FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: September 30, 1998
OR
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A TO
COMMISSION FILE NUMBER : 33-11795
RECOM MANAGED SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
FORMERLY KNOWN AS: Mt. Olympus Enterprises, Inc.
DELAWARE 87-0441351
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
2412 Professional Drive
Roseville, CA 95661
(Address of principal executive offices)
(Zip Code)
(916) 789-2022
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 12, 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 report(s), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO as to filing YES X NO as to filing requirement
The number of shares outstanding at September 30, 1998: 4,300,000
As of the date of this filing, the Company has 2,605,000 shares outstanding.
RECOM MANAGED SYSTEMS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Exhibit
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders ...............................9
Item 5. Other Information ..............................9
Item 6. Exhibits ........................................9
[Inapplicable Items Have Been Omitted]
<PAGE>
PART I. - Financial Information
Item 1. Financial Statements. [Unaudited]
The unaudited Financial Statements of Mt. Olympus
Enterprises, Inc. for the three and nine month periods ending
September 30, 1998, are attached hereto and made a part of this
Report, Item 1. Additionally, the Financial Statements for J2
Technologies, LLC for the one month start-up period ending August
31, 1998 is attached. Further, there is attached the unaudited pro
forma consolidated Financial Statements reflecting the
Reorganization of these companies.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(a) Reorganization - Management of the Registrant does
not believe that this disclosure and report can be understood apart
from the Reorganization of the Company which was approved by its
Board of Directors August 19, 1998, with an agreement entered with
the other reorganization company on August 24, 1998 and which
agreement and specific terms were ratified by Majority Shareholder
Consent on October 30, 1998. Accordingly, this 10-QSB report is
made applicable and conforms with all of the terms and provisions
of the Reorganization Agreement referenced above, even though
ratified after the actual date of this report on September 30, 1998.
In outline fashion, the Reorganization approved by the
Company as of October 30, 1998 was a reverse acquisition in which
the Company acquired a wholly owned operating subsidiary, which
is a California limited liability company, known as J2 Technologies,
LLC ("J2"). It was then agreed that all of the Company's present
activities and business would be exclusively directed through the J2
subsidiary, and the acquired technology business, as more
particularly described below.
As part of the Reorganization, J2 nominated a new Board of
Directors, as elected, and who are more fully described below. The
Company agreed to change its name to an agreed upon name of
RECOM Managed Systems, Inc. ("RECOM"). The Company's
business has now become that of the J2 subsidiary, the new
management has been appointed by the Board of Directors
nominated by J2, and the Company has assumed the name of a
related entity to J2. The Company deems this Reorganization can
properly be characterized as a "reverse acquisition" in that even
though the parent company, Mt. Olympus Enterprises, Inc., remains
as the surviving entity, under another name, all of its attributes,
management, and the new name substantially reflect the acquired
J2 subsidiary.
In outline fashion, the essential terms and provisions of the
Reverse Acquisition, as approved by majority shareholder vote,
involve the following:
1. A reverse split of the issued and outstanding stock of
the Company on a forty-three to one (43:1) basis.
2. Election of a new four member Board of Directors, with a
fifth member to be appointed. Certain biographical
information, as well as shareholder interest of each
management member is set-out in the attached Notice to
Shareholders. No compensation has yet been
fixed for management.
3. A change of name of record to RECOM Managed Systems, Inc.
4. Adoption of the principal business of J2 Technologies as
generally described below.
5. The transfer of the principal business address of the
Company to the prior J2 address at 2412 Professional
Drive, Roseville, California, 95661.
The preparation of initial unaudited consolidated financial
statements for the reorganized entity are attached and incorporated
by this reference.
Management further notes that it is contemporaneously filing
with this 10-QSB report an 8-K report in which the general
information, as outlined above, has been provided. A copy of the
8-K report will be made available to any shareholder or interested
party by contacting the Company or it can be downloaded through
the SEC EDGAR services at the same site as this 10-QSB Report is
located. It is, however, believed by management that the 8-K
Report will not set out any further or additional significant
information not outlined or contained in this 10-QSB filing regarding
the Reorganization.
As a result of the Reorganization and the reverse split, the
prior public shareholders of the Company now hold approximately
3.8% of the issued and outstanding stock, prior management and
affiliated parties with management hold approximately 11.8% of the
issued and outstanding stock and the new shareholders which
contributed their membership interest in the J2 operating subsidiary
hold the balance of approximately 84.4% (2,200,000) of the issued
and outstanding stock.
It should be noted that the predecessor and parent company
(Mt. Olympus Enterprises, Inc. or MOE N/K/A RECOM) has been
totally inactive for approximately the past decade, as earlier
reported, and has not had any assets or business purposes. As a
part of the Reorganization the debts and liabilities of MOE were
substantially paid or otherwise capitalized or discharged. Other
liabilities were acquired from the J2 entity. The consolidated current
liabilities set-out on a pro forma basis are contained in the attached
consolidated pro forma financials and summarized as follows:
The Reorganized Company has total current liabilities
of $364,704, total assets of $174,348 and a current stockholders
deficit of ($190,361). The Company has a current net loss as of
August 31, 1998, on a pro forma consolidation basis, of ($329,559)
largely related to start-up and reorganization costs. In sum, the
Company should be considered a start-up entity without material
assets, accumulated debt as outlined above, and a current net loss
from start-up operations.
It should be further noted that the J2 subsidiary has not been
actually engaged in business to this date and is itself a newly
organized company having a date of inception of July 31, 1998. J2's
only activity since inception, on July 31, 1998, has involved
organizational matters, such as the transfer of assets and
technology from RECOM Technology, Inc., and completing the
Reorganization with the new parent entity, RECOM Managed
Systems, Inc.
Management indicates that there are no historical business
operations to discuss. Management would note that the Company
will incur the typical risk of all start up companies as to whether it
can generate sufficient revenues and income from its initial intended
activities to continue in business and each shareholder should
consider this start up phase as a high risk period in the Company's
attempt to develop operations. Moreover, the Company will be
attempting to engage in a new form of business as a new business
entity and no warranty or assurance to the success of these
business endeavors can or will be made by management.
In essential terms, the J2 subsidiary was generally described
in a Shareholder's Statement sent to each known shareholder of
record which further described the Reorganization and the resulting
operating subsidiary as required under Delaware law and as
approved by the Board of Directors. A copy of that Shareholder's
Statement is incorporated and attached hereto as non-financial
Exhibit A.
J2 is described in the Shareholder Statement as a start up
limited liability company which has its principal place of business at
2412 Professional Drive, Roseville, California 95661. Roseville is
located approximately 20 miles from Sacramento, California. J2 was
organized in July 1998 by various principals of a related technology
company known as Recom Technologies, Inc. ("Recom Tech.") for
the purposes of J2 receiving an assignment of certain intellectual
technologies from Recom Tech. in exchange for membership
interest in the new J2 entity. J2 is intended as a commercial
developer and user of these technologies. As noted above, the new
name of the Company will be RECOM Managed Systems, Inc.
("RECOM").
J2 had approximately twelve (12) members consisting of
individuals and business entities, all of which have contributed either
technology, services or entrepeneurship to the start-up entity in
exchange for their or its membership interest. These members have
now transferred all of their membership interest to RECOM in
exchange for the controlling shareholder interest described below.
RECOM Technology, Inc. ("RECOM-Tech") formed J2
Technology LLC, on July 31, 1998 for the purpose of expanding its
high-tech research and development services beyond federal
government entities into the private sector. J2 was formed to
provide computer support and systems to private companies. J2
will temporarily stay in the same building as RECOM-Tech and will
sub-lease office space from RECOM-Tech.
J2 hired two of the 300 RECOM-Tech employees to carry out
J2's activities. RECOM-Tech did not transfer its market distribution
system, sales force, customer base, operating rights or production
techniques to J2, except that J2 will market its services initially to
three of RECOM-Tech's current commercial customers. Revenue
from these customers was not material to RECOM-Tech. RECOM-Tech will
provide documented desktop and network support
procedures to J2. The intellectual property transferred from
RECOM-Tech to J2 has been appraised at $4,750,000 but has been
recorded by J2 at RECOM-Tech's book value of zero. Based upon
the above, RECOM-Tech is not considered a predecessor to J2 and,
accordingly, financial statements of RECOM-Tech are not included
herein.
J2 intends to engage primarily in the development and
servicing of commercial computer networks, including local area,
wide area, Internet and Intranet. It is envisioned that J2 will provide
unique processes and procedures obtained from the Recom Tech.
assignments for setting up and servicing various computer networks
on an on-site and off-site basis. It is further envisioned J2 will
provide unique hardware and software configurations for these
networks, both in their implementation, operation and servicing. The
Company also intends to provide both hardware and software
servicing and maintenance as part of a complete service package
for the commercial and business computer client. It is intended that
the initial sites of its operations will be primarily the Northern
California area.
Recom Tech. has an extensive historical experience in the
development and marketing of world class information technical
services related to basic business utilities with particular emphasis
upon network systems. It has been successful in developing and
marketing these technical services to both governmental and
industry sector clients, but with a special emphasis upon
governmental programs such as NASA and the Department of
Defense. It is believed that this proven experience will provide a
unique competitive advantage to J2 to engage in its intended
business activities.
It should be understood that, to date, J2 has not engaged in
any commercial activities and has only received the assignment of
the technology from Recom Tech. as part of its initial organizational
efforts. It should be further understood these assets, while believed
to have value, cannot be valued by the Company on its formal
accounting statements as attached.
As you may be aware, the predecessor entity (MOE), has
primarily incurred expenditures over the past few years for legal and
accounting expenses in an attempt to keep the Company current in
it's reporting requirements under the Securities and Exchange Act
of 1934. As further noted above, these accrued debts and
obligations were or will be discharged either by payment from prior
management through its agent Mr. Dennis Madsen; through the
issuance out or cash consideration by the new J2 subsidiary group
at the closing of the reorganization; or, thirdly, for issued shares of
stock for prior services. The Company believes that the terms of the
Reorganization are more fully set out in the Reorganization
Agreement captioned as a Stock-for-Interest Agreement, a copy of
which is attached hereto and incorporated by this reference as
non-accounting Exhibit B.
Finally, it should be noted that the new board of directors and
officers constituting management of the Company are more fully
described, with brief biographical information and shareholder
interest, in the Exhibit A Shareholder Statement.
(b) Results of Operations - As noted above, the MOE
parent entity has not had any income or operations for the past
several years. The acquired operating subsidiary J2 is a start up
entity having commenced business and acquired intangible assets
as of July 30, 1998. As a result, the Company does not have any
initial results of operations with which to report, but would anticipate
that operational results may be reported as of the next quarterly
reporting period.
All prospects for future revenues and income depend upon
the success of the J2 technology and technological applications as
generally described above. No assurance or warranty as to the
commercial implementation of this technology can be or is given.
(c) Significant Events - See Above
PART II. - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Reorganization described above between the parent
entity, MOE (and now known as RECOM Managed Systems, Inc.)
and J2 was submitted for Majority Shareholder Ratification as of
October 30, 1998 and approved. A copy of the Majority
Shareholder Ratification is attached hereto as a non-financial Exhibit
C along with the required Shareholder Statement as the previously
referenced Exhibit B.
Item 5. - Other Information.
See Above
Item 6. Exhibits and Reports on Form 8-K.
(1) Unaudited Financial Statements dated
September 30, 1998, for MOE, Audited Financials for J2 dated
August 31, 1998, and consolidated pro forma unaudited Financial
Statements for the combined companies.
(2) An 8-K Report referencing the Reorganization
between the company, as generally described above, is being
concurrently filed by the Registrant. The Registrant does not deem
that the 8-K contains any new or additional information other than
referenced in this filing.
................................................
Non-Financial Exhibits:
(A) Shareholders Statement
(B) Reorganization Agreement
(C) Majority Shareholder Ratification
SIGNATURES
Pursuant to the requirements 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.
RECOM MANAGED SYSTEMS, INC.
Date: 11/12/98 By /S/
Mr. Andrew Limpert
President
Date: 11/13/98 By
G.K. (Jack) Lee
Secretary/Treasurer
Chief Financial Officer
<PAGE>
NON-FINANCIAL EXHIBIT A
SHAREHOLDER STATEMENT
MT. OLYMPUS ENTERPRISES, INC.
NOW KNOWN AS RECOM MANAGED SYSTEMS, INC.
