SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES ACT OF 1934 (Fee required)
FOR THE FISCAL YEAR ENDED APRIL 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No fee required)
For the transition period from to
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COMMISSION FILE NUMBER 0-17206
MANAGEMENT TECHNOLOGIES, INC.
-----------------------------
(Name of small business issuer in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
13-3029797
(I.R.S. Employer Identification No.)
630 Third Avenue
New York, New York
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(Address of principal executive offices)
10017-6705
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(Zip Code)
Issuer's telephone number, including area code (212) 983 5620
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Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share (Title of Class)
------------------------------------------------------------
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $23,751,664
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: August 8, 1997: $10,036,171
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: as of August 1, 1997: 139,203,439
Transitional Small Business Disclosure Format (check one): Yes No X
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ITEM 1. DESCRIPTION OF BUSINESS
Business Development
The Registrant (the "Company") was incorporated in the State of New York in
1980.
The Company owns all shares issued and outstanding of the following operating
subsidiaries:
1.Winter Partners Limited, ("Winter Partners") a United Kingdom company with
offices in London, England
2.MTi Abraxsys Systems, Inc, ("Abraxsys Inc.") a United States company with
offices in New York, New York
3.MTi Abraxsys Systems (Pte) Limited, ("Abraxsys Pte") a Singapore company with
offices in Singapore
4.MTi Abraxsys Systems (HK) Limited ("Abraxsys HK"), a Hong Kong company with
offices in Hong Kong
5.MTinnovation S.A. ("MTinnovation"), a French company with offices in Paris,
France.
6.MTi Holdings (UK) Limited ("MTi Holding") , a United Kingdom company with
offices in London, England
7.Advanced Banking Solutions Limited ("ABS") , a United Kingdom company with
offices in London, England
In turn, MTi Holding (UK) Limited owns all shares issued and outstanding of MTi
Trading Systems Limited ("MTi Trading") United Kingdom company with offices in
London, England
The Company's other wholly owned subsidiaries in the United Kingdom, New York,
Massachusetts, Canada and Australia are currently inactive.
By order dated March 19 and March 20, 1997, the High Court of Justice, Chancery
Division, Companies Court, in London, England, appointed Messrs. Malcolm Cohen
and Peter Supperstone of BDO Stay Hayward as joint administrators of Winter
3
Partners, MTi Holding and MTi Trading, pursuant to the provisions of Section 8
of the English Insolvency Act 1986, for the purposes of (i) the survival of the
companies, and the whole or any parts of their undertaking, as a going concern,
(ii) the approval of certain voluntary arrangements with the companies'
creditors, and (iii) a more advantageous realization of their assets than would
be effected on a winding up. Cosequently, the Company ceased to control MTI
Trading, Winter Partners and MTi Holding from the date they were put in
administration, or to exercise control over the software products owned by MTi
Trading.
On July 22, 1997, ABS acquired certain assets from Winter Partners, in
administration, including intellectual property rights to certain software
products, various fixtures and equipment, accounts receivable, and work-in-
progress for a total consideration of 257,000 British pounds. In addition ABS
assumed certain contracts from Winter Partners, in administration. Certain
employees and management of Winter Partners, in administration, were hired by
ABS. From July 23, 1997 on, ABS is carrying out in the UK and in certain parts
of the world, the business that was formerly that of Winter Partners, defined
below as the Banking Systems business. The business defined below as the
Trading Systems business was substantially handled by MTi Trading in the UK.
The Company's principal executive offices are located at 630 Third Avenue, New
York, New York 10017. The telephone number is (212) 983 5620. Unless the
context otherwise requires, references to the Company include its subsidiaries.
The Company develops, markets, licenses, installs, maintains and supports
software products catering to the needs of international banks and financial
institutions.
Business of the Registrant
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The Company is engaged in the back office banking software business (the
"Banking System" business) and in the trading room software business (the
"Trading System" business).
Back Office Software Products of the Registrant
- -----------------------------------------------
The Company's principal back office banking software products are Abraxsys,
IBS-90, IBS-V5, and Pro-IV IBS. Abraxsys, IBS-90, IBS-V5 and Pro-IV IBS are
back office international banking software products running on mid range
computer systems. Abraxsys and IBS-90 are installed at approximately 75
locations in over 30 countries; IBS-V5 and Pro-IV IBS are installed at
approximately 70 locations in over 25 countries.
The Company transferred title to its integrated software packages for financial
institutions known as ManTec to Global Financial Systems Ltd. ("GFS"), a
corporation based in London, England that sells and services the ManTec product
line and other products. The Company shares in any license fees GFS may
generate through the ManTec line. The Company no longer directly supports its
ManTec product line. GFS provides support to certain clients. The ManTec
product line runs on IBM and IBM-compatible mainframe computers.
The Company's Banking System business is handled through Abraxsys Inc., Abraxsys
Pte, Abraxsys HK, Winter Partners and MTinnovation, while intellectual property
rights to certain Banking System software products rests with Management
Technologies, Inc.
IBS-90
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IBS-90 is a comprehensive suite of computer programs designed to support the
back office activities of banks. The product provides transaction processing
support for a bank's foreign exchange and money market business, including
various off-balance sheet instruments such as forward rate agreements, interest
rate swaps, and repurchase agreements; various lending activities including
commercial, syndications, participations and mortgages; trade finance business,
retail or demand deposit accounting business; funds transfer activities and
general ledger and other accounting support.
The product offers multi-lingual support, multi-branch and multi-currency
processing, right down to profit center level. In addition, the product offers
some front office support to various functional areas in a bank, the most
important of which is teller/cashier support.
IBS-90 reflects some 20 years of an evolutionary development and previous
versions have been marketed under the names of International Banking System,
and Arbat Banking System.
The product is written in the AIMS computer language, a derivative of the widely
accepted BASIC language. The product runs on any model of Digital Equipment
Corporation's ("Digital") VAX computer processors, under the control of
Digital's proprietary operating system VMS.
IBS-90 was first marketed in 1989, and to date has been licensed to
approximately 50 banks.
ABRAXSYS
6
Abraxsys is a complete redevelopment of IBS-90 and is now marketed as one of the
Company's prime offering to banks to computerize bank's back offices.
Abraxsys comprises essentially the same functions as IBS-90, but includes many
enhancements, particularly in the processing support offered to a bank's trade
finance department.
Abraxsys is written in the industry standard `C' language and runs on a variety
of hardware platforms and operating systems, the most significant of which is
UNIX, and is targeted to meet the market demand for open systems, i.e. software
products that are engineered to run on a variety of hardware platforms and
operating systems.
PRO IV - IBS
Pro-IV IBS is a suite of banking products using state-of-the-art technology.
Its key features are as follows:
. direct portability from PC to mini to mainframe
. direct portability of applications development skills between machines and
environments
. reduced software maintenance loads
. interoperability with existing software environments
. access to a wide range of popular databases
. fully integrated system security at all levels
Designed to meet open systems standards, Pro-IV IBS is independent of database
management software and graphic user interface ("GUI"), and runs on almost any
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hardware and software platform, including different platforms within the same
bank. The product is a modern fourth generation computer language-based
solution which offers a safe migration path from existing systems. It is
designed to interface easily with existing systems, including older legacy
systems, and can be purchased as a complete system or in modules with selected
functionality.
IBS-V5
IBS-V5 is an integrated transaction processing and trade support system designed
to enable financial institutions to monitor, evaluate and control banking and
trading activities by supplying critical management information in a timely
manner. The product is a proven and stable international banking system,
representing the latest version of a product launched in 1986 by McDonnell
Information Systems Plc ("MDIS"), and acquired by the Company in March of 1996.
IBS-V5 offers the following functional modules: Customer Information File;
Foreign Exchange; Money Market; Commercial Lending; Letters of Credit; Bills of
Exchange; Centralized Nostro Reconciliation; Demand Deposit Accounting; General
Ledger, Precious Metals, Money Transfer, Futures and Options, and International
Securities.
The inherent flexibility of IBS-V5 makes it capable of providing benefits in all
these areas of banking operations in terms of risk management, provision of
management information, integration of front and back office and automated
settlements.
MANTEC
8
ManTec is a suite of computer programs designed to support the back office
functions of banks. It addresses substantially the same areas of functions as
IBS-90 Abraxsys. The major differences with ManTec is that it is designed to
run exclusively on IBM and IBM-compatible mainframe computers. The popularity
of mainframe computers in the Company's target markets has declined rapidly over
the past few years.
The Company decided in July 1994, following the acquisition of the IBS-90 and
Abraxsys products, to discontinue directly selling and servicing the ManTec
product line. This decision was based on the view that the market for `open'
systems such as Abraxsys was much larger and expanding versus the contracting
market for mainframe systems.
However, in recognition that a small market exists for the ManTec product, the
Company transferred title to ManTec to Global Financial Systems Ltd. ("GFS"), a
corporation based in London, England that sells and services the ManTec product
line and other products. The Company shares in any license fees GFS may
generate through the ManTec line.
Trading Room Software Products of the Registrant
- ------------------------------------------------
The Company's principal Trading Systems products are the OpenTrade family of
products. The OpenTrade family of products comprises OpenTrade, TradeWizard,
MediaWizard and EXTRA. OpenTrade is used by 50 customers supporting 6,000
trading positions.
The Company's Trading Systems business is handled though MTi Trading. MTi
Trading holds title to the Company's Trading Systems software products. As of
9
March 20, 1997, MTi Trading was put in administration. Accordingly, the Company
ceased to exercise control over OpenTrade, TradeWizard, MediaWizard and EXTRA.
Markets
- -------
The Company markets its products to the international banking area of domestic
and foreign banks. In the United States, the Company believes there are
approximately 850 banks engaged in international banking activities of
sufficient size to require, at least some of the components of the Company's
products. In Europe, the Middle East and the Far East, the Company believes
that there are in excess of 3,000 banking offices which form the primary market
for the Company's software products.
Data processing has become increasingly important to international banking
activities. Management believes that the market potential for more
sophisticated software systems has increased as a result of declining computer
hardware prices, the high cost of staff and the increasing need to process
transactions promptly so as to be able to adequately assess and control
different types of risks. At the same time, management believes that it has
become increasingly more difficult for users to internally develop the software
necessary for their data processing requirements because of the substantial
expense and commitment of personnel and other resources necessary to design and
maintain such software programs.
Distribution Methods of the Products and Services
- -------------------------------------------------
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The Company has narrowed its focus to specific geographic areas in which
relatively greater interest has been expressed in particular products (although
there can be no assurance that such focus will translate into sales). The areas
the Company is focusing upon are Western Europe, Eastern and Central Europe, the
Far East and North America.
The Company primarily relies upon its own direct sales force to achieve sales.
In certain geographical markets, the Company has sales agents and/or support
agents. Included among these are COMAS in Korea for Abraxsys; Systex
Corporation in Taiwan for Abraxsys; IDOM, Inc. for the support of the IBS-V5
and Pro-IV IBS products in Central and Eastern Europe, the Commonwealth of
Independent States (former republics of the Soviet Union) and the US; and
Itochu Electronics in Japan.
Banking Systems Strategic Alliances
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SOFTSTAR INTERNATIONAL SOLUTIONS, INC. ("SIS")
A joint partnership was signed in July of 1997 with SIS to realize the benefits
of promoting SIS's multi-currency, multi-language, multi standard database and
financial applications to the Company's extensive customer base. SIS is a US
based leading supplier of financial and business software applications to
businesses operating across language, national and cultural barriers. The
agreement provides for a sharing of revenue from any SIS sale to the Company's
customers.
LANIT, INC. ("LANIT")
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A joint partnership was signed in July of 1997 with Lanit to realize the
benefits of promoting Lanit's wide range of software services to the Company's
extensive customer base. Lanit is a Russian leading supplier of financial and
business software services in certain areas of the Commonwealth of Independent
Republics. The agreement provides for a sharing of revenue from any SIS sale to
the Company's customers.
GARG DATA INTERNATIONAL, INCORPORATED ("GDI")
GDI is a US based leading supplier of systems integration services and certain
software products. A joint partnership was signed in July of 1997 with GDI to
realize the benefits of promoting GDI's systems integration software services
to the Company's extensive customer base. GDI also provides certain
development and support services to certain clients of the Company with regard
to certain software products of the Company. The agreement provides for a
sharing of revenue from any SIS sale to the Company's customers.
Sources of Revenue
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SOFTWARE LICENSING
The Company generally licenses Banking Systems software products to its
customers for use under non-exclusive 5 to 25 year license agreements, and
perpetual non-exclusive license for its Trading Systems software products.
Pursuant to the Company's standard form of license agreement, the customer pays
a fixed license fee which varies depending on the number of users licensed to
access the software, and acquires the non-transferable and non-exclusive right
to use the software at a designated site. If the customer desires to use the
12
software at multiple locations or to add further users additional license fees
are required. The one-time license fees for the Company's application software
packages currently range from $100,000 to $2,000,000.
The Company is dependent for license revenues upon sales of its IBS-90, Pro-IV
IBS, IBS-V5, and Abraxsys software products. The Company is no longer dependent
on sales of ManTec product lines.
MAINTENANCE
As part of the fixed license fee for the Company's software products, customers
receive, a warranty period of typically 90 days after installation, during which
period the Company provides free maintenance services. After that period, the
Company offers maintenance services to its customers based upon an annual fee
reflecting the service provided by the Company. Maintenance fee revenues are
recognized ratably over the period of the contract. The Company warrants that
its software will conform with documented specifications. To date, warranty
expense has been minimal.
The Company's maintenance agreements generally provide for the maintenance by
MTI of MTI licensed software at a specified site for a period of one to three
years. Under the maintenance agreements, MTI is required to correct or replace
its licensed software and/or provide services necessary to remedy significant
programming errors attributable to it. Maintenance fees range from
approximately $30,000 to $400,000 annually, depending upon the number of
licensed users.
CUSTOMER SERVICES
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The company provides support services relating to the custom design and
production of modifications to software products to meet the specific needs of a
customer. In addition, the Company offers a full range of customer support
services, including project planning and management, system installation,
software implementation, user training/education, technical support and
documentation and on-site engineering. The Company charges customers for these
services with the exception of documentation. Customer services fees are
recognized as revenue as work is performed and invoiced by the Company.
THIRD PARTY PRODUCTS
The Company also derives revenues from selling other companies' products. Such
arrangements include sales of both hardware and software. Such sales are either
as part of packaged deals or are where other products are embedded within the
Company's product.
a) Hardware
--------
The Company occasionally acts as an authorized value added reseller ("VAR") for
Digital or its distributors, Sun Microsystems ("Sun") and International Business
Machine Corporation ("IBM") in connection with the licensing of its IBS-90,
Abraxsys and OpenTrade software products. In the year ended April 30, 1997, the
Company recognized approximately $212,540 of revenues for sales of hardware
associated with certain software product licenses.
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b) Third Party Software Products Licensed in Conjunction with Banking Systems
--------------------------------------------------------------------------
Licenses
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The Company has a marketing agreement in place with Microbank Software, Inc. to
distribute Stor/QM, an advanced data storage, research and analytical
application.
Competition
- -----------
The financial institutions software industry is highly competitive. The Company
believes that the principal factors affecting the marketing of software packages
are product availability, advanced technology, comprehensiveness of product
applications, flexibility, ease-of-use to meet customer needs, software
enhancements, maintenance, customer support, training, documentation, efficient
use of computer hardware and customer references. Price is a primary
consideration to penetrate certain market segments, particularly smaller banks
where automation may be postponed if its cost is deemed prohibitive.
The Company encounters its primary competition from other software vendors.
The Company competes with many companies which have greater financial resources,
more technical personnel and more extensive service capabilities than the
Company. The market is highly fragmented; however, the Company views Midas-
Kapiti International Limited ("MKI"), Internet Systems Corp. ("Internet"),
International Banking Information Systems Limited ("IBIS") as its principal
Banking Systems industry competitors.
15
The Company is also subject to substantial competition from potential customers
with existing comprehensive applications software packages for international
banking insofar as such companies might elect to modify rather than replace
existing systems. The Company's ability to compete successfully requires that
it continues to develop and maintain the necessary technical proficiency for
easy assimilation of future technological advances, that it continue to offer
marketable and reliable applications software programs which satisfy the
information management and competitive requirements of banks and financial
institutions, and that it provide sufficient customer support and related
services, as to any of which there can be no assurance.
Dependence on a few major customers
- -----------------------------------
Digital owns several subsidiaries which act as prime contractors to many of the
Company's end customers. The Company has no customers which in fiscal year
ended April 30, 1997 contributed 10% or more of the Company's revenue. The
Company does not consider that it is dependent on any one customer for its
future business success.
Foreign Operations
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The Company has foreign operations in the United Kingdom, France, Singapore, and
Hong Kong.
Subsidiaries outside the United States accounted for 91% of the Company's
revenues in the year ended April 30, 1997.
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Included in North America revenues for the years ended April 30, 1997 and 1996
were export revenues of $203,000 and $20,000, respectively.
Research and Development
- ------------------------
The Company continues to be engaged in computer software development and
improvements of its existing software products. The development of applications
software packages for banks and financial institutions is a continuous process.
Technological advances in computer hardware, systems software, industry
deregulation and other regulatory changes affecting banking institutions require
software modifications and result in more complex and comprehensive processing
needs. In the event the Company fails to continue to update its product line,
the Company's products may become obsolete. The Company believes that its
principal products remain competitive. However, the Company is continuing to
engage in research and development activities, principally, in the "open
systems" area. Accordingly, the Company is committed to retaining and
developing competitive product lines.
In the year ended April 30, 1997, the Company capitalized approximately
$476,000 of software development.
