SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECURITIES OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: March 30, 1998
CHEQUEMATE INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Commission File Number: 33-28511-FW
Utah
76-0279816
(State or other jurisidiction) I.R.S.EmployerIdentification Nn.)
Incorpoartion or organization)
57 West 200 South Suite 350
Salt Lake City, Utah 84101
(Address of principal executive offices)
Registrant's telephone number, including area code: (801)
322-1111
Item 5. Other Events.
The Registrant and its subsidiary companies have faced a
variety of opportunities and
challenges during the fiscal year 1997 in entering its new
products into separate markets.
Although certain synergies are inherent between some of the
products, the main target markets
for each product are distinct.
Financial Planning Services
The Registrant has entered into an agreement to sell the Web
Dynamics product line to
Holicow, Inc. a Utah corporation. The Web Dynamics product
consists of services related to
establishing an internet website presence for customers of the
Registrant. Due to the Company's
existing focus on the Realeyes C-3D Digital Imaging System,
management believes that at this
time the Company is not able to devote the marketing attention
and resources necessary to the
Web Dynamics product line in order to promote it properly.
Therefore, it is beneficial to all
parties to enter into an agreement to sell. As part of the
consideration to purchase the product
line, Holicow, Inc. has agreed to forgive a $25,000 payable for
services due it from the
Registrant. In addition, Holicow, Inc. has agreed to accept
$10,000 in total consideration for an
ongoing royalty agreement between Greg Sargent, owner of Holicow,
Inc., and the Registrant.
Another component of the consideration for the transaction
with Holicow, Inc.is the
transfer to the Registrant of the 49% minority ownership of Data
Control, Inc. Data Control is
the processing center for all client money management data and
related sales and commission
reports and management data. Currently the Registrant is the
owner of 51% of Data Control, Inc.
and believes a 100% ownership and control will enhance the
day-to-day supervision over all the
related activities. Greg Sargent is one of the principal
shareholders of the 49% interest in Data
Control, Inc. and has agreed to combine the sale of Web Dynamics
with the acquisition of the
49% interest in Data Control Inc. Consent from all related
shareholders of Data Control, Inc., has
been obtained based on the following:
1. Data Control,Inc. has agreed to forgive $33,312 in a
payable for services due it from
the Registrant.
2. $5,403 in equipment lease liability has been absorbed by
the 49% Data Control, Inc.
owners, with ownership of the equipment passing to the
Registrant.
3. All Data Control, Inc. equipment currently used by Data
Control, Inc., will stay with
such entity.
4. Sargent will continue for 18 months to provide service
and support on the general
systems of Data Control, Inc.
By entering into this agreement, the Registrant reduces present
expenses, streamlines areas of
marketing , receives forgiveness of existing debt and obtains
100% control of its processing
center and related revenues.
C-3D Digital Imaging System
Since the acquisition (May 1997) of the Realeyes C-3D
Digital Imaging System
technology from Advanced Technology Group, LLC., the Company has
focused a major portion
of its resources toward the further development and marketing of
the 3-D product and
technology. The challenge is to create a new broad based
viewing of 3-D entertainment on a
commercial, retail, and pay per view home basis. The initial
objective was to go from a working
prototype to production in 60 days. Over 100 changes evolved
from the initial prototype.
Following an initial pre-production run of 200 units, it became
apparent that additional work was
necessary to bring the production process into a routine
procedure. To control costs and realize
performance continuity there could be no exceptions in the
production process. The many
improvements and upgrades to the initial prototype and
pre-production units verified that the C-3D Imaging System was in
deed a cutting edge product in the new technology of three
dimensional viewing. Compliance with FCC and international
standards have been meet. With
improved reliability along with simplified manufacturing, the
product has now been shipping for
approximately six months.
The Registrant has selected the hotel/motel industry as a
model to begin to expand the
processes of this new technology. This market provides a series
of existing unique characteristics
which will expose millions of individuals and families to the
Registrant's 3D products through a
captivated market looking for entertainment that requires no
significant advertising expense.
Preparations are currently under way with hotels and motels to
install master systems for
hotel/motel units. Each room within that unit has already been
pre-wired and is ready for our
product to be viewed through existing television sets. In each
hotel/motel room there will be a C-3D Imaging System which will
allow the guests to have the opportunity of viewing a pay-per-
view 3-D channel. By blending the existing 2D programing and our
production 3D, the hotel
guests will not only be entertained, they will also be given the
opportunity to become exclusive
members of our Home 3D Club, through the hotel.
The Company is excited about the possibilities of being in
the forefront of a new
dimension to the fields of entertainment, education, medicine and
in other ways only limited by the
imagination. The Registrant will continue to rely strongly on
each segment of its business to
accomplish the vision of what this new technology offers.
QPD and Teleservices
The Company purchased QPD and the rights to a program known
as Telcharge to fulfill
the need of the small business owner and independent contractor
to accept credit cards. An
alliance relationship was formed with Cardservice International,
one of the largest processors of
credit card transactions in the United States, to sell and market
Telecharge. In November 1997,
Cardservices made an offer to purchase all tangible and
intangible assets of the Telecharge
business. The assets of Telecharge were sold for $375,000 cash
and the assumption of a
$325,000 promissory note plus a monthly royalty for all business
resulting from clients referred to
Cardservices by the Company.