2412 Professional Drive
Roseville, CA 95661
(916) 789-2022
NOVEMBER 11, 1998
This Information Statement is being provided to all
shareholders of record of Mt. Olympus Enterprises, Inc. ("MOE" or
"the Company") to inform them of certain actions approved and
recommended by the Board of Directors and subsequently
approved by Majority Shareholder Consent without meeting. As you
may be aware, MOE is a Delaware Corporation; and, under
Delaware law, a meeting is not necessary when a majority of the
shareholders of record approve certain corporate actions that would
otherwise require notice of a shareholder meeting and voting by
shareholders. However, Delaware law, as well as the By-Laws of
your Company, require that all shareholders of record should be
given disclosure and notice of the action taken by Majority
Shareholder Consent. Your management also believes that such
notice is a fair and equitable requirement.
Attached to this Shareholder Notice is a copy of the Majority
Shareholder Consent Resolution signed by the shareholders holding
the majority of the issued and outstanding shares. This consent
should serve as a brief summary of the matters recommended by
the Board of Directors and approved by a majority of the
shareholders. As many of you may know, the Company is presently
implementing a reorganization with a privately held California limited
liability company engaged in computer software and hardware
applications and processing of unique proprietary programs which
are related to various business applications. The Company
acquired all of the ownership interest in that limited liability company
known as J2 Technologies, LLC ("J2") as its wholly owned operating
subsidiary. The Company is in the process, contemporaneously
with the sending of this notice, of changing its name of record in
Delaware to RECOM Managed Systems, Inc. to reflect the new
direction and business of the Company. Further, various parties, as
indicated in the attached Majority Shareholder Consent, and as
nominated by the prior J2 management, have become the majority
shareholders of the Company, the new directors of the Company
and have replaced the existing officers, as more particularly
described and set out below. This type of reorganization is typically
characterized and described as a "reverse acquisition".
The purpose of the following Shareholder Information
Statement is to supply to you substantially the same information as
you would have received concerning this Reorganization if it were
required to be submitted pursuant to a Proxy Solicitation for your
vote. The information package being supplied to you consists
primarily of this basic Shareholder Information Statement which, as
indicated above, is similar to a Proxy Statement; secondly, the
Company has enclosed the current financial statements which
presently exist for MOE,
along with the current audited financial statements of J2, and an
unaudited pro forma consolidated financial statement for the two
entities. Thirdly, there is enclosed in this package a short business
description of the J2 Technologies, LLC, and its intended business
activities as RECOM Managed Systems, Inc.
The new management of the Company will also be available
to discuss any aspects of the business and answer your questions
at any time should you wish to contact them directly.
Finally, should any shareholders wish a copy of the most
recently filed 10-KSB and 10-Q SB statements for MOE, they will be
made available to any shareholder or interested party upon request.
However, you should be advised that this material has been largely
superseded by the subsequent agreement for "reverse acquisition,"
which the Company believes is fairly and fully disclosed in the
enclosed Shareholder Information Statement, and is otherwise more
briefly reported in a filed 8-K report with the SEC, a copy of which
may also be made available to shareholders or interested parties
upon request.
BRIEF DESCRIPTION OF J2
J2 is a start-up California limited liability company, having its
principal place of business at 2412 Professional Dr., Roseville,
California 95661. Roseville is located approximately 20 miles from
Sacramento, California. J2 was organized in July 1998 by various
principals of a related technology company known as Recom
Technologies, Inc. ("Recom Tech.") for the purposes of receiving an
assignment of certain intellectual assets from Recom Tech. in
exchange for membership interest in the new J2 entity. J2 is
intended as a commercial developer and user of these assets. As
noted above, the new name of your company will be RECOM
Managed Systems, Inc. ("RECOM").
J2 had twelve (12) members consisting of individuals and
business entities, all of which have contributed either technology,
services or entreupeneurship to the start-up entity in exchange for
their or its membership interest. These members have now
transferred all of their ownership interest to MOE/RECOM in
exchange for the controlling shareholder interest described below.
J2 intends to engage primarily in the development and
servicing of commercial computer networks, including local area,
wide area, internet and intranet. It is envisioned that J2 will provide
unique processes and procedures obtained from the Recom Tech.
assignments for setting up and servicing various computer networks
on an on-site and off-site basis. It is further envisioned J2 will
provide unique hardware and software configurations for these
networks, both in their implementation, operation and servicing. The
Company also intends to provide both hardware and software
servicing and maintenance as part of a complete service package
for the commercial and business computer client. It is intended that
the initial sites of its operations will be primarily the Northern
California area.
Recom Tech. has an extensive historical experience in the
development and marketing of world class information technical
services related to basic business utilities with particular emphasis
upon network systems. It has been successful in developing and
marketing these technical services to both governmental and
industry sector clients, but with a special emphasis upon
governmental programs such as NASA and the Department of
Defense. It is believed that this proven experience will provide a
unique competitive advantage to J2 to engage in its intended
business activities.
It should be understood that, to date, J2 has not engaged in
any commercial activities and has only received the assignment of
the intellectual assets from Recom Tech. as part of its initial
organization efforts. It should be further understood these assets,
while believed to have value, cannot be valued by the Company on
its formal accounting statements as attached.
GENERAL DESCRIPTION OF REORGANIZATION
On or about August 24, 1998, Mt. Olympus entered into the
referenced Stock-for-Membership Interest Agreement with the J2
Limited Liability Company and its members. The essential terms of
this reorganization agreement provided that Mt. Olympus acquired
all of the outstanding membership interest in J2 which has become
its wholly owned operating subsidiary. There is not presently
contemplated an actual merger between the two entities for the
foreseeable future, though the companies will retain such merger
option. Presently, it is intended that J2 will operate as the sole
commercial business operating subsidiary of the Company. To
accommodate this reorganization, the Company will change its
name to "RECOM Managed Systems, Inc." to reflect the actual
business operations of the Company and will be managed and
guided by a new board of director nominees and officers from the
current J2 management as described below.
Since the Company is, for practical purposes, going to be
reorganized to operate like the J2 subsidiary, this type of
reorganization is often generically called as a "reverse acquisition."
In the reverse acquisition the public company formally continues as
an entity, but the management, name and business purpose
become those of the newly acquired entity, in this case J2.
The terms of the reorganization agreement also required MOE
to go through a 43:1 reverse split of its shares, so that the
predominant ownership and control of the new entity will be held by
the prior members in J2, see below. As a majority of the present
shareholders of Mt. Olympus have approved this reorganization,
there will be, after this reorganization, certain new reverse split
shares issued to the prior J2 Members, as well as a limited number
of reverse split shares which would be issued to prior management
and affiliates of Mt. Olympus for prior services rendered. In the case
of Mr. Madsen and Benchmark the reverse split shares would be
issued, in part, as a finder's fee for the proposed reorganization.
<PAGE>
There would be a total of 2,605,000 reverse split shares
issued and outstanding upon approval of the reorganization as
outlined below:
Issuee No. of Shares % of Reverse Split Share
Recom, Inc. 660,500 25.4 %
Lee 300,000 11.5
Epperson 300,000 11.5
Kayne 340,000 13.1
Intervest, Inc. 150,000 5.8
SOMA, Inc. 340,000 13.1
Joyce 57,000 2.2
Toth 7,500 .3
Lawrence 7,500 .3
Ostermiller 7,500 .3
Lai 25,000 1.0
Shariq 5,000 .2
Existing MOE S/H 100,000 * 3.8
Andrew Limpert 105,000 * 4.0
Dennis Madsen 87,500 * 3.4
Benchmark Group 87,500 * 3.4
Julian Jensen 5,000 * .2
L. Kent Mackey 5,000 * .2
Gregory Stringham 5,000 * .2
Dave Winters 5,000 * .2
Donald Baird 5,000 * .2
2,605,000 100%(1)
* Asterisk denotes existing MOE stockholders, management or
affiliates.
(1) Rounded
The new management group selected and nominated from
the prior J2 management is set-out subsequently and described in
this material. The present shareholders of Mt. Olympus, after the
reverse split, now only constitute a remaining block of approximately
100,000 shares. Of this 100,000 shares, approximately 32.5% are
held by Mr. Madsen, another 17.4% by Alpine Securities and the
remaining 50% by the public shareholders of Mt. Olympus.
Management of Mt. Olympus has determined that the reverse
organization, as generally described above, and as approved by
majority shareholder consent, was in the best interest of all
shareholders, since the Company had no alternative business
purposes.
While management is aware that approval of this reverse
organization constitutes a substantial dilution and reduction of
sharehold ownership in the Company to existing shareholders,
management supported this acquisition, since the Company had no
other business activities or expectations. Moreover, management
believes that the terms and provisions of the reorganization are
generally fair since the sole assets and future business activities of
the Company are being contributed by the J2 members and the
Company would not otherwise have any expectation of any future
business activity.
ANY SHAREHOLDER WISHING TO REVIEW A COPY OF THE
STOCK-FOR-INTEREST AGREEMENT MAY OBTAIN A COPY AT
THE ADDRESS INDICATED ABOVE FOR THE MANAGEMENT.
The Company knows of no person or group, except the
following, which, as of the date of this Shareholder Statement,
beneficially owns and has the right to vote more than five percent
(5%) of the Company's Common Stock:
NAMES OF
BENEFICIAL OWNERS SHARES BENEFICIALLY OWNED PERCENT OF CLASS
RECOM, Inc. 660,500 25.4
SOMA, LLC 240,000 13.1
Kayne International LLC 340,000 13.1
Jack Lee 300,000 11.5
John Epperson 300,000 11.5
Intervest, LLC 150,000 5.8
NEWLY APPOINTED DIRECTORS
Management of Mt. Olympus indicates that the following
individuals constitutes J2's nominees elected to the Board of
Directors. The Board also received a proxy to appoint the fifth
member from the Majority Shareholder Resolution:
1. MR. JOHN (JACK) C. EPPERSON, JR.; Age 50. Mr.
Epperson resides with his wife and family in Auburn, California. Mr.
Epperson is a 1980 graduate of University of Northern Colorado with
an MA degree in public administration and a BA degree in Marketing
Science from Chaminade University in 1970.
Mr. Epperson currently serves as the Executive Vice President
of Recom Technologies, Inc. a related corporation, and has more
than 27 years of experience in the field of corporate management,
information technology and facility support services.
Mr. Epperson has also acted as an entrepreneur on the
founding of three successful information service companies and
currently serves on the Board of Directors of Miranet, Inc., Recom
International and Recom Applied Solutions. He has experience in
both corporate management and in project management with these
entities.
Prior to his affiliation with Recom Technologies, Mr. Epperson
was employed by Computer Sciences Corporation, Control Data
Corporation, VanGuard Technologies, and earlier served in the U.S.
Army as an ADP Plans and Operations Officer.
Mr. Epperson will continue as an Executive Vice President of
Recom Technologies and will serve the Company as a Board
Member on an as needed basis. It is also presently intended that
Mr. Epperson will be appointed by the Board as the President and
Chief Executive Officer in the reorganized J2 Technologies
Company.
2. MR. G.K. (JACK) LEE; Age 62. Mr. Lee resides with
his wife and family in San Jose California. Mr. Lee was an awarded
an MS Degree in Applied Mathematics from San Jose University in
1964 and a BS in Mathematics and Physics from University of British
Columbia in 1962.
Mr. Lee is a founder of Recom Technologies and has more
than 25 years experience in the information technologies services,
including 20 years of management. He also has extensive
experience in systems analysis and programming. Mr. Lee currently
serves as President of Recom and as a member of its Board of
Directors.
Prior to his affiliation with Recom, Mr. Lee was employed by
Sterling Softwares and was an independent consultant to NASA. He
has also served as President of the Asian American Manufacturing
Association and is a Board Member for Goodwill Industries and
Attention Control Systems, Inc.
It is intended that Mr. Lee will continue as an Officer and
Director of Recom and will devote such time as necessary as a
Director to the reorganized J2 and as its Secretary.
3. SYED Z. SHARIQ. Age. 49. Dr. Shariq resides with his
wife and family in Palo Alto, California. Dr. Shariq is a graduate of
Virginia Polytechnic Institute with a Ph.D. in Operations Research, an
MS in Applied and Mathematical Statistics from Rutgers University,
and BE in Mechanical Engineering from University of Jabalpur, India.
Mr. Shariq is Assistant to the Center Director for Strategic
Alliances at NASA Ames Research Center. He has served as
Director of Ames Commercial Technology Office with responsibilities
to develop collaborative programs between NASA, industry,
universities, states and regions. He was the founder of the agency's
commercialization initiatives that successfully raised over $90 million
in private sector capital. He has received extensive national
recognition for his successes in the commercialization of
technology.
