CHEQUEMATE INTERNATIONAL, INC.
57 West 200 South, Suite #350
Salt Lake City, Utah 84101
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
to be used at the Annual Shareholders Meeting of Chequemate International, Inc.,
a Utah corporation (the "Company"), formerly known as Automated Compliance &
Training, Inc. The meeting will be held on Friday, August 15, 1997 at 3:00 p.m.
MST, at the corporate headquarters located at 57 West 200 South, Suite #350 Salt
Lake City, Utah, and any adjournment thereof.
The solicitation of proxies in the enclosed form is made on behalf of the Board
of Directors of the Company. It is anticipated that the mailing of this Proxy
Statement will commence on July 18, 1997. In all events, the proxy materials
will be mailed at least 20 days prior to the Annual Meeting.
The Company will bear the cost of the meeting and the cost of soliciting
proxies, including the cost of mailing the proxy material. In addition to
solicitation by mail, directors, officers, and regular employees of the Company
(who will not be specifically compensated for such services) may solicit proxies
by telephone or otherwise. Arrangements will be made with brokerage houses and
other custodians, nominees, and fiduciaries to forward proxies and proxy
material to their principals, and the Company will reimburse them for their
expenses.
Shareholders who execute proxies may revoke them by giving written notice to the
secretary of the Company at any time before such proxies are voted. Attendance
at the meeting shall not have the effect of revoking a proxy unless the
shareholders so attending (1) shall, in writing, notify the secretary of the
meeting at any time prior to the voting of the proxy, or (2) shall vote in
person at the meeting. If a shareholder specifies how the proxy is to be voted
with respect to any of the proposals for which a choice is provided, the proxy
will be voted in accordance with such specifications. If a shareholder fails to
so specify with respect to such proposals, the proxy will be voted FOR proposals
1, 2, 3 and 4.
CORPORATE MATTERS
The Board of Directors does not know of any corporate matter other than the
following:
(a) to ratify the action of the Board of Directors in the purchase of the assets
of Quality Products Distribution, Inc., (b) to ratify the action of the Board
of Directors to license the technology and intellectual property of Applied
Technology Group, LLC., (c) to elect the board of directors, and (d) to
confirm the appointment of auditors for the current fiscal year, that are
expected to be presented for consideration at the meeting. However, if other
matters properly come before the meeting, the persons named in the accompanying
proxy intend to vote thereon in accordance with their judgment.
All proxies received pursuant to his solicitation will be voted except as to
matters where authority to vote is specifically withheld and, where a choice is
specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the proxy
solicited by the Board of Directors of the Company intend to vote for the
nominees for election as directors of the Company listed in this Proxy
Statement, and for all other proposals discussed in this Proxy Statement.
OUTSTANDING VOTING SECURITIES
Only Shareholders of record at the close of business on June 30, 1997, the
record date for the meeting will be entitled to notice of and to vote at the
meeting. On the record date, the Company had 13,496,841 issued and outstanding
shares of Common Stock, which are the only securities of the Company entitled to
vote at the Shareholders' meeting, each share being entitled to one vote. A
simple majority of the total shares outstanding is required to elect directors
and ratify or approve the other items being voted on at this time.
Listed in the following table are the only beneficial owners as of June 30,
1997, of more than five percent (5%) of the Company's outstanding Common Stock.
In addition, this table includes the outstanding voting securities beneficially
owned by each of the executive officers listed in the Summary Compensation Table
and the number of shares owned by directors and executive officers as a group.
Any voting securities beneficially owned by directors and director nominees are
disclosed under Election of Directors, below.
Title of Class Name of Currently Acquirable Percent
Beneficial Owner Owned Within 60 Days of Class
Common Blaine Harris 2,560,371 35,000 19%
Common Robert Warfield 1,000,000 *
Common Hal Glick 528,962 *
Common All Directors and 4,099,333 99,286 31%
Executive officers
as a group (6
Persons, including
Harris, Warfield,
Glick)
* This Director holds less than five percent (5%) of the total issued and
outstanding shares of common stock of the Company.
RATIFICATION OF THE ASSET PURCHASE OF QUALITY PRODUCTS DISTRIBUTION INC.
At the meeting, a vote will be taken to ratify the action previously taken by
the board of directors to purchase the assets of Quality Products Distribution,
Inc (QPD). The board has authorized the purchase of the assets of QPD, and the
purchase of QPD was finalized in the fourth quarter of fiscal year 1996. The
vote of the shareholders simply ratifies previous action of the board of
directors. A negative vote will not have the effect of voiding or reversing the
transaction. Please see the description of the QPD business in the Products and
Services section of this proxy statement.
RATIFICATION OF THE LICENSING AGREEMENT FOR THE TECHNOLOGY AND INTELLECTUAL
PROPERTY OF APPLIED TECHNOLOGY GROUP, LLC.
At the meeting, a vote will be taken to ratify the action of the board of
directors to license the assets of Applied Technology Group, LLC. (ATG). The
board has authorized the License Agreement of the technology and intellectual
property of ATG. The vote of the shareholders simply ratifies previous action
taken by the board of directors. A negative vote will not have the effect of
voiding or reversing the transaction. Please see, at page 10, the description
of the business of the Company conducted pursuant to the license agreement.
ELECTION OF DIRECTORS
At the meeting, six (6) directors are to be elected each to hold office until
the next annual meeting and until his respective successor has been elected and
qualified. If any nominee listed in the table on the following page should
become unavailable for any reason, which the management does not anticipate, the
proxy will be voted for any substitute nominee or nominees who may be selected
by the management prior to or at the meeting, or, if no substitute is selected
by the management prior to or at the meeting, for a motion to reduce the
membership of the Board to the number of nominees available. The information
contained in this Proxy Statement concerning the nominees and their security
holdings has been furnished by them to the Company.
The following table contains certain information concerning the nominees for
the Board of Directors of the Company.
Name and Principle Occupation or Age First Shares of Percentage of
Employment Became a Common Stock Common Stock
Director Beneficially Outstanding
Owned
Blaine Harris 58 1994 2,595,371 19%
CEO and President of the Company.
Elected as an officer of the
Company in 1994
Harold P. Glick 55 1995 528,962 3.9%
Partner in the real estate
company of Moore Warfield & Glick.
Robert E. Warfield 56 1995 1,000,000 7.4%
Partner in the real estate company
of Moore Warfield & Glick.
Chuck Coonradt 53 1996 11,000 *
Chairman and CEO of the Game of
Work, Inc. a management consulting
firm
Lavar M. Butler 64 1995 35,000 *,1
Senior VP of the Company.
Elected as an officer of
the Company in 1995
Bert Alvey 45 Proposed 321,429 *
President Chequemate Third Director
Dimension, Inc.
*This Director owns less than three percent (3%) of the total issued and
outstanding shares.
1 Mr. Butler's 35,000 shares are shares which he has the right to acquire
within sixty days pursuant to options granted through May 31, 1997.
Business Experience
Blaine Harris. Chairman, Director, CEO and President. Mr. Harris is an alumnus
of Idaho State University, where he majored in Business and Marketing. Mr.
Harris has extensive experience in real estate with his primary focus being
commercial and residential project development. From 1986 to 1991, he served
as Chief Executive Officer and Chairman of the Board of Directors of
Help-U-Sell, Inc. and was involved with Help-U-Sell as a partner of Conquest
Management, a Utah partnership, which managed and owned a 49% interest in Help-
U-Sell. During his administration, Help-U-Sell grew form 118 franchises to 650
plus franchises and was listed as the fastest growing real estate franchising
organization in the country. In 1991, the Help-U-Sell parent company, Mutual
Benefit Life, was taken over by the New Jersey State Insurance Regulators and
its subsidiaries were liquidated, including Help-U-Sell, Inc. In 1991, Mr.
Harris formulated and began development of Chequemate International, Inc. Mr.
Harris is also a Director of Fountain Fresh Inc.
Lavar Butler. Director and Senior Vice President. Mr. Butler has a BS degree
in Industrial Management. Mr. Butler spent 25 years as a General Manager, Vice
President and President while managing manufacturing and marketing companies in
Utah, Indiana, England and California prior to joining AC&T in the spring of
1992.
Harold P. Glick. Director. Mr. Glick received his BS degree in Accounting from
the University of Mar
yland in 1965 and became a Certified Public Accountant the following year. Mr.
Glick successfully built and managed a family-owned retail business prior to
joining Mr. Robert Warfield as a partner in the real estate Company of Moore,
Warfield and Glick. Additionally, since 1988, Mr. Glick has been a regional
owner of Help-U-Sell Real Estate in Virginia, Maryland, Washington D.C. and
Delaware. Mr. Glick served as President of the Greater Ocean City, Maryland,
Board of Realtors in 1988, is a member of the Advisory Board of Nations Bank and
serves on the Maryland Governor's Economic Development Committee.
