UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended August 31, 1997
Commission File Number: 17598
CONSYGEN, INC.
(Exact name of registrant as specified in its charter)
Texas 76-0260145
----- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10201 South 51st Street, Suite 140, Phoenix, Arizona 85044
- ---------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(602) 496-4545
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
14,061,831 shares of Common Stock, $.003 par value, as of October 6, 1997
-------------------------------------------------------------------------
CONSYGEN, INC. AND SUBSIDIARIES
-------------------------------
INDEX
-----
PART I FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets,
August 31, 1997 and May 31, 1997
Consolidated Condensed Statements of Operations - Three
Months Ended August 31, 1997 and August 31, 1997
Consolidated Condensed Statements of Cash Flows - Three
Months Ended August 31, 1997 and August 31, 1996
Notes to Consolidated Condensed Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II OTHER INFORMATION
SIGNATURES
Part I - Financial Information
Item 1. Financial Statements
CONSYGEN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
August 31, May 31,
---------- -------
1997 1997
---- ----
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 51,084 $ 21,483
Stock Subscriptions Receivable 560,000 -
Debt Issuance Expense - Net 33,336 33,336
Prepaid Expenses 10,425 18,225
----------- -----------
Total Current Assets 654,845 73,044
----------- -----------
Furniture and Equipment - Net 291,617 72,031
----------- -----------
Other Assets:
Debt Issuance Expense - Net of Current Portion 52,775 61,108
Other Assets 4,596 4,596
----------- -----------
Total Other Assets 57,371 65,704
----------- -----------
Total Assets $1,003,833 $ 210,779
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current Liabilities:
Notes Payable $ 236,317 $ 259,507
Loans Payable 160,000 160,000
Loans Payable - Related Parties 162,275 139,177
Accounts Payable 114,947 62,704
Accrued Liabilities 276,805 308,899
----------- -----------
Total Current Liabilities 950,344 930,287
Long-Term Debt 1,000,000 1,000,000
----------- -----------
Total Liabilities 1,950,344 1,930,287
----------- -----------
Stockholders' Deficit:
Common Stock, $.003 Par Value, 40,000,000 Shares
Authorized, Issued and Outstanding 13,919,831 Shares
at August 31, 1997 and 13,796,231 Shares at May 31, 1997 41,760 41,389
Additional Paid-In Capital 18,121,325 17,108,689
Common Stock Subscribed, 100,000 Shares 504,000 -
Accumulated Deficit (19,613,596) (18,869,586)
----------- -----------
Total Stockholders' Deficit (946,511) (1,719,508)
----------- -----------
Total Liabilities and Stockholders' Deficit $1,003,833 $ 210,779
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
CONSYGEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For The Three Months
Ended
August 31,
1997 1996
------------- -------------
Revenues:
Interest Income $ 5,915 $ --
------------ ------------
Costs and Expenses:
Software Development 284,045 210,560
General and Administrative Expenses 333,813 1,010,658
Interest Expense 110,664 62,980
Depreciation and Amortization 21,403 67,216
------------ ------------
Total Costs and Expenses 749,925 1,351,414
------------ ------------
Net Loss $ (744,010) $ (1,351,414)
============ ============
Weighted Average Common Shares Outstanding 13,919,831 8,076,889
============ ============
Net Loss Per Common Share $ (.05) $ (.17)
============ ============
The accompanying notes are an integral part of the financial statements.
CONSYGEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For The Three Months
Ended
August 31,
1997 1996
--------------- --------------
Cash Flows From Operating Activities:
Net Loss $ (744,010) $(1,351,414)
Adjustments to Reconcile Net Loss to Net
Cash (Used) by Operating Activities:
Depreciation 13,070 4,883
Stock Issued for Services -- 888,503
Amortization of Debt Issuance Expense 8,333 62,333
Loan Interest - Additional Paid-In Capital 8,607 16,430
Changes in Operating Assets and Liabilities:
Accounts Receivable -- 13,265
Prepaid Expenses 7,800 --
Accounts Payable 52,243 ( 52,030)
Accrued Liabilities ( 88,094) ( 30,560)
----------- -----------
Net Cash (Used) by Operating Activities ( 742,051) ( 448,590)
----------- -----------
Cash Flows From Investing Activities:
Purchases of Furniture and Equipment ( 232,656) ( 11,644)
----------- -----------
Net Cash (Used) by Investing Activities ( 232,656) ( 11,644)
----------- -----------
Cash Flows From Financing Activities:
Proceeds of Debt Financing -- 481,000
Proceeds of Loans and Notes Payable -- 34,908
Payments of Loans and Notes Payable ( 23,190) ( 50,000)
Proceeds of Loans Payable - Related Parties 23,190 --
Payments of Loans Payable - Related Parties ( 92) ( 1,549)
Proceeds on Sale of Common Stock 1,080,000 --
Commissions on Sale of Common Stock ( 75,600) --
----------- -----------
Net Cash Provided by Financing Activities 1,004,308 464,359
----------- -----------
Net Increase in Cash and Cash Equivalents 29,601 4,125
Cash and Cash Equivalents - Beginning of Period 21,483 --
----------- -----------
Cash and Cash Equivalents - End of Period $ 51,084 $ 4,125
=========== ===========
The accompanying notes are an integral part of the financial statements.
CONSYGEN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
For The Three Months
Ended
August 31,
1997 1996
------------- ------------
<S> <C> <C>
Supplemental Cash Flow Information:
Cash Paid for Interest $ 95,000 $ 1,559
============= ============
Cash Paid for Income Taxes $ - $ -
============= ============
Supplemental Disclosure of Non-Cash Financing Activities:
Cancellation of Debt into Additional Paid-In Capital - Related Parties $ - $ 350,000
============= ============
Issuance of Common Stock as Debt Issuance Expense $ - $ 24,000
============= ============
Issuance of Common Stock as Payment of Debt - Related Parties $ - $ 350,000
============= ============
Issuance of Common Stock as Finder's Fee on Sale of Common Stock $ 21,600 $ -
============= ============
Common Stock Subscribed - Net of Commissions $ 504,000 $ -
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
CONSYGEN, INC. AND SUBSIDIARY
-----------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
AUGUST 31, 1997
---------------
(Unaudited)
NOTE 1 - Basis of Presentation
The consolidated financial statements include the accounts of
ConSyGen, Inc., a Texas corporation ("ConSyGen-Texas") and its wholly-owned
subsidiary, ConSyGen, Inc., an Arizona corporation ("ConSyGen-Arizona").
Significant intercompany accounts and transactions have been eliminated.
ConSyGen-Texas and its wholly-owned subsidiary
ConSyGen-Arizona are hereafter collectively referred to as the "Company".
In the opinion of the Company, the accompanying unaudited
consolidated financial statements reflect all adjustments (which include only
normal recurring adjustments) necessary to present fairly the results of
operations and cash flows for the periods presented.
Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year due to external factors
which are beyond the control of the Company.
NOTE 2 - Stockholders' Deficit
Common Stock Private Placement
------------------------------
In June 1997 the Company sold 120,000 shares of its common
stock in a private placement for gross proceeds of $1,080,000. In connection
with the sale, the Company paid finder's fees of $75,600 and issued 3,600 shares
of common stock valued at $21,600. These shares were sold in a private placement
exempt from registration under the Securities Act of 1933, as amended ("the
Act"), pursuant to Regulation D promulgated thereunder.
In late August 1997, the Company accepted subscriptions to
purchase 100,000 shares of common stock for aggregate consideration of $504,000,
net of $56,000 in finder's fees. On September 9, 1997, the Company received the
net proceeds ($504,000) of these subscriptions. These shares were sold in a
private placement exempt from registration under the Act, pursuant to Regulation
D promulgated thereunder.
