<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1998.
Registration No. 333-56147
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
XXSYS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
California 33-0161808
- ----------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
4619 Viewridge Avenue, San Diego, CA 92123
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(Address of Principal Executive Offices) (Zip Code)
XXSYS TECHNOLOGIES, INC. 1991 STOCK OPTION PLAN,
XXSYS TECHNOLOGIES, INC. 1996 STOCK OPTION PLAN
AND OTHER PLAN STOCK AND STOCK OPTIONS
--------------------------------------
(Full title of the plan)
Dr. Gloria C.L. Ma
4619 Viewridge Avenue
San Diego, California 92123
---------------------------------------
(Name and address of agent for service)
(619) 974-8200
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
Calculation of Registration Fee
- - ------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
securities to be Amount to be offering price aggregate Amount of
registered registered per unit offering price registration fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,550,000 $0.42(1) $651,000 $295
no par value shs.(2)
Common Stock, 1,900,000 $0.45 $855,000 $252.23
no par value shs.(3)
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the average of the high and low prices for the registrant's
common stock on October 12, 1998 for purposes of computing the
registration fee in accordance with Rule 457(c) under the Securities
Act of 1933, as amended.
(2) Pursuant to Rule 416, there are also being registered such additional
shares as may become issuable pursuant to anti-dilution provisions of
the various options.
(3) Represents shares of Common Stock previously registered.
<PAGE> 2
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
XXSYS TECHNOLOGIES, INC.
Common Stock
---------------------------------
XXSYS TECHNOLOGIES, INC. 1991 STOCK OPTION PLAN,
XXSYS TECHNOLOGIES, INC. 1996 STOCK OPTION PLAN
AND OTHER PLAN STOCK AND STOCK OPTIONS
---------------------------------
3,450,000 Shares of Common Stock, No Par Value
This Prospectus relates to shares of the Common Stock, no par value
("Common Stock"), of XXsys Technologies, Inc. (the "Company") which may be
issued from time to time by the Company (i) to employees, officers, directors,
consultants and independent contractors upon their exercise of stock options
granted under the XXsys Technologies, Inc. 1991 Stock Option Plan; (ii) to
employees, officers, directors, consultants and independent contractors upon
their exercise of stock options granted under the XXsys Technologies, Inc. 1996
Stock Option Plan; (iii) shares of Common Stock and options granted to
Continental Capital & Equity Corporation pursuant to a separate Consulting
Agreement, dated April 15, 1998 ("Consulting Agreement"); and (iv) shares of
Common Stock issuable to employees of and consultants to the Company pursuant to
separate written compensation contracts. The per unit price of the shares of
Common Stock issued upon exercise of options granted under the XXsys
Technologies, Inc. 1991 Stock Option Plan and the XXsys Technologies, Inc. 1996
Stock Option Plan will be determined from time to time based upon the market
price of the Common Stock in accordance with the terms of the XXsys
Technologies, Inc. 1991 Stock Option Plan or the XXsys Technologies, Inc. 1996
Stock Option Plan, as the case may be. It is suggested that this Prospectus be
retained for further reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------------
This Prospectus does not cover resales of shares of XXsys Technologies, Inc.
Common Stock acquired hereunder. However, persons who are not affiliates of
XXsys Technologies, Inc. as defined in Rule 405 of the Securities Act of 1933,
as amended (the "Act") ordinarily may publicly resell such shares acquired
hereunder without registration under the Act, in reliance on Section 4(1)
thereof. An affiliate of XXsys Technologies, Inc. may not publicly resell shares
acquired hereunder without compliance with Rule 144 promulgated under the Act or
registration under the Act.
---------------------------------
The date of this Prospectus is October 15, 1998.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE COMPANY........................................................................ 1
INFORMATION ABOUT THE
XXSYS TECHNOLOGIES, INC.