The Company does not have any material contracts relating to third-party
research and development .
Employees
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As of July 30, 1997 the Company had 62 salaried employees, as compared with 233
employees as of April 30, 1996, excluding the employees of MTi Trading, in
17
administration. The Company decreased its staff since April 30, 1996 as a
result of the restructuring of its operations in the UK through the
administration proceedings and various cost cutting measures in other companies
of the group. The Company's employees are not represented by any union or other
collective bargaining unit. The Company believes that it has a satisfactory
relationship with its employees.
Trademarks, Copyrights and Licenses
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The Company believes that rapid technological advances in the computer software
industry make it impractical for the Company to obtain patent protection for
most of its products and that it must rely principally upon innovative software
engineering skills and contractual safeguards. The Company seeks to protect its
proprietary software products through restrictions in its license agreements
which prohibit resale, transfer, disclosure or reproduction of the software,
except for archival purposes or to provide back-up copies, and which restrict
the customer's use to designated sites.
The Company's software products cannot be modified without the source code,
which the Company keeps secure. The Company also requires employees to enter
into non-disclosure agreements prior to joining the Company. To date, the
Company has not been required to enforce the contractual safeguards relating to
the use of its software. The Company also retains exclusive ownership rights to
all software it develops. Pursuant to the indemnification provisions of its
license agreements, the Company agrees to indemnify customers from losses
resulting from any third-party claims that the Company's software infringes upon
proprietary rights of such third-party. The amount of such indemnification is
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generally limited to the amount of the license fee paid by such customer. To
date, there have been no such claims.
General
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The Company's business is not seasonal, nor does the Company do any business
with the United States government nor any other government
ITEM 2. DESCRIPTIONS OF PROPERTIES
The Company's principal executive offices are located at 630 Third Avenue, New
York, New York. The New York office also houses the sales and support operation
for North America.
In addition to its Executive offices the Company has the following facilities:
LONDON, ENGLAND
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BONHILL STREET - facility leased in March 1996 for UK headquarters housing
development, sales, administration and support. Effective July 22, 1997,
approximately half of this facility is used by ABS and the other half by Trading
Systems, in adminstration.
OTHER LOCATIONS
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PARIS - MTinnovation sales and support office
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SINGAPORE - Abraxsys Pte and Abraxsys HK Asia/Pacific sales and support office
The following table summarizes the relevant lease/license agreements relating to
these facilities, apart from Moscow which is a local one year renewable rental
agreement with Digital Russia. Each of the lease agreements is with a non-
affiliate company. The party to the lease/license agreements are the relevant
local entity in that country.
LOCATION AGREEMENT & EXPIRY DATE ANNUAL RENT ANNUAL RENT NOTES
DATE (LOCAL) (APPROX.
US$)
New York Lease May 31 2001 US$ 191,075 US$ 191,075
London - Sub Lease Month to GBP 170,000 US$ 256,300 Rent free
England March 1 1996 month until
Bonhill December
31, 1997
Singapore Lease August August 15 , S$ 60,000 US$42,384
15, 1997 2000
Paris - Lease October, FFr 540,000 US$ 89,720
France October 1996 1999
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ITEM 3. LEGAL PROCEEDINGS
1. Claim of Sharon F. Merrill ("Merrill")
Merrill filed suit against the Company in the Superior Court of the Commonwealth
of Massachusetts. In 1994, Merrill received 250,000 shares of restricted stock
of the Company in exchange for all shares issued and outstanding of MTi Merken,
Inc., with certain registration rights. Merrill alleges that the Company did
not register her shares in a timely fashion and that she sustained losses as a
result of a decline in the price of the stock of the Company. Merrill claims
damages in the amount of $180,000 plus interest and treble damages in the amount
of $631,000. The Company is defending vigorously and disclaiming any liability
for any losses claimed by Merrill.
The Company is not a party to any other material litigation.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock are traded in the over-the-counter market under the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
symbols MTCI. The Company's Class "C" Warrants expired on April 28, 1997. The
Company's other warrants are not publicly traded. Class "C" Warrants and other
warrants are described in Item 7, Note 12. On April 28, 1995, the Company's
21
shareholders resolved to reverse split the Company's issued and outstanding
common stock on a one for seven basis. The reverse split took effect on May 15,
1995. The following sets forth, and the high and low trade prices for the eight
quarters ending April 30, 1997, as reported by NASDAQ, adjusted to give effect
to the May 15, 1995 reverse split. Such prices represent prices between dealers
without adjustment for retail mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions.
COMMON STOCK COMMON STOCK
HIGH LOW
($) ($)
MAY 1-JUL 31, 1995 2 13/16
AUG 1-OCT 31, 1995 1 1/16 1/2
NOV 1-JAN 31, 1996 1 5/8
FEB 1-APR 30, 1996 1 15/16 23/32
MAY 1-JUL 31, 1996 1 3/32 1/2
AUG 1-OCT 31, 1996 3/4 3/32
NOV 1-JAN 31, 1997 1/4 3/64
FEB 1-APR 30, 1997 1/8 1/32
On August 8, 1997 the closing bid prices of the Common Stock was $3/32
The approximate number of stockholders of record on April 30, 1997, was 324, and
a substantial number of shares are held in "street-name" by approximately 6,000
individuals or entities.
22
The Company has never paid any cash dividends on its Common Stock. The Company
does not anticipate paying any dividends in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF AND RESULTS OF OPERATIONS
FINANCIAL CONDITIONS.
GENERAL
The Company's revenue consists of license fees from the Company's software
products, maintenance fees and customer service fees. Billings made in advance
of delivery are recorded as deferred income. The amount by which recognized
revenue exceeds billings to customers is shown as unbilled accounts receivable.
The Company recognizes revenue for licensing of its IBS-90 and Abraxsys products
in compliance with Statement of Position 91-1 ("SOP 91-1"); accordingly, it
recognizes license revenues upon delivery provided that no significant vendor
obligations remain and collection of the resulting receivable is deemed
probable. The Company's contracts with its customers provide for payment to be
made on specified schedules that may differ from the timing by which revenue is
recognized. Revenues from licensing the Open Trade product were recognized on
the percentage of completion method of accounting as costs are incurred in
compliance with Statement of Position 81-1 ("SOP 81-1").
Maintenance fee revenues are recognized ratably over the period of the contract.
Customer service fees are recognized as revenue as work is performed under the
service arrangement.
23
The Company's revenues and results of operations are subject to significant
fluctuations, depending primarily on the number of software components delivered
in any period. License fees range from $100,000 to $2,000,000. As is typical
in the software industry, maintenance fees are a more stable source of revenue.
Costs of software products consist of the cost of third party products resold
with the Company's products and the amortization of acquired software technology
and of capitalized software. Other costs of software products, such as the
costs of duplicating products from product masters and physical packaging of the
Company's software, are immaterial. The costs of providing maintenance and
customer service are allocated between maintenance and customer service fees in
proportion to their respective revenues. Management believes that such
allocations are reasonable.
COMPARISON OF FISCAL YEARS
In the year ended April 30, 1997, the business of the Company was substantially
affected as a result of administration proceedings of its subsidiaries MTi
Trading, MTi Holding and Winter Partners. It is likely that the Company's
business in the year ending April 30, 1998, will be substantially different from
that in the years ended April 30, 1997 and 1996.
The consolidated results for the year ended April 30, 1997 include results for
MTi Trading, MTi Holding and Winter Partners for the period from May 1, 1996 to
March 19 and 20, 1997, and twelve months of operation for Management
Technologies, Inc., Abraxsys Inc., Abraxsys Pte, Abraxsys HK and MTinnovation.
The Company's total revenues were $23,750,000 and $21,227,000 for the years
ended April 30, 1997 and 1996, respectively. This increase in revenue is due to
(i) an increase in license revenues to $6,602,000 from $5,916,000 in the years
24
ended April 30, 1997 and 1996, respectively, and (ii) an increase in customer
services fees to $9,304,000 from $7,652,000 in years ended April 30 1996 and
1995, respectively. However, there was a reduction in the maintenance revenue
to $7,105,000 in the year ended April 30, 1997 from $7,586,000 in the year
ended April 30, 1996. The Company's license revenues are subject to
significant fluctuation due to the relatively high cost of license fees.
The cost of software products increased to $3,856,000 from $2,598,000 for the
years ended April 30, 1997 and 1996, respectively. Costs of maintenance
increased to $8,433,000 from $3,884,000 for the years ended April 30, 1997 and
1996 respectively. The increase in the cost of maintenance is a result of new
clients who have come out of warranty during the period and the addition of the
IBS version 5 and the IBS Pro-IV product lines.
Costs of customers' services fees increased to $9,646,000 from $3,824,000 for
the years ended April 30, 1997 and 1996, respectively. The increase in the cost
of services is a result of the addition of the IBS version 5 and the IBS Pro-IV
product lines.
The Company's selling general and administrative expenses decreased to
$10,957,000 from $20,242,000 in the years ended April 30, 1997 and 1996,
respectively. This decrease is a result of the Company's efforts to control
costs.
The Company recognized a net loss of $16,523,000 for the year ended April 30,
1997, inclusive of a loss on disposition of its UK subsidiaries in the amount of
$6,139,000. The Company recognized a loss from operations of $10,297,000 in the
year ended April 30, 1997 as compared to a loss of $10,965,000 for the year
ended April 30, 1996.
The Company currently conducts its business in currencies other than United
States dollars, although a large part of the Company's business abroad is
conducted in United States Dollars. The revenue from subsidiaries outside the
25
United States amounts to 91% of the Company's revenue in the year ended April 30
1997 and 88% in year ended April 30 1996.
LIQUIDITY AND CAPITAL RESOURCES
At April 30 1997 the Company had a working capital deficiency of $3,513,000.
The Company had a net loss of $10,384,000 and $10,802,000 before loss from
disposition of subsidiaries, in the years ended April 30, 1997 and 1996,
respectively. Net cash of $9,864,000 and $8,762,000 was used in operating
activities in the years ended April 30, 1997 and 1996, respectively. Net of
472,000 and $0 was used in investing activities in the years ended April 30,
1997 and 1996, respectively. Financing activities provided $10,411,000 and
$8,245,000 in the years ended April 30, 1997 and 1996, respectively, primarily
from proceeds of private placement of the Company's common equity and from the
placement of convertible debentures.
At April 30, 1997, the Company had net operating loss carry-forwards for
federal income tax purposes in the United States of $20,174,000 subject to
Internal Revenue Service review, which are available to offset future federal
taxable income, if any, through 2011 and may be subject to annual limitations in
use due to the Company's equity issuances.
In the year ended April 30 1997, the Company issued convertible debentures
pursuant to Regulation S in the aggregate gross amount of $9,911,000 and issued
91,925,535 shares in conversion of debt. The Company further sold 1,000,000
shares of common stock pursuant to Regulation S for a gross consideration of
$500,000, and issued 92,000 shares in compensation for services.
The Company believes that until such time as it may experience a substantially
expanded cash flow from operations, it will be required to seek alternative
sources of funds for working capital and to fund the continuation of its
development and marketing efforts. The Company intends, to the extent required
to provide working capital and to satisfy all outstanding debt, to continue to
sell its securities directly to investors in private placements and it may, in
26
the future, attempt to arrange an offering through a private placement agent or
underwriter.
The Company's long-term liquidity and its ability to continue as a going concern
will ultimately depend upon the Company's ability to generate sufficient
cashflow from operations.
ITEM 7. FINANCIAL STATEMENTS
MANAGEMENT TECHNOLOGIES, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
April 30, 1997 and 1996
With Independent Auditors' Report Thereon
27
MANAGEMENT TECHNOLOGIES, INC.
AND SUBSIDIARIES
Table of Contents
Independent Auditors' Report
Consolidated Balance Sheet
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Management Technologies, Inc.:
We have audited the accompanying consolidated balance sheet of Management
Technologies, Inc. and subsidiaries as of April 30, 1997 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended April 30, 1997 and 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we 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. We believe that our audits provide a reasonable basis
for our opinion.
29
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Management
Technologies, Inc. and subsidiaries at April 30, 1997, and the results of their
operations and their cash flows for the years ended April 30, 1997 and 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 4 to the
financial statements, the Company has suffered recurring losses from operations
and at April 30, 1997 has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 4. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ KPMG PEAT MARWICK LLP
New York, New York
August 13, 1997
Member Firm of Klynveld Peat Marwick Goerdeler
MANAGEMENT TECHNOLOGIES, INC.
30
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
April 30, 1997
(in $000)
ASSETS
Current assets:
Cash 371
Accounts receivable 514
Prepaid expenses and other current assets 290
TOTAL CURRENT ASSETS 1,175
Property and equipment, net of accumulated depreciation 162
Intangible assets, less accumulated amortization 5,403
Other assets 31
TOTAL ASSETS 6,771
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 1,014
31
Accrued expenses 2,086
Taxes payable 432
Deferred income 1,152
Other current liabilities 4
TOTAL CURRENT LIABILITIES 4,688
Convertible debentures 3,699
Other long term liabilities 48
TOTAL LIABILITIES 8,435
Stockholders' equity
Common stock $.01 par value. Authorized shares 1,177
200,000,000, issued shares 117,703,439
Additional paid in capital 60,464
Accumulated deficit (63,388)
Foreign currency translation adjustment 83
TOTAL STOCKHOLDERS' EQUITY (1,664)
TOTAL LIABILITIES AND STOCKHOLDERS' 6,771
EQUITY
The accompanying notes are an
integral part of these financial statements
32
MANAGEMENT TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in $000 except share data)
Number Commo Additi
n onal
of stock paid Accumula Tran Total
in ted slat
ion
shares par capita deficit adju
value l stme
nt
Balances at April 14,540,169 145 42,467 (36,063) (530 6,019
30, 1995 )
Issuance of common 672,700 7 507 514
stock for
compensation and
services
Issuance of common
stock in
conversion of 4,456,749 45 2,452 2,497
convertible
debentures
33
Issuance of common 100,000 1 99 100
stock on exercise of
warrants
Issuance of common 4,916,466 49 4,289 4,338
stock
Net loss for the (10,802) (10,802)
year
Translation 963 963
adjustment
Balances at April 24,686,084 247 49,814 (46,865) 433 3,629
30, 1996
Issuance of common
stock for
compensation and 92,000 1 29 30
services
Issuance of common
stock for
cancellation of 91,925,355 919 10,131 11,050
subordinated notes
34
Issuance of common 1,000,000 10 490 500
stock for sale
Net loss for the (16,523) (16,523)
year
Translation (350 (350)
adjustment )
Balances at April 117,703,439 1,177 60,464 (63,388) 83 (1,664)
30, 1997
The accompanying notes are an integral part of these financial statements
MANAGEMENT TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended April 30, 1997 and 1996
(in $000)
35
1997 1996
Revenues
Software products 6,602 5,916
Maintenance fees 7,105 7,586
Customer service fees 9,304 7,652
Other income 739 73
Total revenues 23,750 21,227
Cost and expenses
Cost of software products 3,856 2,598
Cost of maintenance 8,433 3,884
Costs of customer service 9,646 3,824
Selling, general and administrative 10,957 20,242
Amortization of intangible assets 484 730
Depreciation 671 914
Total costs and expenses 34,047 32,192
LOSS FROM OPERATIONS (10,297) (10,965)
Interest expense (66) (901)
Income taxes (21) -
Other income - 1,064
Loss from disposition of subsidiaries (6,139) -
36
NET LOSS (16,523) (10,802)
Net loss per share (0.24) (0.58)
Weighted average number of common shares 67,615,622 18,669,728
outstanding
The accompanying notes are an integral part of these financial statements
MANAGEMENT TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 30, 1997 and 1996
(in $000)
1997 1996
Cash flow from operating activities
Net loss (16,523) (10,802)
Adjustments to reconcile net loss to net cash
37
used in operating activities
Depreciation and amortization 1,313 2,073
Loss from disposition of subsidiaries 6,139 -
Gain on affiliate - (1,064)
Issuance of common stock for compensation 30 514
Write off of property, plant & equipment 62 -
Changes in assets and liabilities net of
effects from acquisitions:
Decrease (increase) in accounts 6,177 (1,421)
receivable
Decrease in prepaid & other assets 1,987 1,857
Decrease in accounts payable & (3,435) (1,020)
accrued expenses
(Decrease) increase in taxes payable (3,421) 2,899
Decrease in deferred income (1,541) (518)
Decrease in other liabilities (652) (1,280)
Net cash used in operating activities (9,864) (8,762)
Cash flows from investing activities:
Capitalized software costs (472) -
Net cash used in investing activities (472) -
Cash flow from financing activities
Proceeds from notes payable and convertible 9,911 7,802
debentures
Repayment of notes payable - (1,745)
Proceeds from issuance of common stock 500 2,188
38
Net cash provided by financing activities 10,411 8,245
Effect of exchange rate on cash (17) (3)
Increase (decrease) increase in cash and cash 58 (520)
equivalents
Cash and cash equivalents - beginning of period 313 833
Cash and cash equivalents - end of period 371 313
Supplemental disclosure of cash flow information
Non-cash financing activities
Settlement of acquisition note with accounts 2,564 -
receivable
Issuance of common stock in conversion of debt 11,050 2,497
Issuance of common stock for MDIS acquisition - 2,250
The accompanying notes are an integral part of these financial statements
39
All monetary figures in the notes to the financial statements are expressed in
US $ unless otherwise noted.