Warrant Issuance to Consultant
------------------------------
In July, 1997, in connection with the new agreement with the
Company's consultant the Company agreed to issue the consultant warrants to
purchase 300,000 shares of common stock at a price of $5.00 per share. The
shares of common stock issuable upon exercise of these warrants will be
restricted securities under the Securities Act of 1933. The warrants are
immediately exerciseable, expire two years from the date of grant, and are
callable upon 60 days notice.
NOTE 2 - Stockholders' Deficit - Continuation
Increase in Common Shares Authorized
------------------------------------
In July 1997, the Company amended its Articles of
Incorporation to increase its authorized common shares from 16,666,666 to
40,000,000 shares.
NOTE 3 - Subsequent Events
-----------------
In early September 1997, the Company accepted subscriptions to
purchase an additional 52,000 shares of common stock for aggregate consideration
of $312,500, net of $10,000 in finder's fees. The Company has since received the
net proceeds ($312,500) of these subscriptions. These shares were sold in a
private placement exempt from registration under the Act, pursuant to Regulation
D promulgated thereunder.
On September 10, 1997, the Company granted Ronald I. Bishop, President
and Chief Executive Officer of the Company, options to purchase 500,000 shares
of Common Stock pursuant to the Company's 1997 Amended and Restated Non
Qualified Stock Option Plan. The option has a term of 10 years, the exercise
price is $5.50 per share, and the options are exercisable as follows: 125,000
are immediately exercisable and the remaining 375,000 become exercisable in 24
equal monthly installments commencing one month from the date of grant.
In September 1997, the Company sold 900,000 shares of Common
Stock in a private placement for gross proceeds of $5,276,250. In connection
with this offering, the Company paid the following finder's fee: approximately
$185,000 in cash and 31,500 shares of Common Stock. The net proceeds of this
offering were approximately $5.1 million. These shares were sold in a private
placement exempt from registration under the Act, pursuant to Regulation D
promulgated thereunder.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
--------
ConSyGen, Inc., a Texas corporation ("ConSyGen-Texas"), was
incorporated on September 28, 1988 as C Square Ventures, Inc. ConSyGen-Texas was
formed for the purpose of obtaining capital in order to take advantage of
domestic and foreign business opportunities which may have profit potential. On
March 16, 1989, ConSyGen-Texas (then C Square Ventures, Inc.) completed an
initial public offering.
Acquisition of ConSyGen, Inc.
-----------------------------
ConSyGen-Texas entered into an agreement, dated as of August
28, 1996, to acquire 100% of the issued and outstanding shares of ConSyGen,
Inc., a privately held Arizona corporation ("ConSyGen-Arizona") (f/k/a
International Data Systems, Inc.). Immediately prior to the acquisition
transaction, ConSyGen-Texas effected a 1-for-40 reverse split of its common
stock. ConSyGen-Texas closed the acquisition of ConSyGen-Arizona on September 5,
1996. As a result of the acquisition, ConSyGen-Arizona became a wholly-owned
subsidiary of ConSyGen-Texas. The transaction has been treated as a reverse
acquisition (purchase) with ConSyGen-Arizona being the acquirer and
ConSyGen-Texas being the acquired company. Consequently, only the historical
operations of ConSyGen-Arizona are presented through September 5, 1996.
In connection with the acquisition, ConSyGen-Texas issued an
aggregate of 9,275,000 shares of its common stock directly to the stockholders
of ConSyGen-Arizona, in exchange for all of the issued and outstanding shares of
ConSyGen-Arizona. Upon the closing of the acquisition, ConSyGen-Texas issued an
additional 3,850,000 shares of common stock to various consultants for services
rendered. Such shares were registered under the Securities Act of 1933, as
amended, pursuant to a Registration Statement on Form S-8. In addition,
ConSyGen-Texas issued 150,000 shares of common stock to a consultant for
services rendered. Following the closing of the acquisition, ConSyGen-Arizona's
stockholders held a larger portion of the voting rights of ConSyGen-Texas than
was held by the ConSyGen-Texas stockholders prior to the acquisition
(approximately 69% at closing). In connection with the acquisition, outstanding
options to purchase 1,275,000 shares of ConSyGen-Arizona's common stock granted
under its Non-Qualified Stock Option Plan were terminated and ConSyGen-Texas
adopted a new Non-Qualified Stock Option Plan and issued options to purchase
1,275,000 shares of common stock at an exercise price of $1.00 per share. In
addition, ConSyGen-Arizona terminated warrants to purchase 1,000,000 shares of
its common stock in connection with the acquisition, and ConSyGen-Texas reserved
for issuance replacement warrants to purchase 1,000,000 shares of its common
stock at an exercise price of $5.00 per share.
ConSyGen-Texas and its wholly-owned subsidiary,
ConSyGen-Arizona, are hereafter collectively referred to as the "Company".
Description of Business of ConSyGen, Inc.
-----------------------------------------
ConSyGen-Texas' business consists solely of the business of
its wholly owned subsidiary, ConSyGen-Arizona. ConSyGen-Arizona was incorporated
in Arizona on October 11, 1979. Until 1995, ConSyGen-Arizona licensed its
proprietary computer software, which was used in the hotel and airline
industries, and also provided software maintenance services. In 1996,
ConSyGen-Arizona discontinued its practice of software licensing and providing
software maintenance services. ConSyGen-Arizona is currently engaged in the
business of rendering automated software conversion services, although it has
not yet generated any operating revenue from its conversion business this year.
ConSyGen-Arizona uses its proprietary toolsets to provide fully automated
conversions of mainframe hardware applications to open systems. ConSyGen-Arizona
also uses its toolsets to convert software so that it is Year 2000 compliant.
The company's ConSyGen 2000 toolset is a fully-automated toolset that
automatically corrects dates in both source code and data to be compliant for
the Year 2000 and beyond. The company's ConSyGen Conversion toolset
automatically converts software to run on a different hardware platform. For
example, the company can automatically convert software running on older BULL,
IBM, Unisys, etc., mainframes so that it can run on the new Client/Server
platforms (often called downsizing).
Material Changes in Results of Operations
-----------------------------------------
Net Losses
----------
For the quarter ended August 31, 1997, the Company incurred
net losses of $744,000, compared with net losses of $1,351,000 for the
comparable prior quarter, a decrease of $607,000. An explanation of these losses
is set forth below.
Revenues
--------
For the quarters ended August 31, 1997 and 1996, the Company
had no operating revenue. The Company has abandoned its software licensing and
maintenance business and is now focused on the development of software for use
in providing conversion services, including Year 2000 conversion services, and
the marketing of such services. In September, 1997, the Company signed a revenue
generating contract with Lender's Service, Inc., a Merrill Lynch company,
pursuant to which the Company will provide conversion services with respect to
approximately 3,000,000 lines of code, including year 2000 correction services.
Software Development Expenses
-----------------------------
For the quarter ended August 31, 1997, software development
expenses were $284,000, compared with approximately $211,000 for the quarter
ended August 31, 1996, an increase of approximately $73,000. The increase in
software development expenses is primarily attributable to the Company's hiring
of additional personnel dedicated to the development of software for use in
providing conversion services, including Year 2000 conversion services.
General and Administrative Expenses
-----------------------------------
For the quarter ended August 31, 1997, general and
administrative expenses were approximately $334,000, compared with approximately
$1,011,000 for the three months ended August 31, 1996, a decrease of $677,000.
This decrease in general and administrative expenses was primarily attributable
to a decrease of $889,000 in non-cash compensation expenses (related to stock
issued for services), offset by the following: a $113,000 increase in expenses
associated with the Company's status as a public company, consisting primarily
of professional fees in the amount of $92,000 and other expenses of $21,000; a
$30,000 increase in sales and marketing expense; a $12,000 increase in rent
expense; a $21,000 increase in expenses associated with hiring new personnel;
and a $36,000 increase in salaries and other general expenses.