Prior to joining NASA, Dr. Shariq served as a Senior
Associate with Montgomery Securities, a West Cost investment
banking firm specializing in corporate finance, venture capital, and
institutional trading services for emerging growth and technology
companies. He has also served as Director of research and
development and advisor of strategic business and policy for several
organizations.
He has served on the faculties of several universities,
including Duke and John Hopkins, and is a visiting faculty fellow at
Stanford University and University of Texas at Austin. He is an
active community volunteer in the Silicon Valley, serving as founding
member of the board of directors for four non-profit regional
business initiatives. He is a member of numerous advisory groups,
including the Governor's California Information Technology
Commission.
4. MR. ROBERT S. IGER, ESQ.; Age 57. Mr. Iger resides in
Irvine, California with his wife and family. Mr. Iger is a member of
the California Bar and obtained his JD Degree in 1993 from Western
State University. Mr. Iger also holds a Masters Degree in
Economics from the State University of New York at Buffalo in 1969.
Mr. Iger, in addition to practicing law since 1994, has served
on various boards and in executive positions with LAR Holding, Ltd.,
Oxford First Corporation and Xerox Corporation. Mr. Iger's practice
concentrates currently in corporate and securities law. He would
intend on serving the company on an as needed basis as a Director
and legal advisor.
MANAGEMENT & COMPENSATION
The following chart sets out the essential information
regarding the number of reverse split shares held by each director
and officer. No present decision on compensation to officers has
been made. Only Mr. Joyce, the Vice President of Operations, will
initially serve on a full-time basis. It should also be noted that Mt.
Olympus does not have any salaried or compensated positions at
the present time and any compensation to be paid will be paid
solely through the J2 subsidiary. Further, Directors do not receive
compensation at the present time for their services, but receive a
per diem payment for each meeting attended to be set by the
Board, presently $500 per meeting. At present it is intended that
only the Vice-President will be employed full-time as an officer, with
the other officers serving part-time on an as-needed basis. Mr.
Limpert will act as an interim President through November 30, 1998,
at which time Mr. Epperson will assume that office.
<PAGE>
Name of Director Number of Shares % of Issued & Outstanding
John Epperson, Jr.,(1)
Director & President 300,000 11.5%
G.K. (Jack) Lee,
Director, CFO &
Treasurer/Secretary 300,000 11.5%
Syed Shariq,
Director 5,000 .2%
Robert S. Iger, Esq.,
Director 0 0%
James (Jim) Joyce,
Vice President Operations 57,000 2.2%
(1) Appointment effective December 1, 1998. Mr. Limpert is continuing
to serve as interim President.
through November 30, 1998.
(2) Includes all shares legally or beneficially owned.
(3) There are presently no outstanding options, warrants or other share
acquisition rights.
APPOINTMENT OF INDEPENDENT AUDITORS
Management had determined pursuant to majority
shareholder consent to continue the appointment of the accounting
firm of Hansen, Barnett & Maxwell of Salt Lake City, Utah as the
continuing auditors for the Company for an interim term.
Management believes that it is important to retain the
historical auditors of the Company during this transitional period and
until consolidated financial statements can be prepared reflecting
the integration of the J2 subsidiary.
BY AUTHORITY OF THE BOARD OF DIRECTORS:
___________________________________
Mr. Andrew Limpert
President
A:\moe4\sharehol.inf
RECOM MANAGED SYSTEMS, INC.
BUSINESS SUMMARY
Leveraging Proven Performance in a Growth Market
Recom Managed Systems, Inc (RMSI) is a spin-off of Recom
Technologies, an 18 year old company with extensive experience
supporting the information technology requirements of large federal
customers, primarily NASA and Department of Energy. RMSI was
formed to leverage Recom Technologies' expertise in desktop and
network systems. RMSI' s primary goal is to become the primary
systems support partner for mid-size and small commercial customers
by offering predictable 'NASA' level reliability and quality.
The key strengths of this business opportunity are: a determined
focus on a very fertile market, a roll-up growth strategy applicable to
acquisitions, and a strong management team armed with proven
Recom processes and technologies. Recom Technologies is assigning
intellectual property assets to RMSI independently appraised at
$4,750,000. These assets provide a significant competitive advantage
in providing world class systems support.
RMSI will become a national service provider with Sacramento as the
first regional site. The Sacramento Valley is forecast to be the fastest
growing business region in the country in the next ten years and is
already experiencing rapid growth from technology companies.
Over the last three years, the top national and Sacramento based
companies offering desktop and networking products and services have
experienced over 50% annual growth.
RMSI plans to capture a significant market share by implementing a
remote support center, a user support web site and by extending
Recom's brand name recognition for quality and reliability. The remote
center and web site will allow RMSI to offer a level of technical support
not affordable by any one mid-size company.
Opportunity to Manage Total Cost of Ownership
Companies have more desktop assets than ever before, but exactly
how many assets, their location, their configuration or their total cost
are often unknown. Supporting these systems often depletes the
companies' ability to take advantage of important new technologies.
Many organizations react by hiring temporary staff, yet real expertise
and reliable results are hard to find. Increasingly companies are solving
this problem by outsourcing basic desktop and network support
services while refocusing their internal Information Technology staff on
implementing technologies that provide unique strategic business
advantages.
Besides managing total cost of ownership, other key outsourcing drivers
are:
the ability to retain, recruit and train the necessary systems
engineers and technicians,
the ability to make major capital reinvestments in systems every
three years,
sufficient IT staff to complete needed business growth projects
RMSI answers the total cost of ownership problem and other related IT
issues by providing the ability to selectively out-task' specific
desktop and network support responsibilities.
RMSI's services include:
Technology and Support Planning. RMSI offers technology
planning to help our clients assess how their business is
currently deploying and supporting distributed computing
systems. Our assessments identify opportunities for improving
desktop and network support functions.
Help Desk Services and User Training. RMSI's proactive
approach to user support for desktop and network applications
focuses on continuous improvement to maximize productivity.
Using industry best practices and tools, we'll help eliminate user
problems before they occur. RMSI's training courses increase
user productivity while decreasing support levels of effort.
Maintenance and Asset Management Services. RMSI's goal is
to minimize user downtime and reduce the cost of on-site
technical support through our umbrella maintenance services.
RMSI provides responsive, single-source maintenance for
desktop and network equipment. Our clients regain control of
their technology investment and manage cost through our
careful tracking of PC and networking assets.
Network Services. RMSI offers a single source for network
reengineering, architecture planning, integration, operations,
network management, administration and support. RMSI
provides these services for local and wide area network and
internet/intranet systems.
Full-Service Leasing. RMSI offers a full-service leasing
program for desktop, laptop and server computing. Our leasing,
rental, and financing services are contoured to our clients'
business needs. Our Full-Service Leasing program will combine
management services with flexible financing that lets our clients
upgrade or trade in assets at virtually any point during the lease
term.
IT Staffing. RMSI provides insource (client managed) or
outsource (RMSI managed) technical staff with a wide range of
capabilities including PowerBuilder, Oracle and SilverStream.
Services Strategy
RMSI will provide the same high quality technical support provided at
computing intensive government organizations like NASA, by using
proven best business practices and support technologies based on
proprietary and intellectual assets assigned by Recom Technologies.
RMSI provides specialized "out-tasking" service level agreements
designed to meet our clients' prioritized operational needs. Our
service agreements are assured by measuring and reporting critical
performance indicators such as system availability, system
performance, customer satisfaction, call and ticket volume, mean
response time and mean time-for-repair
RMSI's remote support center will have the capability to predict failures
and solve problems before they become apparent to the customer.
Real-time asset management will be used to determine the status of all
network components at any given time and this information will be
available for customer review through secure access on the user
support web site. Knowledge bases will be used by the remote support
staff for problem resolution and also made available to users for self
help' on the web site.
The remote support center, user support web site, and knowledge base
will better leverage our senior technical staff by reducing the time
needed for on-site visits. With remote control capabilities like remote
boot and software distribution, many systems problems will be resolved
without sending a technician on-site.
To further streamline our service, the RMSI team will provide a
knowledge base directly to our customers through our web site. This
web site allows customers to:
resolve many common problems themselves
obtain real time operational status of computing resources
submit trouble calls and track their resolution
receive training on standard desktop/network software
Support services will concentrate on desktop (Windows NT/95/98),
client/server network architectures (Microsoft NT and Novell Netware)
and internet/intranet systems.
System maintenance and management functions will include:
software installations, metering and updates
remote systems monitoring, optimization and tuning
system/data back-up and recovery
data security and virus protection
asset management
preventative maintenance
RMSI will provide a complete range of desktop support services that
eventually will include the lease of systems/services. Moreover,
utilizing Recom's proprietary processes and the latest remote agent
software, RMSI will provide superior services that are not currently
available to the mid-level market. All services will be
"institutionalized using Recom's already-developed procedures.
Recom will provide expertise gained through its participation on two
recently awarded Seat Management contracts with the federal
government. These contracts will provide services similar to the above
for government agencies. Government customers will pay a set monthly
fee per desktop workstation for all hardware, software, diagnostic,
repair, call center, asset management and upgrade support. That is,
complete network outsourcing. During the first year of operation, RMSI
intends to establish a similar model with its Sacramento customer base.
Market Analysis
The growth potential of this market is significant on a regional,
national and international level. International Data Corporation (IDC)
1998 study predicts that the support outsourcing market will grow from
$7.9 billion in 1997 to $17.4 billion in 2002 with AGR of 17.2%.
A survey of Northern California companies that offer network services
reveals that the competent companies are growing 100% per year.
Three companies are currently dominant and offer only time and
materials support. Also, the largest companies are hardware vendors
first and services suppliers second. No one offers mid-size and small
companies the services anticipated by RMSI.
RMSI is uniquely positioned to rapidly become a large player in this
market. Through its Recom connections it has a cadre of well-qualified
technical staff, in-place procedures, local support infrastructure and
knowledge of local businesses. In addition, it has the ability to
support the State of California through Recom's current California Master
Agreement for Services, thereby enabling state agencies to buy
services through a pre-negotiated contract vehicle.
Initially services will be provided in the Northern California region.
This market niche was selected for several reasons:
(i) Corporate networks (including local area, wide area, Internet
and Intranet connections) are a rapidly growing market
(ii) It has a rapidly growing customer base (The Sacramento
region is forecasted to be the fastest growing region in the
country and is already experiencing a large migration of
companies from the Silicon Valley)
(iii) Companies know that technical talent is expensive and
difficult to find
(iv) In-house expertise and small consulting firms seldom offer a
full range of capabilities to completely satisfy enterprise
networking requirements
(v) Large companies already have sufficient in house expertise
or outsource to large service providers; moderate size
companies rarely enjoy a consistent and reliable level of
support
(vi) Often customers must deal with several vendors for complete
network services. This inevitably leads to delays, "finger
pointing" and an unreliable level of support
Industry leaders providing similar service at the Fortune 500 / 1000
level are Hewlett Packard, IBM, EDS, Entex, and Vanstar. Each of
these companies have been acquiring mid-size, local service
companies in order to expand their national and global position.
Business Development
Initial market growth will be accomplished by acquiring several high
potential technology companies, as well as hiring and integrating
several established consultants. These additions will provide access to
technical staff and the needed infrastructure to provide remote systems
management.
The plan for company acquisitions is:
Desktop / Network Systems Integrators and VARs [several]
Training Center
Recruiting/Staffing Agency
Internet Service Provider
The Sacramento Valley is forecast to be the fastest growing business
region in the country in the next ten years and is already experiencing
growth from technology companies like Intel, Packard Bell, Hewlett
Packard and Oracle. In addition, Sacramento is receiving a large
migration of high tech companies from Silicon Valley. Over the last
three years, the top five Sacramento companies offering desktop and
networking products and services have experienced 100% annual
growth. Yet, the majority of the existing outsourcing market is
supported by small (1-5 person) consulting firms.
After RMSI is established in the Sacramento Valley, the regional
service concept will be expanded to other growing west coast business
regions such as: South Bay, San Francisco, Portland, Seattle, and
Vancouver.
Marketing Plan
The RMSI marketing plan consists of demonstrating the benefits of the
quality service that will be provided through the RMSI team at the
remote support center, web site as well as the field technicians.
Marketing and sales will be targeted through these main initiatives:
Acquiring and expanding a customer base through acquisitions
Obtaining customers through a marketing alliances with Capital
Communications
Pursuing companies having difficulty recruiting senior technical
staff
Direct marketing outsourcing opportunities
Establishing service alliances with hardware providers, Telcom
companies, and software vendors
Management
RMSI fields a strong, experienced management team and board of
directors.