Robert E. Warfield. Director. Mr. Warfield has a BS Degree in Economics from
Western Maryland College. He has an extensive background in real estate and
regional sales management with the Weyerhaeuser Corporation. Mr. Warfield first
became licensed in real estate in 1962, and in 1975 started Warfield Real
Estate. He has been in the real estate and development business in Ocean City,
Maryland since 1971. For the past 17 years Mr. Warfield has been President of
Moore, Warfield, and Glick, Inc., with real estate sales over $100 million and
rentals of $12 million. Additionally, since 1988, Mr. Warfield has been a
regional owner of Help-U-Sell Real Estate in Virginia, Maryland, Washington D.C.
and Delaware. Mr. Warfield currently serves on the Board of Directors of
Atlantic General Hospital and Ocean City Golf and Yacht Club. He has also
served as a director of Second National Service Corp., and Salisbury School.
Chuck Coonradt. Director. Mr. Coonradt is Chairman of the Board and CEO of The
Game of Work, a Utah-based corporation engaged in providing management and
personnel training for its corporate clients in the fields of goal-setting and
profit improvement. Clients of the firm include Quaker Oats, Wendy's, The
Chicago Tribune, First Interstate Bank, Dow Chemical and Pepsi-Cola.
Bert Alvey. Proposed Director, President of Chequemate Third Dimension, Inc.
Mr. Alvey graduated from the University of Utah with a BS degree in Journalism
and Mass Communications in Telecommunications (Radio and Television
Broadcasting). Sixteen years of experience in the audio/video field through
sales, marketing and management of A/V products to consumers. Professional
video sales to Television Broadcasters, State Government Agencies, Boards of
Education, School Districts, Universities, Hospitals and Healthcare Agencies,
Production Houses, Military and Federal Government Facilities in the
intermountain area.
Organizational skills and discipline gained through eight years of military
service as a Naval Aviator. Ranked one out of twenty-five graduates Naval
Flight Training, selected to "Commodores List" for superior performance in all
facets of primary flight training, and "Student of the week" upon completion of
primary flight training. Graduate of Naval Fighter Weapons School (Top Gun)
designated air combat adversary instructor. Responsible for personnel
placement and administratively coordinating over 110 men and women and 100
million dollars worth of aircraft and parts. Gained money management skills as
a securities assistant manager for First Security Bank. Mr. Alvey was the
former President of the ATG group through the research and development stage of
the Realeyes product.
EXECUTIVE OFFICERS
Name Age Positions Held Current Term of
Office or Directorship
and period of Service
Ken Redding 34 Executive Vice Current Term August
President 1996- August 1997.
Service since November
1994
Greg L. Popp 28 Secretary / Current Term June 1996-
Treasurer and August 1997. Service
C.O.O. CMI since June 1996
John Garrett 55 VP, Financial Current Term June 1996-
Advisor to the June 1997. Service
President since May 1996
Kent Summers 36 President AC&T Current Term August 1996-
Direct August 1997. Service
since May 1995
Business Experience
Kenneth D. Redding. Executive Vice President. Mr. Redding is an alumnus of
California Sate University, Sacramento where he majored in Business
Administration and Marketing. From 1985 to 1992, Mr. Redding was involved in
the ownership and operation of several Help-U-Sell real estate franchise offices
throughout Northern California. Mr. Redding is the son-in-law of Blaine Harris
.
Greg L. Popp. Secretary / Treasurer and Assistant Operations Officer. Mr. Popp
graduated from the University of Utah with a BS degree in finance. From 1990
until 1995, he was employed by the law firm of Callister, Duncan & Nebeker.
During this time he was involved in creating and maintaining a new compensation
package for senior and associate level attorneys, quarterly and annual reports
to the executive committee and board of directors, and assisting the firm
administrator in general administrative tasks. In January 1995, Mr. Popp joined
Automated Compliance & Training as the assistant controller. In August 1995,
Mr. Popp became the VP of Operations of the Company and in March 1996 he was
elected by the Board of Directors as the Secretary / Treasurer.
John Garrett. Vice President, Financial Advisor to the President. Mr. Garrett
received his BS degree in finance from Brigham Young University in 1967. He
also graduated from Pacific Coast Banking School, University of Washington in
1983. He has 15 years executive management experiences in banking and was a
founder and executive officer of First Beverly Bank, Beverly Hills California.
He has developed, owned and/or managed a variety of financial, manufacturing
and industrial businesses over the past 20 years.
Kent Summers. President of AC&T Direct. Mr. Summers has a BS degree in
Marketing Education and a Masters degree in Business Education from Utah State
University. From 1987 until 1992, he was employed by Morton Thiokol and the
Thiokol Corporation Space Operations in Brigham City, Utah. In this capacity,
he was engaged in management education, safety and human resources functions.
From 1992 until 1994 Mr. Summers was the manager of the quality management and
safety department of Beehive Clothing Mills in Salt Lake City, Utah. This
assignment involved responsibilities for OSHA Compliance. In 1994, he created a
start-up computer based training company known as ASKESIS Corporation. This
company developed computer based training as a multi-media database computer
product for inventory control.
EXECUTIVE COMPENSATION
The table set forth on the following page contains information about the
remuneration received and accrued during fiscal years 1996 and 1997 from the
Company and its subsidiaries by the Chief Executive Officer and each of the
most highly compensated executive officers of the Company.
Name and Principal Fiscal Year Salary ($) Bonus ($) All Other Annual
Position Compensation
Blaine Harris, CEO 1997 $100,000 $1,015 $2,443
1996 $100,000 $355 $24,174*
Lavar Butler, President 1997 $60,000 $650 $2,166
1996 $59,583 $379 $2,400
Ken Redding, Executive 1997 $54,000 $585 $3,249
VP 1996 $54,000 $379 $1,662
John Garrett, VP 1997 $48,370 $390 $1,642
1996 $0.00 $0.00 $0.00
Kent Summers, Pres. 1997 $50,000 $541 $4,413
AC&T Direct 1996 $45,833 $271 $3,689
The following chart shows the stock options that were granted to any executive
officer of the Company during the last completed fiscal year.
Name and Principal Total Options Granted Total Options Vested
Position
Blaine Harris, CEO 70,000 35,000
Lavar Butler, President 70,000 35,000
Ken Redding, Executive VP 70,000 28,000
Greg L. Popp, Sec. / Tres. 70,000 14,000
John Garrett, Vice President 70,000 7,000
Kent Summers, President 40,000 8,000
Other Executive Officers 60,000 15,000
(2)
* This amount includes payment of $17,174 in deferred compensation from previous
fiscal years.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
A proposal will be presented at the meeting to approve the appointment of Jones,
Jensen & Company as the Company's independent public accountants. The
affirmative vote of the Shareholders of at least a majority of the outstanding
shares of common stock present and entitled to vote at the meeting is required
for the confirmation of appointment of auditors for the current fiscal year.
BUSINESS
History of the Company
The Company was incorporated under the laws of the State of Texas on April 21,
1989 under the name Ainsley Corporation. The Company issued its initial shares
of common stock on April 25, 1989 (inception) and was organized primarily for
the purpose of raising capital to take advantage of potential business
opportunities. The name of the Company was later changed to Automated
Compliance & Training, Inc. (AC&T), with Utah the state of incorporation. On
September 3, 1996, AC&T merged with its wholly owned subsidiary Chequemate
International, Inc. (the "Company" or "CMI") and assumed the name of the
subsidiary.
On December 31, 1992, the Company obtained the title and interest in a computer
software product that has application for OSHA compliance and training. The
software is designed to train employees on procedures and tracking of compliance
with OSHA regulations. The software has applications in the medical, dental,
industrial and governmental fields and can be modified for use in other areas.
The Company has also developed and is marketing a preventing sexual harassment
training and management documentation software product known as "Conduct".
On November 15, 1994, The Company acquired all of the outstanding capital stock
of CMI, a marketing company of family and small business finance products. In
addition, the Company purchased Families in Focus, Inc., a Utah corporation.
Chequemate International, Inc. was incorporated under the laws of the State of
Utah in March 1992. CMI, and it's subsidiaries, provide financial record
keeping and money management services to individuals and small business.
On June 15, 1992, CMI entered into an agreement with its majority owned (51%)
subsidiary Data Control Inc. (DCI) whereby DCI is to perform computer processing
required by CMI for its financial record keeping and money management services.
The agreement stipulates that CMI is not to participate in any profits of DCI
until July 1, 1997.
On September 3, 1996 AC&T merged with its wholly owned subsidiary CMI and
officially changed its name to Chequemate International, Inc. CMI maintained
it's subsidiaries of FIF and DCI as previously outlined.
The Company emphasizes innovation through advanced technology in the industries
of finance, communications and entertainment. It is the objective of CMI to
take workable ideas in technology and intellectual property and transform them
into viable market opportunities in each of the three industries of focus.