Depreciation and Amortization Expense
-------------------------------------
For the quarter ended August 31, 1997, depreciation and
amortization expense was approximately $21,000, compared with $67,000 for the
comparable prior period, a decrease of $46,000. This decrease is attributable
primarily to a $54,000 decrease in amortization of debt issuance expense,
partially offset by an $8,000 increase in depreciation expense. The decrease in
amortization of debt issuance expense is primarily attributable to certain debt
issuance expenses having been fully amortized.
Material Changes in Financial Condition, Liquidity and Capital
Resources
--------------------------------------------------------------
At August 31, 1997 the Company was experiencing a working
capital deficiency and has historically incurred substantial and recurring
losses. At August 31, 1997, the Company was not generating any significant
revenue. The Company continues, however, to incur substantial costs and expenses
in connection with its business operations and the development of its software.
In September, 1997, the Company signed a revenue generating contract with
Lender's Service, Inc., a Merrill Lynch company, pursuant to which the Company
will provide conversion services with respect to approximately 3,000,000 lines
of code, including year 2000 correction services.
The Company's cash balances were approximately $51,000 at
August 31, 1997, compared with $21,000 at May 31, 1997. The Company had a
working capital deficit of approximately $295,000 at August 31, 1997, compared
with a working capital deficit of approximately $857,000 at May 31, 1997, a
decrease in the working capital deficit of approximately $562,000. This decrease
in the working capital deficit is primarily attributable to a stock subscription
in the amount of $504,000 (net of finder's fees), and an increase in cash and
cash equivalents in the amount of $30,000.
In September 1997, the Company sold 900,000 shares of Common
Stock in a private placement for gross proceeds of $5,276,250. In connection
with this offering, the Company paid the following finder's fee: approximately
$185,000 in cash and 31,500 shares of Common Stock. The net proceeds of this
offering were approximately $5.1 million, the receipt of which has remedied the
working capital deficit that existed at August 31, 1997. The Company intends to
use the net proceeds of this offering for working capital and general corporate
purposes, including for the Company's sales and marketing efforts. The Company
now has sufficient capital to fund its continuing operations for the foreseeable
future.
As of October 1997, the Company has committed to spend
approximately $25,000 for capital expenditures, consisting of $12,500 for
computer equipment and $12,500 for furniture and fixtures. The Company will fund
these expenditures out of currently available cash.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
On July 10, 1997, the stockholders of the Company approved an amendment
to the Company's Articles of Incorporation which increased the number of
authorized shares of common stock, $.003 par value ("Common Stock"), from
16,666,666 to 40,000,000. The amendment became effective July 17, 1997.
On or around June 2, 1997, the Company sold an aggregate of 120,000
shares of Common Stock for aggregate consideration of $1,080,000. In connection
with this transaction, the Company paid a finder's fee in the amount of
approximately $75,000. The securities were offered and sold exclusively to
"accredited investors," within the meaning of Rule 501 under the Securities Act
of 1933, as amended (the "Act").
The sale of these warrants was exempt from registration under Section 5
of the Act, pursuant to Section 4(2) of the Act and the rules and regulations
thereunder. The facts relied upon by the issuer were as follows: the consultant
and its designee are "accredited investors", within the meaning of Rule 501
under the Act, the warrants were not offered or sold by means of any general
solicitation or advertising, the consultant is knowledgeable about the Company
and its prospectus, and the issuer took reasonable steps to assure that the
consultant was not an underwriter within the meaning of Section 2(11) under the
Act.
From on or around August 27, 1997 until on or around September 6, 1997,
the Company sold an aggregate of 152,000 shares of Common Stock for aggregate
consideration of $882,500. In connection with this transaction the Company paid
a finder's fee of $66,000. The securities were offered and sold exclusively to
"accredited investors," within the meaning of Rule 501 under the Act.
The sale of all of the foregoing securities was exempt from
registration under Section 5 of the Act, pursuant to Rule 506 of Regulation D
promulgated thereunder. The facts relied upon by the issuer were as follows: all
the investors were "accredited investors," within the meaning of Rule 501 under
the Act; the securities were not offered or sold by means of general
solicitation or advertising; investors were provided information about the
Company and given the opportunity to ask questions of and receive answers from
management of the Company;
and the issuer took reasonable steps to assure that the purchasers were not
"underwriters" within the meaning of Section 2(11) of the Act.
On August 1, 1997, the Company issued to a consultant of the Company
and its designee warrants to purchase an aggregate of 300,000 shares of Common
Stock at an exercise price of $5.00 per share. The warrants were issued to the
consultant in consideration of services rendered to the Company. The sale of
these warrants was exempt from registration under Section 5 of the Act, pursuant
to Section 4(2) of the Act and the rules and regulations thereunder. The facts
relied upon by the issuer were as follows: the consultant is an "accredited
investor," within the meaning of Rule 501 under the Act; the warrants were not
offered or sold my means of any general solicitation or advertising; the
consultant is sophisticated about business and financial matters and
knowledgeable about the Company and its prospects; and the issuer took
reasonable steps to assure that the consultant was not an underwriter within the
meaning of Section 2(11) under the Act.
Item 3. Defaults Upon Senior Securities
The following defaults on the indebtedness of the Company (after giving
effect to the acquisition) existed at August 31, 1997.
The Company is in default under the terms of a note payable, in the
principal amount of $23,000, bearing interest at approximately 10% per annum and
due June 30, 1989. The Company did not repay the principal and interest due
under the terms of the note on the due date. The payee under the note has not
made demand on the Company for payment. As of August 31, 1997, the total
arrearage under the note was approximately $48,000, consisting of $23,000 in
principal and approximately $25,000 of interest.
The Company is in default under the terms of a note payable, in the
principal amount of $100,000, bearing interest at 10% per annum and due July 31,
1996. The Company did not repay the principal and interest due under the terms
of the note on July 31, 1996, and interest has been accruing at the default rate
of 18% per annum since that date. The payee under the note has not made demand
on the Company for payment. As of August 31, 1997, the total arrearage under the
note was approximately $140,000, consisting of $100,000 in principal and
approximately $40,000 of interest.
Item 4. Submission of Matters to a Vote of Security Holders
A Special Meeting of the Stockholders of the Company was held on July
10, 1997. At such Special Meeting, the Stockholders of the Company approved an
amendment to the Company's Articles of Incorporation which increased the number
of authorized shares of Common Stock, from 16,666,666 to 40,000,000. 9,544,262
votes were cast in favor of the amendment, 656 votes were cast against the
amendment, and there were 324 abstentions and broker non-votes. The amendment
became effective July 17, 1997.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2 Plan of Acquisition between the Registrant and the
stockholders of ConSyGen, Inc., an Arizona
corporation, dated August 28, 1996, filed as Exhibit 2
to the Registrant's Current Report on Form 8-K dated
September 5, 1996 and incorporated herein by
reference.
3.1 Articles of Incorporation of the registrant, as
amended.
3.2 By-Laws of the registrant, filed as Exhibit 3.B to the
Registrant's Registration Statement on Form S-18, File
No. 33-22900 - FW, and incorporated herein by
reference.
4.1 Specimen common stock certificate, filed as Exhibit
4.B to the Registrant's Registration Statement on Form
S-18, File No. 33-22900 - FW, and incorporated herein
by reference.