1991 STOCK OPTION PLAN ................................. 1
Introduction................................................................ 1
General Purpose............................................................. 1
ERISA....................................................................... 1
Shares Available............................................................ 1
Administration.............................................................. 2
Eligibility................................................................. 2
Grant of Options............................................................ 2
Exercise of Options......................................................... 3
Nontransferability.......................................................... 3
Termination of Employment................................................... 3
Disability.................................................................. 3
Duration, Amendment and Termination......................................... 4
Options Outstanding......................................................... 4
INFORMATION ABOUT THE
XXSYS TECHNOLOGIES, INC.
1996 STOCK OPTION PLAN ................................. 5
Introduction................................................................ 5
General Purpose............................................................. 5
ERISA....................................................................... 5
Shares Available............................................................ 5
Administration.............................................................. 6
Eligibility................................................................. 6
Grant of Options............................................................ 6
Exercise of Options......................................................... 6
Nontransferability.......................................................... 7
Termination of Employment................................................... 7
Disability.................................................................. 7
Duration, Amendment and Termination......................................... 7
Options Outstanding......................................................... 8
OTHER PLAN STOCK AND STOCK OPTIONS................................................. 8
FEDERAL INCOME TAX CONSEQUENCES.................................................... 8
ISO's Under the 1991 Plan and the 1996 Plan................................. 8
NSO's Under the 1991 Plan, the 1996 Plan and the Consulting Agreement....... 10
Exercise of Options Through Use of Previously Acquired
Common Stock of the Company................................................. 10
Stock Acquired Pursuant to the Consulting Agreement......................... 11
RESTRICTIONS ON RESALE............................................................. 11
LEGAL MATTERS...................................................................... 11
EXPERTS............................................................................ 11
AVAILABLE INFORMATION.............................................................. 12
</TABLE>
i
<PAGE> 4
PART I
ITEM 1. PLAN INFORMATION
THE COMPANY
XXsys Technologies, Inc. (the "Company") was incorporated in the State
of California on November 19, 1985. The Company's executive offices are located
at 4619 Viewridge Avenue, San Diego, California 92123; telephone (619) 974-8200.
INFORMATION ABOUT THE
XXSYS TECHNOLOGIES, INC.
1991 STOCK OPTION PLAN
Introduction
The summary of the XXsys Technologies, Inc. 1991 Stock Option Plan
("1991 Plan"), included below highlights the principal features of that plan and
is qualified in its entirety by reference to the 1991 Plan and the form of
agreement to be received by the Company from those individuals who are granted
options (the "Option Agreement"), copies of which are available from the
Company's Chief Financial Officer.
General Purpose
On December 14, 1991, the Board of Directors of the Company adopted the
1991 Plan to provide officers, directors, employees, consultants and independent
contractors added incentive for high levels of performance and unusual efforts
to increase the earnings of the Company by providing an opportunity to acquire,
maintain and increase a proprietary interest in the Company's success and thus
encouraging those employees to continue their employment with the Company.
Options granted under the 1991 Plan are designed either as incentive stock
options ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or as non-qualified stock options ("NSOs").
ERISA
The 1991 Plan is not an "employee pension benefit plan" as defined in
Section 3(2) of the Employee Retirement Income Security Act ("ERISA") and is not
qualified as a profit sharing plan as described in Section 401 of the Code.
Shares Available
A total of 550,000 shares of Common Stock have been reserved for
issuance under the 1991 Plan, which may be authorized but unissued shares or
shares reacquired by the Company at any time.
If an option granted under the 1991 Plan is not exercised prior to its
expiration or otherwise terminates, the shares which are subject to that option
will be available for the grant of further options under the 1991 Plan.
The number of shares of Common Stock reserved for issuance under the
1991 Plan is subject to equitable adjustments for any recapitalizations,
mergers, consolidations, stock dividends, split-ups, combinations, exchanges or
any other similar changes which may be
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<PAGE> 5
required to prevent dilution. Similarly, the Stock Option Committee which
administers the 1991 Plan ("Committee"), in its sole discretion, may adjust the
number of shares a selected optionee is permitted to acquire if any event occurs
prior to that employee's exercise of an option granted pursuant to the 1991 Plan
which causes an increase or decrease in the amount of outstanding capital stock.