(1) Summary of Significant Accounting Policies
------------------------------------------
DESCRIPTION OF BUSINESS
The primary business of Management Technologies, Inc. and of its
subsidiaries (collectively, the "Company") is the development,
installation, marketing, maintenance and support of an integrated line
of standardized, international, banking application software packages.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Management Technologies, Inc. and its wholly-owned subsidiaries, for
the periods during which such subsidiaries were controlled by
Management Technologies, Inc. Accordingly, the financial statements
include the accounts of MTi Trading Limited ("MTi Trading") and MTi
Holding (UK) Limited ("MTi Holding") through March 19, 1997 and the
accounts of Winter Partners Limited ("Winter Partners") through March
20, 1997. All significant inter-company balances and transactions
have been eliminated in consolidation.
As used hereafter, "Company" refers to Management Technologies Inc.,
and its consolidated subsidiaries unless otherwise stated.
REVENUE RECOGNITION
40
The Company accounts for revenue in conformity with Statements of
Position (SOP) 91-1 and 81-1.
Billings made in advance of delivery are recorded as deferred income.
The amount by which recognized revenue exceeds billings to customers is
shown as unbilled accounts receivable.
In accordance with SOP 91-1, revenues from IBS-90 and Abraxsys
licenses are recognized on delivery to the customer, provided that no
significant vendor obligations remain and collection of the resulting
receivable is deemed probable. The Company's contracts with its
customers provide for payment to be made on specified schedules that
may differ from the timing by which revenue is recognized.
Revenues form OpenTrade, TradeWizard, MediaWizard, EXTRA and Pro-IV IBS
licenses are recognized on the percentage-of-completion method of
accounting as costs are incurred (cost to cost basis) in conformity
with SOP 81-1. An estimate is made of the revenue attributable to
work completed and is recognized once the outcome of the contract can
be assessed with reasonable certainty.
Maintenance fees are recognized proportionately over the term of the
maintenance agreement.
Customer service fees represent fees charged to customers for
modifications of standard software to customer specifications or work
charged on the basis of the time spent on the task as required by
41
customers. Customer services fees are recognized as revenue as work is
performed and invoiced by the Company.
FOREIGN CURRENCY TRANSLATION
Foreign currency transactions and financial statements of foreign
subsidiaries are translated into US dollars at prevailing or current
rates respectively except for revenues, costs and expenses that are
translated at average current rates during each reporting period.
Gains and losses resulting from foreign currency transactions are
included in income currently. Gains and losses resulting from the
translation of financial statements are excluded from the statement of
income and are credited or charged directly to a separate component of
stockholders' equity.
PRODUCT RESEARCH AND DEVELOPMENT
Costs associated with product research, development and enhancement are
recorded as follows:
. Speculative technical research, usually incurred as input to
discussions related to product planning, are expensed until the point
at which the product reaches technological feasibility. Subsequent
costs incurred to the point where the product is available for
general release to the customer are capitalized.
. The costs of development specific to individual customers and not
generally applicable to other customers are expensed.
42
. Development costs applicable to core products, which are predominantly
of a maintenance nature, are expensed as incurred. Such development
is generally designed to insure that products are kept up to date with
regulatory requirements, accounting policies and banking practices and
do not result in new salable products.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are stated at cost. Plant and equipment
under capital leases are stated at the present value of minimum lease
payments.
Plant and equipment under capital leases are depreciated straight line
over the shorter of the lease term or estimated useful life of the
assets.
Depreciation on plant and equipment is calculated on the straight-line
method over the estimated useful lives of the assets as follows:
Computer Equipment two to five years
Furniture, fixtures and fittings four to five
years
Leasehold improvements over the minimum
period of the
lease
Motor vehicles four years
43
INCOME TAXES
The Company conforms to the provisions of Statement of Financial
Accounting Standards No. 109 ("Statement 109"), Accounting for Income
Taxes. Under the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
LOSS PER COMMON SHARE
Loss per common share is calculated using the weighted average number
of common shares outstanding for each period.
USE OF ESTIMATES
The Company has made a number of estimates and assumptions relating to
the reporting of assets and liabilities as well as revenues and
expenses, and the disclosure of contingent assets and liabilities to
prepare these consolidated financial statements in conformity with
44
generally accepted accounting principles. Actual results could differ
from those estimates.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, on May 1, 1996. This
Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future earnings
expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair value
of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. Adoption of this
Statement did not have a material impact on the Company's financial
position, results of operations, or liquidity.
STOCK OPTION
Prior to May 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, compensation expense would be
recorded on the date of grant only if the current market price of the
45
underlying stock exceeded the exercise price. On May 1, 1996, the
Company adopted Statement of Financial Accounting Standards No. 123
("Statement 123"), Accounting for Stock-Based Compensation, which
permits entities to recognize as expense over the vesting period the
fair value of all stock-based awards on the date of grant.
Alternatively, Statement 123 also allows entities to continue to apply
the provisions of APB Opinion No. 25 and provide pro forma net income
and pro forma earnings per share disclosures for employee stock option
grants made in 1996 and future years as if the fair-value-based method
defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the
pro forma disclosure provisions of Statement 123.
(2) Subsidiaries in Administration
------------------------------
By order dated March 19 and March 20, 1997, the High Court of Justice,
Chancery Division, Companies Court, in London, England, appointed
Messrs. Malcolm Cohen and Peter Supperstone of BDO Stay Hayward as
joint administrators of Winter Partners, MTi Holding and MTi Trading,
pursuant to the provisions of Section 8 of the English Insolvency Act
1986, for the purposes of (i) the survival of the companies, and the
whole or any parts of their undertaking, as a going concern, (ii) the
approval of certain voluntary arrangements with the companies'
creditors, and (iii) a more advantageous realization of their assets
than would be effected on a winding up.
On July 22, 1997, Advanced Banking Solutions, Limited ("ABS"), a wholly
owned subsidiary of Management Technologies, Inc., acquired certain
assets from Winter Partners, in administration, including intellectual
46
property rights to certain software products, various fixtures and
equipment, accounts receivable, work-in-progress. In addition ABS
assumed certain contracts from Winter Partners, in administration, and
related liabilities in the approximate amount of 55,000 British pounds.
ABS paid a total consideration of 257,454 British pounds for the
acquired assets and the assumed contracts. Certain employees and
management of Winter Partners, in administration, were hired by ABS.
From July 23, 1997 on, ABS is carrying out in the UK and in certain
parts of the world, the Banking Systems business that was formerly that
of Winter Partners.
Winter Partners was acquired in July of 1994 in an acquisition
transaction that included Abraxsys, Inc., Abraxsys Pte and Abraxsys HK.
The Company paid a total of $12,800,000, and incurred certain
additional costs of approximately $325,000. The transaction was
accounted for as a purchase and resulted in a one-time charge of
$7,000,000 for acquired research and development that was in process at
the time of acquisition. The Company recognized $1,300,000 in acquired
software technology and recorded goodwill of $5,270,000 as the excess
of the purchase price over the fair value the net assets acquired. The
Company believes that it will recover the net original cost of acquired
software technology through the activities of ABS, Abraxsys, Inc.,
Abraxsys Pte and Abraxsys HK. The Company wrote off $3,450,000 of the
$5,270,000 originally recorded as goodwill. In the years ended April
30, 1995, 1996 and 1997, Winter Partners incurred losses of $5,038,147,
$6,070,311 and $1,954,026, respectively.
No dividend was paid to Management Technologies, Inc. in conjunction
with the liquidation of Winter Partners. Accordingly, at April 30,
1997, the Company's apportioned investment in, and advances to, Winter
Partners are valued at zero. The Company recognized a loss of
47
approximately $172,000 on disposition of Winter Partners to reflect the
difference between accumulated losses and the investment in, and
advances to, Winter Partners. These financial statements reflect
$1,820,000 in goodwill related to Abraxsys, Inc., Abraxsys Pte and
Abraxsys HK, which the Company believes will be recovered through the
activities of those subsidiaries.
There is no remaining actual or contingent liability to Management
Technologies, Inc. related to Winter Partners except for a certain
lease guarantee for approximately $72,000.
MTi Trading was acquired in January of 1995 for a total consideration
of $10,169,000 by MTi Holding, a wholly owned subsidiary of Management
Technologies, Inc. The transaction was accounted for as a purchase and
resulted in a one-time charge of $1,740,000 for acquired research and
development that was in process at the time of acquisition. The
Company recognized $3,000,000 in acquired software technology and
recorded goodwill of $5,700,000 as the excess of the purchase price
over the fair value of the net assets acquired. In the years ended
April 30, 1995, 1996 and 1997, MTi Trading incurred losses of
$1,977,217, $3,510,638 and $4,123,537, respectively.
There is no guarantee that Management Technologies, Inc. will receive
any dividend from the disposition of the assets of MTi Trading.
Accordingly, at April 30, 1997, the Company's investment in, and
advances to, MTi Trading and MTi Holding, in administration, were
valued to zero. Any dividend received in the liquidation of MTi
Trading and MTi Holding, in administration, will be treated as a gain
in the period in which it occurs. The Company recognized a loss of
approximately $5,967,000 on disposition of MTi Trading to reflect the
difference between accumulated losses and the investment in, and
advances to, MTi Trading.
48
There is no remaining actual or contingent liability to Management
Technologies, Inc. related to MTi Trading and MTi Holding.
At April 30, 1997, the Company owned all shares issued and outstanding
of MTi Trading, Winter Partners and MTi Holding; effective March 19
and March 20, 1997, court appointed administrators controlled the
affairs of these wholly owned subsidiaries. Results of these
subsidiaries for the period from May 1, 1996 to March 19 and 20, 1997
are consolidated in these financial statements. The following is a
summary of the results of MTi Trading and Winter Partners for the
consolidated period. MTi Holding did not have any significant income
or loss during the consolidated period.
Winter Partners MTi Trading Total
Revenue $6,640,842 $12,990,905 $19,631,747
Cost of Sales $6,891,832 $13,259,129 $20,150,961
Other Costs $1,390,631 $3,855,313 $5,245,944
Net Loss $1,641,621 $4,123,537 $5,765,158
(3) Acquisitions
------------
MDIS ACQUISITION - INTERNATIONAL BANKING SYSTEMS BUSINESS OF MDIS
49
Effective March 1 1996, the Company acquired the international banking
systems business of MDIS. The acquisition involved the transfer of
certain assets including the rights to PRO-IV IBS, a newly developed
back office banking system which had not yet been brought to market,
the assumption of MDIS rights and obligations under certain contracts,
and the transfer of all shares issued and outstanding of McDonnell
Informatique S.A., a French corporation since renamed MTinnovation S.A.
The consideration for the acquisition was a maximum of two million
common shares issuable to MDIS on the Company recognizing at least
$6,000,000 of revenue from the acquired business. Shares are issuable
on a pro-rata basis at the rate of one thousand shares for every $3,000
of revenues. The first issuance of these shares is due in February
1997, and then quarterly up to April 1999. The Company has valued the
two million shares at $2,250,000. In addition, a further one million
shares become issuable if the Company achieves a profit in excess of
$10,000,000 in the fiscal year ending April 30 1999. The additional
shares have not been recorded at this time, as management does not
believe that it is probable that they will be issued.
Through April 30, 1997, the Company had recognized $670,000 of revenue
with respect to the acquired business. Accordingly, approximately
224,000 shares were issuable to MDIS as of April 30, 1997. The
Company currently believes that it will recognize $6,000,000 in
revenues on the acquired business and will issue the 2,000,000
consideration shares.
50
The Company recognized $2,532,645 in acquired software technology in
this transaction related to the PRO-IV IBS product. This will be
amortized over the expected life of the PRO IV IBS product of ten (10)
years.
The prime reason for the MDIS acquisition was to obtain a newly
developed PRO-IV IBS banking system software product. The other assets
acquired included IBS V5, the forerunner to PRO-IV IBS, a small number
of desktop PC's and other fixed assets of negligible value in terms of
the acquisition. IBS V5 is no longer actively marketed.
(4) Liquidity
---------
The Company has suffered losses from operations in the fiscal years
ended April 30, 1997 and 1996, and has a working capital deficiency of
approximately $3,513,000 as of April 30, 1997.
. The Company believes that until such time as it may experience a
substantially expanded cash flow from operations, it will be required to
seek alternative sources of funds for working capital and to fund the
continuation of its development and marketing efforts. The Company
intends, to the extent required to provide working capital and to
satisfy all outstanding debt, to continue to sell its securities
directly to investors in private placements and it may, in the future,
attempt to arrange an offering through a private placement agent or
underwriter.
51
The Company's long-term liquidity and its ability to continue as a going
concern will ultimately depend upon the Company's ability to generate
sufficient cashflow from operations.
(5) Prepaid expenses and other current assets
-----------------------------------------
Prepaid expenses and other current assets consist principally of the
following items:
$000
Rent deposits 135
Deferred financing charges 65
Corporate tax refund 10
Other 80
Total 290
52
(6) Property, plant and equipment
-----------------------------
Balances of major classes of assets owned by Management Technologies,
Inc. and subsidiaries under its control at April 30, 1997, and
allowances for depreciation and amortization are as follows:
COST ACCUMULATED NET
DEPRECIATION VALUE
Computer Equipment 482,617 451,744 30,873
Leasehold improvement 196,311 148,570 47,741
Office Furniture and 393,488 309,965 83,523
Equipment
1,072,417 910,280 162,137
Depreciation expense was approximately $671,000 and $914,000 in the
years ended April 30, 1997 and 1996, respectively.
53
(7) Intangible Assets
-----------------
Intangible assets as of April 30, 1997 are made up of software products
and goodwill:
$
Goodwill less accumulated amortization of 1,477,000
$343,000
Software products less accumulated 3,926,000
amortization of $512,000
5,403,000
See also note 2.
54
(8) Accrued expenses
----------------
The major components of accrued expenses are as follows:
$000
Accrued interest 456
Provision for litigation 370
Accrued legal, professional and other fees 339
Staff related costs 274
Accrued cost of product sold 182
Rent 67
Other accrued expenses 396
2,086
(9) Taxes Payable
-------------
Taxes payable comprise payroll deductions plus estimated penalties and
interest for late payment.
(10) Deferred income
---------------
Deferred income consists entirely of deferred maintenance income. The
Company expects to recognize as revenue all deferred income within the
next fiscal year.
55
(11) Convertible Debentures
----------------------
56
At April 30, 1997, the Company had $3,698,000 in outstanding
convertible debentures from a total issued of $16,863,000. $3,906,000
were converted in the year ended April 30, 1996, and $9,259,000 in the
year ended April 30, 1997. $1,380,000 of the balance at April 30,1997
matures on July, 1999, $1,103,000 on August of 1997 and the balance in
December, 1997.
Interest on the convertible debentures is payable quarterly through the
terms of the notes. The Series SA debentures have been entirely placed
with the staff and management of the Company; all other debentures were
placed with unrelated parties. The principal and interest of the
convertible debentures are convertible into shares of the Company's
common stock at the holder's option on or before the due date of the
note. The Company is entitled to require the holders to convert
principal and interest balances before maturity except for the RBB and
the SA convertible debenture, in the total amount of $2,256,000 at
April 30, 1997, where the holder is entitled to be paid in cash at
maturity. Debentures are convertible pursuant to their terms as
follows:
SERIES CONVERTIBLE AT THE LOWER OF
A 62.5 % of the market price over $0.48 per share
SA the 5 business days immediately
preceding the date of
conversion
B 62.5 % of the market price over $0.53 per share
the 5 business days immediately
57
preceding the date of
conversion
C 62.5 % of the market price over $0.85 per share
the 5 business days immediately
preceding the date of
conversion
D 62.5 % of the market price over $0.60 per share
the 5 business days immediately
preceding the date of
conversion
E 62.5 % of the market price over $0.60 per share
the 5 business days immediately
preceding the date of
conversion
H 65 % of the market price over 100 % of the
the 5 business days immediately market price
preceding the date of over the 5
conversion business days
immediately
preceding the
date of the
debenture
X 65 % of the market price over 65 % of the
the 5 business days immediately market price
preceding the date of over the 5
58
conversion business days
immediately
preceding the
date of the
debenture
Y 70 % of the market price over 100 % of the
the 5 business days immediately market price
preceding the date of over the 5
conversion business days
immediately
preceding the
date of the
debenture
Z 70 % of the market price over 85 % of the
the 5 business days immediately market price
preceding the date of over the 5
conversion business days
immediately
preceding the
date of the
debenture
RBB 70 % of the market price over 100 % of the
the 5 business days immediately market price
preceding the date of over the 5
conversion business days
immediately
59
preceding the
date of the
debenture
(12) Shareholders' Equity
--------------------
(1) Warrants
The Company's C Warrants expired on April 28, 1997.
The Company has the following additional warrants outstanding:
Number of shares Exercise Expiration date
price
675,000 $0.69 various dates
1,295,002 $1.00 July 10, 2000
3,085,714 $1.75 November 4, 1997
95,238 $4.55 none
95,238 $4.90 none
133,810 $5.25 none
(2) Options
60
At April 30, 1997, the Company had outstanding options as follows:-
NUMBER OF EXERCISE NOTE
SHARES PRICE
Qualified Stock Options Plan
- Employees
Shares under option at April 1,857 $7.00-$7.84 (a)
30, 1996
Granted 0
Lapsed (429)
Exercised 0
Shares under option at April 1,428 $7.00
30, 1997
Options exercisable at April 1,428 $7.00
30, 1997
Non qualified Stock Options (b)
Plan for Directors, Officers
and Consultants
Shares under option at April 146,429 $0.01-$8.75
30, 1996
Granted 0 $0.01
Lapsed (146,429)
Exercised 0
Shares under option at April 0
61
30, 1997
Options exercisable at April 0
30, 1997
Non qualified Stock Options (c)
Plan for Key Employees
Shares under option at April 7,142 $3.50-$7.00
30, 1996
Granted 0
Lapsed (7,142)
Exercised 0
Shares under option at April 0
30, 1997
Other Stock Options (d)
Shares under option at April 0
30, 1996
Granted 15,750,000 $0.03-$0.16
Lapsed (0)
Exercised (0)
---
Shares under option at April 15,750,000 $0.03-$0.16
30, 1997
Options exercisable at April 0
62
30, 1997
Options to purchase C (e)
Warrants
Warrants under option at 71,428 $3.43
April 30, 1996
Granted 0
Lapsed 71,428
Exercised 0
Warrants under option at
April 30, 1997 0
(a) The Company adopted a qualified stock option plan under
which the granting of options to purchase up to 8,000,000 shares has
been authorized. The exercise price of the options is determined by
the Option Committee appointed by the Board of Directors, but can be no
less than 85% of the fair market value of the Company's stock on the
date the option is granted. The maximum period during which each
option may be exercised cannot exceed five years from the date of
grant.