4.2 Form of Common Stock Purchase Warrant used in
connection with issuance of warrants to purchase an
aggregate of 1,000,000 shares of the Registrant's
Common Stock, $.003 par value.(1)
4.3 Subscription Agreement between the Registrant and
Little Wing, L.P. for convertible debt of the
Registrant (including Summary of Terms). (1)
4.4 Subscription Agreement between the Registrant and
Tonga Partners, L.P. for convertible debt of the
Registrant (including Summary of Terms). (1)
4.5 Form of Subscription Agreement used in connection with
Rule 506 offering in the aggregate amount of
$1,080,000.
4.6 Form of Subscription Agreement used in connection with
Rule 506 offering in the aggregate amount of $882,500.
4.7 Common Stock Purchase Warrant issued to a consultant,
Howard R. Baer, in August, 1997.
4.8 Common Stock Purchase Warrant issued to Howard R.
Baer's designee, Kevin C. Baer, in August, 1997.
- ----------
(1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1996 and
incorporated herein by this reference.
Item 6. Exhibits and Reports on Form 8-K - Continuation
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10.1 Agreement between the Registrant and Carriage House
Capital, Inc., dated May 19, 1997, superseding letter
agreements (also filed as Exhibit 10.1 hereto) between
Carriage House Capital, Inc. and the Registrant's
wholly-owned subsidiary, dated June 14, 1996 and
October 26, 1995. (1)
10.2 Consulting Agreement between Carriage House Capital,
Inc. and the Registrant dated July 10, 1996. (1)
10.3 Consulting Agreement between Mikesco, Inc. and the
Registrant dated July 10, 1996. (1)
10.4 Consulting Agreement between Concorda Corp. and the
Registrant dated July 10, 1996. (1)
10.5 Consulting Agreement between Scarlett Investment
Group, Inc. and the Registrant dated July 10, 1996.
(1)
10.6 Consulting Agreement between The Canter Corporation
and the Registrant dated August 20, 1996. (1)
10.7 Registrant's 1996 Non-Qualified Stock Option Plan. (1)
10.8 Registrant's 1997 Non-Qualified Stock Option Plan. (1)
10.9 Consulting Agreement between the Registrant and
Innovative Research Associates, Inc. (1)
27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable.
- ----------
(1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1996 and
incorporated herein by this reference.
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.
CONSYGEN, INC.
--------------
Date: October 8, 1997 By:/s/ Ronald I. Bishop
------------------------------- -------------------------------
Ronald I. Bishop, President
and Chief Executive Officer
Date: October 8, 1997 By:/s/ Kenneth Harvey
------------------------------- -------------------------------
Kenneth Harvey, Controller
(Chief Accounting Officer)
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2 Plan of Acquisition between the Registrant and the
stockholders of ConSyGen, Inc., an Arizona
corporation, dated August 28, 1996, filed as Exhibit 2
to the Registrant's Current Report on Form 8-K dated
September 5, 1996 and incorporated herein by
reference.
3.1 Articles of Incorporation of the registrant, as
amended.
3.2 By-Laws of the registrant, filed as Exhibit 3.B to the
Registrant's Registration Statement on Form S-18, File
No. 33-22900 - FW, and incorporated herein by
reference.
4.1 Specimen common stock certificate, filed as Exhibit
4.B to the Registrant's Registration Statement on Form
S-18, File No. 33-22900 - FW, and incorporated herein
by reference.
4.2 Form of Common Stock Purchase Warrant used in
connection with issuance of warrants to purchase an
aggregate of 1,000,000 shares of the Registrant's
Common Stock, $.003 par value.(1)
4.3 Subscription Agreement between the Registrant and
Little Wing, L.P. for convertible debt of the
Registrant (including Summary of Terms).(1)
4.4 Subscription Agreement between the Registrant and
Tonga Partners, L.P. for convertible debt of the
Registrant (including Summary of Terms).(1)
4.5 Form of Subscription Agreement used in connection with
Rule 506 offering in the aggregate amount of
$1,080,000.
4.6 Form of Subscription Agreement used in connection with
Rule 506 offering in the aggregate amount of $882,500.
4.7 Form of Common Stock Purchase Warrant issued to a
consultant, Howard R. Baer, in August, 1997.
4.8 Common Stock Purchase Warrant issued to Howard R.
Baer's designee, Kevin C. Baer, in August, 1997.
- ----------
(1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1996 and
incorporated herein by this reference.
EXHIBIT INDEX - CONTINUATION
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10.1 Agreement between the Registrant and Carriage House
Capital, Inc., dated May 19, 1997, superseding letter
agreements (also filed as Exhibit 10.1 hereto) between
Carriage House Capital, Inc. and the Registrant's
wholly-owned subsidiary, dated June 14, 1996 and
October 26, 1995.(1)
10.2 Consulting Agreement between Carriage House Capital,
Inc. and the Registrant dated July 10, 1996.(1)
10.3 Consulting Agreement between Mikesco, Inc. and the
Registrant dated July 10, 1996.(1)
10.4 Consulting Agreement between Concorda Corp. and the
Registrant dated July 10, 1996.(1)
10.5 Consulting Agreement between Scarlet Investment Group,
Inc. and the Registrant dated July 10, 1996.(1)
10.6 Consulting Agreement between The Canter Corporation
and the Registrant dated August 20, 1996.(1)
10.7 Registrant's 1996 Non-Qualified Stock Option Plan.(1)
10.8 Registrant's 1997 Non-Qualified Stock Option Plan.(1)
10.9 Consulting Agreement between the Registrant and
Innovative Research Associates, Inc.(1)
27 Financial Data Schedule
- ----------
(1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended August 31, 1996 and
incorporated herein by this reference.
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CONSYGEN, INC.
Pursuant to the provisions of Section 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following amendment to
the Corporation's Articles of Incorporation.
1. The name of the Corporation is CONSYGEN, INC.
2. The following amendment to the Articles of Incorporation, as
amended, was adopted by the shareholders of the corporation on July 10, 1997.
Article Fourth of the Articles of Incorporation, as amended, is hereby amended
to read in its entirety as follows:
FOURTH:
(a) The total number of shares of all classes of stock which the
Company shall have authority to issue is 40,000,000 shares of common stock,
$.003 par value per share ("Common Stock").
3. The number of shares of the corporation outstanding at the time of
the adoption was 13,386,231; the number of shares entitled to vote on the
amendment was 13,386,231.
4. The number of shares that were voted for the amendment and the
number of shares that were voted against the amendment were as follows:
FOR: 9,544,262
AGAINST: 656
Dated this 15th day of July, 1997.
CONSYGEN, INC.
By: /s/Ronald I. Bishop
------------------------------
Ronald I. Bishop, President
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the provisions of the Texas Business Corporation Act, the
undersigned corporation adopts the following amendment to the Corporation's
Articles of Incorporation, which amendment was adopted by the shareholders of
the Corporation on September 4, 1996 by the holders of the outstanding common
stock, the only voting group entitled to vote thereon, by written consent
pursuant to Section 9.10 of the Texas Business Corporation Act. The number of
shares of common stock outstanding and entitled to vote on the amendment was
13,386,116 shares and the number of shares consenting to the amendment was
9,275,000 which was sufficient for approval by that group. All written notice
required by Article 9.10 has been given.
1. The name of the Corporation is C SQUARE VENTURES, INC.
2. The purpose of this Amendment is to change the name of this
corporation as follows:
The name of this corporation is CONSYGEN, INC.
C SQUARE VENTURES. INC.
By: /s/Carl H. Canter
---------------------------
President - Director
September 4, 1996
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the provisions of the Texas Business Corporation Act, the
undersigned corporation adopts the following amendment to the Corporation's
Articles of Incorporation, which amendment was adopted by the shareholders of
the Corporation on August 22, 1996 by the holders of the outstanding common
stock, the only voting group entitled to vote thereon, by written consent
pursuant to Section 9.10 of the Texas Business Corporation Act. The number of
shares of common stock outstanding and entitled to vote on the amendment was
4,444,667 shares and the number of shares consenting to the amendment was
3,733,666 which was sufficient for approval by that group. All written notice
required by Article 9.10 has been given.