CMI's main focus is on two rapidly growing markets, Small Business and
Independent Contractors. The divisions of finance and communications provide
products that enhance the ability of the small business and independent
contractor to successfully compete in today's marketplace. CMI provides these
financial and communicational products through the use of cutting edge
technology.
The entertainment division will bring an even larger international flare to the
Company. The entertainment division will also focus on the use of cutting edge
technology to produce immediate short-term cash flow and a sustained long-term
cash flow for the Company.
The following breakdown of the three divisions in terms of products and
services, distribution methods and competition will highlight the new focus of
the Company.
Principal Products and Services
Finance
"Changing the financial course of America, one family at a time." This
is the mission statement of the financial arm of the Company, and statistics
seem to support the need for such a change. According to the U.S. Social
Security Department, only two (2%) percent of Americans will retire
financially secure. The rest will rely on some degree of support from family,
charity, friends or the government. With debt overwhelming the majority of
families in the United States, the Company has developed a powerful and
effective financial program enabling individuals, families and small
businesses to take and maintain control of their financial futures.
The Company bases its financial programs on The Four T's - tracking,
targeting, trimming and training. Through its FastrakTM System, the Company
provides a method to quickly and easily track spending and income,
generating monthly reports that pinpoint exactly where each penny was spent.
Targets, or goals, are then set based on spending information, providing the
means and motivation to trim unnecessary expenditures. Finally, the Company
offers educational and training opportunities that build positive spending and
money-management habits, a necessity for long-term financial success.
The Chequemate Financial Manager (CFM) program takes the Fastrak System
a step further by offering a debt restructuring and an accelerated repayment
program. When combined with Fastrak, CFM represents a means to not only get
out of debt (in less than 10 years in most cases, including a mortgage), but
to stay out of debt permanently. The CFM program provides simple, but
powerful tools to assist individuals and families in achieving freedom from
debt, establishment of financial goals, control of financial resources, and
realization of financial freedom.
Data Control, Inc. (DCI), the 51% owned subsidiary of the Company, performs all
computer processing required by the Company for its family and business finance
products, Chequemate Financial Manager, and tax record keeping systems.
Chequemate Tele-Services Inc., a fifty-one percent (51%) owned subsidiary of the
Company, provides automated telephone processing of Visa and MasterCard credit
card purchases through its TelechargeTM system. With no equipment or software
requirements and 24-hour toll free access for the end user, Telecharge is
specifically designed to facilitate payments to small and home-based businesses,
network marketers and sales personnel.
Families in Focus, a wholly owned subsidiary of the Company, markets a program
of self guided activities that enrich and strengthen family life in seven key
areas. Families choose activities specifically designed to strengthen their
ties in the seven areas from the "Families in Focus" manual, a United Nation's
endorsed publication. Through music and instruction in basic social skills and
money management concepts (part of the seven key areas), Elementary and Junior
High School students and their parents are brought together in a stimulating
activity where the parents are introduced to the Chequemate Family program. The
Families in Focus program has been tested and refined over twenty-two years of
practical use.
Communications
Satellites and computers are more and more becoming the foundation for
communications, and the Company is capitalizing on a number of opportunities
presented in the industry.
In a joint venture with HoliCow, Inc., the Company designs and develops
interactive Internet web sites for financial advisors. This venture, Web
Dynamics, provides a web presence that changes content each time the site is
accessed. This turnkey web presence includes helpful tips to make life easier,
weekly articles on financial topics and a series of financial calculators,
enabling the financial advisor to maintain constant communication with
customers.
The Company uses the latest in communication technologies to offer continuing
financial education and support to participants and distributors of the Fastrak
and CFM systems. Through a Satellite network, the Company regularly broadcasts
programs dealing with in-depth financial matters that arm its viewers with the
knowledge and information necessary to get the most out of a growing network of
financial offerings.
Through AC&T (Automated Compliance & Training) Direct, a wholly owned subsidiary
, the Company uses innovative computer teaching technology to provide
instruction on such constantly changing issues as sexual harassment and
Occupational Safety and Health Administration (OSHA) requirements. AC&T
Directs' instructional software packages not only train employees on these
issues (information is updated as related laws change), but also document
compliance with training requirements, providing a solid defense against the
growing number of lawsuits stemming from on-the-job injuries.
Entertainment
In April of 1997, CMI established Chequemate Third Dimension, Inc. (CTD), a
wholly owned subsidiary dedicated to the commercialization of breakthrough
technologies in the entertainment industry. Advanced Technology Group, LLC is
the developer of state-of-the-art 3-D television, which is currently being
manufactured and marketed by CTD. CTD has acquired the exclusive worldwide
license to this 3-D technology.
This revolutionary new system, called Realeyes 3D, is used to show 3-D images on
any television. The system is capable of displaying pre-processed stereoscopic
imagery, or converting two-dimensional media into three-dimensional images in
real time. Realeyes 3D accepts NTSC or PAL compatible signals from network
broadcasts, video game consoles, satellite transmissions, cable decoders, VCR's,
or any video component. After receiving a composite RCA or S-VHS video input
from a signal source, Realeyes 3D digitally processes the images and displays
them in real-time on any standard television. Now, any television set can
transform images from a flat 2-D screen into true 3-D images.
Distribution Methods
Finance
The CFM program is distributed through a network of CMI independent
representatives. Currently, CMI representatives are located in 19 States
ranging from Hawaii to Florida, and number more than 275. CMI has also
established a network of Regional and Center Managers across the United States.
The current number of established Regions is 19, with over 75 Centers.
Regional and Center Managers and Independent Representatives are made up of
local financial professionals or individuals looking for an opportunity to
provide the best financial management systems available to the market today.
These individuals are committed to changing the financial course of their
clients from indebtedness to financial prosperity.
CMI continues to operate under a written agreement with Safeguard Business
Systems, Inc. in which CMI has adapted Safeguard's one-write Check Writing
System into a vehicle to deliver the CashFlow PLUS system to small businesses.
Safeguard is the leading provider of one-write check systems in North America,
and the Safeguard one-write systems are now being provided through over 800
distributors across the United States, Canada and abroad. CMI is presently
interfacing with selected Safeguard Distributors.
There are two main sources of distribution for the Telecharge program. The
first distribution method is through direct marketing companies and small and
home based business associations. There are over thirteen direct marketing
companies offering the Telecharge program to suppliers and distributors of their
products. The Company is the primary credit card acceptance provider for this
market. This status is a result of aggressive positioning by the Company
through industry association memberships, cooperative vendor relationships,
direct mail campaigns, and telephone solicitations. In September 1996, the
Company became a supplier member of the Direct Selling Association (DSA).
Attendance at the annual convention of the DSA resulted in contact with over
thirty-five (35) representatives of new direct marketing companies.
In April of 1997, the Company became a registered agent of Cardservice
International, Inc. (CSI). Through this relationship, CSI has agreed to allow
their two thousand (2,000) representatives to market and sell the Telecharge
program. CSI is one of the largest processors of credit card transactions in
the United States. Initial marketing of the Telecharge program is beginning i
n July of 1997. Initial response of the CSI representatives has been extremely
positive.
The Families in Focus program is marketed through a non-profit organization
called "Families in Focus". Through a musical presentation, elementary aged
children and their parents are taught the seven basic keys to family success.
The Families in Focus manual is also sold to various organizations interested
in strengthening family relations and family communication.
Communications
Distribution of the Web Dynamics program is beginning in July of 1997 at the
National Convention of Financial Planners in Pennsylvania. Over one thousand
(1,000) representatives of national and local financial planning institutions
will be present at the convention. Those attending the convention represent
136,000 financial planners nationwide. CMI will use in house sales
representatives to call on the leads generated from the conference.
Also, two financial planning firms located in Northern California are currently
representing the Web Dynamics and CFM programs to their base of over 3,000
independent financial planners. These firms represent clients such as the
California State Small Business Association, the California State Police
Association, and various railroad companies located in the Western United
States.
The OSHA compliance software package ("Safety & Health Plus") along with the
preventing sexual harassment training software program ("Conduct") are marketed
through AC&T Direct, a wholly owned subsidiary of the Company. AC&T Direct was
incorporated January 1995 and assumed the operations and marketing of both
software product lines. AC&T Direct is working with several national
associations for marketing the two products to Medical, Dental, Mortuaries and
Industrial users. The products are also marketed through trade associations,
government agencies and directly to businesses.
AC&T Direct continues to develop and market its product under a patent license
from Harding and Harris Behavioral Research Inc. The patented process provides
for a method of automated indexing of OSHA compliance software as developed by
the Company. The preferred embodiments of the patent are disclosed in the
United States patent application designated as file #501,011 and filed September
9, 1992 in the United States patent office as serial #4,611,289.
