Administrators, Trustees, Etc., Should Give Full Title
As Such. If The Signer Is A Corporation, Please Sign Full Corporate Name By
Duly Authorized Officer.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY. THE FAILURE TO CHECK A
BLOCK WILL BE TAKEN AS A VOTE FOR THE PROPOSITION.
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