John (Jack) C. Epperson, Chief Executive Officer
Mr. Epperson has more than 27 years of experience in the field of
corporate management, information technology and facility support
services. As Executive Vice President of Recom Technologies, he
currently supports Recom in an executive capacity with
responsibilitiesincluding strategic planning, business development,
and executive management.
Mr. Epperson is a founding principal in three successful information
services companies and serves as a board member for Miranet,
Incorporated, Recom International and Recom Applied Solutions. His
experience includes corporate management, project management,
consulting, operating systems analysis and programming, hardware
configuration and installation specifications, and applications
analysis.
Previous to his leadership of Recom Technologies and Epsilon
Automation, Mr. Epperson was employed by Computer Sciences
Corporation (CSC), Control Data Corporation (CDC), Vanguard
Technologies and served in the US Army as a ADP Plans and Operations
Officer. He holds an MA in Public Administration and a BA in
Marketing Science.
James P. Joyce, Vice President Operations
Mr. Joyce has more than 21 years of experience in providing
information systems services.
As Director of the IT Consulting Division within Recom Technologies,
he is responsible for establishing consulting services for
commercial businesses in the Sacramento region.
As Project Manager of a $10 million support services contract, Mr
Joyce managed more than 65 full-time and part-time team members.
Previous to his responsibilities with Recom Technologies, Mr. Joyce
had a distinguished career in Information Systems with the US Air
Force. His varied technical experience included teaching computer
science at the US Air Force Academy and managing a $25 million
automation effort in support of the F-117 Stealth Fighter.
Mr. Joyce holds a BS in Computer Science from Oregon State
University and an MS in Information Systems from the Air Force
Institute of Technology.
Mr. Joyce and Mr. Epperson have worked together in Recom Technologies
since 1993.
Staffing
During the first quarter of operations, these key management
positions will be filled: VP of Technology, VP of Finance and VP
of Sales and Marketing. These positions may be filled by the
principals of acquired companies.
Board of Directors
RMSI will be lead by the following Directors:
Jack Epperson is CEO of Recom Managed Systems and VP of
Recom Technologies.
Jack Lee is CEO of Recom Technologies. Mr. Lee, the founding
principal of Recom Technologies, has more than 25 years of
experience in Information Technology services, including 20 years of
management, five years of system analysis, and four years of
programming. As President of Recom, Mr. Lee grew the company
from a one-person operation to a $31 million company with 430
employees.
His performance record includes positions in supervision, project
management, technical group management, and contract management.
He is past president of Asian American Manufacturing Association and
is a serves as a board member for Goodwill Industries and Attention
Control Systems, Inc. Previous to his career with Recom, Mr. Lee was
employed by Sterling Software and as an independent consultant to
NASA. Mr. Lee has an MS degree in Applied Mathematics and BS in
Mathematics and Physics.
Dr. Syed Shariq is a graduate of Virginia Polytechnic Institute with a
Ph.D in Operations Research, an MS in Applied and Mathematical
Statistics from Rutgers University, and BE in Mechanical Engineering
from University of Jabalpur, India.
Dr. Shariq is Assistant to the Center Director for Strategic Alliances at
NASA Ames Research Center. He has served as Director of Ames
Commercial Technology Office with responsibilities to develop
collaborative programs between NASA, industry, universities, states
and regions. He was the founder of the agency's commercialization
initiatives that successfully raised over $90 million in private
sector capital. He has received extensive national recognition for
his successes in the commercialization of technology.
Prior to joining NASA, Dr. Shariq served as a Senior Associate with
Montgomery Securities, a West Coast investment banking firm specializing in
corporate finance, venture capital, and institutional trading services for
emerging growth and technology companies. He has also served as Director
of research and development and advisor of strategic business and policy
for several organizations.
He has served on the faculties of several universities, including Duke
and John Hopkins, and is a visiting faculty fellow at Stanford
University and University of Texas at Austin. He is an active community
volunteer in the Silicon Valley serving as founding member of the board
of directors for four non-profit regional business initiatives. He is a
member of numerous advisory groups,including the Governor's California
Information Technology Commission.
Robert Iger is a member of the California ar and obtained his JD
Degree from Western State University. Mr. Iger also holds a Masters
Degree in Economics from the State University of New York at Buffalo.
Mr. Iger has served on various boards and in executive positions with
LAR Holding Ltd., Oxford First Corporation, and Xerox Corporation.
Mr. Iger's practice concentrates in corporate and securities law. He
would intend on serving the company as a director and legal adviser.
Advisers
Tom Schultz has been the President and Chief Executive Officer of
Vista Technologies, Inc., a public surgical center firm form February
1996 to March 1997. Prior to joining Vista Tecnologies, Inc., Mr.
Schultz served as Chairman/Chief Executive Officer of Crystallume, a
NASDAQ-listed corporation, from February 1986 to January 1996.
Robert Kendrick founded Mackenzie Shea, Inc in 1995. Mr.
Kendrick has 15 years of experience including founding and operating
a multinational securities broker/dealer, advising on investment
banking, mergers and acquisitions advisory activities. His
expertise is in the area if inovative corporate financial
structuring and guiding companies throught the ever changing
regulatory environment. Mr. Kendrick has developed vital
relationships that provide access to capital and has an astute
comprehension of the essential broker/dealer
network throughout the U.S., Europe, Canada and South America.
Leveraging Assets from Recom Technologies
On August 15, 1998, Houlihan Valuation Advisors provided a report that
assessed the value of the proprietary and intellectual assets being
assigned by Recom Technologies to RMSI at $4,750,000.
Financial Analysis
Recom Managed Systems is a start-up company with proven business
processes and technologies. Based on first level and second level
funding, we project meaningful earnings
for 1999. Revenues for 1999 are projected to be over $10,000,000.
NON-FINANCIAL EXHIBIT B
STOCK-FOR-MEMBERSHIP INTEREST EXCHANGE
AGREEMENT
THIS STOCK-FOR-MEMBERSHIP INTEREST EXCHANGE
AGREEMENT (this "Agreement") is entered into as of August ,
1998, by and among Mt. Olympus Enterprises, Inc., a Delaware
corporation ("MOE"), Dennis Madsen, an individual ("Madsen")
and Andrew Limpert, an individual ("Limpert"), J2 Technologies, a
California limited liability company ("J2"), Jack Lee, and individual
("Lee"), John Epperson, Jr., an individual ("Epperson"),
Mackenzie Shea, Inc., a California corporation ("MSI"), Kayne
International Corporation, a Cayman Islands corporation
("Kayne"),Intervest, LLC, an Oregon limited liability company
("Intervest"), SOMA 2000, a California limited liability company
("SOMA") and Recom Technologies, Inc., a California corporation
("Recom"), Margaret Toth, an individual ("Toth"), James Joyce, an
individual ("Joyce"), David Lawrence, an individual ("Lawrence"),
Daniel Ostermiller, an individual ("Ostermiller"), Cal Lai, an
individual ("Lai") and Syed Shariq, an individual ("Shariq") (all
parties except MOE are collectively referred to as "J2 Owners"
and whenever all of the above are collectively referenced they
shall sometimes be designated as the "Parties"), with reference to
the following.
RECITALS
A. MOE is an inactive publicly traded corporation
desirous of acquiring operating businesses and technologies in
exchange for stock.
B. Dennis Madsen is a promoter of MOE and the
reorganization agent designated by MOE to effect the acquisition
of J2, Andrew Limpert is an officer, director and prior to the
closing will be a substantial shareholder of MOE.
C. J2 is a technology company owned by the J2
Owners, which is in the business of development, distribution and
consulting of computer hardware and software.
D. MOE and the J2 Owners desire to exchange all of
the membership interests in J2 for the majority of the outstanding
common stock of MOE, in accordance with the terms of this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing
premises, the provisions set forth below and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Exchange of Shares. In consideration of and in
exchange for all of the outstanding membership interests in J2,
MOE shall exchange for and deliver to the J2 Owners, the
number of shares of common stock of MOE as set forth below
(the "Exchange Shares"). At the conclusion of the exchange,
MOE will own all or substantially all of the outstanding
membership interests of J2 and the J2 Owners will own the
majority of the outstanding shares of common stock of MOE, in
the amounts set forth below:
Number of Number of
J2 Owners J2 Membership Units Exchange Shares Received
Lee 300,000 units 300,000 shares
Epperson 300,000 units 300,000 shares
Recom 660,500 units 660,500 shares
MSI 420,000 units 420,000 shares
Kayne 420,000 units 420,000 shares
Joyce 57,000 units 57,000 shares
Toth 7,500 units 7,500 shares
Lawrence 7,500 units 7,500 shares
Ostermiller 7,500 units 7,500 shares
Lai 15,000 units 15,000 shares
Shariq 5,000 units 5,000 shares
2. Reorganization. Immediately prior to (a) the
closing of the within stock exchange, and (b) the issuance of the
Exchange Shares set forth above, and as a contingency to the
closing of the stock exchange as contemplated by this Agreement
(the "Closing"), MOE's shareholders shall have approved, at a
duly noticed and held shareholder meeting, a reverse split of its
common stock resulting in each 43 outstanding shares of its
commons stock being reduced to one (1) share (the "43:1
Reverse Split"); the change of the name of MOE to J2
Technologies, Inc.; and the terms of this Agreement.
Notwithstanding the foregoing, prior to the issuance of the
Exchange Shares to the J2 Owners, there shall be not more than
430,000 shares of MOE's equity securities outstanding, including
securities convertible into common or preferred shares.
3. Capital Structure After Exchange. Effective at the
Closing, there shall be a total of 2,630,000 shares of reverse split
common stock issued as follows:
Issuee No.Of Shares
Recom 660,500
Lee 300,000
Epperson 300,000
MSI 420,000
Kayne 420,000
Joyce 57,000
Toth 7,500
Lawrence 7,500
Ostermiller 7,500
Lai 15,000
Shariq 5,000
*Existing MOE Affiliates 330,000
MOE Public Shareholders 100,000
*The shares issued to the existing MOE affiliates include
25,000 shares issued to prior directors and counsel for MOE after
the reverse split for services provided; 100,000 reverse split
shares to Dennis Madsen for services and advances; 105,000
reverse-split shares to Andrew Limpert for services and
advances; 100,000 to the Benchmark Group Ltd. for
consulting/referral services. Upon the issuance of the foregoing
shares to prior management and affiliates, MOE affirms that there
are no other outstanding stock, stock rights charges or claims
owing to any affiliate, officer, director or shareholder of MOE by
MOE.
4. Assumption of Debt. MOE shall assume the
obligation to repay that certain promissory note from J2 to Kayne,
MSI, Epperson and Lee, in the outstanding principal amount of
$150,000 (the "Note"). The Note shall be paid from the first funds
raised in any financing after the date of this Agreement.
5. Due Diligence Period. J2 shall have until
, 1998 (the "Review Date") to complete its due diligence of MOE.
MOE and Madsen shall provide all information required under this
Agreement and all information on MOE and its shareholders
reasonably requested by the J2 Owners. After the Review Date,
provided J2 or the J2 Owners have not canceled this Agreement
for reasonable cause, there shall be no contingencies to the
Closing, except as set forth in Section 13 of this Agreement.
6. Expenses. At the Closing, J2 shall pay the costs of
the exchange which are: (i) the legal costs for the preparation
and filing of the most current 10-Q and 10-K reports as filed, in
the amount of $4,000, and the accounting costs in the amount of
$4,115; (ii) $4,500 in legal fees to complete the proxy and
prepare and file the second quarter 1998 10-Q and 8-K reports;
and (iii) accounting and transfer agent fees of approximately
$2,000.
7. Resignation of Board of Directors. At the
Closing, each of the current members of MOE's Board of
Directors shall tender their resignation, effective as of the
Closing.
8. Shareholder Meeting and Approval. The MOE
shareholder meeting to ratify this Agreement, elect new Board
Members as set out below, change the name to J2 Technologies,
Inc. and to approve the 43:1 reverse split will be noticed within
ten (10) days of the Review Date and held within 30 days of such
date, provided that no recission notice is given by any of the J2
parties. The Closing will be deemed to occur concurrently upon
the adoption of the foregoing matters by the MOE shareholders.