(b) The Company adopted a non qualified stock option plan for
directors, officers and consultants under which the granting of options
to purchase up to 15,000,000 shares has been authorized. The exercise
price of the options is determined by the Option Committee appointed by
the Board of Directors. In the year ended April 30, 1996 granted below
market options and recognized compensation expense in the amount of
63
approximately $149. The maximum period during which each option may be
exercised cannot exceed five years from the date of grant.
(c) The Company adopted a non qualified stock option plan for
key employees under which the granting of options to purchase up to
10,000,000 shares has been authorized. The exercise price of the
options is determined by the Option Committee appointed by the Board of
Directors. The maximum period during which each option may be
exercised cannot exceed five years from the date of grant.
(d) The Company granted options at market rate to purchase
common shares to key executives in connection with their employment
agreements. These options will vest as follows:
. 5,250,000 when the Company achieves annual sales of
$50,000,000 and $3,500,000 in pre-tax profits;
. 5,250,000 when the Company achieves annual sales $100,000,000
and $7,000,000 in pre-tax profits;
. 5,250,000 when the Company achieves annual sales of
$150,000,000 and $10,000,000 in pre-tax profits;
(e) The Company has issued options to purchase C Warrants to a
former officer of the Company in connection with his employment
agreement. The option entitles its holder to purchase one Class C
warrant at $3.01 per warrant. The Class C Warrants expired on April
28, 1997, causing the option to purchase such Class C Warrants to
lapse.
64
The Company applies APB Opinion No. 25 in accounting for its stock
options. For the years ended April 30, 1997 and 1996, no compensation
cost was incurred for its stock options in the financial statements.
Had the Company determined compensation cost based on the fair value at
the grant date for its stock options under Statement 123, the Company's
net income would not have been affected.
65
(13) Leases
------
The Company has various non cancelable operating leases, primarily for
office premises, that expire over the next three to five years. These
leases generally contain renewal options for periods ranging from three
to five years and require the Company to pay all costs such as
maintenance and insurance.
Future minimum lease payments under non cancelable operating leases
(with initial or remaining lease terms in excess of one year) as of
April 30, 1997 are:
OPERATING LEASES
$
Year ending April 30
1998 323,179
1999 323,179
2000 270,842
2001 205,203
2002 15,922
Later years 0
Total minimum lease payments $1,138,326
66
(14) Income Taxes
------------
At April 30, 1997, the Company had net operating loss carry-forwards
for federal income tax purposes in the United States of $20,174,000
which, subject to I.R.S. review, will be available to offset future
federal taxable income, if any, through 2011 and are subject to annual
limitations in use due to the Company's equity issuances.
The Company has provided a valuation allowance equal to the estimated
future benefit to be derived from the net operating loss carry forward
as it is more likely than not that the losses will not be utilized.
(15) Pension Benefits
----------------
Abraxsys, Inc. , has a 401(k) and contributes 25% of the employee's
contribution up to 6% of the employee's salary. Abraxsys, Inc.
recognized expenses related to its contribution to its 401(k) plan in
the amount of $11,000.
The employees of the Company's subsidiaries in the UK are entitled to
receive additional compensation equivalent to 7% of their annual base
salaries in lieu of any other pension provision by the Company. Expenses
related to such additional compensation amount to approximately
$710,000.
Abraxsys Pte contributes to the Government of Singapore Central
Provident Fund in respect of all employees. The rate paid during the
year ended April 30, 1997, was 20% of the employees' gross compensation
67
subject to monthly maximum payments. Abraxsys Pte recognized expenses
related to its pension contributions in the amount of $65,000.
(16) Business and Credit Concentrations
----------------------------------
Most of the Company's customers are located in Europe and in the
countries of the former Soviet Union. No customers accounted for more
than ten percent of the Company's revenues in the years ended April
30, 1997 and 1996.
68
(17) Industry Segment and Geographic Information
-------------------------------------------
The Company operates in one principal industry segment; the design,
production, sales and maintenance of computer systems and software
together with the provision of associated services to international
banking and financial institutions.
The Company derived 91% and 88% of its gross revenues from its
international subsidiaries, primarily in the UK in the years ended
April 30, 1997 and 1996, respectively.
(18) Commitments and Contingencies
-----------------------------
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's consolidated financial position, results of
operations or liquidity.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
69
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.
The information required by Item 9 with respect to the Company's directors and
executive officers is as follows:
POSITION(S) HELD
----------------
NAME AGE WITH COMPANY PERIOD
---- --- ------------ ------
Michael Awerbuch 39 Director March 1996 to
January 1997
Anthony J. Cataldo 46 President December 1991 to
June 1994
Chairman of the Board June 1994 to
& Chief Executive July 1995
Officer
Director November 1991 to
July 1995
Michael J. Edison 52 President and Chief February 1997 to
Executive present
Director February 1997 to
present
Paul Ekon 38 Chief Executive October 1995 to
Officer February 1997
Director October 1995 to
70
present
Patrick Huguenin 50 Chief Financial April 1997 to
Officer present
Director April 1997 to
present
Peter Morris 41 President November 1995 to
March 1997
Chief Operating November 1995 to
Officer March 1997
Director November 1995 to
March 1997
John Ridley 40 Director March 1996 to
March 1997
Peter Svennilson 35 Director October 1994 to
November 1995
Chairman of the Board July 1995 to
November 1995
Chief Executive September to
Officer November 1995
S. Keith Williams 47 President & Chief July 1994 to
Operating Officer September 1995
Director November 1994 to
September 1995
71
MICHAEL AWERBUCH served as a Director of the Company from March 1996 to January
1997. Mr. Awerbuch also served as a consultant to the Company during that
period. From 1987 to 1992, Mr. Awerbuch worked as a broker with Kaplan and
Stewart, Ltd. in Johannesburg, South Africa. From 1993 to 1994, Mr. Awerbuch
worked as a broker with Taglich Brothers, D'Amadeo and Wagner & Co, Inc. in New
York. From 1994 to 1996, Mr. Awerbuch served as Vice President for Sales of New
World Technologies, Inc., a New York computer distribution and sales company.
ANTHONY J. CATALDO, joined the Company as its President and a Director in
November 1991. He served as Chairman of the Board and Chief Executive Officer
from June 1994 to July 1995. From March 1986 to November 1991, Mr. Cataldo was
President of Internet Systems Japan, a producer of software for financial
institutions, where he was responsible for Japanese sales and marketing.
MICHAEL J. EDISON has served as a Director, Chief Executive Officer and
President of the Company from February of 1997. Mr. Edison served as Chairman
and Chief Executive Officer of the Edison Companies Inc. since 1991. Mr.
Edison founded Insur USA in 1984 and served as its Chairman from 1984 to 1991.
PAUL EKON was appointed a Director and Chief Executive of the Company in
October of 1995. Mr. Ekon was engaged in various manufacturing and marketing
businesses in South Africa since 1990.
PATRICK HUGUENIN has served as Chief Financial Officer and as Director from
April of 1997. Mr. Huguenin served as Vice President for Finance and
Administration and in various management positions with the Company since 1985.
He holds a law degree and an Master of Business Administration.
PETER MORRIS served as a Director and as President and Chief Operating Officer
of the Company from November of 1995 to March of 1997. Mr. Morris served as
managing director of DESISCo, re-named MTi Trading Systems, from 1993 to
November 1995, and as director of sales of DESISCo from 1992 to 1993. He
served as a Director and Chief Operating Officer for Security Pacific, Hoare
72
Govett from 1990 to 1992, Chairman and Chief Executive Officer for Fulcrum
Management Consultancy Plc, from 1987 to 1990, and Director and Chief Operating
Officer for Shearson Lehman Brothers International, from 1982 to 1987.
JOHN RIDLEY held the positions of Systems Architect, Product Manager and Head of
Product Development for DESISCo, since renamed MTi Trading. He served as a
Director of the Company from March of 1996 to March of 1997
PETER SVENNILSON served as Director of the Company from October 1994 to November
1995, as Chairman of the Board from July 1995 to November 1995 and as Chief
Executive Officer from September to November 1995. From 1983 to 1993, Mr.
Svennilson was an Associate Managing Director for Nomura International Plc. in
London, England. From 1993 to the present, Mr. Svennilson served as a Managing
Director of Stoneporch Limited, in London, England. Stoneporch Limited, under
the trade name of Irongate, provides strategic advice to several US and European
corporations. Mr. Svennilson is also a non-executive Director of Skandigen AB,
a public Swedish biotechnology company.
S. KEITH WILLIAMS was appointed President and Chief Operating Officer in July of
1994, and a Director in November of 1994 and served in those capacities through
September 1995. Mr. Williams was employed as General Manager of the Winter
Partners subsidiaries for the five years preceding his employment with the
Company.
Each of the directors of the Company has been elected for up to a one year term,
expiring at the next annual meeting of the shareholders of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company has received a copy of reports on Form 5 filed by Messrs. Edison,
Huguenin and Ekon, and has not received copies of any other Form 5 with respect
to the fiscal year ended April 30, 1997 or any representations from any other
officer or director or 10% shareholder of the Company, that any such Form 5
was not required to be filed. Accordingly, Messrs. Morris, Ridley, Awerbuch, as
well as any other person who, at any time during such fiscal year, was a
73
director, officer or beneficial owner of more than ten percent of the Company's
Common Stock may not have filed, on a timely basis, reports required by Section
16(a) during the most recent fiscal year.
ITEM 10 EXECUTIVE COMPENSATION
The following table shows, for the years ended April 30, 1996, 1995 and 1994,
the total cash compensation paid by the Company to its chief executive officers
and most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
NAME AND FISCALSALARY BONUS OTHER RESTRICTED SECURITIES LTIP ALL
PRINCIPAL YEAR ($) ($) ANNUAL STOCK UNDERLYING PAY- OTHER
POSITION COMPEN- AWARD(S) OPTIONS OUT COMP
SATION ($) SARS ($) ENSA
($) (#) TION
Anthony J. 1996 54,167 4,498 287,108
Cataldo, 1995 225,000 10,000 52,896 400,000
Chief
Executive
Officer,
President
74
(1)
Michael J. 1997 68,400
Edison (2)
Paul Ekon 1997 90,598 0
(3) 1996 105,916 16,714
Peter 1997 338,434
Morris, 1996 252,650 108,000 0
President 1995 77,000 124,500
and Chief
Operating
Officer
(4)
Peter 1996 0 0 0
Svennilson 1995 0 0 0
Chairman,
Chief
Executive
Officer
and
Director
John 1997 164,941
Ridley
S. Keith 1996 100,104 0 16,114
75
Williams, 1995 196,389 99,511 34,546
President
and Chief
Operating
Officer
(5)
(1) Effective December 31, 1991, Mr. Cataldo entered into an employment
agreement with the Company to serve as its President. The term of the agreement
expired on July 31, 1995, and was extended to July 31, 1997 by an Amendment and
Extension Agreement dated August 1, 1994 (the "Amendment and Extension
Agreement"). Under the terms of Mr. Cataldo's original employment contract, he
received an annual salary of $150,000, plus a bonus equal to 2% of the Company's
annual revenues as reported in the Company's annual report. Mr. Cataldo was
also entitled to receive an expense allowance of $2,000 per month. Pursuant to
his employment agreement, Mr. Cataldo also received options, to purchase 700,000
shares of Common Stock at $0.25 per share and options to purchase 700,000 Class
C Warrants at $0.43 per warrant. The employment agreement provided that options
to purchase 150,000, 200,000, 200,000 and 150,000 options of each type are to be
exercisable as of December 31, 1991, 1992, 1993 and 1994, respectively. Mr.
Cataldo received $12,500 for consulting services rendered in November and
December of 1991. On September 22, 1993 and September 15, 1994, Mr. Cataldo
exercised options to purchase 75,000 and 100,000 shares of Common Stock,
respectively, at an exercise price of $.25 per share. Under the terms of the
Amendment and Extension Agreement, Mr. Cataldo's contract was extended to August
1, 1997. He was entitled to a annual compensation of $250,000 and to an expense
allowance of $25,000 per annum. He no longer received a bonus. In addition,
the Amendment and Extension Agreement provided for the grant, each year, of
options to purchase 400,000 common shares of the Company at $0.625 each.
76
Effective July 13, 1995, Mr. Cataldo resigned as Chairman and Chief Executive
Officer. By Separation Agreement and Release dated July 6 and 7, 1995 (the
"Separation Agreement"), the Company agreed to pay Mr. Cataldo $300,000 in
consulting fees in twelve $25,000 monthly installments, to be applied against
fees for financial consulting services Mr. Cataldo may render to the Company;
in addition, the Company agreed to grant Mr. Cataldo a non-recourse, interest
free $280,000 loan to purchase common shares of the Company; the loan is
secured by said common shares. The Separation Agreement also provides that Mr.
Cataldo relinquishes all stock options and warrants granted to him under his
employment agreements. By amendment to the Separation Agreement, Mr. Cataldo
and the Company agreed to cancel the $280,000 non-recourse loan granted Cataldo
and to retire the common shares subscribed by Cataldo and pledged to secure said
loan. The Company further agreed to pay Mr. Cataldo $20,000 in addition to
$105,000 previously paid to Cataldo under the Separation Agreement and to issue
Mr. Cataldo 212,700 shares of common stock of the Company in full and final
satisfaction of the Company's obligations to Mr. Cataldo.
(2) Effective December 18, 1996, Mr. Edison entered into an employment agreement
with the Company to serve as its President and Chief Executive Officer. for a
period ending December 18, 1999. Mr. Edison is entitled to a bas compensation
of 10,000 British pounds per month, or approximately $195,000 per annum. In
addition, Mr. Edison was granted 10,000,000 shares of common stock of the
Company, in lieu of additional compensation. Mr. Edison is entitled to a
performance bonus of (i) 5,000,000 shares of common stock of the Company in the
event the market price of the Company's common stock closes at or above $0.25
for ten consecutive trading days, and (ii) 5,000,000 shares of common stock of
the Company in the event the market price of the Company's common stock closes
at or above $0.50 for ten consecutive trading days. The Company is obligated to
register one half of the shares granted to Mr. Edison as soon as practical.
77
Mr. Edison was granted options to purchase 15,000,000 shares common stock of the
Company at $0.16. Such options shall vest as follows:
. 5,000,000 when the Company achieves annual sales of $50,000,000 and
$3,500,000 in pre-tax profits;
. 5,000,000 when the Company achieves annual sales $100,000,000 and
$7,000,000 in pre-tax profits; 5
. 5,000,000 when the Company achieves annual sales of $150,000,000 and
$10,000,000 in pre-tax profits;
(3) Mr. Ekon serves as the Company's Chief Executive Officer. His base salary
is 60,000 British Pounds per year or approximately $93,000. Mr. Ekon is also
entitled to a car allowance of 6,000 British Pounds per year, or approximately
$9,300. Mr. Ekon's contract was terminated effective September 30, 1996 by
agreement between Mr. Ekon and the Company. Mr. Ekon served as Chief Executive
Officer through February, 1997 and continues to serve as a Director of the
Company.
(4) Effective January 20, 1995, Mr. Morris entered into an employment agreement
with the Company to serve as Managing Director of its wholly owned subsidiary,
MTi Trading Systems. Under the terms his employment contract, Mr. Morris was
entitled to an annual base salary of 150,000 British Pounds or approximately
$230,000 and to a stock option equivalent to half of one percent of the
Company's registered shares, plus a 50,000 British Pounds or approximately
$77,500 sign on bonus. Subsequent to Mr. Morris' appointment as the Company's
President and Chief Operating Officer, the Company agreed to raise Mr. Morris'
base salary to 200,000 British Pounds or approximately $310,000 and to grant Mr.
Morris a 100,000 British Pound or approximately $155,000 bonus and a 50,000
British Pounds or approximately $77,500 success bonus on completion of the MDIS
Acquisition, in exchange for unpaid sign on bonus plus cancellation of his
stock options. The MDIS Acquisition was closed on March 1, 1996. Mr. Morris is
also entitled to the use of a company car at a cost of 7,500 British Pounds or
78
approximately $11,000. Mr. Morris' employment contract can be terminated by
either party on a one year notice. Mr. Morris resigned as a director and as an
officer of the Company effective April 1, 1997. The Company agreed to pay Mr.
Morris 63,941.99 British pounds as full and final settlement under his
employment agreement.
(5) On July 12, 1994, Mr. Williams entered into an employment agreement with
the Company which was due to terminate on May 31, 1997, providing for a minimum
base salary of 155,000 British pounds per annum, or approximately $248,000. Mr.