Entertainment
Distribution of the initial units of the Realeyes 3D product began July 10, 1997
with an initial shipment of four hundred units. Approximately 2,100 units are
projected for manufacturing and shipping in the following week, with weekly
production runs of 2,500 projected to commence July 21, 1997. Initial orders of
the Realeyes 3D product stand at approximately 2,500 units. The Company will
send out an order form mailing to over 13,000 customers who have responded to
the Realeyes product and are waiting for shipping to begin.
Future distribution of this product will be through conventional retail and
wholesale outlets in the United States, Canada and Asia. A distribution
agreement with Telemedia Latinoamericana S.A. for South America has been
formalized and will include distribution throughout all of South America and
much of Central America.
Another distribution Agreement has been signed for Russia with Russia California
Associates. Other Agreements are under negotiation in Europe and Asia. Inquires
have been received by the Company from several direct marketing companies.
Currently, the Company has not formalized plans to market through direct
marketing outlets.
Status of Publicly Announced Products or Service
AC&T Direct has released the full Beta test of the windows version of the Safety
and Health plus product. Beta tests of the product will be used in various
associations that the AC&T Directs services throughout the country.
Publication of the book called "The Four Laws of Debt Free Prosperity" has
continued throughout fiscal year 1997 and through the beginning of fiscal year
1998. The book is now being published in paper back, and is the center of a
weekly radio show called "Principles with Promise" which airs nationwide on
Sunday mornings from 9:00 am to 10:00 am MST. Mark VanWagoner hosts the show.
Sales of the book for the first year of publication have exceeded the
expectations of the Company and can be found in many bookstore chains across the
country and into Canada. The Company is currently negotiating the rights for a
foreign publisher on the rights to a Spanish version of the book.
Competition
Finance
CMI has spent four years developing a finance system of individual and small
business services. The Company feels after years of research and development
there is no other company or system that provides the broad range of financial
services offered by CMI. There are computer based software packages that will
provide an after point of purchase or month end reconciliation, but none applies
the point of purchase principles of financial management, behavioral change and
discipline created by CMI's Fastrak system.
Communications
The computer software which AC&T Direct markets is part of an industry
characterized by rapid growth and intense competition. While pricing is still
the principal method of competition, service and quality are important ancillary
competitive considerations.
At present, the financial professional market segment is rapidly moving toward
creating an Internet presence and increasing communication with clients via the
Internet. Up to this point in time, the source of obtaining an internet
presence has been through standard internet presence providers, providing a
general, static web page; which market is highly competitive. Conversely, the
Web Dynamics product approaches the broad opportunity in the financial community
with a very focused and unique approach to providing an Internet presence. This
direction centers in on the specific needs of the financial related market. Web
Dynamics will provide the financial professional with a site that dynamically
changes, offers the utmost in professional image and provides client focused
tools and information all while providing the professional with the capability
of customizing key areas of the site right at their fingertips. The Company has
not seen any competitive product offering to the financial professional
marketplace.
Entertainmen
At present, the Company has not found a similar technology in the
marketplace or ready to be manufactured. Other companies are developing 3D
technologies that are cost prohibitive and not mass marketable. Management of
the Company has visited and viewed 3D technologies of Sony, Sanyo, Sharp and
Phillips, and have not found 3D technology that can compete against Realeyes 3D
in the following four categories:
1) Eye dominance: The Realeyes product allows viewers to adjust
their pair of glasses based on eye dominance. Eye dominance capability
allows the viewer to see 3D images without side effects such as
eyestrain or headaches. The Realeyes product is the only developed or
marketable product that incorporates eye dominance technology.
2) Depth Adjustment: The Realeyes product allows the viewers to
adjust the level of depth they see on the television set. The 3D
products being developed do not allow any adjustment of the depth of the
picture. This makes it extremely difficult for multiple viewers to find
a comfortable amount of depth.
3) Compatibility: Currently developed 3D technologies require a
special system or television set. The Realeyes 3D product is compatible
with any television set, and can be viewed with the NTSC and PAL
broadcasting signals.
4) Cost: Current 3D systems developed and ready for manufacturing
are cost prohibitive for a mass market. These systems cost two to three
times more expensive then the Realeyes 3D product.
The Realeyes product is currently without competition. The product is
currently being manufactured and shipped. This gives the Company first mover
advantages in market penetration and name recognition. Mass marketing of the
product will begin in August of 1997.
Patents and Trademarks
In connection with its business operations, the Company will depend upon certain
patents, trademarks, or licenses with respect to the conduct of its business.
At present, AC&T Direct has licensed a patent for indexing information from
Harding and Harris Behavioral Research, Inc, and CMI has patented the three
digit code and design elements of its CFM programs. The Company has filed
trademark applications with the U.S. Patent & Trademark Office as follows:
ITEM: REGISTRATION DATE:
Automated Compliance &
Training with Design September 26, 1995
Chequemate August 15, 1995
Chequemate International with Design August 22, 1995
Chequemate International August 29, 1995
Provisional Patent on May, 1997
Licensed intellectuals property
on Realeyes product
Taxtutor May 25, 1993
CASHFLOW Plus September 1, 1995
Lighthouse Design September 29, 1995
Safety and Health Plus and Design September 29, 1995
Conduct Preventing Sexual Harassment September 29, 1995
Employees
As of June 30, 1997, the Company and its subsidiaries had 20 full time employees
.
Description of Property
The Company occupies leased office space at 57 West 200 South, Suite 350, 301 &
302, Salt Lake City, Utah. The Company offices comprise of 7,921 square feet a
and are leased at a monthly base rental of $8,479. The Company also occupies
space for its fulfillment division at 545 West 500 South, Suite 140 Bountiful,
Utah. The office space is 3,879 square feet, and is leased at a monthly base
rental of $2,223. The Company also occupies space for its Teleservices
subsidiary at 10300 North Central Express Way Suite 170, Dallas, Texas. The
office space is 7,844 square feet, and is leased at a monthly base rental of
$7,844. The Company also occupies space for Chequemate Third Dimension, Inc. at
459 West 9160 South Sandy, Utah. The office space is a shared space with the
Company's rentable square feet at 791 at a price of $1,800 per month.
Legal Proceedings
The Company is not a party to any pending legal proceeding. To the knowledge of
the Company, no director, officer or affiliate of the Company, or owner of
record or beneficial owner of the voting securities of the Company, or any
security holder of the Company, is engaged in any proceeding which is adverse to
the Company.
SECURITIES OF THE COMPANY, MARKET INFORMATION AND DIVIDENDS
The stock of the Company is traded on the OTC Bulletin Board (OTCBB) of the NASD
Stock Market, Inc. The OTCBB symbol for the Company is CQMT. As of June 30,
1997, there were approximately 771 shareholders of record of the Company. As of
June 30, 1997, the Company had issued and outstanding shares, and paid
subscriptions for shares, in an aggregate amount of 14,666,851. Actual trading
volume of the stock of the Company in the most recent fiscal year has increased
over previous years. Non-U.S. investors hold a material portion of the stock
of the Company. The stock of the Company, as of July 11, 1997, was quoted at
$6.00 bid and $6.25 ask.
During fiscal year 1994, the Company became listed in the Moody's OTC Industrial
Manual and in the Moody's OTC Unlisted Manual. These listings enable the stock
of the Company to be traded in a significant number of jurisdictions in the
United States. The Company is continuing to file quarterly and annual reports
with the United States Securities and Exchange Commission in order to comply
with commission regulations and to make available current public information
regarding the Company.
The NASD Stock Market, Inc provided the fiscal year 1997 quotations for the
Company's stock. The referenced quotations reflect inter-dealer prices without
dealer retail mark-up, markdown or commissions and may not represent actual
transactions.
Price Range of Common Stock
Fiscal Year High Bid Price Low Bid Price
1996 - 1st Quarter (4/95-6/95) 7.50 6.625
1996 - 2nd Quarter (7/95-9/95) 7.50 7.00
1996 - 3rd Quarter (10/95-12/95) 7.00 6.25
1996 - 4th Quarter (1/96-3/96) 7.75 6.00
1997 - 1st Quarter (4/96 - 6/96) 7.25 6.625
1997 - 2nd Quarter (7/96 - 9/96) 7.00 6.25
1997 - 3rd Quarter (10/96 - 12/96) 7.00 5.75
1997 - 4th Quarter (1/97 - 3/97) 6.25 3.50
The Company has paid no dividends on common stock during its two most recent
fiscal years, and has no present intention to pay dividends in fiscal year 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table on the following page sets forth certain information as of June 30,
1997 with respect to each person who owns of record, or is known to the Company
to beneficially own, more than 5% of the outstanding shares of Voting Common
Stock, and the beneficial ownership of such securities by each officer and
director who owns any stock, and by all officers and directors as a group. The
original directors and officers of the Company, whose aggregate share holdings
are now less than three percent of the total shares outstanding, may be deemed
to have been promoters of the Company.