The following will constitute the J2 nominees for election at the
shareholder meeting:
Jack Lee
Jack Epperson
Tom Schultz
Cal Lai
Robert Iger
9. Closing.
a. The Closing contemplated by this Agreement
shall be held at the offices of Boyd & Chang, LLP, 19900
MacArthur Boulevard, Suite 660, Irvine, California 92612, upon
the conclusion of the shareholder meeting.
b. After the Closing Date, and from time to time
thereafter, the parties to this Agreement shall execute such
additional instruments and take such other action as either party
may reasonably request in order to effectuate the transactions
contemplated by this Agreement.
10. Resignation of Officers. At the Closing, MOE shall
deliver the resignation of each of the existing officers of MOE and
prior to the resignation of MOE's existing Board of Directors, such
Board shall have appointed the following individuals to the offices
set forth across from their name:
Name Office
Jack Epperson President, ChiefExecutive Officer
Jack Lee Secretary
Tom Schultz ChiefFinancial Officer & Treasurer
James Joyce Vice President of Operations
11. Representations and Warranties of MOE. MOE
hereby represents and warrants to J2 and the J2 Owners as
follows:
a. Organization and Standing: Articles and
Bylaws. MOE is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to carry on its
businesses as now conducted and as proposed to be conducted
in the future. MOE is not presently qualified to do business as a
foreign corporation in any jurisdiction, except Utah, and the failure
to be so qualified will not have a material adverse effect on its
business as now conducted and as proposed to be conducted in
the future.
b. Corporate Power. MOE has now, and will
have at the Closing Date, all requisite corporate power to enter
into this Agreement and to sell and issue the Exchange Shares.
This Agreement constitutes a valid and binding obligations of
MOE enforceable in accordance with its respective terms, except
as the same may be limited by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the
enforcement of creditors' rights.
c. Subsidiaries. MOE does not control, directly
or indirectly, any other corporation, association, or business
entity.
d. Capitalization. The authorized capital stock
of MOE is 50,000,000 shares of Common Stock, $.001 par value,
of which 4,300,000 shares are issued and outstanding.
Immediately prior to the Closing there shall not be more than
430,000 shares of MOE's common stock outstanding. All such
issued and outstanding shares have been or will be duly
authorized and validly issued, are or will be fully paid and
nonassessable, and were or will be issued in compliance with all
applicable state and federal laws concerning the issuance of
securities. There are no outstanding rights (including conversion
or preemptive rights), warrants, conversion rights, options or
agreement (oral or in writing) for the purchase or acquisition from
MOE of any shares of its capital stock, except as identified in
paragraph 3 of this Agreement, i.e. the "affiliate shares.".
e. Authorization.
(1) Corporate Action. All corporate action
on the part of MOE, its officers, directors, and shareholders
necessary for the authorization, execution and delivery of this
Agreement, the sale and issuance of the Exchange Shares and
the issuance of the Common Stock issuable upon conversion of
the Exchange Shares and the performance of MOE's obligations
hereunder has been taken or will be taken prior to the Closing.
(2) Valid Issuance. The Exchange Shares,
when issued in compliance with the provisions of this Agreement,
will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances
caused or created by MOE; provided, however, that all such
shares will be issued and labeled as restricted securities and may
be subject to standard and customary restrictions on the transfer
of restricted securities under state and federal securities laws as
set forth herein, and as may be required by future changes in
such laws.
(3) No Preemptive Rights. No person has
any right of first refusal or any preemptive rights in connection
with the issuance of the Exchange Shares or any future
issuances of securities by MOE.
f. Compliance with Other Instruments, None
Burdensome, etc. MOE is not in violation of any term of its
Certificate of Incorporation or Bylaws, nor is MOE in violation of
or in default in any material respect under the terms of any
mortgage, indenture, contract, agreement, instrument, judgment,
or decree, the violation of which would have a material adverse
effect on MOE as a whole, and to the knowledge of MOE, is not
in violation of any order, statute, rule, or regulation applicable to
MOE, the violation of which would have a material adverse effect
on MOE. The execution, delivery and performance of and
compliance with this Agreement and the issuance and sale of the
Exchange Shares will not (a) result in any such violation, or (b)
be in conflict with or constitute a default under any such term, or
(c) result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the properties or assets of
MOE pursuant to any such term. To the knowledge of MOE,
there is no such term which materially adversely affects, or, so far
as MOE may now foresee, in the future may materially adversely
affect, the business, condition, affairs, or operations of MOE or
any of its properties or assets.
g. Litigation, etc. There is no known action,
proceeding, or investigation of any kind or nature, civil, criminal or
administrative, pending or currently threatened against MOE or,
to knowledge, its officers, directors, shareholders, employees or
consultants of MOE (or, to knowledge, any basis therefore or
threat thereof). MOE is not a party to or subject to the provisions
of any order, writ, injunction, judgment, or decree of any court or
government agency or instrumentality. There is no action, suit,
proceeding, or investigation by MOE currently pending, or which
MOE currently intends to initiate.
h. Government Consent, etc. Based in part
upon the representations and warranties of J2 and the J2 Owners
in Section 12 herein, no consent, approval or authorization of or
designation, declaration, or filing with any governmental authority
on the par of MOE is required in connection with: (a) the valid
execution and delivery or this Agreement; or (b) the offer, sale, or
issuance of the Exchange Shares, or (c) the obtaining of the
consents, permits, and waivers specified in subsection 11(a)(2)
hereof, except the requirement to file Articles of Amendment to
evidence the agreed upon reorganization matters.
i. Taxes. MOE has filed or will file by the
Review Date all tax returns that are required to have been filed
with the appropriate federal, state, county, and local
governmental agencies or instrumentalities, except where the
failure to do so would not have a material adverse effect upon
MOE, taken as a whole. MOE has paid or established reserves
for all material income, franchise, and other taxes, assessments,
governmental charges, penalties, interest, and fines due and
payable by them on or before the Closing. There is no pending
dispute with any taxing authority relating to any of such returns
and MOE has not knowledge of any proposed liability for any tax
to be imposed upon the properties or assets of MOE.
j. Title. MOE owns its properties and assets,
including the properties and assets reflected in the Financial
Statement, if any, free and clear of all liens, mortgages, loans, or
encumbrances, except liens for current taxes not yet due and
payable and for such minor encumbrances and liens which arise
in the ordinary course of ownership or use of such properties and
assets and which do not materially impair MOE's operation. With
respect to the property and assets leased by MOE, if any, MOE is
in compliance with such leases and holds valid leasehold
interests free and clear of any liens, claims, or encumbrances.
k. Financial Statements. MOE has delivered to
J2 and the J2 Owners its audited financial statements for the
years of 1996, 1997 and unaudited 1998 First Quarter financial
statements (hereinafter referred to as the "Financial Statements").
The Financial Statements are complete and correct in all material
respects and have been prepared on a consistent basis
throughout the relevant periods. The Financial Statements
accurately set out and describe the financial condition and
operating results of MOE as of the dates, and during the periods,
indicated therein. Except as set forth in the Financial Statements,
as of the Closing Date MOE has no liabilities of any nature
(matured or unmatured, fixed or contingent). MOE maintains and
will continue to maintain a standard system of accounting
established and administered in accordance with generally
accepted accounting principles.
l. Absence of Changes. Except as
contemplated by this Agreement since the date of the balance
sheet provided: (a) MOE has not entered into any transaction
which was not in the ordinary course of business, (b) there has
been no material adverse change in the condition (financial or
otherwise) of the business, property, assets, or liabilities of MOE
other than changes in the ordinary course of business, none of
which, individually or in the aggregate, has been materially
adverse, (c) there has been no damage to, destruction or, or loss
of physical property (whether or not covered by insurance)
materially adversely affecting the assets, financial condition,
operation results, business, or operations of MOE, (d) MOE has
not declared or paid any dividend or made any distribution on its
stock, or redeemed, purchased, or otherwise acquired any of its
stock, (e) MOE has not materially changed any compensation
arrangement or agreement with any of its key employees or
executive officers, or materially change the rate of pay of its
employees as a group, (f) MOE has not received notice that there
has been a cancellation of an order of MOE's products or a loss
of a customer of MOE, the cancellation or loss of which would
materially adversely affect the business of MOE, (g) MOE has not
changed or amended any material contract by which MOE or any
or its assets are bound or subject, (h) there has been no
resignation or termination or employment of any key officer or
employee or MOE and MOE does not know of any impending
resignation or termination of employment of any such officer or
employee that if consummated would have a material adverse
effect on the business or MOE, (i) there has been no labor
dispute involving MOE or its employees and none is pending or,
to the best of MOE's knowledge, threatened, (j) there has been
no change, except in the ordinary course of business, in the
material contingent obligations of MOE (nor in any contingent
obligation of MOE regarding any director, shareholder, key
employee, or officer of MOE) by way of guaranty, endorsement,
indemnity, warranty, or otherwise, (k) there have been no loans
made by MOE to any of its employees, officers, or directors other
than travel advances and other advances made in the ordinary
course of business, (l) there has been no waiver by MOE of a
valuable right or of a material debt owing to it, (m) there has not
been any satisfaction or discharge of any lien, claims,
encumbrance, or any payment of any obligation by MOE, except
in the ordinary course of business and which is not material to
the assets, properties, financial condition, operation results, or
business of MOE, and (n) to the best of the knowledge of MOE,
there has been no other event or condition of any character
pertaining to and materially adversely affecting the assets or
business of MOE. MOE HAS REPRESENTED TO THE J2
PARTIES THAT IT HAS NO BUSINESS, ASSETS OR
FACILITIES.
m. Outstanding Indebtedness. MOE has no
indebtedness for borrowed money which it has directly or
indirectly created, incurred, assumed, or guaranteed, or with
respect to which it has otherwise become liable, directly or
indirectly, other than obligation discharged through the issuance
of stock described in paragraph 3 to MOE affiliates. MOE has no
liability or obligation, absolute or contingent, which is not shown
or provided for in the Financial Statements.
n. Certain Transactions. MOE is not indebted,
directly or indirectly, to any of its officers, directors, or
shareholders or to their spouses or children, in any amount
whatsoever other than to be discharged pursuant to the terms
described in this Agreement; and none of said officers, directors
or, to the best of MOE's knowledge, shareholders, or any
member of their immediate families, are indebted to MOE or have
any direct or indirect ownership interest in any firm or corporation
with which MOE is affiliated or with which MOE has a business
relationship (except as a holder of securities of a corporation
whose securities are publicly traded and which is subject to the
reporting requirements of the Securities Exchange Act of 1934, to
the extent of owning not more than two percent (2%) of the
issued and outstanding securities of such corporation). No such
officer, directors, or shareholder, or any member of their
immediate families, is, directly or indirectly, interested in any
material contract with MOE. MOE is not a guarantor or
indemnitor of any indebtedness of any person, firm or
corporation.
o. Corporate Documents: Minute Books. The
Certificate of Incorporation and Bylaws of MOE are in the form
previously provided to J2 and J2 Owners. The minute books of
MOE previously made available to J2 and J2 Owners contain a
complete summary of all meetings of directors and shareholders
during the tenure of the current management, and reflect all
transactions referred to is such minutes accurately in all material
respects.
p. Disclosure. No representation or warranty by
MOE in this Agreement, or in any document or certificate
furnished or to be furnished to J2 and the J2 Owners pursuant
hereto or in connection with the transactions contemplated
hereby, when taken together, contains or will contain any untrue
statement of a material fact or omits or will omit a material fact
necessary to make the statements made herein and therein, not
misleading.
q. Shareholder Agreements. There are no
agreements or arrangements between MOE and any of MOE's
shareholders or to MOE's knowledge, between any of MOE's
shareholders, which materially and adversely affect any
shareholder's ability or right to freely alienate or vote such
shares, and to MOE's knowledge, none of MOE's shareholders is
affiliated with or has any agreements or arrangements with any
customer of or supplier to MOE.
r. Registration Rights. MOE has not granted or
agreed to grant any registration rights, including piggyback rights,
to any person or entity.
s. Contracts. MOE is not a party to or bound by
any contract, agreement, instrument, lease, license, arrangement,
or understanding, or subject to any charter or other restriction.
t. SEC Filings. MOE has represented, and J2
understands and agrees, that MOE has filed all reports required
by the Securities and Exchange of 1934 (" 34' Net Filings") from
December 1996 through the present, though sometimes on a
delinquent basis. Prior to 1996 there was a substantial period
where no 34 Act Filings were made. MOE believes, in good faith,
that its 34 Act Filings since 1996 have been accepted by the
Securities and Exchange Commission ("SEC") and have cured or
obviated the need to file reports prior to such date. However,
MOE & J2 mutually agree and understand the MOE cannot and
does not make any warranty or representation as to any future
position of the SEC with regards to prior delinquent filings.