Williams resigned on September 25, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The Company granted options to purchase 15,000,000 common shares to Mr. Edison
and options to purchase 750,000 common shares to Mr. Huguenin. These options
will vest as follows:
. One third when the Company achieves annual sales of $50,000,000 and
$3,500,000 in pre-tax profits;
. One third when the Company achieves annual sales $100,000,000 and
$7,000,000 in pre-tax profits;
. One third when the Company achieves annual sales of $150,000,000 and
$10,000,000 in pre-tax profits;
No options or SAR's were exercised by officers or directors of the Company
during the year ended April 30, 1997.
The Company does not have Long-Term incentive plans.
Other than health, life and 401(k) plan benefits available to all employees, and
the stock option plans described below which the Company may determine to pay to
officers and/or employees, the Company does not currently have in effect any
pension, profit sharing or other employee benefit plans.
The Company does not have a Directors and Officers liability insurance policy in
force.
79
COMPENSATION OF DIRECTORS
The Company pays $5,000 per year to non-employee directors and reimburses them
for travel and lodging expenses incurred in connection with their services in
that capacity.
In addition, Mr. Guazzoni, a Director of the Company from February 1994 to March
1996, was granted 50,000 warrants exercisable at $0.01 from July 15, 1996 to
January 15, 1997 as additional compensation for his services as a Director of
the Company. He exercised these warrants.
QUALIFIED INCENTIVE STOCK OPTION PLAN
On April 20, 1990 the shareholders of the Company approved a qualified incentive
stock option plan (the "QISOP"). The QISOP provides for the granting of
options, at the Board of Directors' discretion, to purchase up to an aggregate
of 1,000,000 shares of Common Stock to eligible employees at an exercise price
determinable at the discretion of the Option Committee (the "Committee") as
appointed by the Company's Board of Directors but no less than 85% of the market
value of the common stock on the date the option is granted. Options may be
granted to all salaried employees of the Company and its subsidiaries. Options
granted under the QISOP are exercisable according to a vesting schedule which is
determined by the Committee. Subject to the provisions of the Options Plan with
respect to death and termination, the maximum period each option may be
exercised shall be fixed by the committee at the time the option is granted, but
shall not exceed five years. On April 28, 1995, the shareholders of the Company
approved an increase in the number of stock options under the QISOP from
1,000,000 to 8,000,000, at $0.01 par value.
As of April 30, 1997, there were outstanding options to purchase a total of
1,428 shares, at an average exercise price of $7.00, under the QISOP.
KEY EXECUTIVE STOCK BONUS GRANT
80
Concurrently with the approval of the QISOP, the shareholders of the Company
approved a Key Executive Stock Bonus Grant Plan (the "Bonus Plan") for key
executives. The Bonus Plan provides for the issuance of up to an aggregate of
100,000 shares of Common Stock to officers or key employees of the Company for
little or no consideration. The grants require the approval of the Board of
Directors. Qualification criteria are established by the Board of Directors and
are based on the Key Executive's potential and dedication to the Company. The
grants are subject to a two year vesting period and terminate if the executive's
employment with the Company terminates during the vesting period.
As of the fiscal year ended April 30, 1997, there were no outstanding grants
under the Bonus Plan.
NON QUALIFIED STOCK OPTION PLAN FOR KEY EMPLOYEES
The shareholders of the Company approved a non qualified stock option plan for
key employees(the "NSOPKEY") on April 20, 1990. The NSOPKEY provides for the
granting of options to purchase up to an aggregate of 1,000,000 shares of Common
Stock to key employees of the Company, with an exercise price determined by an
option committee at the time of grant. No part of any option granted under the
NSOPKEY will be exercisable more than five years after the date of grant. On
April 28, 1995, the shareholders of the Company approved an increase in the
number of stock options under the NSOPKEY from 1,000,000 to 10,000,000, at $0.01
par value.
As of the fiscal year ended April 30, 1997, there were no outstanding options
under the NSOPKEY.
NON QUALIFIED STOCK OPTION PLAN FOR DIRECTORS, OFFICERS AND CONSULTANTS
The shareholders of the Company approved a non qualified stock option plan for
Directors, Officers and Consultants (the "NSOPDOC") on April 20, 1990. The
NSOPDOC provides for the granting of options to purchase up to an aggregate of
2,000,000 shares of Common Stock to consultants and non-employee directors of
the Company. No part of any option granted under the NSOPDOC will be
81
exercisable more than five years after the date of grant. On April 28, 1995, the
shareholders of the Company approved an increase in the number of stock options
under the NSOPDOC from 2,000,000 to 15,000,000, at $0.01 par value.
As of the fiscal year ended April 30, 1997, there were no outstanding options
under the NSOPDOC.
401(K) PLAN AND OTHER PENSION PLANS
MTi Abraxsys Systems, Inc., a wholly owned subsidiary of the Company, has a
401(k) savings plan for its employees. MTi Abraxsys Systems, Inc. contributes
25% of the employee's contribution, up to 25% of 6% of the employee's salary.
The employees of the Company's subsidiaries in the UK are entitled to receive
additional compensation equivalent to 7% of their annual base salaries in lieu
of any other pension provision by the Company.
The Company's Singapore subsidiary contributes to the Government of Singapore
Central Provident Fund in respect to all employees matching employee
contributions, currently 8.75% of the employees' gross compensation.
All officers have executed non-compete agreements which provide that the
individual will not compete with the Company during employment or for a period
of one year following termination.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 31, 1997, certain information
regarding beneficial ownership of Common Stock (i) by each person who is known
to the Company to be the beneficial owner of more than 5% of the Common Stock,
(ii) by each of the directors and executive officers of the Company and (iii) by
all directors and executive officers of the Company as a group. Ownership is
expressed in post May 15, 1995 split shares:
82
Name and Address of Amount and Nature of Percent of
Beneficial Holder or Beneficial Ownership Class
Identity of Group Common stock Common Stock(1)
Michael Awerbuch 0 0
216 Seventh Avenue, # 4A
New York, NY 10011
Anthony J. Cataldo 212,985 0.2%
63 North East Village Rd
Concord, NH 03301
Paul Ekon 35,714 0.0%
22 Wellington Garden
Hampstead
London NW3
Michael J. Edison 10,000,000 (2) 7.2%
3540 W Sahara, Suite 469
Las Vegas, Nevada 89102
Patrick Huguenin 500,000 (3) 0.4%
319 East 78th Street, Apt 2A
New York, NY 10021
Peter Morris 0(4) 0
Shottley Hall
Church Walk
83
Shottley
United Kingdom
John Ridley 0 (5) 0
117 Highfield Way
Rickmansworth
Hertfordshire
WD3 2TL
England
Peter Svennilson 0 0
12 Old Bond Street
London, England
S. Keith Williams 0 0
18 Broomfield Road
Oxshott, Surrey
England
All Officers and Directors as 10,748,699 7.72%
a Group (9 persons)
(1) Based on an aggregate of post May 15, 1995 split shares of Common Stock
("Shares") outstanding as of August 8, 1997 of 139,203,435.
(2) Excluding options to purchase 15,000,000 common shares of the Company, not
vested as of April 30, 1997.
(3) Excluding options to purchase 750,000 common shares of the Company, not
vested as of April 30, 1997.
84
(4) Excluding shares issuable on conversion of $310,000 of Series SA
convertible debenture held by Mr. Morris. See Note 11 to the Financial
Statements for conversion terms.
(5) Excluding shares issuable on conversion of $7,750 of Series SA convertible
debenture subscribed by Mr. Ridley. See Note 11 to the Financial Statements for
conversion terms.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PETER J. MORRIS
Mr. Morris was appointed President and Chief Operating Officer of the Company in
November of 1995. On February 14, 1996, the Company issued Mr. Morris a Series
SA convertible debenture in the amount of $310,000 in settlement of all bonuses
due Mr. Morris at that date. The convertible debenture is convertible into
common shares of the Company at the lower of $0.48 or 62.5% of the average close
bid for the Company's common stock for the five days immediately preceding the
declaration of conversion. The Series SA convertible debenture yields 9%
interest and matures on December 31, 1997.
JOHN RIDLEY
On February 13, 1996, Mr. Ridley subscribed to a Series SA convertible debenture
in the amount of $7,750. The convertible debenture is convertible into common
shares of the Company at the lower of $0.48 or 62.5% of the average close bid
for the Company's common stock for the five days immediately preceding the
declaration of conversion. The Series SA convertible debenture yields 9%
interest and matures on December 31, 1997.
85
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements Page No.
Independent Auditors' Report 25
Consolidated Balance Sheet 27
Consolidated Statements of 28
Stockholder's Equity
Consolidated Statements of Operations 29
Consolidated Statements of Cash Flows 30
Notes to Consolidated Financial 32
Statements
2. Exhibits
Exhibit Number
--------------
3.1 Restated Articles of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.1 to Amendment
No. 4 on Form 8 to Registrant's Annual Report on Form 10-
K for the fiscal year ended April 30, 1992, filed with
the Commission on February 24, 1993 ("Amendment No. 4")).
3.2 Form of Amendment to Certificate of Incorporation
(incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 (File No.
33-25528) filed with the Commission on November 15,
86
1988).
3.3 Certificate of Amendment to Certificate of Incorporation,
dated May, 1995.
3.4 By-Laws of the Registrant (incorporated by reference to
Exhibit 3.5 to the Registrant's Registration Statement on
Form S-18 (File No. 33-10342-NY) dated May 13, 1987 (the
"Form S-18")).
3.5 By-Laws of the Registrant, as amended.
10.1 Form of Warrant Agreement dated May 21, 1987 between the
Company, D.H. Blair & Co., Inc. and American Stock
Transfer & Trust Company (incorporated by reference to
Exhibit 10.4 to the Form S-18).
10.2 Class C Warrant Agreement dated as of February 28, 1992
among the Company, D.H. Blair & Co., Inc. and American
Stock Transfer & Trust Company (the "Class C Warrant
Agreement") (incorporated by reference to Exhibit C to
the Company's Current Report on Form 8-K dated March 11,
1992 (the "March 11 8-K")).
10.3 Amendment dated as of July 20, 1992 to the Class C
Warrant Agreement (incorporated by reference to Exhibit C
to the Registrant's Current Report on Form 8-K dated July
24, 1992 (the "July 24 8-K")).
10.4 Amendment dated as of August 24, 1992 to the Class C
Warrant Agreement (incorporated by reference to Exhibit
10.4 to Amendment No. 4).
10.5 Amendment dated as of December 11, 1992 to the Class C
Warrant Agreement (incorporated by reference to Exhibit
10.5 to Amendment No. 4).
10.5.1 Amendment dated as of February 22, 1993 to the Class
87
Warrant Agreement (incorporated by reference to Exhibit
10.5.1 to the Registrant's Current Report on Form 8-K
dated February 22, 1993).
10.5.2 Form of Underwriting Agreement dated May 14, 1987 between
the Company and D.H. Blair & Co., Inc. (incorporated by
reference to Exhibit 1.1 to the Form S-18).
10.5.3 Form of Agency Agreement dated February 6, 1993 between
the Company and D.H. Blair & Co., Inc. (incorporated by
reference to Exhibit A to the March 11 8-K).
10.6 Form of Subordinated Convertible Note (incorporated by
reference to Exhibit B to the March 11 8-K).
10.6.1 Unit Purchase Option dated January 28, 1992 made by the
Company to D.H. Blair & Co., Inc. (incorporated by
reference to Exhibit 10.6.1 to Amendment No. 5 on Form 8
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended April 30, 1992, filed with the
Commission on April 5, 1993 ("Amendment No. 5")).
10.7 8% Subordinated Mortgage Note dated April 28, 1989 made
by the Company to D.H. Blair Holdings, Inc. (incorporated
by reference to Exhibit B to the Registrant's Current
Report on Form 8-K dated May 2, 1989 (the "May 2 8-K")).
10.8 Amendment No. 1 to the 8% Subordinated Mortgage Note held
by D.H. Blair Holdings, Inc. (incorporated by reference
to Exhibit E to the March 11 8-K).
10.9 Security Agreement and Chattel Mortgage between the
Company and D.H. Blair & Co., Inc. (incorporated by
reference to Exhibit A to the May 2 8-K).
10.10 Assignment of Software Codes as Security for Subordinated
Mortgage Note made by the Company to D.H. Blair & Co.,
88
Inc. (incorporated by reference to Exhibit C to the May 2
8-K).
10.11 Pledge Agreement made by Barrington J. Fludgate to D.H.
Blair & Co., Inc. (incorporated by reference to Exhibit D
to the May 2 8-K).
10.12 Promissory Note dated February 7, 1992 made by the
Company to D.H. Blair Holdings, Inc., as amended
(incorporated by reference to Exhibit 10.12 to Amendment
No. 4).
10.13 Loan Agreement dated May 26, 1992 between the Company and
D.H. Blair Investment Banking Corp. (incorporated by
reference to Exhibit A to the Company's Current Report on
Form 8-K dated May 26, 1992 (the "May 26 8-K")).
10.14 Promissory Note dated May 26, 1992 made by the Company to
D.H. Blair Investment Banking Corp., as amended
(incorporated by reference to Exhibit 10.14 to Amendment
No. 4).
10.15 Letter Agreement dated December 31, 1992 between D.H.
Blair Investment Banking Corp. and the Company
(incorporated by reference to Exhibit 10.15 to Amendment
No. 4).
10.16 Letter Agreement dated December 3, 1991 between the
Company and ABN/AMRO Bank N.V. ("ABN") (incorporated by
reference to Exhibit 10.16 to Amendment No. 4).
10.17 Promissory Note dated December 13, 1991 made by the
Company to ABN (incorporated by reference to Exhibit
10.17 to Amendment No. 4).
10.18 General Liability Agreement dated November 27, 1991
between the Company and ABN, with attached Guaranty dated
89
November 27, 1991 given by Barrington J. Fludgate to ABN
(incorporated by reference to Exhibit 10.18 to Amendment
No. 4).
10.19 Security Agreement dated November 27, 1991 between the
Company and ABN (incorporated by reference to Exhibit
10.19 to Amendment No. 4).
10.20 Corporate Guarantee dated November 26, 1991 from
Management Technologies Financial Consultants Pty. to ABN
(incorporated by reference to Exhibit 10.20 to Amendment
No. 4).
10.21 Corporate Guarantee dated November 26, 1991 from
Management Technologies Trade Services, Inc. to ABN
(incorporated by reference to Exhibit 10.21 to Amendment
No. 4).
10.22 Purchase Agreement dated as of July 17, 1992 between the
Company and Michael Bollag, as amended (incorporated by
reference to Exhibit A to the July 24 8-K and Exhibit D
to the September 17 8-K).
10.23 Registration Rights Agreement dated as of July 23, 1992
between the Company and Michael Bollag (incorporated by
reference to Exhibit B to the July 24 8-K).
10.24 Purchase Agreement dated as of September 15, 1992 among
the Company, Michael Bollag, Naomi Bollag and William
Karon (incorporated by reference to Exhibit B to the
September 17 8-K).
10.25 Registration Rights Agreement dated as of September 5,
1992 among the Company, Michael Bollag, Naomi Bollag and
William Karon (incorporated by reference to Exhibit B to
the September 17 8-K).
90
10.26 Purchase Agreement dated as of October 6, 1992 between
the Company and S. Sungyull Koo (incorporated by
reference to Exhibit 4.18 to the Company's Registration
Statement on Form S-3, Registration Nos. 33-25528 and 33-
52074).
10.27 Subscription Agreement dated as of December 14, 1992
between the Company and Robert Trump (incorporated by
reference to Exhibit 10.27 to Amendment No. 4).
10.28 Purchase Agreement dated as of December 18, 1992 between
the Company and Clarion Capital (incorporated by
reference to Exhibit 10.28 to Amendment No. 4).
10.29 Software Distribution License Agreement dated May 28,
1991 between the Company and Global Financial Systems
Inc. (the "Distribution Agreement"), as amended
(incorporated by reference to Exhibit 10.29 to Amendment
No. 4).
10.30 Software Development and Marketing Agreement dated
December 23, 1992 between the Company and Hewlett Packard
Company (incorporated by reference to Exhibit 10.30 to
Amendment No. 5).
10.31 Employment Agreement dated December 31, 1991 between the
Company and Anthony Cataldo (incorporated by reference to
Exhibit F to the Company's Current Report on Form 8-K
dated March 11, 1992 (the "March 11 8-K")).
10.32 Employment Agreement dated December 31, 1991 between the
Company and Clifford Brune (incorporated by reference to
Exhibit G to the March 11 8-K).
10.33 Employment Agreement dated April 30, 1992 between the
Company and Barrington Fludgate (incorporated by
91
reference to Exhibit A to the Company's Current Report on
Form 8-K dated May 13, 1992).
10.34 Employment Agreement dated October 31, 1992 between the
Company and Mark Blundell (incorporated by reference to
Exhibit 10.34 to Amendment No. 4).
10.35 Severance Agreement dated June 15, 1992 between the
Company and Peter Lore (incorporated by reference to
Exhibit B to the May 26 8-K).
10.36 Agreement dated January 1993 between the Company and
Blundell & Associates, Inc., as supplemented
(incorporated by reference to Exhibit 10.36 to Amendment
No. 4).
10.37 Incentive Stock Option Plans (incorporated by reference
to Exhibit 10.37 to Amendment No. 4).
10.38 Lease for the Company's premises at One Penn Plaza, New
York, New York (incorporated by reference to Exhibit 10.4
to the Form S-18).
10.39 Lease Termination Agreement dated February 3, 1993 by and
between the Company and Delta Airlines (incorporated by
reference to Exhibit 3 to the Company's Current Report on
Form 8-K dated February 26, 1993 (the "February 26 8-
K")).