Administration
The 1991 Plan is administered by the Committee, which consists of the
Company's Board of Directors. The Committee members act in the capacity of plan
administrators. The Committee has the authority to determine who will be granted
options, the time or times those selected persons will be granted and may
exercise all or any part of those options and the number of shares to be subject
to each option, the purchase price of the shares of Common Stock covered by each
option and the method of payment of such price. The Committee also has the
authority to construe and interpret the 1991 Plan, decide all questions and
settle all controversies and disputes which may arise in connection with the
1991 Plan and prescribe, amend and rescind rules and regulations relating to
administration of the 1991 Plan.
Eligibility
Only officers, employees and directors who are also employees of the
Company or any subsidiary are eligible to receive grants of ISOs. Officers,
employees and directors (whether or not they are also employees) of the Company
or any subsidiary, as well as consultants, independent contractors or other
service providers of the Company or any subsidiary are eligible to receive
grants of NSOs.
In determining (i) the number of shares to be covered by each option,
(ii) the purchase price for such shares and the method of payment of such price,
(iii) the individuals of the eligible class to whom options shall be granted,
(iv) terms and provisions of the respective Option Agreements, and (v) the times
at which such options shall be granted, the Committee shall take into account
such factors as it shall deem relevant in connection with accomplishing the
purpose of the 1991 Plan.
Grant of Options
Options granted under the 1991 Plan entitle optionees to purchase shares
of Common Stock at the exercise price specified in the Option Agreement. The
1991 Plan does not specify any maximum or minimum amount of options which may be
granted to any optionee. However, in no event shall ISOs be granted such that
the sum of (i) aggregate fair market value (determined at the time the ISOs are
granted) of the stock subject to all stock options granted under the 1991 Plan
which are first exercisable during the same calendar year plus (ii) the
aggregate fair market value (determined at the time the options are granted) of
all stock subject to all other incentive stock options granted to such optionee
by the Company, its parent and subsidiaries which are exercisable for the first
time during such calendar year, exceeds $100,000. Options may be granted for a
term up to ten (10) years from the date it is granted, and in the case of an
optionee owning at the time an ISO is granted more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiaries such ISO shall not be exercisable later than five (5) years after
the date of grant.
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<PAGE> 6
Exercise of Options
The exercise price per share for each share which the optionee is
entitled to purchase under an ISO shall be determined by the Committee but shall
not be less than the fair market value per share on the date of the grant of the
ISO; provided, however, that the exercise price shall not be less than one
hundred ten percent (110%) of the fair market value per share of Common Stock on
the date of grant of the ISO in the case of an individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary. The Committee determines the fair market
value of shares for this purpose.
The exercise price for each share which an optionee is entitled to
purchase under an NSO shall be determined by the Committee but shall not be less
than one-hundred percent (100%) of the fair market value per share on the date
of the grant of the NSO.
The consideration to be paid for the shares to be issued upon exercise
of an option, including the method of payment, shall be determined by the
Committee and may consist of cash, shares of common stock of the Company or such
other consideration and method of payment for the shares as may be permitted
under applicable state and federal laws.
Nontransferability
Options granted under the 1991 Plan are not transferable, otherwise than
by will or the laws of descent and distribution. During the lifetime of an
optionee, options are exercisable only by such optionee.
Termination of Employment
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary for any reason other than cause
or disability, all options granted to such optionee under the 1991 Plan will
terminate not later than three (3) months thereafter. If an optionee ceases to
be employed by, or ceases to have a relationship with, the Company or any
subsidiary by reason that the employment or relationship has been terminated by
the Company for cause, all options granted to such optionee shall expire
immediately; provided, however, the Committee may, in its sole discretion,
within thirty (30) days of such termination, waive the expiration of the Option.