12. Representations and Warranties of J2 and the J2
Owners and Restrictions on Transfer Imposed by the
Securities Act.
J2 and the J2 Owners represent and warrant MOE as
follows:
a. Investment Intent. This Agreement is made
with J2 and the J2 Owners in reliance upon their representations
to MOE, evidenced by their execution of this Agreement, that J2
and the J2 Owners are acquiring the Exchange Shares for
investment for their own account, not as a nominee or agent, and
not with a view to or for resale in connection with, any distribution
or public offering thereof within the meaning of the Securities Act
and applicable law. J2 and the J2 Owners have the full right,
power, and authority to enter into and perform this Agreement.
b. Exchange Shares Not Registered. J2 and the
J2 Owners understand and acknowledge that the offering of the
Exchange Shares pursuant to this Agreement will not be
registered under the Securities Act or qualified under the
applicable law on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from
registration under the Securities Act pursuant to Section 4(2)
thereof and exempt from registration pursuant to applicable state
law and other applicable state Exchange Shares or blue sky laws,
and that MOE's reliance upon such exemptions is predicated
upon such Purchaser's representations set forth in this
Agreement. J2 and the J2 Owners acknowledge and understand
that the Exchange Shares must be held indefinitely unless the
Exchange Shares are subsequently registered under the
Securities Act and qualified under the state law or an exemption
from such registration and such qualification is available.
c. Knowledge and Experience. J2 and the J2
Owners (i) have such knowledge and experience in financial and
business matters as to be capable of evaluation the merits and
risks of their prospective investment in the Exchange Shares; (ii)
have been furnished with and had access to such information as
J2 and the J2 Owners have considered necessary to make a
determination as to the purchase of the Exchange Shares
together with such additional information as is necessary to verify
the accuracy of the information supplied; (iii) have had all
questions which have been asked by J2 and the J2 Owners
satisfactorily answered by MOE; and (iv) have not been offered
the Exchange Shares by any form of advertisement, article,
notice, or other communication published in any newspaper,
magazine, or similar medium; or broadcast over television or
radio; or any seminar or meeting whose attendees have been
invited by any such medium.
d. Not Organized to Purchase. J2 has not been
organized for the purpose of purchasing the Exchange Shares.
e. Audited Financials. J2 will supply to MOE on
or prior to the Review Date audited financial statements through
not earlier than the First Quarter of 1998 and extending back for
a period of not less than two years or inception as a condition to
closing.
13. Conditions to Closing.
a. Conditions to J2 and the J2 Owner's
Obligations. The obligations of J2 and the J2 Owners to
purchase and exchange the Exchange Shares at the Closing are
subject to the fulfillment to its satisfaction, on or prior to the
Closing Date, of the following conditions:
(1) Representations and Warranties
Correct; Performance of Obligations. The representations and
warranties made by MOE in Section 11 hereof shall be true and
correct when made, and on the Closing Date. MOE's business
and assets shall not have been adversely affected in any material
way prior to the Closing Date. MOE shall have performed in all
material respects all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing Date.
(2) Consents and Waivers. MOE shall
have in a timely fashion any and all consents, permits, and
waivers, including without limitation, Board of Directors' approval
and shareholder's approval, necessary or appropriate for
consummation of the transactions contemplated by this
Agreement.
(3) Reverse Split. The 43:1 Reverse Split
shall have been conducted and closed.
(4) Resignation of Directors and Officers.
MOE's directors and officers shall have resigned.
(5) Shareholder Approval. The
Shareholder Approval shall have been effected.
(6) Election of Officers. MOE's Board of
Directors shall have elected new officers as contemplated in
section 9 of this Agreement.
b. Conditions to Obligations of MOE. MOE's obligation
to sell and issue the Exchange Shares at the Closing is subject to
the condition that the representations and warranties made by J2
and the J2 Owners in Section 12 hereof shall be true and correct
when made, and on the Closing Date.
14. Notices. Any and all notices or other
communications or deliveries required or permitted to be given or
made pursuant to any of the provisions of this Agreement shall
be deemed to have been duly given or made for all purposes if
sent by certified or registered mail, return receipt requested, and
postage prepaid, Federal Express, Express Mail, hand delivered
or sent by telegraph, telex or facsimile with confirmation as
follows:
If to MOE: Mt. Olympus Enterprises, Inc.
c/o Jensen, Duffin, Carmen, Dibb & Jackson
311 South State Street, Suite 380
Salt Lake City, CA 84111
Telephone: (801) 531--6600
Facsimile: (801) 521-3731
If to J2 Owners: Tom Schultz
833 Orchid Place
Los Altos, CA 94024
Telephone: (650) 941-8424
Facsimile: (650) 941-7370
or at such other address as any Party may specify by notice
given to other Party in accordance with this Article. The date of
giving of any such notice shall be the date of the actual receipt
thereof.
15. Waivers and Amendments. With the written
consent of the record holder of at least a majority of the
Exchange Shares, the obligations of MOE and the rights of the
holders of the Exchange Shares under this Agreement may be
modified, waived or amended (either generally or in a particular
instance); provided, however, that no such modification, waiver or
amendment shall reduce the aforesaid proportion of Exchange
Shares. Upon the effectuation of each such waiver or
amendment, MOE shall promptly give written notice thereof to the
record holders of the Exchange Shares who have not previously
consented thereto in writing. Except to the extent provided in this
subsection (a), this Agreement or any provision hereof may be
amended, waived, discharged, or terminated only by a statement
in writing signed by the party against which enforcement of the
amendment, waiver, discharge, or termination is sought.
16. Survival. The representations, warranties,
covenants and agreements made herein shall survive the Closing
of the transactions contemplated hereby, notwithstanding any
investigation made by J2 and the J2 Owners. All statements as
to factual matters contained in any certificate or other instrument
delivered by or on behalf of MOE pursuant hereto or in
connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by MOE hereunder
as of the date of such certificate amount.
17. Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto.
18. Entire Agreement. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to
the subjects hereof and thereof and they supersede, merge, and
render void every other prior written and/or oral understanding or
agreement among or between the parties hereto.
19. Finder's Fees and Other Fees
a. MOE (i) represents and warrants that it
has not retained any finder or broker in connection with the
transactions contemplated by this Agreement, and (ii) hereby
agrees to indemnify and to hold J2 and the J2 Owners harmless
from and against any liability for commission or compensation in
the nature of a finder's fee to any broker or other person or firm
(and the costs and expenses of defending against such liability or
asserted liability) for which MOE, or any of its employees or
representatives, is responsible.
b. J2 and the J2 Owners (i) represent and
warrant that they have not retained any finder or broker in
connection with the transactions contemplated by this Agreement,
and (ii) hereby agree to indemnify and to hold MOE harmless
from and against any liability for any commission or
compensation in the nature of a finder's fee to any broker or
other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which J2 or the J2
Owner's are responsible.
20. Governing Law: Disputes. This Agreement will be
in accordance with California law, including all matters of
construction, validity, performance and enforcement, without
giving effect to any principles of conflict of laws. Any dispute or
proceeding concerning this Agreement will be resolved by binding
arbitration to be held in San Francisco County, California. Any
party may demand arbitration through written notice sent by
certified mail to the other (an "Arbitration Demand"). Within
fifteen (15) days after the date that the Arbitration Demand is first
mailed, each of the parties will confer to select a mutually
acceptable arbitrator or arbitrators from the Judicial Arbitration
and Mediation Service ("JAMS"). There shall be a panel of three
arbitrators, unless objected to by one or both parties. If multiple
arbitrators, the parties shall agree upon any odd number. If the
arbitrator or arbitrators so selected is unavailable, the parties will
confer to select another arbitrator or arbitrators. If the parties
cannot mutually agree to the number or selection of an arbitrator,
or if one party refuses to participate in the selection process,
JAMS will appoint an arbitrator. The arbitrator will be governed
by the provisions of this Agreement rather than the rules of
JAMS.
If JAMS is unable or unwilling to select an arbitrator,
the Presiding Judge of the San Francisco County Superior court
will select an arbitrator upon the request of either party, and such
selection will be binding on the parties. The arbitrator or
arbitrators so selected will schedule the arbitration hearing within
sixty (60) days after he, she, or they are is first selected. The
parties will be permitted written discovery and one deposition
each. The arbitrator or arbitrators will have authority to enter a
binding judgment even if the parties do not appear at the
arbitration and may also grant any remedy or relief that the
arbitrator reasonably believes to be just or appropriate, provided
that such remedy or relief is within the scope of this Agreement.
If there be more than one arbitrator, all decisions
shall be made by majority vote.
All fees and expenses of the arbitration will be paid
equally by the parties participating in the arbitration. At the
conclusion of the arbitration, the arbitrator or arbitrators will award
the prevailing party reasonable costs and Attorney's Fees,
including all arbitration costs. If the arbitration award is made,
the prevailing party may convert the award into a judgment and
execute upon that judgment.
21. Attorney's Fees. If any arbitration, litigation, action,
suit or other proceeding is instituted to remedy, prevent or obtain
relief from a breach of this Agreement, in relation to a breach of
this Agreement or pertaining to a declaration of rights under this
Agreement, the prevailing party will recover all such party's
reasonable attorney's fees incurred in each and every such
action, suit or other proceeding, including any and all appeals or
petitioner therefrom.
22. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the
same instrument.
23. Severability. Each provision of this Agreement is
intended to be severable and if any term or provision herein is
determined invalid or unenforceable for any reason, such illegality
or invalidity shall not affect the validity of the remainder of this
Agreement and, wherever possible, intent shall be given to the
invalid or unenforceable provision.
24. Entire Agreement. This Agreement contains the
entire and complete understanding between the parties
concerning its subject matter and all representations, agreements,
arrangements and understandings between or among the parties,
whether oral or written, have been fully merged herein and are
superseded hereby.
25. Remedies. All rights, remedies, undertakings,
obligations, options, covenants, conditions and agreements
contained in this Agreement shall be cumulative and no one of
them shall be exclusive of any other.
26. Successors. Subject to the foregoing paragraph,
this Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, legatees, legal
representatives, successors and permitted assigns.
27. Interpretation. The language in all parts of this
Agreement shall be in all cases construed simply according to its
fair meaning and not strictly for or against any party. Whenever
the context requires, all words used in the singular will be
construed to have been used in the plural, and vice versa, and
each gender will include any other gender. Any error in syntax,
grammar, spelling or usage shall be given reasonable
interpretation and application. The captions of the paragraphs of
this Agreement ar for convenience only and shall not affect the
construction or interpretation of any of the provisions herein.
28. Benefit of Agreement. This Agreement is for the
sole and exclusive benefit of the signatories hereto and nothing in
this Agreement shall be construed to give any person or entity
other than the parties hereto any legal or equitable right, claim or
remedy.
29. Limitation on Actions. Any claim, dispute,
controversy or action for breach relative to this Agreement ar fully
incorporated into this Agreement by reference. Unless expressly
set forth otherwise herein, all references herein to a "day,"
"month," or "year" shall be deemed to be a reference to a
calendar day, month or year, as the case may be. All cross-references
herein shall refer to provisions within this Agreement,
and shall not be deemed to be references to the overall
transaction or to any other agreement or document.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
"MOE" MT. OLYMPUS
ENTERPRISE, INC., a Delaware corporation
By:______________________________
Its:______________________________
"J2 OWNERS" J2
TECHNOLOGIES, a California limitedliability company
By:______________________________
Jack Epperson,
Manager
__________________________________
JACK LEE, an individual
___________________________________
JACK EPERSON, Jr. an individual
MACKENZIE SHEA, INC., a California
Corporation
By:_________________________________
Its:___________________________________
REMCO MANAGED TECHNOLOGIES, INC., a
California Coporation
By:_________________________________
Its:___________________________________
___________________________________
JAMES JOYCE, an
individual
_____________________________________
MARGARET TOTH, an individual
____________________________________
DAVID LAWRENCE, an individual
_____________________________________
DANIEL OSTERMILLER, an individual
_____________________________________
CAL LAI, an individual
____________________________________
SYED SHARIQ, an individual
MOE4/MOEJ2.REO
NON-FINANCIAL EXHIBIT C
MAJORITY SHAREHOLDER CONSENT
Mt. Olympus Enterprises, Inc.
October 30, 1998
The undersigned collectively represent the holders of a majority of the
issued and outstanding shares of Mt. Olympus Enterprises, Inc., a Delaware
Corporation ("MOE").