10.40 Agreement of Sublease dated February 26, 1993 between BT
North America, Inc. and the Company (incorporated by
reference to Exhibit 2 to the February 26 8-K).
10.41 Subscription Agreement dated as of February 22, 1993
between the Company and D.H. Blair Holdings, Inc.
(incorporated by reference to Exhibit 3 to the Company's
Current Report on Form 8-K dated February 22, 1993).
92
10.42 Irrevocable Voting Proxy dated February 23, 1993 from
D.H. Blair Investment Banking Corp. in favor of Anthony
J. Cataldo (incorporated by reference to Exhibit 1 to the
February 26 8-K).
10.43 Mutual Release and Hold Harmless Agreement dated January
19, 1993 between MCN-CSI Computer Services, Inc. and the
Company (incorporated by reference to 10.43 to Amendment
No. 5).
10.44 Subscription Agreement dated April 26, 993, between
Robert S. Trump and the Company (incorporated by
reference to Exhibit A to the Company's Current Report on
Form 8-K dated April 30, 1993 (the "April 30 8-K")).
10.45 Letter Agreement dated April 36, 1993, between Robert S.
Trump and the Company dated April 26, 1993 (incorporated
by reference to Exhibit B to the April 30 8-K).
10.46 Letter Agreement dated April 26, 1993 between Gerald
Franz and the Company (incorporated by reference to
Exhibit C to the April 30 8-K).
10.47 Escrow Agreement dated April 26, 1993 among Gerald Franz,
Baratta & Goldstein, as escrow agent, and the Company
(incorporated be reference to Exhibit D to the April 30
8-K).
10.48 Letter Agreement dated April 26, 1993 between Gerald
Franz and the Company (incorporated by reference to
Exhibit E to the April 30 8-K).
10.49 Letter Agreement dated April 26, 1993 between Gerald
Franz and the Company (incorporated by reference to
Exhibit F to the Company's April 30 8-K).
10.50 $50,000 Convertible Note executed by the Company in favor
93
of Gerald Franz dated April 26, 1993 (incorporated by
reference to Exhibit G to the Company's April 30 8-K).
10.51 Letter Agreement dated August 13, 1993 between Sharon S.
Merrill and the Company (incorporated be reference to
Exhibit A to the July 29, 1993 8-K).
10.52 Subscription Agreement dated July 30, 1993 between D.H.
Blair Holdings, Inc. and the Company (incorporated by
reference to Exhibit A to the August 6, 1993 8-K).
10.53 Subscription Agreement dated August 6, 1993 between Bruno
Guazzoni and the Company (incorporated by reference to
Exhibit B to the Company's August 25, 1993 8-K).
10.54 Subscription Agreement dated August 9, 1993 between
Duncan Robertson and the Company (incorporated by
reference to Exhibit B to the Company's August 25, 1993
8-K).
10.55 Subscription Agreement dated August 9, 1993 between
Caisse Centrale des Banques Populaires and the Company
(incorporated by reference to Exhibit B to the Company's
August 25, 1993 8-K).
10.56 Stock Purchase Agreement dated July 29, 1993 among the
MTI Merken Corporation, Sharon F. Merrill and the Company
(incorporated by reference to Exhibit A to the Company's
September 16, 1993 8-K).
10.57 Agreement dated August 30, 1993 between Mark Blundell
Associates, Inc. and New Paradigm Software Corp.
(incorporated by reference to Exhibit 1 to the Company's
November 30, 1993 8-K).
10.58 Agreement dated August 25, 1993 between New Paradigm
Software Corp. and the Company (incorporated by reference
94
to Exhibit 2 to the Company's November 30, 1993 8-K).
10.59 Agreement dated August 25, 1993 between New Paradigm
Software Corp. and the Company (incorporated by reference
to Exhibit 3 to the Company's November 30, 1993 8-K).
10.60 Proxy dated November 19, 1993 by the Company
(incorporated by reference to Exhibit 4 to the Company's
November 30, 1993 8-K).
10.61 Letter Agreement dated November 19, 1993 between New
Paradigm Software Corp. and the Company (incorporated by
reference to Exhibit 5 to the Company's November 30, 1993
8-K).
10.62 Heads of Agreement dated February 10, 1994 between Winter
Partners Holding A.G. and the Company (incorporated by
reference to Exhibit 2 to the Company's February 7, 1994
8-K).
10.63 Subscription Agreement dated July 8, 1994 between Edelson
Partners III and the Company (incorporated by reference
to Exhibit A to the Company's July 12, 1994 8-K).
10.64 Employment Agreement dated July 12, 1994 between Keith
Williams and the Company (incorporated by reference to
Exhibit 2 to the Company's July 13, 1994 8-K).
10.65 Purchase and Sale Agreement dated July 13, 1994 between
Winter Partners Holding A.G. and the Company
(incorporated by reference to Exhibit 1 to the Company's
July 13, 1994 8-K).
10.66 Purchase of Stock Agreement dated July 11, 1994 between
Robert Trump and the Company (incorporated by reference
to Exhibit A to the Company's July 13, 1994 8-K).
10.67 Amendment to Option Agreement dated July 11, 1994 between
95
Robert Trump and the Company (incorporated by reference
to Exhibit B to the Company's July 13, 1994 8-K).
10.68 Secured Promissory Note in favor of Midland Associates
dated July 11, 1994 (incorporated by reference to Exhibit
C to the Company's July 13, 1994 8-K).
10.69 Pledge Agreement and Corporate Guarantees dated July 11,
1994 between Midland Associates and the Company
(incorporated by reference to Exhibit D to the Company's
July 13, 1994 8-K).
10.70 Common Stock Purchase Warrant dated July 11, 1994
(incorporated by reference to Exhibit E to the Company's
July 13, 1994 8-K).
10.71 Promissory Note by the Company in favor if FINMANAGEMENT
dated July 7, 1994 (incorporated by reference to Exhibit
A to the Company's July 13, 1994 8-K).
10.72 Common Stock Purchase Warrant (incorporated by reference
to Exhibit B to the Company's July 13, 1994 8-K).
10.73 Agreement pursuant to Regulation "S" dated July 8, 1994
between Wellbourne Trust and the Company (incorporated by
reference to Exhibit A to the Company's July 13, 1994 8-
K).
10.74 Common Stock Purchase Warrant (incorporated by reference
to Exhibit B to the Company's July 13, 1994 8-K).
10.75 Promissory Note by the Company in favor if Edelson
Technology Partners III dated July 25, 1994 (incorporated
by reference to Exhibit 1 to the Company's July 27, 1994
8-K).
10.76 Offshore Subscription Agreement between Bruno Guazzoni
and the Company dated March 3rd, 1994 (incorporated by
96
reference to Exhibit 2 to the Company's July 25, 1994 8-
K).
10.77 Offshore Subscription Agreement between COUTTS & Co and
the Company dated March 10, 1994 (incorporated by
reference to Exhibit 3 to the Company's July 25, 1994 8-
K).
10.78 Offshore Subscription Agreement between Caisse Centrale
des Banques Populaires and the Company dated March 10,
1994 (incorporated by reference to Exhibit 4 to the
Company's July 25, 1994 8-K).
10.79 Letter Subscription Agreement between Edelson Technology
Partners III and the Company dated August 23, 1994
(incorporated by reference to Exhibit 1 to the Company's
August 23, 1994 8-K).
10.80 Offshore Subscription Agreement between Credit Suisse
(Hong Kong) and the Company dated September 9, 1994
(incorporated by reference to Exhibit 1 to the Company's
September 13, 1994 8-K).
10.81 Letter Agreement between Metrend Limited and the Company
dated September 16, 1994 (incorporated by reference to
Exhibit 2 to the Company's September 13, 1994 8-K).
10.82 Agreement between NPSC and the Company dated September 6,
1994 (incorporated by reference to Exhibit 1 to the
Company's September 6, 1994 8-K).
10.83 Form of Subordinated Promissory Note by NPSC
(incorporated by reference to Exhibit 2 to the Company's
September 6, 1994 8-K).
10.84 Offshore Subscription Agreement between Credit Suisse
(Hong Kong) and the Company dated October 5, 1994
97
(incorporated by reference to Exhibit 1 to the Company's
October 5, 1994 8-K).
10.85 Offshore Subscription Agreement between Roberto Jimenez
Collie and the Company dated October 11, 1994
(incorporated by reference to Exhibit 1 to the Company's
October 11, 1994 8-K).
10.86 Offshore Subscription Agreement between Toteam Ltd Inc.
and the Company dated October 11, 1994 (incorporated by
reference to Exhibit 2 to the Company's October 11, 1994
8-K).
10.87 Offshore Subscription Agreement between Bruno Guazzoni
and the Company dated October 11, 1994 (incorporated by
reference to Exhibit 3 to the Company's October 11, 1994
8-K).
10.88 Offshore Subscription Agreement between Wellbourne Trust
and the Company dated November 1, 1994 (incorporated by
reference to Exhibit A to the Company's November 3, 1994
8-K).
10.89 Offshore Subscription Agreement between Toteam Ltd., Inc.
and the Company dated July 15, 1993 (incorporated by
reference to Exhibit 1 to the Company's November 4, 1994
8-K).
10.90 Offshore Subscription Agreement between Toteam Ltd., Inc.
and the Company dated June 3rd, 1993 (incorporated by
reference to Exhibit 1 to the Company's November 4, 1994
8-K).
10.91 Offshore Subscription Agreement between Roberto Jimenez
Collie and the Company dated June 7, 1993 (incorporated
by reference to Exhibit 2 to the Company's November 4,
98
1994 8-K).
10.92 Offshore Subscription Agreement between Bruno Guazzoni
and the Company dated November 1, 1994 (incorporated by
reference to Exhibit 3 to the Company's November 4, 1994
8-K).
10.93 Offshore Subscription Agreement between Bruno Guazzoni
and the Company dated June 10, 1993 (incorporated by
reference to Exhibit 3 to the Company's November 4, 1994
8-K).
10.94 Agreement between M.H. Meyerson & Co. and the Company
dated December 7, 1994 (incorporated by reference to
Exhibit 1 to the Company's December 7, 1994 8-K).
10.95 Heads of Agreement between Digital Equipment
International Limited, Digital Equipment International
bv, Digital Equipment (Holdings) bv, and Digital
Equipment Co. Ltd. and the Company dated December 12,
1994 (incorporated by reference to Exhibit 3 to the
Company's December 12, 1994 8-K).
10.96 Stock Purchase and Sale Agreement between Digital
Equipment International Limited, Digital Equipment
International bv, Digital Equipment (Holdings) bv, and
Digital Equipment Co. Ltd., MTi Holding and the Company
dated December 22, 1994 (incorporated by reference to
Exhibit 1 to the Company's December 22, 1994 8-K).
10.97 Assignment of Secured Loan between Digital Equipment Co.
Ltd., MTi Holding and the Company dated December 22, 1994
(incorporated by reference to Exhibit 2 to the Company's
December 22, 1994 8-K).
10.98 Letter Agreement between Midland Associates and the
99
Company dated January 23, 1995 (incorporated by reference
to Exhibit 1 to the Company's February 16, 1995 8-K).
10.99 Letter Agreement between Digital Equipment Co. Ltd, MTi
Holding and the Company dated March 2nd, 1995
(incorporated by reference to Exhibit 3 to the Company's
March 10, 1995 8-K/A).
10.100 Offshore Subscription Agreement between Wellbourne Trust
and the Company dated February 23, 1995 (incorporated by
reference to Exhibit 1 to the Company's February 28, 1995
8-K).
10.101 Promissory Note in favor of Howard Schraub dated February
17, 1995 (incorporated by reference to Exhibit 1 to the
Company's March 10, 1995 8-K).
10.102 Letter Agreement between Howard Schraub and the Company
dated February 17, 1995 (incorporated by reference to
Exhibit 2 to the Company's March 10, 1995 8-K).
10.103 Non-qualified Stock Option Agreement between Howard
Schraub and the Company (incorporated by reference to
Exhibit 3 to the Company's March 10, 1995 8-K).
10.104 Non-qualified Stock Option Agreement between Howard
Schraub and the Company (incorporated by reference to
Exhibit 4 to the Company's March 10, 1995 8-K).
10.105 Promissory Note in favor of Bruno Guazzoni dated January
5, 1995 (incorporated by reference to Exhibit 5 to the
Company's March 10, 1995 8-K).
10.106 Offshore Subscription Agreement between Wellbourne Trust
and the Company dated February 23, 1995 (incorporated by
reference to Exhibit 1 to the Company's March 28, 1995 8-
K).
100
10.107 Offshore Subscription Agreement between Parkland Limited
and the Company dated April 4th, 1995 (incorporated by
reference to Exhibit 1 to the Company's May 3rd, 1995 8-
K).
10.108 Offshore Subscription Agreement between Hillside
Industries, Inc. and the Company dated May 25, 1995
(incorporated by reference to Exhibit 1 to the Company's
May 23, 1995 8-K).
10.108 Offshore Subscription Agreement between Hillside
Industries, Inc. and the Company dated May 25, 1995
(incorporated by reference to Exhibit 2 to the Company's
May 23, 1995 8-K).
10.109 Separation Agreement and Release between Anthony J.
Cataldo and the Company dated July 6 and 7, 1995
(incorporated by reference to exhibit (a) to the
Company's August 9, 1995 8-K)
10.110 Pledge-Escrow Agreement between Anthony J. Cataldo and
the Company (incorporated by reference to exhibit (c) to
the Company's August 9, 1995 8-K)
10.111 Non-recourse Promissory Note by Anthony J. Cataldo date
July 17, 1995 (incorporated by reference to exhibit (b)
to the Company's August 9, 1995 8-K)
10.112 Settlement Agreement by and between the Company and MCI
dated August 31, 1995 (incorporated by reference to
exhibit 10.112 to the Company's August 31, 1995 8-K)
10.113 Settlement Agreement by and between the Company and
Midland Associates dated September 13, 1995 (incorporated
by reference to exhibit 10.113 to the Company's September
29, 1995 8-K)
101
10.115. Copy of Letter Agreement dated December 15, 1995 with
Israel Trading Fund, Ltd. and Select Capital Advisors,
Inc. (incorporated by reference to exhibit 10.115 to the
Company's March 14, 1996 8-K)
10.116. Copy of Letter Agreement dated December 22, 1995 with
Israel Trading Fund, Ltd. and Select Capital Advisors,
Inc. (incorporated by reference to exhibit 10.116 to the
Company's March 14, 1996 8-K)
10.117 Copy of Agreement For Consulting Services with Barrocas
and Behzadi Investments dated November 27, 1995.
(incorporated by reference to exhibit 10.117 to the
Company's March 14, 1996 8-K)
10.118 Copy of 9% Convertible A Debenture issued to Torah
Vachesed Lezra Vesad dated December 19, 1995.
(incorporated by reference to exhibit 10.118 to the
Company's March 14, 1996 8-K)
10.119 Copy of Escrow Agreement with Barry B. Globerman, dated
December 20, 1995. (incorporated by reference to exhibit
10.119 to the Company's March 14, 1996 8-K)
10.120 Copy of a Treasury Order dated December 20, 1995.
(incorporated by reference to exhibit 10.120 to the
Company's March 14, 1996 8-K)
10.121 Copy of an Offshore Securities Subscription Agreement
with Torah Vachesed Lezra Vesad dated December 20, 1995.
(incorporated by reference to exhibit 10.121 to the
Company's March 14, 1996 8-K)
10.122 Copy of 9% Convertible A Debenture issued to Schulamit
Pritzker dated December 19, 1995. (incorporated by
reference to exhibit 10.122 to the Company's March 14,
102
1996 8-K)
10.123 Copy of Escrow Agreement with Barry B. Globerman, dated
December 20, 1995. (incorporated by reference to exhibit
10.123 to the Company's March 14, 1996 8-K)
10.124 Copy of a Treasury Order dated December 20, 1995.
(incorporated by reference to exhibit 10.124 to the
Company's March 14, 1996 8-K)
10.125 Copy of an Offshore Securities Subscription Agreement
with Schulamit Pritzker dated December 20, 1995
(incorporated by reference to exhibit 10.125 to the
Company's March 14, 1996 8-K)
10.126 Copy of 9% Convertible A Debenture issued to Aaron Meyer
Gee dated December 22, 1995. (incorporated by reference
to exhibit 10.126 to the Company's March 14, 1996 8-K)
10.127 Copy of Escrow Agreement with Barry B. Globerman, dated
December 22, 1995. (incorporated by reference to exhibit
10.127 to the Company's March 14, 1996 8-K)
10.128 Copy of a Treasury Order dated December 20, 1995.
(incorporated by reference to exhibit 10.128 to the
Company's March 14, 1996 8-K)
10.129 Copy of an Offshore Securities Subscription Agreement
with Aaron Meyer Gee dated December 22, 1995
(incorporated by reference to exhibit 10.129 to the
Company's March 14, 1996 8-K)
10.130 Copy of 9% Convertible A Debenture issued to Dovasar
S.A., dated December 29, 1995. (incorporated by reference
to exhibit 10.130 to the Company's March 14, 1996 8-K)
10.131 Copy of Escrow Agreement with Barry B. Globerman, dated
December 29, 1995. (incorporated by reference to exhibit
103
10.131 to the Company's March 14, 1996 8-K)
10.132 Copy of a Treasury Order dated December 29, 1995.
(incorporated by reference to exhibit 10.132 to the
Company's March 14, 1996 8-K)
10.133 Copy of an Offshore Securities Subscription Agreement
with Dovasar S.A. dated December 29, 1995 (incorporated
by reference to exhibit 10.133 to the Company's March 14,
1996 8-K)
10.134 Copy of 9% Convertible A Debenture issued to Chava
Fischman, dated December 29, 1995. (incorporated by
reference to exhibit 10.133 to the Company's March 14,
1996 8-K)
10.135 Copy of Escrow Agreement with Barry B. Globerman, dated
December 29, 1995. (incorporated by reference to exhibit
10.135 to the Company's March 14, 1996 8-K)
10.136 Copy of a Treasury Order dated December 29, 1995.
(incorporated by reference to exhibit 10.136 to the
Company's March 14, 1996 8-K)
10.137 Copy of an Offshore Securities Subscription Agreement
with Shava Fischman dated December 29, 1995
(incorporated by reference to exhibit 10.137 to the
Company's March 14, 1996 8-K)
10.138 Copy of 9% Convertible B Debenture issued to Henry
Zieleniec, dated January 25, 1996. (incorporated by
reference to exhibit 10.138 to the Company's March 14,
1996 8-K)
10.139 Copy of Escrow Agreement with Barry B. Globerman, dated
January 25, 1996. (incorporated by reference to exhibit
10.139 to the Company's March 14, 1996 8-K)
104
10.140 Copy of a Treasury Order dated January 25, 1996.
(incorporated by reference to exhibit 10.140 to the
Company's March 14, 1996 8-K)
10.141 Copy of an Offshore Securities Subscription Agreement
with Henry Zieleniec dated January 25, 1996.