Name and Address of Beneficial Amount and Nature Percent of currently
of ownership of issued and Subscribed
Owner Voting Stock Common Stock
Blaine Harris 2,595,371*2 17.7%
57 West 200 South Suite 350 Direct Ownership
Salt Lake City, Utah 84101
Robert Warfield 1,000,000
10481 Golf Course Road Direct Ownership 6.8%
Ocean City, MD 21842
Don Christensen 816,617 5.6%
10225 Kensington Parkway Apt. 616 Direct Ownership
Kensington, MD 20895
Harold P. Glick 528,962
10706 Piney Island Drive Direct Ownership 3.6%
Bishopville, MD 21842
Chuck Coonradt 11,000*2 *3
3797 W. Blacksmith Road Direct Ownership
Park City, Utah 84060
Ken Redding 28,000*2 *3
57 West 200 South Suite 350 Direct Ownership
Salt Lake City, Utah 84101
Lavar Butler 35,000*2 *3
57 West 200 South Suite 350 Direct Ownership
Salt Lake City, Utah 84101
Greg L. Popp 14,000*2 *3
57 West 200 South Suite 350 Direct Ownership
Salt Lake City, Utah 84101
Kent Summers 8,000*2 *3
57 West 200 South Suite 350 Direct Ownership
Salt Lake City, Utah 84101
Officers and Directs as a group 4,220,333 28.8%
(8 persons)
The Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change in control of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS
General
For more detailed financial information, please refer to the Audited Financial
Statements for the periods of March 31, 1997 and 1996. A copy of these
Financial Statements is attached to this Proxy Statement beginning at page 27.
The Company and its subsidiaries have faced a variety of challenges during
fiscal 1997, including congressional and federal budget reforms, marketing
opportunities, and product enhancements. The Company has continued to research
various marketing strategies to market its products and how to effectively
implement the information gained from its pilot programs.
As a result of the pilot and the test marketing programs of several marketing
strategies, the Company has refined its approach to their main markets of Small
Businesses and Independent Contractors.
The Company discovered a need for small business owners and independent
contractors to accept credit cards to compete with more established retail and
wholesale outlets. In order to meet the needs of the market, CMI purchased QPD
and the rights to the Telecharge program. The Telecharge program allows small
businesses and independent contractors easy access to credit card processing
without meeting stringent and overburdensome restrictions and regulations. As
a result of a strong focus on customer satisfaction, QPD has maintained an
industry low one third of one percent as a charge back rate.
The purchase of QPD and the Telecharge product brought new clients, associations
and direct marketing companies as customers. As a result of the purchase, it
became necessary for the Company to contract with an outside processor to
provide the backend processing for the Telecharge program. In April 1997, CMI
became a registered agent of Cardservice International, Inc. a partner of First
Data Corporation. The transfer over to Cardservice has now taken place and the
Telecharge program is gaining acceptance in new markets previously unavailable.
The current financial statements of the Company reflect the purchase price
and operating expenses associated with QPD and Telecharge.
In order to provide additional products and services to independent financial
advisors, the Company expanded their debt eliminator program to include their
money management system, debt restructuring and a bill paying system. This new
program, called the Chequemate Financial Manager, created a unique combination
of products to eliminate a client's debt, manage income and expenses and
increase savings. For the fourth quarter of fiscal 1997 and the first quarter
of fiscal 1998, the Company has invested capital in the development of the CFM
program. During the first quarter of fiscal 1998, the Company began to market
the CFM program through a network of independent representatives and agents of
the Company.
The Company has also developed the Web Dynamics product to provide the
financial advisor with a tool that will enable the participating financial
advisor an interactive resource to enhance financial analysis, client
recruitment, product advertising and event planning and advertising. This
product required initial capital from the Company for hardware components and
software programs to develop the interactive capabilities and rapid expansion.
During the fourth quarter of fiscal 1997, the Company was presented an
opportunity to purchase the Realeyes 3D product. The developers of the
technology had perfected a prototype unit, but were unable to fund further
development and manufacturing of the product. CMI was positioned to provide
capital to fund the purchase and initial manufacturing of the product. The
Company raised $3,000,000 to fund initial production of the units and issued
restricted stock to the members of the ATG, LLC for the license of the
intellectual property and worldwide rights to manufacture and market the
Realeyes 3D product and other related technologies.
Liquidity and Capital Resources
The audited financial statements reflect the consolidated financial position of
the Company and its subsidiary entities. March 31, 1996, totals have also been
consolidated. As of March 31, 1997, the Company had current assets of $398,409
with current liabilities of $703,670. This represents negative working capital
of $305,261. At March 31, 1996, current assets were $175,767 with current
liabilities of $243,929 which represented negative working capital of $68,162.
The change in working capital results in a ratio of current assets to current
liabilities, as of March 31, 1997, of .57 as compared to .72 on March 31, 1996.
This change is primarily due to the acquisition of QPD. The amount of
installment payments credited to current liabilities in the twelve-month period
ending March 31, 1998 is $300,000.
At March 31, 1997, long term liabilities were $145,639 compared to $182,301 at
March 31, 1996, a reduction of $36,662. This reduction was accomplished by
payments toward the CEDO loan and decreasing the long term related party note.
Also, the Company was able to fund operations without incurring additional long-
term debt.
At March 31, 1997, the Stockholders' equity was $437,451 versus $120,173 at
March 31, 1996. This represents an improvement of $317,278 over fiscal year
1996.
The sale of stock to offshore entities continues to be an important source of
capital funding for the Company. As previously reported in form S8, the Company
has sold additional shares to offshore entities to raise capital for the
continued operations of the Company and the acquisitions of QPD and ATG. It is
anticipated the Company will continue to draw on this source of funding for
initial stocking of inventory of the Realeyes product for the second quarter of
fiscal 1998.
Results of Operations
For the fiscal year 1997, total gross revenue of the Company was $776,963
compared to $382,137 for the previous fiscal year; an increase in gross revenue
of $394,826. Total expenses for fiscal year 1997 decreased by $56,960 compared
to fiscal year 1996. The combination of increased revenue and decreased
expenses resulted in a reduction of net loss from $1,879,015 in fiscal year 1996
to $1,502,573 in fiscal year 1997.
The loss for the twelve-month period ended March 31, 1997 is mainly attributed
to the purchase of QPD and the development and test marketing costs of the CFM
program. Also, associated costs for the development of the Web Dynamics product
were incurred during the fourth quarter of fiscal 1997. These expense were one
time expenses and the Company was able to fund these capital expenditures
without assuming short or long term debt.
CERTAIN TRANSACTIONS
In calendar year 1992, the limited liability company ( the "LLC") of John C.
Wilkinson, a former director of the Company, received a CEDO grant for the
development of the Compliance Software. Of this amount, the LLC loaned $120,000
to the Company. In fiscal year 1993, the Company borrowed $30,000 from WAC
Research, Inc. (WAC). Donald M. Wood, then a member of the board of directors
of the Company, was an officer, director and shareholder of WAC. The $30,000
loan from WAC was paid in May of 1993. In a restructuring of the financial
obligations of the Company, the Company paid $200,000 of expenses for the LLC of
Mr. Wilkinson, satisfying the $120,000 loan to the Company by the LLC and
resulting in a net payable of the LLC to the Company of $78,890 as of the end
of fiscal year 1993. As of April, 1993, the Company loaned to the LLC an
additional $30,043. The LLC and John Wilkinson executed a promissory note
reflecting the foregoing transactions, resulting in an obligation of the LLC and
John Wilkinson to the Company, at that time, in the total amount of $108,933.
This note was an unsecured demand note bearing interest at the rate of 10%.
On April 29, 1993, the LLC was dissolved. Pursuant to such dissolution, all
assets and liabilities of the LLC were dissolved. Pursuant to such
dissolution, all assets and liabilities of the LLC were distributed to the
members of the LLC. Therefore, the promissory note was considered to be the
obligation of Mr. Wilkinson. As of October 30, 1994, other advances had been
made pursuant to the transaction and the principal balance of such loan was
$151,202. This amount was canceled in exchange for Mr. Wilkinson's return of
his 290,000 shares of the stock of the Company at the time of the CMI
acquisition.
Pursuant to the authorization of the board of directors in their December 31,
1992 directors' meeting, the Company issued 2,000,000 shares of Non-Voting
Common Stock of the Company. These shares reflected certain rights of
conversion to Voting Commons Stock. Subsequently, 1,000,000 of the Non-Voting
Common Stock shares were canceled. Of the remaining shares, 500,000 were issued
to John C. Wilkinson, an officer and director of the Company and 500,000 were
issued to WAC Research, Inc., a Utah corporation. Donald M. Wood, the former
Chairman of the board of directors of the Company, was an officer, director and
shareholder of WAC and is deemed to be a beneficial owner of such shares. Mr.