In accordance with Delaware Law, the undersigned majority shareholders
understand and agree that they may waive notice of a shareholders' meeting
and agree to the adoption of any action or election of directors which could
be enacted or voted upon by a majority of the MOE shareholders at a
shareholder meeting regularly called for such purposes. The undersigned
hereby wish to exercise such right and do hereby waive notice
of a Special Shareholders Meeting and the opportunity to vote at such meeting
and hereby express, by their majority consent, approval to the following
corporate actions and elections requiring shareholder consent and approval:
1. Approve that the Board of Directors (as now constituted or as may
subsequently be constituted pursuant to the Stock- for- Membership
Exchange Agreement) proposal to change the name of the corporation
of record to RECOM Managed Systems, Inc., or any reasonable
derivation of such name as determined by the Board.
2. Even though not required under Delaware Law, the undersigned
shareholders wish to ratify, as part of the Stock-for-Membership
Agreement, the reverse split by the Board of Directors of the
Company's shares on a Forty Three to One (43:1) ratio, including
the shares of the undersigned.
3. Ratify the change of business purpose and location of MOE to the
business currently conducted by J2 Technologies, Inc. (J2) at its
current place of business in or around Roseville, California.
4. Increasing the number of Directors to five. Approve the election
of the following nominees by J2 to be the new Board of Directors of
the Company (RECOM Managed Systems, Inc.):
(a) Jack Lee
(b) John Epperson, Jr.
(c) Dr. Syed Shariq
(d) Robert Iger
(e) Proxy to Board to appoint fifth member
5. Ratify all other terms and provisions of the Stock-for-Membership
Agreement between the Company and J2.
Each of the undersigned fully cast all of their votes which they are
entitled to vote in favor of the election and appointment of the
foregoing to the Board of Directors, subject only to the closing of the
Stock-for-Membership Agreement with J2.
<PAGE>
While not requiring shareholder approval, the undersigned also wish to
ratify and affirm the Board's decision to issue out, as part of the
reorganization with J2, two million one hundred thousand (2,100,000)
shares of the Company's reverse split stock to the J2 members as part of
the Stock-for-Membership Agreement.
The undersigned represent they have been fully informed of the terms of
the Stock-for-Membership Agreement between MOE and J2 and have been given an
opportunity to review such Agreement before entering this informed consent.
The undersigned shareholders further represent that they have had full
opportunity to ask questions of and discuss the proposed matters listed
above, and the other terms and conditions of the Stock-for-Membership
Agreement, with MOE management and are fully satisfied with the
fact that they have been given full and complete disclosure of such
transaction and herewith voluntarily and willfully approve such transaction
of their free will and accord. Further, the undersigned understand that
they may consent to such action or may withhold their consent and that
they are fully entitled to review this decision with outside legal or
accounting experts of their own choosing and have either done so, or
knowingly elected not to do so.
Finally, the undersigned shareholders understand and agree through their
majority approval of the above matters that a formal meeting and proxy will
not be solicited of the other shareholders in the Company; but, in accordance
with the By-Laws of the Company and Delaware Law, notice of the undersigned
majority consent and the actions taken pursuant to this consent will be
distributed to all shareholders of the Company by the new management group.
WITNESS the signature and date of each of the undersigned shareholders
of the Company constituting a majority of all issued and outstanding shares
on this 30th day of October, 1998.
SHAREHOLDERS:
750,000
Mark Peterson Date 10/30/98 # of Shares
President,
Alpine Securities Corp.
1,400,000
Dennis Madsen Date 10/30/98 # of Shares
300,000
Robert Lewis Date 10/30/98 # of Shares
RECOM MANAGED SYSTEMS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
MT. OLYMPUS ENTERPRISES, INC.
Condensed Balance Sheet - September 30, 1998 . . . . . . . . . . F-2
Condensed Statements of Operations for the Three Months and
the Nine Months Ended September 30, 1998 and 1997 and for the
Cumulative Period from January 19, 1987 (Date of Inception)
through September 30, 1998. . . . . . . . . . . . . . . . . . . F-3
Condensed Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and 1997 and for the Cumulative Period
from January 19, 1987 (Date of Inception) through
September 30, 1998. . . . . . . . . . . . . . . . . . . . . . . F-4
Notes to Condensed Financial Statements. . . . . . . . . . . . . F-5
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
. F-6
Unaudited Pro Forma Condensed Consolidated Balance Sheet
- August 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . F-7
Unaudited Pro Forma Condensed Consolidated Statements of
Operations from July 31, 1998 (Date of Inception) through
August 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-8
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements. . . . . . . . . . . . . . . . . . . . . . F-9
J2 TECHNOLOGIES, LLC
Independent Auditor's Report . . . . . . . . . . . . . . . . . . F-10
Balance Sheet - August 31, 1998. . . . . . . . . . . . . . . . . F-11
Statement of Operations and Changes in Members' Equity
(Deficiency) July 31,1998 (Inception) to August 31, 1998. . . . F-12
Statement of Cash Flows July 31, 1998 (Inception) to
August 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-13
Notes to Financial Statements. . . . . . . . . . . . . . . . . . F-14
F-1
<PAGE>
MT. OLYMPUS ENTERPRISES, INC.
(A Development Stage Enterprise)
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(Unaudited)
ASSETS
Current Assets
Prepaid expenses $ 140
----------
Total Current Assets 140
----------
Total Assets $ 140
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accrued expenses $ 145,322
Convertible debt 60,000
----------
Total Current Liabilities 205,322
----------
Stockholders' Deficit
Common stock - $0.001 par value; 50,000,000
shares authorized; 100,000 shares issued
and outstanding 100
Additional paid-in capital 93,779
Deficit accumulated during the development stage (299,061)
----------
Total Stockholders' Deficit (205,182)
----------
Total Liabilities And Stockholders' Deficit $ 140
==========
See the accompanying notes to condensed financial statements.
F-2
<PAGE>
MT. OLYMPUS ENTERPRISES, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Cumulative
Period From
January 19, 1987
Date of
For the Three Months For the Nine Months Ended Inception)
Ended September 30, September 30, Through
---------------------- ---------------------- September 30,
1998 1997 1998 1997 1998
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income $ - $ - $ - $ - $ -
Option Expenses - - - - 55,349
Merger and Reorganization Expenses
112,750 17,922 113,577 32,475 200,282
General and Administrative Expenses
11,450 366 18,988 496 55,087
Interest Expense
7,500 - 7,500 1,054 14,213
---------- ---------- ---------- ---------- ----------
Net Loss Before Extraordinary
Item
(131,700) (18,288) (140,065) (34,025) (324,931)
---------- ---------- ---------- ---------- ----------
Extraordinary Gain from Debt
Forgiveness, net of Tax of $0
- - - 22,566 25,870
---------- ---------- ---------- ---------- ----------
Net Loss
$ (131,700) $ (18,288) $ (140,065) $ (11,459) $ (299,061)
========== ========== ========== ========== ==========
Basic and Diluted Loss Per Common
Share Before Extraordinary Item
$ - $ - $ - $ - $ (3.66)
========== ========== ========== ========== ==========
Basic and Diluted Loss Per
Common Share
$ - $ - $ - $ - $ (3.66)
========== ========== ========== ========== ==========
Weighted Average Common Shares
Outstanding
100,000 100,000 100,000 100,000 81,698
========== ========== ========== ========== ==========
<FN>
See the accompanying notes to condensed financial statements.
</FN>
</TABLE>
F-3
<PAGE>
MT. OLYMPUS ENTERPRISES, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Cumulative
Period From
January 19, 1987
For the Nine Months (Date of Inception)
Ended September 30, Through
----------------------- September 30,
1998 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (140,065) $ (11,459) $ (299,061)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization - - 5,164
Extraordinary gain of debt forgivene - (22,566) (25,870)
Services for convertible debt - 15,613 15,613
Expenses paid by stockholder - 1,592 15,247
Expenses paid from deposit with legal counsel
- 6,900 10,000
(Decrease) in prepaid expenses (140) (78) (140)
Increase in accrued interest payable 7,500 8,945 14,213
Increase in accrued liabilities 132,705 1,053 193,866
--------- ---------- -----------
Net Cash Used In Operating Activities - - (70,968)
---------- ---------- -----------
Cash Flows From Investing Activities
Payment for organization costs - - (5,164)
---------- ---------- -----------
Net Cash Used In Investing Activities - - (5,164)
---------- ---------- -----------
Cash Flows From Financing Activities
Proceeds from notes payable to related party - - 37,000
Repayment of note from related party - - (25,000)
Proceeds from issuance of common stock,
net of offering costs - - 64,132
---------- ---------- -----------
Net Cash Provided By Financing Activities - - 76,132
---------- ---------- -----------
Net Decrease In Cash - - -
Cash at Beginning of Period - - -
---------- ---------- -----------
Cast at End of Period $ - $ - $ -
========== ========== ===========
<FN>
See the accompanying notes to condensed financial statements.
</FN>
</TABLE>
F-4
<PAGE>
MT. OLYMPUS ENTERPRISES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1--CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared by the
Company, and are not audited. All adjustments necessary for fair
presentation have been included and consist only of normal recurring
adjustments except as disclosed herein. These financial statements are
condensed and, therefore, do not include all disclosures normally required
by generally accepted accounting principles. These statements should be read
in conjunction with the Company's annual financial statements included in
the Company's Annual Report on Form 10-KSB dated December 31, 1997. The
financial position and results of operations presented in the accompanying
financial statements are not necessarily indicative of the results to be
generated for the remainder of 1998.
NOTE 2--CONVERTIBLE DEBT
In September 1997, a shareholder assumed $44,387 of liabilities of the
Company. The shareholder made arrangements with a third party to borrow
$60,000 at 10% per annum to pay for these obligations. The Company granted
the third party the right to convert the debt into shares of common stock
which was subsequently done as described in Note 4.
NOTE 3--EXTRAORDINARY GAIN FROM DEBT FORGIVENESS
In 1997 and 1996 the Company negotiated reductions in the amounts owed to
creditors. As a result, the creditors forgave a total of $25,870 in
liabilities. The gain from the debt forgiveness has been recognized as an
extraordinary gain in the accompanying statements of operations.
NOTE 4- SUBSEQUENT EVENTS - REORGANIZATION
Reverse Stock Split - On October 30, 1998, the Company entered into a
reorganization agreement with J2 Technologies, LLC, a California limited
liability company, ("J2"). Immediately prior to the reorganization the
Company completed a 43-for-1 reverse stock split of the common stock
outstanding. The amounts herein have been restated for the effects of the
split for all periods presented.
Reorganization - At the time of the reorganization, the Company had 100,000
common shares (post-split) outstanding. J2 had outstanding membership
interests of 2,200,000. As part of the agreement, Mt. Olympus Enterprises,
Inc. exchanged 2,200,000 shares of its common stock for all of the
outstanding membership interests of J2 and changed the Company's name to
Recom Managed Systems, Inc. Also, as part of reorganization, $60,000 of
convertible debt and $132,632 of accrued interest and other accrued
liabilities were converted into 305,000 shares of common stock. As a result
of the agreement, Recom Managed Systems, Inc. had 2,605,000 shares of common
stock outstanding. The agreement will be accounted for as the reorganization
of J2 and the acquisition of Mt. Olympus enterprises, Inc. using the
purchase method of accounting. Since Mt. Olympus Enterprises, Inc. did not
have any operations and had only nominal assets at the date of the
agreement, the acquisition of the net liabilities of Mt. Olympus
Enterprises, Inc. will be recorded at their historical cost.
F-5
<PAGE>
RECOM MANAGED SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On August 24, 1998, the members of J2 Technologies, LLC, a California limited
liability company, ("J2") entered into an agreement with Mt. Olympus
Enterprises, Inc. ("Mt. Olympus") pursuant to which Mt. Olympus issued
2,200,000 shares of its common stock on October 30, 1998 in exchange for
100% of the membership interests of J2. In addition, Mt. Olympus changed its
name to Recom Managed Systems, Inc. The agreement has been accounted for as
the reorganization of J2 and the issuance of common stock for the net
liabilities of Mt. Olympus. The following unaudited pro forma condensed
consolidated balance sheet has been prepared to present the consolidated
financial position of the combined companies as though the agreement had
been consummated on August 31, 1998. The following unaudited pro forma
condensed consolidated statement of operations has been prepared to present
the operations of the consolidated companies for the month ended August 31,
1998 assuming the agreement had been completed on July 31, 1998.