1. The name of the Corporation is C SQUARE VENTURES, INC.
2. The purpose of this Amendment is to accomplish a one-for-forty
reverse stock split of the outstanding common stock of this corporation as
follows:
Each 40 shares of the Corporation's outstanding Common Stock, $.003 par
value, shall be and they are hereby automatically changed (without any further
act) into one share of Common Stock, $.003 par value per share, provided that
any fractional shares shall be increased to the next whole share. Immediately
after the effective date of this amendment, the stockholders of record as of the
close of business on the effective date, shall be given notice to surrender
their certificates for shares of Common Stock to the transfer agent for
cancellation and reissuance in accordance with the terms of the foregoing.
The Board of Directors of the Corporation or any executive committee
thereof is empowered to adopt further rules and regulations concerning the
foregoing reverse stock split and to appropriately adjust any options, warrants
or other securities which are convertible into shares of the Corporation's
Common Stock, if any.
C SQUARE VENTURES. INC.
By: /s/Carl H. Canter
----------------------
Carl H. Canter
President
August 26, 1996
ARTICLES OF AMENDMENT BY THE
SHAREHOLDERS TO THE
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the Provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Article of
Amendment to its Articles of Incorporation.
ARTICLE I
The name of the corporation is C Square Ventures, Inc.,
ARTICLE II
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the corporation on October 31, 1989. Article IV of the
Articles of Incorporation is hereby amended to read in full as follows:
"The aggregate number of shares which the corporation shall have
authority to issue is sixteen million six hundred sixty-six thousand six hundred
sixty-six (16,666,666) at the par value of three tenths of a cent ($.003)."
ARTICLE III
The number of shares of the corporation outstanding at the time of the
adoption was 133,344,613; and the number of shares entitled to vote on the
amendment was 133,344,613.
ARTICLE IV
The number of shares which voted for the amendment, and the number of
shares which voted against the amendment was as follows:
FOR: 112,956,178
AGAINST: 24,000
ABSTAIN: 20,364,435
ARTICLE V
The amendment provides for an exchange of issued shares and the manner
in which the exchange is effected is as follows: All shares outstanding shall be
surrendered to the transfer agent in exchange for new shares at the rate of one
new share for each thirty shares surrendered. Fractional shares will not be
issued but cash in an amount equal to the fair market value of such fractional
shares will be issued in lieu thereof.
Dated this 6th day of November, 1989.
C SQUARE VENTURES, INC.
By:/s/ Carl H. Canter
-------------------------
Carl H. Canter, President
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
The undersigned natural person of the age of eighteen (18) years or
more acting as incorporator of a corporation under the Texas Business
Corporation Act hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation is C Square Ventures, Inc.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the corporation is organized is the transaction
of any and all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act.
ARTICLE IV
The aggregate number of shares which the corporation shall have
authority to issue is five hundred million (500,000,000) at the par value of ten
thousandths of a cent ($.0001).
ARTICLE V
The corporation will not commence business until it has received for
the issuance of shares consideration of the value of one thousand dollars
($1,000) consisting of money, labor done, or property actually received.
ARTICLE VI
The street address of its initial registered office is 1600 Smith
Street, Suite 4900, Houston, Texas 77002, and the name of its initial registered
agent at such address is Hank Vanderkam.
ARTICLE VII
The number of Directors constituting the initial Board of Directors is
three (3), and the names and addresses of the persons who are to serve as
Directors until the first annual meeting of the shareholders or until their
successors are elected and qualified are:
CARL H. CANTER
417 Goolsby Boulevard
Deerfield Beach, Florida 33442
ROBERTA WEHR
417 Goolsby Boulevard
Deerfield Beach, Florida 33442
HANK VANDERKAM
1600 Smith Street, Suite 4900
Houston, Texas 77002
ARTICLE VIII
The name and address of the incorporator is:
HANK VANDERKAM
Vanderkam & Sanders
1600 Smith Street, Suite 4900
Houston, Texas 77002
ARTICLE IX
A Director of the corporation is not liable to the corporation or its
shareholders or members for monetary damages for an act or omission in the
Director's capacity as Director, unless the act or omission involves a breach of
a Director's duty of loyalty to the corporation or its shareholders or members;
or the act or omission is not in good faith or involves intentional misconduct
or a knowing violation of the law; or the Director engages in a transaction from
which he receives an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the Director's office; or the act or
omission is one in which the liability of the Director is expressly provided for
by statute; or the Director engages in an act related to an unlawful stock
repurchase or payment of dividend.
ARTICLE X
The shareholders of the corporation shall not have a preemptive right
to acquire additional, unissued or treasury shares of the corporation, or
securities of the corporation convertible into or carrying a right to subscribe
to or acquire shares.
ARTICLE XI
The shareholders of the corporation by this Article are hereby
prohibited from cumulatively voting their shares at any election for Directors.
SIGNED this 27th day of September, 1988.
/s/Hank Vanderkam
----------------------------
HANK VANDERKAM, Incorporator
STATE OF TEXAS S
S
COUNTY OF HARRIS S
BEFORE ME, a notary public on this day personally appeared HANK
VANDERKAM, known to me to be the person whose name is subscribed to the
foregoing document and being by me first duly sworn, declared that the
statements therein contained are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 27th day of September,
1988.
/s/ Janet K. Webb
-------------------------
Notary Public in and for the
State of TEXAS
/s/ Janet K. Webb
-------------------------
Printed Name of Notary Public
My Commission Expires: 3/28/92
EXHIBIT 4.5
May 30, 1997
Mr. Robert L. Stewart
c/o ConSyGen, Inc
10201 South 51st Street, Suite 140
Phoenix, Arizona 85044
Re: ConSyGen, Inc.
------------------
Dear Mr. Stewart:
The undersigned hereby subscribes to the immediate acquisition of
__________ of your shares of Common Stock, $.003 par value (the "Securities"),
of ConSyGen, Inc., a Texas corporation (the "Company"), at a per share price of
U.S. $9.00, for aggregate consideration of U.S. $_______________. Upon your
acceptance of this subscription, the undersigned shall deliver to you U.S.
$_____________ by certified check or federal funds wire transfer against receipt
of certificates evidencing the Securities.
In connection with the purchase of the Securities, the undersigned
acknowledges, warrants and represents to you as follows:
1. The undersigned is acquiring the Securities for investment for its
own account and without the intention of participating, directly or indirectly,
in a distribution of the Securities, and not with a view to resale or any
distribution of the Securities, or any portion thereof.
2. The undersigned has knowledge and experience in financial and
business matters and has consulted with its own professional representatives as
it has considered appropriate to assist in evaluating the merits and risks of
this investment. The undersigned has been provided with and has carefully
reviewed the documents attached hereto as Exhibit A (together, the "Company
Information"). The undersigned has had access to and an opportunity to question
the officers of the Company, or persons acting on their behalf, with respect to
material information about the Company and, in connection with its evaluation of
this investment, has, to the best of its knowledge, received all information and
data with respect to the Company that the undersigned has requested. The
undersigned is acquiring the Securities based solely upon (1) the Company
Information; and (2) its independent examination and judgment as to the
prospects of the Company.
3. The Securities were not offered to the undersigned by means of
publicly disseminated advertisements or sales literature.
4. The undersigned acknowledges that an investment in the Securities is
speculative and the undersigned may have to continue to bear the economic risk
of the investment in the Securities for an indefinite period. The undersigned
acknowledges that the Securities are being sold to the undersigned without
registration under any state or federal law requiring the registration of
securities for sale, and accordingly will constitute "restricted
securities" as defined in Rule 144 of the Securities and Exchange Commission.