Wilkinson and WAC executed Non-Voting Stock Shareholder's Agreements principally
relating to the conversion rights of the stock. These transactions were
effective as of January 8, 1993. The non-voting shares were issued as
consideration for certain management, marketing and consulting services rendered
by the shareholders. On March 31, 1993, the board of directors of the Company
authorized the conversion of such stock to Voting Common Stock. In conjunction
with the CMI acquisition, Mr. Wood, Mr. Wilkinson, and their transferees
returned a total of 1,820,425 shares of stock to the Company for cancellation.
During fiscal year 1995, Mr. Hal Glick, Bob Warfield and Oxford International
Management Inc., three principal shareholders of the Company including two
directors, loaned $273,140 to the Company. On March 29, 1996, these loans plus
accrued interest were exchanged for 87,783 shares of restricted common stock of
the Company. The exchange price for these shares was $3.50 per share.
Prior to March 31, 1994, Blaine Harris, CEO of the Company and president of its
wholly owned subsidiary Chequemate International, Inc., loaned $215,000 to CMI.
During fiscal year 1995, this loan was paid down to $93,000. Subsequently, Mr.
Harris loaned an additional $200,000 to the Company. This loan was paid in full
in September 1995. The balance of $93,000, owing on the first loan referred to
in this paragraph, bears interest at 12% and matures December 31, 1998.
Blaine Harris, CEO and Chairman of the board and a principal shareholder of the
Company, and Don Christensen, a Director of Chequemate International, Inc. and
shareholder of the Company, have an agreement with the Company to receive a
monthly fee based upon a certain client base of Chequemate International.
During fiscal year 1996, their compensation under this agreement was less than
$1,000.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 1998 Annual Meeting
must be received by the Company no later than February 28, 1998, for inclusion
in the Company's proxy statement and form of proxy for that meeting.
ADDITIONAL INFORMATION
The Form 10-KSB for the fiscal year ending March 31, 1997, including the
Consolidated Financial Statements and schedules thereto, are incorporated by
reference into this Proxy Statement. A copy of any of the above mentioned
documents is available without charge to Shareholders upon written request to
the Secretary of the Company at the offices indicated on the first page of this
Proxy Statement.
THE STATEMENTS IN THIS PROXY STATEMENT AND ACCOMPANYING MATERIALS ARE FOR THE
INFORMATION OF SHAREHOLDERS OF AC&T, INC. THIS PROXY STTEMENT AND ACCOMPANYING
MATERIALS ARE NEITHER AN OFFER TO SELL NOR A SOLICITATION OR OFFER TO BUY ANY
SECURITITES. NO ONE SHOULD BUY OR SELL ANY SECURITY BY REASN OF ANY STATEMENT,
OR ANY ACCOMPANYING MATERIALS.
DATED this day of July, 1997.
By Order of the Directors:
/s/Blaine Harris
Blaine Harris, CEO and Chairman
Proxystatement 1997
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Financial Statements
March 31, 1997 and 1996
C O N T E N T S
Independent Auditors' Report 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 6
Consolidated Statements of Stockholders' Equity (Deficit) 7
Consolidated Statements of Cash Flows 9
Notes to Consolidated Financial Statements 11
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Chequemate International, Inc.
(Formerly Automated Compliance & Training, Inc.)
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheets of Chequemate
International, Inc. (formerly Automated Compliance & Training, Inc.), a Utah
Corporation, as of March 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended March 31, 1997, 1996 and 1995. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Chequemate International, Inc. (formerly Automated Compliance & Training, Inc.)
as of March 31, 1997 and 1996, and the results of their consolidated
operations and their consolidated cash flows for the years ended March 31,
1997, 1996 and 1995, in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
June 14, 1997
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Balance Sheets
ASSETS
March 31,
1997 1996
CURRENT ASSETS
Cash $ 165,536 $ 30,380
Accounts receivable - 38,852 54,862
net of allowances of $7,520 and $8,085
in 1997 and 1996, respectively
Inventory (Note 2) 185,518 83,881
Prepaid expenses 8,503 6,644
Total Current Assets 398,409 175,767
PROPERTY AND EQUIPMENT (Note 3) 454,174 93,533
OTHER ASSETS
Organization costs and product rights(Note 1) 415,610 254,294
Note receivable 7,514 8,894
Refundable deposits 8,053 10,915
Investments 3,000 3,000
Total Other Assets 434,177 277,103
TOTAL ASSETS $ 1,286,760 $ 546,403
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31,
1997 1996
CURRENT LIABILITIES
Accounts payable $ 174,865 $ 100,240
Related party accounts payable (Note 16) 19,413 -
Short term debt (Note 15) 300,000 -
Accrued expenses 103,552 22,495
Income tax payable (Note 1) 400 -
Accrued interest - related party (Note 5) 65,903 72,903
Current portion related party (Note 5) - -
Current portion long-term debt (Note 6) 33,533 30,963
Current portion capital lease (Note 7) 6,004 15,370
Current portion office lease obligation - 1,958
Total Current Liabilities 703,670 243,929
LONG-TERM LIABILITIES
Long-term related party notes payable (Note 5) 90,000 93,000
Long-term debt (Note 6) 46,834 80,574
Capital lease obligations (Note 7) 8,805 8,727
Total Liabilities 849,309 426,230
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.0001 par value, 500,000,000 shares
authorized, 13,117,841 and 12,666,053 shares outstanding
at 1997 and 1996, respectively 1,312 1,267
Minority interest 100,000 -
Subscribed stock (Note 4) 270,000 100,000
Capital in excess of par 7,235,501 5,685,695
Accumulated deficit (7,169,362) (5,666,786)
Total Stockholders' Equity (Deficit) 437,451 120,173
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,286,760 $ 546,403
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Statements of Operations
For the Years Ended March 31,
1997 1996 1995
REVENUES
Sales - products $ 776,963 $ 382,137 $ 407,622
COST OF SALES
Product, supplies and materials 291,072 167,566 155,381
GROSS PROFIT 485,891 214,571 252,241
EXPENSES
Bad debts 6,465 5,627 439
Selling expenses 630,207 539,123 454,824
Software development - - 120,711
General and administrative 1,338,066 1,486,948 1,354,984
Total Expenses 1,974,738 2,031,698 1,930,958
OPERATING (LOSS) (1,488,847) (1,817,127) (1,678,717)
OTHER INCOME (EXPENSE)
Interest income 7,018 - 2,585
Interest expense (20,344) (61,588) (65,097)
Loss on sale of equipment - - (8,373)
Total Other Income (Expense) (13,326) (61,588) (70,885)
(LOSS) BEFORE INCOME TAXES (1,502,173) (1,878,715) (1,749,602)
INCOME TAX PROVISION 400 300 369
NET INCOME (LOSS) $ (1,502,573) $ (1,879,015) $ (1,749,971)
EARNINGS (LOSS) PER SHARE $ (0.12) $ (0.15) $ (0.25)
AVERAGE NUMBER OF
SHARES OUTSTANDING 12,891,947 12,208,526 7,110,732
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended March 31, 1997, 1996 and 1995
Free Total Capital
Restricted Trading Shares Common in Excess
Shares Shares Issued Stock of Par
Balance, March 31, 1994 2,632,400 1,817,100 4,450,100 $ 445 $1,667,455
Expenses of related party
paid by the Company - - - - -
Shares acquired from
related party receivable - (290,000) (290,000) (29) -
Shares acquired for cash
and cancelled (10,000) (200,000) (210,000) (21) (30,979)
Shares acquired before
business combination (510,000) (810,425)(1,320,425) (132) -
Shares issued in business
combination 8,744,025 - 8,744,025 874 402,135
Shares issued through
stock offering - 355,000 355,000 36 509,934
Shares issued for company - 10,000 10,000 1 -
Shares becoming free trading(2,074,500)2,074,500 - - -
Subscribed stock - - - - -
Net loss - - - - -
Balance, March 31, 1995 8,781,925 2,956,775 11,738,700 1,174 2,548,545
Shares becoming free trading(47,000) 47,000 - - -
Shares issued through stock
offering 833,570 - 833,570 83 2,599,917
Shares issued in exchange for
services 6,000 - 6,000 1 29,999
Subscribed stock - - - - -
Shares issued for debt 87,783 - 87,783 9 307,234
250,000 shares donated to the
Company and reissued - - - - 200,000
Net loss - - - - -
Balance, March 31,1996 9,662,278 3,003,775 12,666,053 1,267 5,685,695
Shares becoming free trading(682,590) 682,590
Minority interest - - - - -
Shares issued through
stock offering 450,788 - 450,788 44 1,546,307
Shares issued for services 1,000 - 1,000 1 3,499
Subscribed stock - - - - -
Net loss - - - - -
Balance, March 31, 1997 9,431,476 3,686,365 13,117,841 $1,312 $7,235,501
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
For the Years Ended March 31, 1997, 1996 and 1995
Related
Party Total
Stockholders' Accum Subscribed Minority
Receivable Deficit Stock Interest Equity
Balance, March 31, 1994 $ (91,690) $(1,886,762)$ - $ - $(310,552)
Expenses of related party
paid by the Company (59,512) - - - (59,512)
Shares acquired from related
party receivable 151,202 (151,173) - - -
Shares acquired for cash
and cancelled - - - - (31,000)
Shares acquired before
business combination - 132 - - -
Shares issued in business
combination - - - - 403,009