The following financial information was derived from, and should be read in
conjunction with the separate historical financial statements of Mt. Olympus
for the nine months ended September 30, 1998, included elsewhere herein, and
in conjunction with the separate financial statements of J2 from July 31,
1998, (date of inception) through August 31, 1998, which are included
elsewhere herein. The unaudited pro forma condensed consolidated balance
sheet and statement of operations have been included herein for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have been obtained had the agreement been
completed on August 31, 1998 or July 31, 1998, or the results of operations
which may be obtained in the future. In addition, further results may vary
significantly from the results presented in these pro forma financial
statements.
F-6
<PAGE>
RECOM MANAGED SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AUGUST 31, 1998
<TABLE>
<CAPTION>
J2 Mt.
Technologies, Olympus Pro Forma
LLC Enterprises Adjustments Pro Forma
---------- ---------- ------------ -----------
<S> <C> <C> <C><C> <C>
ASSETS
Current Assets
Cash $ 150,000 $ - $ 150,000
Prepaid expenses - 140 140
---------- --------- ----------
Total Current Assets 150,000 140 150,140
---------- --------- ----------
Property and Equipment 57,324 - 57,324
Less accumulated depreciatio (37,276) - (37,276)
---------- --------- ----------
Net Property and Equipment 20,048 - 20,048
---------- --------- ----------
Intangible Assets 4,160 - 4,160
---------- --------- ----------
Total Assets $ 174,208 $ 140 $ 174,348
========== ========= ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C> <C><C> <C>
Current Liabilities
Accounts payable $ 174,138 $ - (C)$ 14,615 $ 188,753
Accrued expenses - 145,322 (A) (132,632) 12,690
Note payable, Members 150,000 - - 150,000
Due to Member 13,266 - - 13,266
Convertible debt - 60,000 (A) (60,000) -
---------- --------- --------- ----------
Total Current Liabilities 337,404 205,322 (178,017) 364,709
---------- --------- --------- ----------
Stockholders' Equity
Common stock - 100 (A) 305
(B) 2,200 2,605
Additional paid-in-capital - 93,779 (A) 192,327
(B) 17,848
(D) (299,061) 4,893
Members' deficiency (163,196) - (B) 163,196 -
Accumulated deficit - (299,061) (B) (183,244)
(C) (14,615)
(D) 299,061 (197,859)
---------- ---------- ---------- ---------
Total Stockholders' Deficit
(163,196) (205,182) 178,017 (190,361)
---------- ---------- ---------- ---------
Total Liabilities and Stockholders'
Deficit $ 174,208 $ 140 $ - $ 174,348
========== ========== ========== =========
<FN>
Notes to the Unaudited Condensed Pro Forma Consolidated Statements are
presented on page F-9.
</FN>
</TABLE>
F-7
<PAGE>
RECOM MANAGED SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FROM JULY 31, 1998 (DATE OF INCEPTION) THROUGH AUGUST 31, 1998
<TABLE>
<CAPTION>
J2 Mt.
Technologies Olympus Pro Forma Pro Forma
LLC Enterprises Adjustments Results
---------- ---------- ------------- ----------
<S> <C> <C> <C><C> <C>
Revenue $ - $ - $ - $ -
---------- ---------- ---------- ----------
General and administrative expenses
Reorganization expense 150,000 112,750 (C) 14,615 277,365
Appraisal Fee 13,266 - - 13,266
Other 19,978 11,450 - 31,428
Interest - 7,500 7,500
---------- ---------- ---------- ----------
Net Loss $ (183,244) $ (131,700) $ (14,615) $ (329,559)
========== ========== ========== ==========
Basic and Diluted Loss Per
Common Share $ (0.13)
==========
Weighted average number of common
shares used in per share calculation 2,605,000
==========
<FN>
Notes to the Unaudited Condensed Pro Forma Consolidated Statements are
presented on page F-9.
</FN>
</TABLE>
F-8
<PAGE>
RECOM MANAGED SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
A - To record the issuance of 305,000 shares of common stock upon
the conversion of $192,632 of liabilities of Mt. Olympus.
B - To record the issuance of 2,200,000 shares of common stock
in exchange for all of the membership interests of J2 at
historical cost. As a result of the reorganization, there
were 2,605,000 common shares outstanding. The agreement has
been accounted for as the reorganization of J2 and the
acquisition of Mt. Olympus using the purchase method of
accounting. Since Mt. Olympus did not have any operations
and had only nominal assets at the date of the agreement,
the acquisition of the net liabilities of Mt. Olympus were
recorded at historical cost.
C - To record $14,615 of costs incurred in connection with the
reorganization.
D - To eliminate the accumulated deficit of Mt. Olympus at the
date of the reorganization.
F-9
<PAGE>
Drucker, Math & Whitman, P.C.
Certified Public Accountants 2865 U.S. Highway #1
Route 1 & Finnegans Lane
North Brusnswick, NJ 08902
Telephone 732-821-5200
Fax 732-821-7711
Independent Auditors' Report
Members
J2 Technologies, LLC
Roseville, California
We have audited the accompanying balance sheet of J2 Technologies, LLC (a
development stage company) ("Company") as of August 31, 1998, and the
related statements of operations and changes in members' equity
(deficiency), and cash flows for the period from July 31, 1998 (inception)
to August 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of J2 Technologies, LLC (a
development stage company) as of August 31, 1998, and the results of its
operations and its cash flows for the period from July 31, 1998 (inception)
to August 31, 1998 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will be able to commence operations and continue as a going
concern. As discussed in Note 2, the Company has no operating history, is
in the development stage, and, at August 31, 1998, has an equity
deficiency. These matters raise substantial doubt as to the Company's
ability to commence operations and continue as a going concern. Management
plans to generate funds through a merger with a public company followed by
a private placement offering. There is no assurance that such plans will
be completed or, if completed, that such actions will generate sufficient
funds to enable the Company to commence and continue its operations for the
next twelve months. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
DURCKER, MATH & WHITMAN, P.C.
October 26 , 1998
F-10
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
BALANCE SHEET
AUGUST 31, 1998
ASSETS
Current assets:
Cash, held in attorney's trust account $ 150,000
Computer equipment 20,048
Organization costs 4,160
----------
$ 174,208
==========
LIABILITIES AND MEMBERS' EQUITY (DEFICIENCY)
Current liabilities:
Notes payable, Members $ 150,000
Due to Member 13,266
Accounts payable 174,138
----------
337,404
Members' equity (deficiency), 2,200,000
membership share interests outstanding (163,196)
----------
$ 174,208
==========
See notes to financial statements.
F-11
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
STATEMENT OF OPERATIONS AND
CHANGES IN MEMBERS' EQUITY (DEFICIENCY)
JULY 31, 1998 (inception) TO AUGUST 31, 1998
Revenue $ -
General and administrative expenses:
Consulting fee regarding merger 150,000
Appraisal fee 13,266
Legal and accounting 19,978
----------
183,244
----------
Net loss (183,244)
Members' capital contribution,
computer equipment 20,048
----------
Members' equity (deficiency), August 31, 1998 $ (163,196)
==========
See notes to financial statements.
F-12
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
JULY 31, 1998 (inception) TO AUGUST 31, 1998
Cash flows from operating activities:
Net loss $ (183,244)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase in:
Organization costs (4,160)
Due to Member 13,266
Accounts payable 174,138
----------
Net cash used in operating activities -
----------
Cash flow from financing activities,
notes payable, Members 150,000
----------
Increase in cash 150,000
Cash, beginning -
----------
Cash, ending $ 150,000
==========
For non-cash transactions, see Note 6.
See notes to financial statements.
F-13
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
1. Summary of significant accounting policies and business activity:
Business activity:
J2 Technologies, LLC ("Company"), a California limited liability
company, was organized to provide information technology support
services, including systems consulting, design, implementation and
maintenance. The Company is considered to be in the development stage
as no revenues have been derived from operations and the Company is
primarily involved in raising capital. The Company's operating
agreement provides for a termination date of 2050. The owners of the
Company are referred to as "Members". The Company's fiscal year will
end December 31.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Cash and cash equivalents:
The Company considers highly liquid deposits with maturities of three
months or less, including deposits held in attorney's trust accounts, to
be cash equivalents.
Computer equipment:
Computer equipment is stated at cost. See Note 6. Depreciation is
provided on the straight-line method over a three year useful life.
Organization costs:
Organization costs represent costs incurred in connection with
organizing the Company. These costs are being amortized on a
straight-line basis over five years.
Income taxes:
The Company is not a taxpaying entity for federal and state income tax
purposes. No income tax expense or benefit is recorded in the financial
statements. Income or loss of the Company is taxed to (or benefits) the
Members in their respective returns.
F-14
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
2. Going concern:
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has no operating history, is in the development stage, and, at
August 31, 1998, has an equity deficiency. These factors raise
substantial doubt about the Company's ability to commence operations and
continue as a going concern. The financial statements do not include
any adjustments relating to the recoverability and classification of
recorded asset amounts or the amount of liabilities that might be
necessary should the Company be unable to continue in existence.
Continuation of the Company as a going concern is dependent on obtaining
funds to commence its operations. Management plans to generate these
funds through a merger with a public company followed by a private
placement offering. There is no assurance, however, that such plans
will be completed or, if completed, will generate sufficient funds to
enable the Company to commence and continue operations for the next
twelve months.
3. Transfer of assets from related party:
In connection with the issuance of membership shares to a Member, the
Member assigned to the Company on a non-exclusive basis certain
intellectual property. The intellectual property consists of technology
management plans and corporate documents, technical proposals and
management plans, technical operating procedures, corporate management
plans and management resources, and software and data, collectively, the
"Assets". The Assets were initially used or developed as part of
noncommercial projects and contracts by the Member and are currently
used in governmental applications. The assignment does not include
rights for the Company to use the Assets in governmental applications,
which rights are retained by the Member. The Company had the Assets
appraised by an independent valuation firm. In an appraisal dated
August 15, 1998, the appraisal firm estimated the fair market value of
the Assets to be $4,750,000. Under generally accepted accounting
principles, no value for the Assets may be recorded on the Company's
books, although the Company is able to use such Assets, subject to an
assignment agreement, without fees or royalties.
4. Notes payable, Members:
The Company issued four promissory notes for $37,500 each (aggregate
$150,000) to certain members in exchange for cash. The notes bear
interest at 10 percent per annum and are due on or before the earlier of
August 1, 1999 or the closing date of the Company's private placement
offering. As of October 23, 1998, no definitive plans for the offering
had been made.
5. Due to Member:
A Member of the Company advanced to the Company $13,266 which was used
to pay for the valuation of the assigned Assets (see Note 3). The
advance accrues interest at prime plus two percent and is due February
3, 1999. The prime rate at August 31, 1998 was 8 1/2 percent.
F-15
<PAGE>
J2 TECHNOLOGIES, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
6. Computer equipment:
The computer equipment reflected on the balance sheet was used by a
Member and transferred from that Member to the Company. The original
cost to the Member was $57,324 and $37,276 of accumulated depreciation
had been recorded by the Member. The Company recorded the computer
equipment at its net book value of $20,048.
7. Proposed merger:
The Company is in the process of completing a merger with an inactive
publicly traded corporation, Mt. Olympus Enterprises, Inc. ("MTOP").
Pursuant to a "Stock-for-Membership Interest Exchange Agreement"
("Exchange Agreement"), all of the outstanding membership interests of
the Company would be exchanged for shares of common stock of MTOP. The
Exchange Agreement provides for, among other things, MTOP to assume the
obligation to repay the promissory notes payable of the Company and all
other obligations of the Company. The promissory notes payable are to
be paid from funds raised, if any, in any financing by MTOP. At the
closing, the Company shall pay legal, accounting and other fees
approximating $15,000. Such fees will be recorded on the Company's
books if and when the closing takes place.
F-16
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Balance Sheet, Statement of Income and Exhibit 11 (Statement Re
computation of per share earnings) and is qualified in its entirety by
reference to such Financial Statements.
</LEGEND>
<RESTATED>
<CIK> 0000810365
<NAME> RECOM MANAGED SYSTEMS, INC
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 150000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 140
<INVENTORY> 0
<CURRENT-ASSETS> 150140
<PP&E> 61484
<DEPRECIATION> (37276)
<TOTAL-ASSETS> 174348
<CURRENT-LIABILITIES> 364709
<BONDS> 0
0
0
<COMMON> (197,859)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 174348
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (329559)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (329559)
<EPS-PRIMARY> ($0.13)
<EPS-DILUTED> ($0.13)
</TABLE>