The transferability of the Securities is therefor restricted by applicable
United States Federal and state securities laws and may be restricted under the
laws of other jurisdictions.
5. The undersigned is an "accredited investor" as such term is defined
in Rule 501(a) of Regulation D of the Securities and Exchange Commission.
6. In consideration of the acceptance of this subscription, the
undersigned agrees that the Securities will not be offered for sale, sold or
transferred by the undersigned other than pursuant to (i) an effective
registration under the Securities Act of 1933, as amended ("the Act"), an
exemption available under the Act or a transaction that is otherwise in
compliance with the Act; and (ii) an effective registration under the securities
law of any state or other jurisdiction applicable to the transaction, an
exemption available under such laws, or a transaction that is otherwise in
compliance with such laws.
7. The undersigned understands that no U.S. federal or state agency has
passed upon the offering of the Securities or has made any finding or
determination as to the fairness of any investment in the Securities.
8. The Company will use its best efforts to register the Securities for
resale by the undersigned under the Act within 120 days from the date of
acceptance hereof.
ACCEPTANCE OF SUBSCRIPTION SUBSCRIBER
ConSyGen, Inc. _______________________________
Name:
By: /s/ Ronald I. Bishop Address:
-----------------------------
Ronald I. Bishop, President
Date: June 2, 1997
--------------------------
SCHEDULE TO EXHIBIT 4.5
TOTAL
NO. OF SHARES SUBSCRIBED PRICE PER SHARE SUBSCRIPTION PRICE
40,000 $9.00 $360,000
70,000 $9.00 $630,000
10,000 $9.00 $ 90,000
EXHIBIT 4.6
______________, 1997
ConSyGen, Inc.
c/o John G. Nossiff, Jr., Esq.
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, MA 02111
ATTN: Ronald I. Bishop, President and Chief Executive Officer
Re: ConSyGen, Inc.
------------------
Ladies and Gentlemen:
The undersigned hereby subscribes to the immediate acquisition of
_______ shares of Common Stock, $.003 par value (the "Securities"), of ConSyGen,
Inc., a Texas corporation (the "Company"), at a per share price of U.S. $______
for aggregate consideration of U.S. $___________ The undersigned is delivering
herewith to the Escrow Agent (defined below) at the above address U.S.
$__________ by certified check or federal funds wire transfer to the following
account:
BANK: FLEET PRIVATE BANKING
ABA: 011000138
SWIFT CODE: FLTBUS3B (For international wires only)
CITY: BOSTON
STATE: MASSACHUSETTS
ACCOUNT #: 93568 68063
ACCOUNT NAME: BROWN, RUDNICK, FREED & GESMER, CLIENT
TRUST FUND
ATTN: JOHN G. NOSSIFF, JR.
ORIGINATION OF FUNDS:
BANK:_______________________________________________
CITY:_______________________________________________
STATE:______________________________________________
AMOUNT OF FUNDS WIRED:______________________________
GIVE FOLLOWING INSTRUCTIONS TO ORIGINATING BANK:
- ------------------------------------------------
Originating Bank should instruct Fleet Private Banking to notify BRF&G
Accounting Department upon receipt of the funds - Use Code CSGI.
There is no minimum offering amount. Pending acceptance of this
subscription, the funds delivered herewith will be held in escrow by Brown,
Rudnick, Freed & Gesmer, counsel to the Company (the "Escrow Agent"), in an
interest-bearing account. In the event the funds are not received by the Closing
Date (August 29, 1997, unless extended by the Company) or the Company rejects
this subscription (which the Company reserves the right to do in its sole
discretion), the Company shall cause the Escrow Agent to return the funds to the
subscriber with interest earned thereon. Upon the Company's acceptance of this
subscription, the Company shall deliver the Securities to the undersigned at the
address indicated below and the Escrow Agent shall deliver the funds to the
Company. The Escrow Agent shall have no liability to the undersigned in
connection with acting as Escrow Agent, except for acts constituting fraud or
willful misconduct.
In connection with the purchase of the Securities, the undersigned
acknowledges, warrants and represents to the Company as follows:
1. The undersigned is acquiring the Securities for investment for its
own account and without the intention of participating, directly or indirectly,
in a distribution of the Securities, and not with a view to resale or any
distribution of the Securities, or any portion thereof.
2. The undersigned has knowledge and experience in financial and
business matters and has consulted with its own professional representatives as
it has considered appropriate to assist in evaluating the merits and risks of
this investment. The undersigned has been provided with and has carefully
reviewed the ConSyGen, Inc. Disclosure Memorandum dated August 26, 1997 (the
"Company Information"). The undersigned has had access to and an opportunity to
question the officers of the Company, or persons acting on their behalf, with
respect to material information about the Company and, in connection with its
evaluation of this investment, has, to the best of its knowledge, received all
information and data with respect to the Company that the undersigned has
requested. The undersigned is acquiring the Securities based solely upon (1) the
Company Information; and (2) its independent examination and judgment as to the
prospects of the Company.
3. The Securities were not offered to the undersigned by means of
publicly disseminated advertisements or sales literature.
4. The undersigned acknowledges that an investment in the Securities is
speculative and the undersigned may have to continue to bear the economic risk
of the investment in the Securities for an indefinite period. The undersigned
acknowledges that the Securities are being sold to the undersigned without
registration under any state or federal law requiring the registration of
securities for sale, and accordingly will constitute "restricted securities" as
defined in Rule 144 of the Securities and Exchange Commission. The
transferability of the Securities is therefor restricted by applicable United
States Federal and state securities laws and may be restricted under the laws of
other jurisdictions.
5. The undersigned is an "accredited investor" as such term is defined
in Appendix A.
6. In consideration of the acceptance of this subscription, the
undersigned agrees that the Securities will not be offered for sale, sold or
transferred by the undersigned other than
pursuant to (i) an effective registration under the Securities Act of 1933, as
amended ("the Act"), an exemption available under the Act or a transaction that
is otherwise in compliance with the Act; and (ii) an effective registration
under the securities law of any state or other jurisdiction applicable to the
transaction, an exemption available under such laws, or a transaction that is
otherwise in compliance with such laws.
7. The undersigned understands that no U.S. federal or state agency has
passed upon the offering of the Securities or has made any finding or
determination as to the fairness of any investment in the Securities.
The undersigned agrees to indemnify and hold harmless the Company and
its officers, directors, employees and agents from and against any and all
costs, liabilities and expenses (including attorneys' fees) arising out of or
related in any way to any breach of any representation or warranty contained
herein.
The Company agrees to file, within 45 days of Closing, a Registration
Statement on Form S-1 registering the shares for resale by the undersigned. At
the end of each 30 day period, after the expiration of such 45 day period,
during which the Registration Statement is not filed, a fee shall be paid to the
undersigned equal to two (2%) percent of the amount invested, but in no case
shall such fee exceed ten (10%) percent of the amount invested. Any fee shall be
payable in shares of common stock of the Company. The number of shares shall be
determined by dividing the dollar amount of the fee, determined in accordance
herewith, by $_______ (the per share purchase price hereunder). Any fee shall be
paid with shares within ten (10) days of the due date thereof.
ACCEPTANCE OF SUBSCRIPTION SUBSCRIBER
ConSyGen, Inc. ________________________________
Name: _________________________
Address: ______________________
By: /s/Ronald I. Bishop ______________________
--------------------- ______________________
Ronald I. Bishop, President
Dated:
-----------------
APPENDIX A
An "Accredited Investor" within the meaning of Regulation D under the Securities
Act of 1933 includes the following:
Organizations
- -------------
(1) A bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
insurance company as defined in section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958; an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors.