Shares issued through
stock offering - - - - 509,970
Shares issued for company - - - - 1
Shares becoming free trading
Subscribed stock - - 850,000 - 850,000
Net loss - (1,749,971) - -(1,749,971)
Balance, March 31, 1995 - (3,787,774) 850,000 - (388,055)
Shares becoming free trading - - - - -
Shares issued through stock
offering - - (850,000) - 1,750,000
Shares issued in exchange
for services - - - - 30,000
Subscribed stock - - 100,000 - 100,000
Shares issued for debt - - - - 307,243
250,000 shares donated to
the Company and reissued - - - - 200,000
Net loss - (1,879,015) - -(1,879,015)
Balance, March 31, 1996 - (5,666,789) 100,000 - 120,173
Shares becoming free trade - - - - -
Minority interest - - - 100,000 100,000
Shares issued through
stock offering - - (100,000) - 1,446,351
Shares issued for services - - - - 3,500
Subscribed stock - - 270,000 - 270,000
Net loss - (1,502,573) - -(1,502,573)
Balance, March 31, 1997 $ - $ (7,169,362)$ 270,000 $ 100,000 $ 437,451
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended March 31,
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,502,573) $(1,879,015) $(1,749,971)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Amortization 62,183 78,496 4,142
Depreciation 41,549 31,887 18,787
Bad debt expense 4,602 4,646 439
Non-cash expense - 47,327 44,354
(Increase) decrease in:
Accounts receivable 9,546 (7,466) 46,148
Prepaid expenses (1,859) (6,644) -
Inventory (101,637) 39,191 12,958
Note receivable - (8,894) -
Deposits 2,862 1,065 -
Increase (decrease) in:
Accounts payable 94,038 (61,411) 23,377
Accrued interest payable (7,000) 3,421 69,482
Accrued expenses 81,056 (15,646) 11,006
Income taxes payable 400 - 200
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES (1,316,833) (1,773,043) (1,519,078)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of fixed assets - - 4,343
Purchase/development of intangibles (222,706) - (148,341)
Equipment purchases (101,121) (23,076) (29,271)
Advances on notes receivable - - (19,616)
Collection on notes receivable 1,380 - -
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (322,447) (23,076) (192,885)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 1,549,851 2,800,000 809,979
Acquisition stock - - (31,000)
Subscribed stock 170,000 (750,000) 850,000
Minority interest 100,000 - -
Issuance of notes payable - - 312,500
Payments made on notes payable (45,415) (255,720) (212,610)
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES $ 1,774,436 $1,794,280 $1,728,869
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended March 31,
1997 1996 1995
NET INCREASE (DECREASE)IN CASH $ 135,156 $ (1,839) $ 16,906
CASH AT BEGINNING OF YEAR 30,380 32,219 15,313
CASH AT END OF YEAR $ 165,536 $ 30,380 $ 32,219
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's accounting policies reflect practices of the software sales
and services industries and conform to generally accepted accounting
principles. Certain prior year amounts have been reclassified to be
consistent with the March 31, 1997 presentation. The following policies
are considered to be significant:
Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries Families in Focus, Inc., AC&T Direct, AC&T and Chequemate
Tele-Services, Inc. All significant intercompany accounts and transactions
have been eliminated.
Revenue recognition
Revenue is recognized on an accrual basis upon deliver of the software or
product. Revenue consists of software sales, license fees, and monthly
service fees.
Organization and production costs
Organization and production costs have been capitalized and amortized over
five years using a straight line method. The total amortization of
organizational and production costs for the twelve months ended March 31, 1997
and 1996 amounted to $62,183 and $78,496, respectively.
Property and equipment
Property and equipment are stated at cost with depreciation and amortization
computed on the straight line method. Property and equipment are depreciated
over the following estimated useful lives:
Years
Office equipment 5
Office furniture 5-7
Machinery and equipment 5
Leasehold improvements 3-5
Capital leases 3-5
Intangible assets
Net Book Value
Term Cost Amortization 1997 1996
Product rights 5 years $ 105,500 $ 17,359 $ 88,141 $ 95,708
Goodwill 15 years 97,406 541 96,865 -
Trademark 15 years 50,000 278 49,722 -
Client list 15 years 50,000 278 49,722 -
Training video 5 years 260,007 131,283 128,724 152,895
Organization cost 5 years 17,261 14,825 2,436 5,691
$580,174 $ 164,564 $415,610 $ 254,294
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings per share
Earnings per share are calculated using a weighted average for common stock and
common stock equivalents.
Cash flows
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand and cash on deposit with banks.
Income taxes
The Company's tax basis is the same as the Company's financial statement
basis. The Company has net operating loss carryforwards of approximately
$7,100,000 available to offset future federal and state income tax through
2010. The Company has not recorded a tax benefit attributable to the
carryforwards because realization of such benefit cannot be assured.
Computer software costs
The Company classifies the costs of planing, designing and establishing the
technological feasibility of computer software product as software development
costs and charges those costs to expense when incurred. Costs incurred for
duplicating computer software from product masters, documentation and
training materials and packaging costs are capitalized as inventory and
charged to cost of sales when revenue is recognized. Costs of maintenance
and customer support are charged to expense when costs are incurred.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period
Actual results could differ from those estimates.
NOTE 2 - INVENTORY
The Company inventories are stated at the lower of cost or market, using the
first-in, first-out (FIFO) method.
March 31, March 31,
1997 1996
Finished goods $ 185,518 $ 83,881
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 1997 and 1996 are detailed in the
following summary:
Accumulated Net Book Value
Cost Depreciation 1997 1996
Office furniture and
fixtures $ 52,007 $ 21,432 $ 30,575 $ 24,169
Software 300,000 5,000 295,000 -
Machinery and
equipment 177,487 59,697 117,790 45,063
Capital leases 26,877 19,853 7,024 20,378
Leasehold
improvements 4,581 796 3,785 3,923
Total $ 560,952 $ 106,778 $ 454,174 $ 93,533
Depreciation expense is computed principally on the straight line method
in amounts sufficient to write off the cost of depreciable assets over
their estimated useful lives. Depreciation expense for March 31, 1997 and
1996 amounted to $41,549 and $31,887, respectively.
NOTE 4 - STOCKHOLDERS' EQUITY (DEFICIT)
The Company is authorized to issue 500,000,000 shares of common stock, par
value $.0001. Currently the Company has issued 13,117,841 shares of common
stock.
During the period from April 1993 through March 1996 the Company issued
1,008,226 shares of common stock pursuant to a private placement. These
shares were offered under Regulation S to non U.S. persons and can be
exchanged for free trading stock within 40 days after the closing of the
offering.
The Company continued the placement of Regulation S stock in the current
year and issued 450,688 shares to non U.S. persons. The Company's plans
are to continue placing stock through private placements to fund the growth
requirements of the Company. As part of the private placement, the Company
received $270,000 for the sale of 80,000 shares of common stock. The Company
has accounted for the transaction as subscribed stock until the stock could
be issued.
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 5 - RELATED PARTIES
Notes payable to related parties as of March 31, 1997 and 1996 are detailed
in the following summary:
1997 1996
Note payable to CEO; due in monthly
interest installments of $930 with an
interest rate of 12%; due December 31,
1998; unsecured; accrued interest of
$65,903 is due at September 15, 1997 $ 90,000 $ 93,000
Total related party notes payable 90,000 93,000
Less: current portion - -
Long-term portion $ 90,000 $ 93,000
Maturities of the related party notes payable are as follows:
Period ending March 31, 1998 $ 90,000
1999 -
Total $ 90,000
NOTE 6 - LONG-TERM DEBT
Notes payable as of March 31, 1997 and 1996 are detailed in the following
summary:
1997 1996
Note payable to a company; due in monthly
installments of $3,244 which includes
interest at 8%; due July, 1999, unsecured $ 80,367 $ 111,537
Total long-term debt 80,367 111,537
Less: current portion (33,533) (30,963)
Long-term portion $ 46,834 $ 80,574
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 6 - LONG-TERM DEBT (Continued)
Maturities of long-term debt are summarized below:
Period ending March 31, 1998 $ 33,533
1999 36,316
2000 10,518
2001 -
Total $ 80,367
NOTE 7 - LEASES
All noncancelable leases with an initial term greater than one year have
been categorized as capital or operating leases in conformity with the
definitions in Financial Accounting Standards Board Statement No. 13,
"Accounting for Leases".