(incorporated by reference to exhibit 10.141 to the
Company's March 14, 1996 8-K)
10.142 Copy of 9% Convertible B Debenture issued to Raphael
Lapidus, dated January 29, 1996. (incorporated by
reference to exhibit 10.142 to the Company's March 14,
1996 8-K)
10.143 Copy of Escrow Agreement with Barry B. Globerman, dated
January 29, 1996. (incorporated by reference to exhibit
10.143 to the Company's March 14, 1996 8-K)
10.144 Copy of a Treasury Order dated January 29, 1996.
(incorporated by reference to exhibit 10.144 to the
Company's March 14, 1996 8-K)
10.145 Copy of an Offshore Securities Subscription Agreement
with Raphael Lapidus dated January 29, 1996.
(incorporated by reference to exhibit 10.145 to the
Company's March 14, 1996 8-K)
10.146 Copy of 9% Convertible B Debenture issued to Miriam
Herzel, dated January 29, 1996. (incorporated by
reference to exhibit 10.146 to the Company's March 14,
1996 8-K)
10.147 Copy of Escrow Agreement with Barry B. Globerman, dated
January 29, 1996. (incorporated by reference to exhibit
10.147 to the Company's March 14, 1996 8-K)
10.148 Copy of a Treasury Order dated January 29, 1996.
105
(incorporated by reference to exhibit 10.148 to the
Company's March 14, 1996 8-K)
10.149 Copy of an Offshore Securities Subscription Agreement
with Miriam Herzel dated January 29, 1996 (incorporated
by reference to exhibit 10.149 to the Company's March 14,
1996 8-K)
10.150 Copy of 9% Convertible B Debenture issued to Yosef Yud,
dated January 29, 1996. (incorporated by reference to
exhibit 10.150 to the Company's March 14, 1996 8-K)
10.151 Copy of Escrow Agreement with Barry B. Globerman, dated
January 29, 1996. (incorporated by reference to exhibit
10.151 to the Company's March 14, 1996 8-K)
10.152 Copy of a Treasury Order dated January 29, 1996
(incorporated by reference to exhibit 10.152 to the
Company's March 14, 1996 8-K)
10.153 Copy of an Offshore Securities Subscription Agreement
with Yosef Yud dated January 29, 1996. (incorporated by
reference to exhibit 10.153 to the Company's March 14,
1996 8-K)
10.154 Copy of 9% Convertible B Debenture issued to Menachem M.
Begun, dated January 30, 1996. (incorporated by reference
to exhibit 10.154 to the Company's March 14, 1996 8-K)
10.155 Copy of Escrow Agreement with Barry B. Globerman, dated
January 30, 1996. (incorporated by reference to exhibit
10.155 to the Company's March 14, 1996 8-K)
10.156 Copy of a Treasury Order dated January 30, 1996
(incorporated by reference to exhibit 10.156 to the
Company's March 14, 1996 8-K)
10.157 Copy of an Offshore Securities Subscription Agreement
106
with Menachem M. Begun dated January 30, 1996.
(incorporated by reference to exhibit 10.157 to the
Company's March 14, 1996 8-K)
10.159 Letter Agreement between the Company, ITF and Select
Capital dated February 28, 1996 (incorporated by
reference to exhibit 10.159 to the Company's July 11,
1996 8-K/A)
10.160 Copy of 9% Convertible C Debenture issued to Shulamit
Pritzker, dated February 28, 1996. (incorporated by
reference to exhibit 10.160 to the Company's March 26 8-
K/A)
10.161 Copy of Escrow Agreement with Barry B. Globerman, dated
February 28, 1996. (incorporated by reference to exhibit
10.161 to the Company's March 26 8-K/A)
10.162 Copy of a Treasury Order dated February 27, 1996
(incorporated by reference to exhibit 10.162 to the
Company's March 26 8-K/A)
10.163 Copy of an Offshore Securities Subscription Agreement
with Shulamit Pritzker dated February 27, 1996.
(incorporated by reference to exhibit 10.163 to the
Company's March 26 8-K/A)
10.164 Copy of 9% Convertible C Debenture issued to Joseph
Weinburg, dated February 28, 1996. (incorporated by
reference to exhibit 10.164 to the Company's March 26 8-
K/A)
10.165 Copy of Escrow Agreement with Barry B. Globerman, dated
February 28, 1996. (incorporated by reference to exhibit
10.165 to the Company's March 26 8-K/A)
10.166 Copy of a Treasury Order dated February 28, 1996
107
(incorporated by reference to exhibit 10.166 to the
Company's March 26 8-K/A)
10.167 Copy of an Offshore Securities Subscription Agreement
with Joseph Weinburg dated February 28, 1996.
(incorporated by reference to exhibit 10.167 to the
Company's March 26 8-K/A)
10.168 Copy of 9% Convertible C Debenture issued to Torah
Vachesed Lezra Vesad, dated February 28, 1996.
(incorporated by reference to exhibit 10.168 to the
Company's March 26 8-K/A)
10.169 Copy of Escrow Agreement with Barry B. Globerman, dated
February 27, 1996. (incorporated by reference to exhibit
10.169 to the Company's March 26 8-K/A)
10.170 Copy of a Treasury Order dated February 27, 1996
(incorporated by reference to exhibit 10.170 to the
Company's March 26 8-K/A)
10.171 Copy of an Offshore Securities Subscription Agreement
with Torah Vachesed Lezra Vesad, dated February 28, 1996.
(incorporated by reference to exhibit 10.171 to the
Company's March 26 8-K/A)
10.172 Copy of 9% Convertible C Debenture issued to Yosef Yud,
dated February 28, 1996. (incorporated by reference to
exhibit 10.172 to the Company's March 26 8-K/A)
10.173 Copy of Escrow Agreement with Barry B. Globerman, dated
February 28, 1996. (incorporated by reference to exhibit
10.173 to the Company's March 26 8-K/A)
10.174 Copy of a Treasury Order dated February 28, 1996.
(incorporated by reference to exhibit 10.174 to the
Company's March 26 8-K/A)
108
10.175 Copy of an Offshore Securities Subscription Agreement
with Yosef Yud, dated February 28, 1996. (incorporated by
reference to exhibit 10.175 to the Company's March 26 8-
K/A)
10.176 Copy of 9% Convertible C Debenture issued to Aaron Meyer
Gee, dated February 28, 1996. (incorporated by reference
to exhibit 10.176 to the Company's March 26 8-K/A)
10.177 Copy of Escrow Agreement with Barry B. Globerman, dated
February 28, 1996. (incorporated by reference to exhibit
10.177 to the Company's March 26 8-K/A)
10.178 Copy of a Treasury Order dated February 28, 1996.
(incorporated by reference to exhibit 10.178 to the
Company's March 26 8-K/A)
10.179 Copy of an Offshore Securities Subscription Agreement
with Aaron Meyer Gee, dated February 28, 1996.
(incorporated by reference to exhibit 10.179 to the
Company's March 26 8-K/A)
10.180 Copy of 9% Convertible C Debenture issued to Dovasar
S.A., dated February 29, 1996. (incorporated by reference
to exhibit 10.180 to the Company's March 26 8-K/A)
10.181 Copy of Escrow Agreement with Barry B. Globerman, dated
February 29, 1996. (incorporated by reference to exhibit
10.181 to the Company's March 26 8-K/A)
10.182 Copy of a Treasury Order dated February 29, 1996.
(incorporated by reference to exhibit 10.182 to the
Company's March 26 8-K/A)
10.183 Copy of an Offshore Securities Subscription Agreement
with Dovasar S.A., dated February 29, 1996. (incorporated
by reference to exhibit 10.183 to the Company's March 26
109
8-K/A)
10.184 Letter from Management Technologies, Inc. to Barry B.
Globerman dated December 15, 1995. (incorporated by
reference to exhibit 10.184 to the Company's March 26 8-
K/A)
10.185 Letter from MTi Abraxsys Systems, Inc. to Management
Technologies, Inc. dated December 15, 1995. (incorporated
by reference to exhibit 10.186 to the Company's March 26
8-K/A)
10.186 Asset purchase agreement between McDonnell Information
Systems Group Plc. and Management Technologies, Inc.,
dated March 1, 1996. (incorporated by reference to
exhibit 10.186 to the Registrant's current report on Form
8-K dated June 18, 1996)
10.187 Copy of 9% Convertible C Debenture issued to Israel
Daniel Levy, dated March 26, 1996. (incorporated by
reference to exhibit 10.187 to the Company's July 11,
1996 8-K/A)
10.188 Copy of Escrow Agreement with Barry B. Globerman, dated
March 26, 1996. (incorporated by reference to exhibit
10.188 to the Company's July 11, 1996 8-K/A)
10.189 Copy of a Treasury Order dated March 26, 1996
(incorporated by reference to exhibit 10.189 to the
Company's July 11, 1996 8-K/A)
10.190 Copy of an Offshore Securities Subscription Agreement
with Israel Daniel Levy, dated March 26, 1996.
(incorporated by reference to exhibit 10.190 to the
Company's July 11, 1996 8-K/A)
10.191 Copy of 9% Convertible C Debenture issued to Joseph Yud,
110
dated March 26, 1996. (incorporated by reference to
exhibit 10.191 to the Company's July 11, 1996 8-K/A)
10.192 Copy of Escrow Agreement with Barry B. Globerman, dated
March 26, 1996. (incorporated by reference to exhibit
10.192 to the Company's July 11, 1996 8-K/A)
10.193 Copy of a Treasury Order dated March 26, 1996
(incorporated by reference to exhibit 10.193 to the
Company's July 11, 1996 8-K/A)
10.194 Copy of an Offshore Securities Subscription Agreement
with Joseph Yud, dated March 26, 1996. (incorporated by
reference to exhibit 10.194 to the Company's July 11,
1996 8-K/A)
10.195 Copy of 9% Convertible C Debenture issued to Mary Park
Properties, Ltd., dated March 26, 1996. (incorporated by
reference to exhibit 10.195 to the Company's July 11,
1996 8-K/A)
10.196 Copy of Escrow Agreement with Barry B. Globerman, dated
March 26, 1996. (incorporated by reference to exhibit
10.196 to the Company's July 11, 1996 8-K/A)
10.197 Copy of a Treasury Order dated March 26, 1996
(incorporated by reference to exhibit 10.197 to the
Company's July 11, 1996 8-K/A)
10.198 Copy of an Offshore Securities Subscription Agreement
with Mary Park Properties, Ltd., dated March 26, 1996.
(incorporated by reference to exhibit 10.198 to the
Company's July 11, 1996 8-K/A)
10.199 Copy of 9% Convertible D Debenture issued to Michal Alif,
dated May 2, 1996. (incorporated by reference to exhibit
10.199 to the Company's July 11, 1996 8-K/A)
111
10.200 Copy of Escrow Agreement with Barry B. Globerman, dated
May 2, 1996. (incorporated by reference to exhibit 10.200
to the Company's July 11, 1996 8-K/A)
10.201 Copy of a Treasury Order dated May 2, 1996 (incorporated
by reference to exhibit 10.201 to the Company's July 11,
1996 8-K/A)
10.202 Copy of an Offshore Securities Subscription Agreement
with Michal Alif, dated May 2, 1996. (incorporated by
reference to exhibit 10.202 to the Company's July 11,
1996 8-K/A)
10.203 Copy of 9% Convertible E Debenture issued to AT
Investements SA, dated May 7, 1996. (incorporated by
reference to exhibit 10.203 to the Company's July 15,
1996 8-K)
10.204 Copy of an Offshore Securities Subscription Agreement
with AT Investements SA, dated May 7, 1996. (incorporated
by reference to exhibit 10.204 to the Company's July 15,
1996 8-K)
10.205 Copy of a Regulation S Distribution Agreement between the
Company and U.S. Milestone Corporation dated June 4, 1996
(incorporated by reference to exhibit 10.205 to the
Company's July 30, 1996 8-K)
10.206 Copy of an amendment to Distribution Agreement between
the Company and U.S. Milestone Corporation dated June 11,
1996 (incorporated by reference to exhibit 10.206 to the
Company's July 30, 1996 8-K)
10.207 Copy of an Offshore Securities Subscription Agreement
between the Company and Silverstone International Corp.
dated June 4, 1996. (incorporated by reference to exhibit
112
10.207 to the Company's July 30, 1996 8-K)
10.208 Copy of 6.75% Convertible Denbenture issued to RBB dated
July 5, 1996. (incorporated by reference to exhibit
10.208 to the Company's August 7, 1996 8-K)
10.209 Copy of an Offshore Securities Subscription Agreement
with RBB dated July 5, 1996 (incorporated by reference to
exhibit 10.208 to the Company's July 30, 1996 8-K)
10.210 Form of H Convertible Denbenture. (incorporated by
reference to exhibit 10.210 to the Company's August 8,
1996 8-K)
10.211 Form of Offshore Securities Subscription Agreement
(incorporated by reference to exhibit 10.211 to the
Company's August 8, 1996 8-K)
10.212 Form of X Convertible Denbenture. (incorporated by
reference to exhibit 10.212 to the Company's August 9,
1996 8-K)
10.213 Form of Offshore Securities Subscription Agreement
(incorporated by reference to exhibit 10.213 to the
Company's August 9, 1996 8-K)
10.214 Form of Y Convertible Denbenture. (incorporated by
reference to exhibit 10.214 to the Company's Ocotber 30,
1996 8-K)
10.215 Form of Offshore Securities Subscription Agreement
(incorporated by reference to exhibit 10.215 to the
Company's October 30, 1996 8-K)
10.216 Form of Z Convertible Denbenture. (incorporated by
reference to exhibit 10.216 to the Company's October 31,
1996 8-K)
10.217 Form of Offshore Securities Subscription Agreement
113
(incorporated by reference to exhibit 10.217 to the
Company's October 31, 1996 8-K)
16.01 Letter on change of certifying accountant from Goldstein
& Morris dated May 10, 1995, (incorporated by reference
to exhibit 1 to the Company's May 9, 1995 8-K).
17.01 Resignation letter from Barrington J. Fludgate, dated
September 15, 1995 (incorporated by reference to exhibit
10.185 to the Company's July 11, 1996 8-K/A)
17.02 Resignation letter from Robert Oxenberg, dated December
13, 1995 (incorporated by reference to exhibit (1) of the
Company's December 13, 1995 8-K)
17.03 Resignation letter from Dan Sladden dated September 11,
1995, (incorporated by reference to exhibit 17.03 of the
Company's October 4, 1995 8-K)
17.04 Resignation letter from Keith Williams dated October 3,
1995, (incorporated by reference to exhibit 17.04 of the
Company's October 4, 1995 8-K)
17.05 Resignation letter from Anthony J. Cataldo dated November
30, 1995, (incorporated by reference to exhibit 17.05 of
the Company's December 1, 1995 8-K)
17.06 Resignation letter from Peter Svennilson dated November
29, 1995, (incorporated by reference to exhibit 17.06 of
the Company's December 1, 1995 8-K)
17.07 Resignation letter from Edward Stone dated November 22,
1995, (incorporated by reference to exhibit 17.06 of the
Company's December 1, 1995 8-K)
17.08 Resignation letter from Claudio Guazzoni dated March 26,
1996 (incorporated by reference to exhibit 17.08 to the
Company's March 27, 1996 8-K)
114
17.09 Resignation letter of Michael Awerbuch dated January 3,
1997 (incorporated by reference to exhibit 17.09 to the
Company's January 6, 1997 8-K)
22.01 List of the Company's Subsidiaries
23.02 Consent by KPMG Peat Marwick LLP dated August 13, 1996
(incorporated by reference to exhibit 23.01 to the
Company's 10K-SB dated August 20, 1995)
23.03 Consent by KPMG Peat Marwick LLP dated August 13, 1997
99.01 Resignation letter from Nigel Cole, undated,
(incorporated by reference to exhibit 99.01 of the
Company's October 4, 1995 8-K)
(B) CURRENT REPORTS ON FORM 8-K FILED DURING THE QUARTER ENDED APRIL 30,
1996:
FINANCIAL
STATEMENT
FORM REPORT DATE ITEM REPORTED FILED
8-K April 2, 1997 3, Bankrupcy or None
receivership
5, Extension of C
Warrants and other
matters
115
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MANAGEMENT TECHNOLOGIES, INC.