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(3) A trust (i) with total assets in excess of $5,000,000, (ii) not
formed for the specific purpose of acquiring the Securities, (iii) whose
purchase is directed by a person who, either alone or with his purchaser
representative, has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the proposed
investment.
(4) A corporation, business trust, partnership, or an organization
described in section 501(c)(3) of the Internal Revenue Code, which was not
formed for the specific purpose of acquiring the Securities, and which has total
assets in excess of $5,000,000.
Individuals
- -----------
(5) Individuals with income from all sources for each of the last two
full calendar years whose reasonably expected income for this calendar year
exceeds either of:
(i) $200,000 individual income; or
(ii) $300,000 joint income with spouse.
NOTE: Your "income" for a particular year may be calculated by adding to your
adjusted gross income as calculated for Federal income tax purposes any
deduction for long term capital gains, any deduction for depletion allowance,
any exclusion for tax exempt interest and any losses of a partnership allocated
to you as a partner.
(6) Individuals with net worth as of the date hereof (individually or
jointly with your spouse), including the value of home, furnishings, and
automobiles, in excess of $1,000,000.
(7) Directors, executive officers or general partners of the Issuer.
SCHEDULE TO EXHIBIT 4.6
TOTAL
NO. OF SHARES PRICE PER SUBSCRIPTION
SUBSCRIBED SHARE DATE ACCEPTED PRICE
15,000 $6.75 9/19/97 $101,250
20,000 $5.50 9/19/97 $110,000
2,000 $5.00 9/19/97 $ 10,000
15,000 $6.75 9/19/97 $101,250
50,000 $5.60 8/27/97 $280,000
50,000 $5.60 8/27/97 $280,000
EXHIBIT 4.7
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER
DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE
STATE SECURITIES LAWS, OR (II) AN EXEMPTION FROM REGISTRATION UNDER SUCH
LAWS IS AVAILABLE.
Warrant No. 64 STOCK PURCHASE WARRANT No. of Shares 200,000
To Subscribe for and Purchase Common Stock of
CONSYGEN, INC.
THIS CERTIFIES that, for value received, Howard R. Baer (together with
any subsequent transferees of all or any portion of this Warrant, the "Holder"),
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe for and purchase from CONSYGEN, INC., a Texas corporation
(hereinafter called the "Company"), at the price hereinafter set forth in
Section 2, up to two hundred thousand (200,000) fully paid and non-assessable
shares (the "Shares") of the Company's Common Stock, $.003 par value per share
(the "Common Stock").
1. Definitions. As used herein the following term shall have the
following meaning:
"Act" means the Securities Act of 1933, as amended, or a successor
statute thereto and the rules and regulations of the Securities and Exchange
Commission issued under that Act, as they each may, from time to time, be in
effect.
2. Purchase Rights. Subject to this Section 2, the purchase rights
represented by this Warrant shall be exercisable by the Holder in whole or in
part commencing on the date hereof.
Subject to the terms hereof, the purchase rights represented by this
Warrant shall expire two (2) years from the date hereof.
Subject to this Section 2, this Warrant may be exercised for Shares at a
price of five dollars ($5.00) per share, subject to adjustment as provided in
Section 6 (the "Warrant Purchase Price").
This Warrant may be redeemed by the Company upon 60 days written notice
to the Holder hereof at a price equal to the product of the number of Shares
issuable hereunder and the par value of the Shares ($.003). The Company may
exercise its redemption right by delivering or mailing to the Holder written
notice of redemption to the address according to the Company's records. Within
60 days after the date of the Company's notice of redemption hereunder, the
Holder shall tender to the Company at its principal offices the certificate or
certificates representing this Warrant, all in form suitable for transfer of
this Warrant to the Company, together with such documents as the Company may
reasonably require to effectuate such transfer. Upon its receipt of such
certificate(s), the Company shall deliver or mail to the
Holder a check in the amount of the redemption price determined in accordance
herewith. After the time at which the certificate(s) is required to be delivered
to the Company for transfer to the Company hereunder, the Holder shall have no
rights hereunder, including without limitation the right to exercise the
purchase rights evidenced by this Warrant. In the event that the Company elects
to exercise its redemption right hereunder, it may do so by canceling the
certificate(s) evidencing this Warrant and depositing the redemption price
determined hereunder in a bank account for the benefit of the Holder, whereupon
this Warrant shall be, for all purposes, canceled and neither the Holder nor any
transferee shall have any rights hereunder. In addition to any other legal or
equitable remedies which it may have, the Company may enforce its rights by
actions for specific performance (to the extent permitted by law).
3. Exercise of Warrant. Subject to Section 2 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Warrant Purchase Price per share multiplied by the number of
Shares then being purchased. Upon exercise, the Holder shall be entitled to
receive, within a reasonable time, a certificate or certificates, issued in the
Holder's name or in such name or names as the Holder may direct, for the number
of Shares so purchased. The Shares so purchased shall be deemed to be issued as
of the close of business on the date on which this Warrant shall have been
exercised.
4. Shares to be Issued; Reservation of Shares. The Company covenants
that the Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon issuance in accordance herewith, be fully
paid and non-assessable, and free from all liens and charges with respect to the
issue thereof. During the period within which the purchase rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the right represented by this Warrant.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
6. Adjustments of Warrant Purchase Price and Number of Shares. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Warrant, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Warrant.
7. No Rights as Shareholders. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally
distributed to holders of the capital stock of the Company concurrently with the
distribution thereof to the shareholders. Upon valid exercise of this Warrant
and payment for the Shares so purchased in accordance with the terms of the
Warrant, the Holder or the Holder's designee, as the case may be, shall be
deemed a shareholder of the Company.
8. Sale or Transfer of the Warrant and the Shares; Legend. The Warrant
and the Shares shall not be sold or transferred unless either (i) they first
shall have been registered under applicable State Securities laws, or (ii) such
sale or transfer is exempt from the registration requirements of such laws. Each
certificate representing any Warrant shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
9. THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN EXEMPTION UNDER APPLICABLE STATE SECURITIES LAWS.
10. Such Warrant and Shares may be subject to additional restrictions
on transfer imposed under applicable state and federal securities law.
11. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
the Holder at its address shown on the books of the Company or in the case of
the Company, at the address indicated therefor on the signature page of this
Warrant, or, if different, at the principal office of the Company.
13. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
14. Representations and Warranties of Holder. By accepting this
Warrant, the Holder represents and warrants that he, she or it is acquiring this
Warrant and the Shares for his, her or its own account, for investment and not
with a view to, or for sale in connection with, any distribution thereof or any
part thereof. Holder represents and warrants that he, she or it is (a)
experienced in the evaluation of businesses similar to the Company, (b) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (c) has the
ability to bear the economic risks of an investment in the Company, (d) has been
furnished with or has had access to such
information as is specified in subparagraph (b)(2) of Rule 502 promulgated under
the Act and (e) has been afforded the opportunity to ask questions of and to
receive answers from the officers of the Company and to obtain any additional
information necessary to make an informed investment decision with respect to an
investment in the Company.
15. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon exercise of this Warrant
shall survive the exercise and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
IN WITNESS WHEREOF, CONSYGEN, INC. has caused this Warrant to be
executed by its officer thereunto duly authorized.
ORIGINAL ISSUANCE AS OF: August 1, 1997
CONSYGEN, INC.
----------------------------------
By: Ronald I. Bishop, President
Address: 10201 South 51st Street
Suite 140
Phoenix, AZ 85044
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: CONSYGEN, INC.
1. The undersigned hereby elects to purchase _________ shares of Common
Stock of CONSYGEN, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. The undersigned further represents that such shares shall not be sold or
transferred unless either (1) they first shall have been registered under
applicable state securities laws or (ii) or an exemption from applicable state
registration requirements is available.