The following analysis represents property under capital lease at
March 31, 1997 and 1996.
1997 1996
Equipment $ 26,877 $ 33,295
Less: accumulated depreciation (19,853 ) (12,917 )
Net property under capital lease $ 7,024 $ 20,378
At March 31, 1997 the Company is liable under the terms of noncancelable
leases for the following minimum lease commitments:
Capital Operating
Leases Leases
Period ended March 31,
1998 $ 8,020 83,186
1999 4,228 82,673
2000 2,561 86,799
2001 - 91,137
later years - 62,737
Total minimum lease payments 14,809
Less: interest 3,370
Present value of net minimum
lease payment 14,809
Less: current portion 6,004
Capital lease obligations
payable long-term $ 8,805
Rental expense for the years ended March 31, 1997 and 1996 amounted to
$86,094 and $90,305, respectively.
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 8 - CASH FLOW AND NON CASH INVESTING AND FINANCING ACTIVITIES
Cash flow information
March 31, March 31,
1997 1996
Interest paid $ 24,230 $ 21,197
Interest received $ 2,585 $ -
Income taxes paid $ 300 $ 300
Non-cash investing and financing activities
For the years ending March 31, 1997 and 1996, the Company incurred the
following non-cash investing and financing activities.
March 31, March 31,
1997 1996
Capital lease obligations incurred $ - $ 6,418
Issuance of stock for services rendered $ 1,100 $ 30,000
Conversion of debt to equity $ - $ 307,243
NOTE 9 - FINANCIAL INSTRUMENTS
Concentrations of credit risk
Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of trade receivables. The Company provides
credit to its customers in the normal course of business. However, the
Company performs ongoing credit evaluations of its customers and maintains
allowances for potential credit losses. The company places its temporary
cash investments with high quality financial institutions. At times such
investments may be in excess of the FDIC insurance limit.
NOTE 10 - RIGHTS TO SOFTWARE PRODUCT
The Company obtained all the rights associated with the sexual harassment and
OSHA compliance software through assuming third party debt associated with
development of the product.
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 11 - ACQUISITIONS
On February 27, 1997, the Company established Chequemate Tele-Services, Inc.
(CTS) along with another individual and received fifty-one percent (51%) of
the company. CTS then entered into an asset purchase agreement to acquire
all of the assets of Quality Products Distribution, Inc. The assets
consisted mainly of credit card processing software and certain intangibles.
NOTE 12 - SUMMARY OF SELECTED FINANCIAL INFORMATION
The following is a summary of selected financial information for the years
ended March 31, 1997, 1996 and 1995.
1997 1996 1995
Other Financial Data:
Working capital (deficit) $(300,699) $ (59,269) $ (156,702)
Property & equipment 454,174 93,533 95,572
Total Assets 1,291,324 546,403 646,529
Long-term debt 145,639 173,574 654,718
Stockholders' equity (deficit)442,013 120,173 (387,933)
Book value per share .03 .01 (.04)
Other Information:
Shares outstanding at period end 13,117,841 12,666,053 11,738,700
Stockholders' of record (reported by
stock transfer agent) 1,149 739 398
Number of employees at period end 28 14 18
NOTE 13 - COMMON STOCK OPTIONS
Effective May 17, 1995 the stockholders approved an Incentive Stock Option
Plan granting to key employees options to purchase Company common stock over
a ten year period, at the fair market value at time of grant. The aggregate
number of common shares of the Company which may be granted under the plan
is 800,000 shares. The plan expires on March 23, 2004.
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 13 - COMMON STOCK OPTIONS (Continued)
Activity regarding stock options is summarized as follows:
Number of Shares
1997 1996
Options Granted:
Beginning of year 154,800 103,300
Additional granted 200,000 31,500
End of year 354,800 154,800
Options Exercised:
Beginning of year - -
Additional exercised 100 -
Expired - -
End of year 100 -
Options Outstanding at End of Year - -
Option prices range from $6.25 to $7.00 per share. Options price for
regional directors and executive officers is $3.50 per share.
The Company granted several stock options to various individuals for
service performed or for future services. The option price for the
services performed was stated at $5.00 per share on 14,000 shares.
The option price granted on future services was the lower of the bid
price or $7.50 per share on 100,000 shares.
NOTE 14 - SUBSEQUENT EVENTS
In May of 1997, the Company formed the wholly-owned subsidiary Chequemate
Third Dimension, Inc, (CTD). CTD then entered into an agreement to
acquire technology relating to certain intellectual property from
Advanced Technology Group, LLC. The agreement called for CMI to
contribute to CTD three million dollars within sixty (60) days of
signing. In addition, the agreement requires the Company to establish
a non-qualified stock option for certain members of the LLC. The
non-qualified stock option plan provides various individuals the
option to acquire 2,500,000 shares of stock at a grant price of $0.01
per share.
NOTE 15 - SHORT TERM DEBT
On February 27, 1997, the Company, through its subsidiary Chequemate
Tele-Services, Inc. (CTS) purchased certain intangible assets (see
Note 11 - Acquisitions). As part of the purchase, the Company is
obligated to pay $300,000 through monthly installments starting in
June 1997 and ending in December 1997.
CHEQUEMATE INTERNATIONAL, INC.
(Formerly Automated Compliance & Training, Inc.)
Notes to Consolidated Financial Statements
March 31, 1997 and 1996
NOTE 16 - RELATED PARTY TRANSACTIONS
The Company owes certain officers and directors royalties from the
revenue of book sales. In addition, the Company owes a major shareholder
royalties on active users of the Chequemate product. The total amount
owing to these individuals as of March 31, 1997 was $19,413.00.
NOTE 17 - MARKETING DEVELOPMENT AGREEMENT
In December, the Company entered into a venture with an individual to
enhance and improve its marketing capacity as well to strengthen its
in-house administrative capacity. The Company has incurred monthly
expenses of approximately $10,000 on this venture. The alliance between
the parties indicates that the individual will earn 50% of all net profits
directly generated from revenues generate specifically and exclusively by
this agreement. Upon termination of this alliance the specific revenues
will revert back to the individual.
CHEQUEMATE INTERNATIONAL, INC.
57 West 200 South, Suite 350
Salt Lake City, UT 84101
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
August 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned shareholder(s) appoint(s) Lavar Butler or Ken Redding,
with power of substitution, to represent and to vote on behalf of the
undersigned, all of the shares of Common Stock of Chequemate International,
Inc. which the undersigned is entitled to vote at the meeting of the
shareholders, to be held at 57 West 200 South Suite #350; Salt Lake City,
Utah, on Friday, August 15, 1997 at 3:00 p.m., and at any adjournment thereof,
revoking all proxies heretofore given with respect to such stock, upon the
following proposals more fully described in the accompanying Proxy Statement,
receipt of which is hereby acknowledged.
Please sign this proxy exactly as the name appears on your stock
certificate. If shares are held by joint tenants, both should sign. When
signing as attorney, as executor, administrator, trustee, guardian or other
capacity, please give title as such. When signing as a corporation, please
sign in full corporate name by President or other authorized officer. If you
sign for a partnership, please sign the partnership name by an authorized
person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2), (3) AND (4).
1. RATIFICATION OF BOARD ACTION to purchase the assets of Quality Products
Distribution, Inc.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. RATIFICATION OF BOARD ACTION to license the technology and intellectual
property of Advanced Technology Group, LLC.
( ) FOR ( ) AGAINST ( ) ABSTAIN
<PAGE>
3. ELECTION OF DIRECTORS
( ) For all nominees listed below (except as marked to the
contrary below).
( ) Withhold authority to vote for all nominees listed below:
Blaine Harris Lavar Butler
Harold P. Glick Robert E. Warfield
Chuck Coonradt Bert Alvey
INSTRUCTION: (To withhold authority to vote for any individual nominee, write
the nominee's name on the space provided below.)
4. PROPOSAL TO APPROVE THE APPOINTMENT OF JONES JENSEN & COMPANY
as the independent public accountants of the corporation.
( ) FOR ( ) AGAINST ( ) ABSTAIN
5. In his discretion, the proxy is authorized to vote upon such other
matters as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s). Where direction is not made, this
proxy will be voted for proposals 1, 2, 3 and 4.
DATED this day of , 1997.
Our records indicate the following:
Signature
Signature if held jointly
PLEASE MARK, DATE, SIGN, AND RETURN THE PROXY BALLOT
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE MAKE CORRECTIONS TO THE INFORMATION SHOWN ABOVE.