During fiscal year 1997 the Company formed a fifty-one
percent (51%) owned subsidiary
called Chequemate Tele-Services Inc., to assist in the marketing
and sales of the varied financial
services offered by the Company. Chequemate Tele-Services formed
and operated a telemarketing
service to enhance the sales of the Chequemate Financial Manager
and Telecharge services. With
the decision to sell QPD Telecharge, it was prudent to
discontinue the Tele-Services
telemarketing as well. The Chequemate Financial Manager services
continue to be sold and
marketed through the existing network of national marketing
agents.
Item 9. Sale of Equity Securities Pursuant to Regulation S.
The sale of stock to offshore entities has been the major
source of capital funding for the
Company. Operational expenses of the Registrant have generally
been financed through sales of
restricted common stock. During the calender year January
through December 1997, the
Registrant derived $4,678,000.00 from offshore entities, the
majority was in the form of restricted
stock sold pursuant to Regulation S ("Reg S"), promulgated by the
SEC. Due to the restricted
nature of the stock, the selling price has been discounted from
the current stock price as reflected
on the NASD electronic bulletin board. The sale of restricted
Reg S stock to offshore entities
continues to be an important source of capital funding for the
Company. No assurances can be
given that this source of funding will remain available to the
Company. However, it is anticipated
the Registrant will continue to draw on this resource for funding
the anticipated growth of the
Company, and the 3D technology. In addition to the continued
reliance on offshore investment,
the Registrant is currently negotiating with other sources for
funding capital requirements.
The sales of Reg S stock are generally completed pursuant
to written subscription
agreements and are executed in reliance upon the transaction
exemption afforded by Regulation S.
The facts relied upon to satisfy the exemption were as follows:
(a) The Regulation S stock purchasers (the "Purchasers")
were not U.S. persons as that
term is defined under Regulation S.
(b) At the time the buy order was originated, Purchasers
were outside the U.S. and were
outside the U.S. as of the date of the execution and
delivery of the subscription
agreements.
(c) Purchasers purchased the shares for their own accounts
and not on behalf of any U.S.
Person; the sales have not been pre-arranged with a
purchaser in the U.S.; and all
offers and resells of the securities were only made in
compliance with the provisions
of Regulation S.
(d) The Purchasers were not entities organized under foreign
law by a U.S. person, as
defined in Regulation S Rule 902(o), for the purpose
of investing in unregistered
securities, unless the Purchasers were organized and
owned by accredited investors,
as defined in Regulation D Rule 501(a), who are not
natural persons, estates, or
trusts.
(e) The transactions were not purchased pursuant to a
fiduciary account where a U.S.
person, as defined in Regulation S Rule 902(o), had
discretion to make investment
decisions for the account.
(f) To the knowledge of the Registrant, all offers and sales
of the Regulation S shares by
Purchasers prior to the expiration of a 40-day
restricted period were only to be made in
compliance with the safe harbor contained in
Regulation S, or pursuant to registration
of securities under the 1933 Act, or
pursuant to an exemption from registration. All
offers and sales after the expiration of
the restricted period were to be made only
pursuant to such a registration or to such
exemption from registration. The restricted
period referred to herein began on the
closing of the offering or upon the completion
of the distribution of the offering, as
announced by the Registrant to all Purchasers
under the offering.
(g) All offering documents received by Purchasers
included statements to the effect that
the shares had not been registered under
the 1933 Act and may not be offered or sold
in the United States or to U.S. persons
unless the shares are registered under the 1933
Act or an exemption from the registration
requirements was available.
(h) The Purchasers acknowledged that the purchase of
the shares involved a high degree
of risk and further acknowledged that they could
bear the economic risk of the
purchase of the shares, including the total loss
of their investment.
(i) The Purchasers understood that the shares were
being offered and sold to them in
reliance on specific exemptions from the
registration requirements of the United
States Federal and State securities laws and
that the Registrant was relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgments
and understandings of the Purchasers set
forth in the subscription agreements in order
to determine the applicability of such exemptions
and the suitability of the Purchasers
to acquire share.
In March 1998, the Registrant agreed with offshore
entities to sell a $750,000 block of
Reg S Stock. Because of the restriction requirements
imposed on the issuing of Regulation S
stock, the selling price has been discounted to $1.25 per
share. The Company has received a total
of $375,000 of the total offering, the balance is expected
to be received during the ensuing 60 day
period of time. The Company has also received $175,000 for
two private placements of common
stock pursuant to Regulation D. These sales also are at the
$1.25 per share offering price.
The Registrant disclosed in its three previous
quarterly filings on Form 10Q the sale of
restricted Reg S stock showing the dates of sale as January
14, 1997, February 14, 1997, April 7,
1997, and May 6, 1997, totaling 180,000 shares and showing a
sale price of $2.50 per share. The
agreement on the sale of these shares was at $2.75 per
share, rather than the $2.50 reported. The
block of stock sold in the month of June, 1997 totaling
582,010 shares was sold at $2.00 per
share rather than the $3.50 and $3.375 reported. The
Registrant's financial records have been
changed to accurately reflect the transactions as they each
were agreed upon.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the undersigned has
duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
____________________________
(Registrant)
Date__________________
___/s/ John Garrett
Its: Chief Financial Officer
(Signature)