4. In the event of partial exercise, please re-issue an appropriate
Warrant exercisable into the remaining shares.
-------------------------------
Howard R. Baer
Address:
-----------------------
-----------------------
-----------------------
-------------------------------
(Signature)
-------------------------------
(Date)
EXHIBIT 4.8
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER
DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE
STATE SECURITIES LAWS, OR (II) AN EXEMPTION FROM REGISTRATION UNDER SUCH
LAWS IS AVAILABLE.
Warrant No. 63 STOCK PURCHASE WARRANT No. of Shares 100,000
To Subscribe for and Purchase Common Stock of
CONSYGEN, INC.
THIS CERTIFIES that, for value received, Kevin C. Baer (together with
any subsequent transferees of all or any portion of this Warrant, the "Holder"),
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe for and purchase from CONSYGEN, INC., a Texas corporation
(hereinafter called the "Company"), at the price hereinafter set forth in
Section 2, up to one hundred thousand (100,000) fully paid and non-assessable
shares (the "Shares") of the Company's Common Stock, $.003 par value per share
(the "Common Stock").
1. Definitions. As used herein the following term shall have the
following meaning:
"Act" means the Securities Act of 1933, as amended, or a successor
statute thereto and the rules and regulations of the Securities and Exchange
Commission issued under that Act, as they each may, from time to time, be in
effect.
2. Purchase Rights. Subject to this Section 2, the purchase rights
represented by this Warrant shall be exercisable by the Holder in whole or in
part commencing on the date hereof.
Subject to the terms hereof, the purchase rights represented by this
Warrant shall expire two (2) years from the date hereof.
Subject to this Section 2, this Warrant may be exercised for Shares at a
price of five dollars ($5.00) per share, subject to adjustment as provided in
Section 6 (the "Warrant Purchase Price").
This Warrant may be redeemed by the Company upon 60 days written notice
to the Holder hereof at a price equal to the product of the number of Shares
issuable hereunder and the par value of the Shares ($.003). The Company may
exercise its redemption right by delivering or mailing to the Holder written
notice of redemption to the address according to the Company's records. Within
60 days after the date of the Company's notice of redemption hereunder, the
Holder shall tender to the Company at its principal offices the certificate or
certificates representing this Warrant, all in form suitable for transfer of
this Warrant to the Company, together with such documents as the Company may
reasonably require to effectuate such transfer. Upon its receipt of such
certificate(s), the Company shall deliver or mail to the Holder a check in the
amount of the redemption price determined in accordance herewith. After
the time at which the certificate(s) is required to be delivered to the Company
for transfer to the Company hereunder, the Holder shall have no rights
hereunder, including without limitation the right to exercise the purchase
rights evidenced by this Warrant. In the event that the Company elects to
exercise its redemption right hereunder, it may do so by canceling the
certificate(s) evidencing this Warrant and depositing the redemption price
determined hereunder in a bank account for the benefit of the Holder, whereupon
this Warrant shall be, for all purposes, canceled and neither the Holder nor any
transferee shall have any rights hereunder. In addition to any other legal or
equitable remedies which it may have, the Company may enforce its rights by
actions for specific performance (to the extent permitted by law).
3. Exercise of Warrant. Subject to Section 2 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Warrant Purchase Price per share multiplied by the number of
Shares then being purchased. Upon exercise, the Holder shall be entitled to
receive, within a reasonable time, a certificate or certificates, issued in the
Holder's name or in such name or names as the Holder may direct, for the number
of Shares so purchased. The Shares so purchased shall be deemed to be issued as
of the close of business on the date on which this Warrant shall have been
exercised.
4. Shares to be Issued; Reservation of Shares. The Company covenants
that the Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon issuance in accordance herewith, be fully
paid and non-assessable, and free from all liens and charges with respect to the
issue thereof. During the period within which the purchase rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the right represented by this Warrant.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
6. Adjustments of Warrant Purchase Price and Number of Shares. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Warrant, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Warrant.
7. No Rights as Shareholders. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution
thereof to the shareholders. Upon valid exercise of this Warrant and payment for
the Shares so purchased in accordance with the terms of the Warrant, the Holder
or the Holder's designee, as the case may be, shall be deemed a shareholder of
the Company.
8. Sale or Transfer of the Warrant and the Shares; Legend. The Warrant
and the Shares shall not be sold or transferred unless either (i) they first
shall have been registered under applicable State Securities laws, or (ii) such
sale or transfer is exempt from the registration requirements of such laws. Each
certificate representing any Warrant shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
9. THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN EXEMPTION UNDER APPLICABLE STATE SECURITIES LAWS.
10. Such Warrant and Shares may be subject to additional restrictions
on transfer imposed under applicable state and federal securities law.
11. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
the Holder at its address shown on the books of the Company or in the case of
the Company, at the address indicated therefor on the signature page of this
Warrant, or, if different, at the principal office of the Company.
13. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
14. Representations and Warranties of Holder. By accepting this
Warrant, the Holder represents and warrants that he, she or it is acquiring this
Warrant and the Shares for his, her or its own account, for investment and not
with a view to, or for sale in connection with, any distribution thereof or any
part thereof. Holder represents and warrants that he, she or it is (a)
experienced in the evaluation of businesses similar to the Company, (b) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (c) has the
ability to bear the economic risks of an investment in the Company, (d) has been
furnished with or has had access to such information as is specified in
subparagraph (b)(2) of Rule 502 promulgated under the Act and
(e) has been afforded the opportunity to ask questions of and to receive answers
from the officers of the Company and to obtain any additional information
necessary to make an informed investment decision with respect to an investment
in the Company.
15. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon exercise of this Warrant
shall survive the exercise and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
IN WITNESS WHEREOF, CONSYGEN, INC. has caused this Warrant to be
executed by its officer thereunto duly authorized.
ORIGINAL ISSUANCE AS OF: August 1, 1997
CONSYGEN, INC.
------------------------------------
By: Ronald I. Bishop, President
Address: 10201 South 51st Street
Suite 140
Phoenix, AZ 85044
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: CONSYGEN, INC.
1. The undersigned hereby elects to purchase _________ shares of Common
Stock of CONSYGEN, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. The undersigned further represents that such shares shall not be sold or
transferred unless either (1) they first shall have been registered under
applicable state securities laws or (ii) or an exemption from applicable state
registration requirements is available.
4. In the event of partial exercise, please re-issue an appropriate
Warrant exercisable into the remaining shares.
----------------------------------
Kevin C. Baer
Address: _______________________
__________________________________
__________________________________
----------------------------------
(Signature)
----------------------------------
(Date)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> MAY-31-1997 MAY-31-1998
<PERIOD-START> JUN-01-1996 JUN-01-1997
<PERIOD-END> AUG-31-1996 AUG-31-1997
<CASH> 0 51,084
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 654,845
<PP&E> 0 416,750
<DEPRECIATION> 0 125,133
<TOTAL-ASSETS> 0 1,003,833
<CURRENT-LIABILITIES> 0 950,344
<BONDS> 0 1,000,000
0 0
0 0
<COMMON> 0 41,760
<OTHER-SE> 0 (988,271)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 0 1,003,833
<SALES> 0 0
<TOTAL-REVENUES> 0 5,915
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,226,101 630,928
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 125,313 118,997
<INCOME-PRETAX> (1,351,414) (744,010)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,351,414) (744,010)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,351,414) (744,010)
<EPS-PRIMARY> (.17) (.05)
<EPS-DILUTED> 0 0
<FN>
<F1> Accumulated deficit net of additional paid in capital and common stock
subscribed.
</FN>
</TABLE>