By: /s/ Michael J. Edison
--------------------
Michael J. Edison
President & Chief Executive Officer
Date: August 15, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant, and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President & Chief Executive August 15, 1997
/s/ Michael J Edison Officer and Director
------------------
(Principal Executive Officer)
Michael J. Edison
/s/ Patrick Huguenin Chief Financial Officer, August 15, 1997
--------------------
Director (Principal
Patrick Huguenin
Accounting Officer)
116
/s/ Paul Ekon Director August 15, 1997
---------------
Paul Ekon
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Management Technologies, Inc. and
subsidiaries for the years ended April 30, 1997 and 1996, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000806566
<NAME> MANAGEMENT TECHNOLOGIES, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1997 APR-30-1996
<PERIOD-END> APR-30-1997 APR-30-1996
<CASH> 371 313
<SECURITIES> 0 0
<RECEIVABLES> 514 8,871
<ALLOWANCES> 0 961
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,175 10,225
<PP&E> 1,072 2,205
<DEPRECIATION> 910 1,310
<TOTAL-ASSETS> 6,771 26,640
<CURRENT-LIABILITIES> 4,688 17,218
<BONDS> 3,699 8,246
0 0
0 0
<COMMON> 1,177 247
<OTHER-SE> (2,841) 3,382
<TOTAL-LIABILITY-AND-EQUITY> 6,771 26,640
<SALES> 23,751 21,227
<TOTAL-REVENUES> 23,751 21,227
<CGS> 21,935 10,306
<TOTAL-COSTS> 34,048 32,192
<OTHER-EXPENSES> 0 (162)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 66 901
<INCOME-PRETAX> (10,405) (10,802)
<INCOME-TAX> 21 0
<INCOME-CONTINUING> (10,405) (12,687)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (16,523) (10,802)
<EPS-PRIMARY> (0.24) (1.70)
<EPS-DILUTED> (0.24) (1.70)
</TABLE>
BY-LAWS
-OF-
MANAGEMENT TECHNOLOGIES, INC.
ARTICLE I
---------
OFFICES
-------
SECTION 1. Principal Office
- ----------------------------
The principal office of the Corporation shall be in the city, incorporated
village or town and the county within the State of New York as is designated in
the Certificate of Incorporation.
SECTION 2. Additional Offices
- ------------------------------
The Corporation may also have offices and places of business at such other
places, within or without the State of New York, as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
------------------------
SECTION 1. Time and Place
- --------------------------
Meetings of the shareholders of the Corporation may be held at such time
and place within or without the State of New York as shall be stated in the
notice of the meeting, or in duly executed waiver of notice thereof.
SECTION 2. Annual Meeting
- --------------------------
The annual meeting of the shareholders shall be held in each year on the
anniversary of the date of filing of the Certificate of Incorporation, and the
shareholders shall then elect a Board of Directors and transact such other
business as may properly be brought before the meeting.
SECTION 3. Notice of Annual Meeting
- ------------------------------------
Written notice of the place, date and hour of the annual meeting of
shareholders shall be given personally or by mail to each shareholder entitled
to vote thereat, not less than ten (10) nor more than fifty (50) days prior to
the meeting.
SECTION 4. Special Meetings
- ----------------------------
Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by law or by the Certificate of Incorporation, may be
called by the President or the Board of Directors, and shall be called by the
President at the written request of shareholders holding at least twenty percent
(20%) in amount of shares of the Corporation issued and outstanding and entitled
to vote. Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 5. Notice of Special Meeting
- -------------------------------------
Written notice of a special meeting of shareholders, stating the place,
date and hour of the meeting, the purpose or purposes for which the meeting is
called, and by or at whose direction it is being issued, shall be given
personally or by mail to each shareholder entitled to vote thereat, not less
than ten (10) nor more than fifty (50) days prior to the meeting.
SECTION 6. Quorum
- ------------------
Except as otherwise provided by law or by the Certificate of Incorporation
or these By-Laws, the holders of a third of the shares of the Corporation issued
and outstanding and entitled to vote thereat shall be necessary to and shall
constitute a quorum for the transaction of business at all meetings of the
shareholders: provided, however, that when a specified item of business is
required to be voted on by a class or series, voting as a class, the holders of
a majority of the shares of such class or series issued and outstanding and
entitled to vote thereat shall constitute a quorum for the transaction of such
specified item of business. If a quorum shall not be present at any meeting of
the shareholders, the shareholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, until a quorum shall be present. At any such adjourned meeting at which a
quorum may be present any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 7. Voting
- ------------------
(a) At any meeting of the shareholders every shareholder having the right
to vote shall be entitled to vote in person or by proxy. Each shareholder shall
have one (1) vote for each share of stock having voting power which is
registered in his name on the books of the Corporation. Except where another
date shall have been fixed as a record date for the determination of its
shareholders entitled to vote, no share of stock shall be voted at any election
of Directors which shall have been transferred on the books of the Corporation
within twenty (20) days next preceding such election of Directors.
(b) Except as otherwise provided by law or by the Certificate of
Incorporation or these By-Laws, all elections of Directors shall be decided by a
plurality of the votes cast, and all other matters shall be decided by a
majority of the votes cast.
SECTION 8. Proxies
- -------------------
A proxy, to be valid, shall be executed in writing by the shareholder or by
his attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof, unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the shareholder executing it,
except in those cases where an irrevocable proxy is permitted by law.
SECTION 9. Written Consents
- ----------------------------
Whenever shareholders are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent, setting forth the
action so taken, signed by the holders of all outstanding shares entitled to
vote thereon.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. Board of Directors
- ------------------------------
Subject to any provision in the Certificate of Incorporation, the business
of the Corporation shall be managed by its Board of Directors, each of whom
shall be at least eighteen (18) years of age.
SECTION 2. Number: Tenure
- ---------------------------
(a) The number of Directors constituting the entire Board of Directors
shall be fixed from time to time by resolution of the shareholders, but shall in
no event be less than three (3), except that where all the shares of the
Corporation are owned beneficially and of record by less than three (3)
Shareholders, the number of Directors may be less than three (3) but not less
than the number of shareholders. The Board of Directors shall initially be
composed of three (3) Director(s).
(b) Directors shall be elected at the annual meeting of the shareholders,
except as provided in Section 3 of this Article III. Except as otherwise
provided by the Certificate of Incorporation, each Director shall be elected to
serve until the next annual meeting of shareholders and until his successor has
been elected and qualified.
SECTION 3. Resignation: Removal
- ---------------------------------
Any Director may resign at any time. Except as otherwise provided by law,
the Board of Directors may, by majority vote of all Directors then in office,
remove a Director for cause. Subject to applicable provisions of law, any or
all of the Directors may be removed with or without cause by vote of the
shareholders.
SECTION 4. Vacancies
- ---------------------
Except as otherwise provided by the Certificate of Incorporation, if any
vacancies occur in the Board of Directors by reason of the death, resignation,
retirement, disqualification or removal from office of any Director with cause,
or if any new directorships are created, all of the Director's then in office,
although less than a quorum, may, by majority vote, choose a successor or
successors, or fill the newly created directorships, and the Directors so chosen
shall hold office until the next annual meeting of the shareholders and until
their successors shall be duly elected and qualified, unless sooner displaced:
provided, however, that if in the event of any such vacancy, the Directors
remaining in office shall be unable, by majority vote, to fill such vacancy
within thirty (30) days of the occurrence thereof, the President or the
Secretary may call a special meeting of the shareholders at which such vacancy
shall be filled. In the event of any vacancy created by removal from office of
any Director without cause, such special meeting of the shareholders shall be so
called within thirty (30) days of the occurrence thereof, at which meeting such
vacancy may be filled.
ARTICLE IV
----------
MEETINGS OF THE BOARD
---------------------
SECTION 1. Place
- -----------------
Except as otherwise provided by the Certificate of Incorporation, and
subject to the provisions of Section 6 of this Article IV, the Board of
Directors of the Corporation may hold meetings, both regular and special, either
within or without the State of New York as may be determined by the Board of
Directors. Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or such committee
by means of a conference, telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 2. Regular Meetings
- ----------------------------
Regular meetings of the Board of Directors may be held without notice at
such time and at such place as shall from time to time be determined by the
Board of Directors.
SECTION 3. Special Meetings
- ----------------------------
Special meetings of the Board of Directors may be called by the Chairman of
the Board, if any, or by the President on two (2) days notice to each Director,
either personally or by mail or by telegram: special meetings shall be called
by the Chairman, President or Secretary in like manner and on like notice on the
written request of one (1) Director.
SECTION 4. Quorum: Voting
- ---------------------------
At all meetings of the Board of Directors a majority of the entire Board
shall be necessary to constitute a quorum for the transaction of business, and
the vote of a majority of the Directors present at the time of the vote if a
quorum is present shall be the act of the Board of Directors, except as may be
otherwise specifically provided by law. If a quorum shall not be present at any
meeting of the Board of Directors, the Directors present thereat may adjourn the
meeting from time to time until a quorum shall be present. Notice of any such
adjournment shall be given to any Directors who were not present and, unless
announced at the meeting, to the other Directors.
SECTION 5. Compensation
- ------------------------
Directors, as such, shall not receive any stated salary for their services,
but, by resolution of the Board of Directors, a fixed fee and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 6. Written Consents
- ----------------------------
Unless otherwise restricted by the Certificate of Incorporation, any action
required to be taken by the Board of Directors may be taken without a meeting if
all members of the Board of Directors consent in writing to the adoption of a
resolution authorizing the action. The resolution and written consents thereto
by the members of the Board of Directors shall be filed with the minutes of the
proceedings of the Board of Directors.
ARTICLE V
---------
NOTICES
-------
SECTION 1. Form: Delivery
- ---------------------------
Notices to Directors and shareholders shall be in writing and may be
delivered personally or by mail or telegram. Notice by mail shall be deemed to
be given at the time when deposited in the post office or a letter box, in a
post-paid sealed wrapper, and addressed to Directors or shareholders at their
addresses appearing on the records of the Corporation.
SECTION 2. Waiver
- ------------------
Whenever a notice is required to be given by any statute, the Certificate
of Incorporation or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to such notice. In addition, any
shareholder attending a meeting of shareholders in person or by proxy without
protesting prior to the conclusion of the meeting the lack of notice thereof to
him, and any Director attending a meeting of the Board of Directors without
protesting prior to the meeting or at its commencement, such lack of notice
shall be conclusively deemed to have waived notice of such meeting.
ARTICLE VI
----------
OFFICERS
--------
SECTION 1. Officers
- --------------------
The officers of the Corporation shall be a President, one or more Vice-
Presidents, a Secretary, a Treasurer, and such other officers including a
Chairman of the Board as may be determined by the Board of Directors. Any two
(2) or more offices may be held by the same person, except the offices of
President and Secretary: provided, however, that if all of the issued and
outstanding stock of the Corporation is owned by one (1) person, such person may
hold all or any combination of offices.
SECTION 2. Authority and Duties
- --------------------------------
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By-Laws, or to the extent not so provided, by the Board of
Directors.
SECTION 3. Term of Office: Removal
- ------------------------------------
All officers shall be elected by the Board of Directors and each shall hold
office until the meeting of the Board of Directors following the next annual
meeting of shareholders, and until his successor has been elected or appointed
and qualified.
SECTION 4. Compensation
- ------------------------
The compensation of all officers of the Corporation shall be fixed by the
Board of Directors, and the compensation of agents shall either be so fixed or
shall be fixed by officers thereunto duly authorized.
SECTION 5. Vacancies
- ---------------------
If an office becomes vacant for any reason, the Board of Directors shall
fill the vacancy. Any officer so appointed or elected by the Board of Directors
shall serve only until the unexpired term of his predecessor shall have expired
unless re-elected by the Board of Directors.
SECTION 6. The President
- -------------------------
The President shall be the Chief Executive Officer of the Corporation: in
the absence of the Chairman of the Board, or if there be no Chairman, he shall
preside at all meetings of the shareholders and directors; he shall be ex-
officio, a member of all standing committees, shall have general and active
management and control of the business and affairs of the Corporation, subject
to the control of the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
SECTION 7. The Vice-President
- ------------------------------
The Vice-President or, if there be more than one, the Vice-Presidents, in
the order of their seniority or in any other order determined by the Board of
Directors, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President, and shall generally assist the
President and perform such other duties as the Board of Directors or the
President shall prescribe.
SECTION 8. The Secretary
- -------------------------
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the Board of
Directors and shall perform such other duties as may be prescribed by the Board
of Directors or President, under whose supervision he shall act. He shall keep
in safe custody the seal of the Corporation and, when authorized by the Board,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or an Assistant
Treasurer or Assistant Secretary. He shall keep in safe custody the certificate
books and shareholder records and such other books and records as the Board may
direct and shall perform all other duties incident to the office of the
Secretary.
SECTION 9. The Assistant Secretary
- -----------------------------------
During the absence or disability of the Secretary, any Assistant Secretary,
or if there be more than one, the one so designated by the Secretary or by the
Board of Directors, shall have all the powers and functions of the Secretary.
SECTION 10. The Treasurer
- --------------------------
The Treasurer shall have the care and custody of the corporate funds, and
other valuable effects, including securities, and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation is such depositories as may be designated by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Directors, at the regular
meeting of the Board of Directors, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition of the
Corporation.
SECTION 11. The Assistant Treasurer
- ------------------------------------
During the absence or disability of the Treasurer, any Assistant Treasurer,
or if there be more than one, the one so designated by the Treasurer or by the
Board of Directors, shall have all the powers and functions of the Treasurer.
SECTION 12. Bonds
- ------------------
In case the Board of Directors shall so require, any officer or agent of
the Corporation shall give the Corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the restoration
to the Corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
ARTICLE VII
-----------
SHARE CERTIFICATES
------------------
SECTION 1. Form: Signature
- ----------------------------
The certificates for shares of the Corporation shall be in such form as
shall be determined by the Board of Directors and shall be numbered
consecutively and entered in the books of the Corporation as they are issued.
Each certificate shall exhibit the registered holder's name and the number and
class of shares, and shall be signed by the Chairman or a Vice-Chairman of the
Board of Directors, if there be any, or the President or a Vice-President and
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, and shall bear the seal of the Corporation or a facsimile thereof.
SECTION 2. Lost Certificates
- -----------------------------
The Board of Directors may direct a new share certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost or destroyed.
SECTION 3. Registration of Transfer
- ------------------------------------
Upon surrender to the Corporation or any transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation or such transfer agent to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
SECTION 4. Registered Shareholders
- -----------------------------------
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends or other distributions, and to vote as such
owner, and to hold liable for calls and assessments a person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or legal claim to or interest in such share or shares on the part of any other
person, whether or not it has actual or other notice thereof, except as
otherwise provided by the laws of the State of New York.
SECTION 5. Record Date
- -----------------------
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shares or any adjournment thereof, or to express consent
to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action affecting the
interests of shareholders, the Board of Directors may fix, in advance, a record
date. Such date shall not be more than fifty (50) nor less than ten (10) days
before the date of any such meeting, nor more than fifty (50) days prior to any
other action.
SECTION 5. Record Date (cont'd)
- ------------------------
In each such case, except as otherwise provided by law, only such persons
as shall be shareholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting and any adjournment thereof, or to
express such consent or dissent, or to receive payment of such dividend, or such
allotment of rights, or otherwise to be recognized as shareholders for the
related purpose, notwithstanding any registration of transfer of shares on the
books of the Corporation after any such record date so fixed.
ARTICLE VIII
------------
GENERAL PROVISIONS
------------------
SECTION 1. Fiscal Year
- -----------------------
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
SECTION 2. Dividends
- ---------------------
Dividends upon the capital stock of the Corporation may be declared by the
Board of Directors at any regular or special meeting and may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation and the law.
SECTION 3. Reserves
- --------------------
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purposes as the Board of
Directors shall deem conducive to the interest of the Corporation, and the Board
of Directors may modify or abolish any such reserve in the manner in which it
was created.
SECTION 4. Checks
- ------------------
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
SECTION 5. Seal
- ----------------
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal New
York." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE IX
----------
AMENDMENTS
----------
SECTION 1. Adoption: Amendment: Repeal
- -----------------------------------------
By-Laws of the Corporation may be adopted, amended or repealed by vote of
the holders of the shares at the time entitled to vote in the election of any
Directors. By-Laws of the Corporation may also be adopted, amended or repealed
by the Board of Directors, but any By-Law adopted by the Board of Directors, may
be amended or repealed by the shareholders entitled to vote thereon as herein
provided.
SECTION 2. Amendments Affecting Election of Directors:
- -------------------------------------------------------
NOTICE
- ------
If any By-Law regulating an impending election of Directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of the
next meeting of shareholders for the election of Directors the By-Law so
adopted, amended or repealed, together with a concise statement of the changes
made.
Exhibit 23.03
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Management Technologies, Inc.:
We consent to incorporation by reference in the registration statements
(No. 33-25528 and 33-52074) on Form S-1 and Form S-3 respectively of
Management Technologies, Inc. of our report dated August 13, 1997, relating
to the consolidated balance sheet of Management Technologies, Inc. and
subsidiaries as of April 30, 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years ended
April 30, 1997 and 1996, which report appears in the April 30, 1997 annual
report on Form 10-KSB of Management Technologies, Inc. and subsidiaries.
Our report dated August 13, 1997 contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations and at
April 30, 1997 has a working capital deficiency that raises substantial doubt
about its ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result form the outcome
of that uncertainty.
/s/ KPMG PEAT MARWICK LLP
New York, New York
August 13, 1997