Disability
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary by reason of disability (as
defined in Section 22(e)(3) of the Code), an optionee will have the right,
during the one (1) year period following the date of such termination, to
purchase all or any part of the shares of Common Stock which such optionee would
have been entitled to purchase if exercised on the date of such termination,
except in no case shall an option be exercisable more than ten (10) years after
grant.
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<PAGE> 7
Duration, Amendment and Termination
Unless previously terminated, the 1991 Plan will terminate on December
14, 2001 and no options may be granted after that date under the 1991 Plan
(although options granted before termination and exercisable afterwards will not
be affected). The Committee may at any time and from time to time modify, amend,
suspend or terminate the 1991 Plan. However, except in certain limited
circumstances, the Committee may not increase the maximum number of shares which
may be purchased pursuant to options granted under the 1991 Plan, either in the
aggregate or by an optionee; change the designation of the class of employees
eligible to receive ISO's; extend the term of the 1991 Plan or the maximum
option period thereunder; decrease the minimum ISO exercise price or permit
reductions of the price at which shares may be purchased for ISO's; or cause
ISO's issued under the 1991 Plan to fail to meet the requirements of incentive
stock options under Section 422 of the Code. No termination or amendment of the
1991 Plan may terminate an option or adversely affect an optionee's rights
without the optionee's consent.
Options Outstanding
As of October 12, 1998, options to purchase a total of 436,000 shares of
Common Stock at exercise prices ranging from $0.75 to $5.00 per share had been
granted.
-4-
<PAGE> 8
INFORMATION ABOUT THE
XXSYS TECHNOLOGIES, INC.
1996 STOCK OPTION PLAN
Introduction
The summary of the XXsys Technologies, Inc. 1996 Stock Option Plan
("1996 Plan"), included below highlights the principal features of that plan and
is qualified in its entirety by reference to the 1996 Plan and the form of
agreement to be received by the Company from those individuals who are granted
options (the "Option Agreement"), copies of which are available from the
Company's Chief Financial Officer.
General Purpose
On March 29, 1996, the Board of Directors of the Company adopted the
1996 Plan to provide officers, directors, employees, consultants and independent
contractors added incentive for high levels of performance and unusual efforts
to increase the earnings of the Company by providing an opportunity to acquire,
maintain and increase a proprietary interest in the Company's success and thus
encouraging those employees to continue their employment with the Company.
Options granted under the 1996 Plan are designed either as incentive stock
options ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or as non-qualified stock options ("NSOs").
ERISA
The 1996 Plan is not an "employee pension benefit plan" as defined in
Section 3(2) of the Employee Retirement Income Security Act ("ERISA") and is not
qualified as a profit sharing plan as described in Section 401 of the Code.
Shares Available
A total of 1,000,000 shares of Common Stock have been reserved for
issuance under the 1996 Plan, which may be authorized but unissued shares or
shares reacquired by the Company at any time.
If an option granted under the 1996 Plan is not exercised prior to its
expiration or otherwise terminates, the shares which are subject to that option
will be available for the grant of further options under the 1996 Plan.
The number of shares of Common Stock reserved for issuance under the
1996 Plan is subject to equitable adjustments for any recapitalizations,
mergers, consolidations, stock dividends, split-ups, combinations, exchanges or
any other similar changes which may be required to prevent dilution. Similarly,
the Stock Option Committee which administers the 1996 Plan ("Committee"), in its
sole discretion, may adjust the number of shares a selected optionee is
permitted to acquire if any event occurs prior to that employee's exercise of an
option granted pursuant to the 1996 Plan which causes an increase or decrease in
the amount of outstanding capital stock.
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<PAGE> 9
Administration
The 1996 Plan is administered by the Committee, which consists of the
Company's Board of Directors. The Committee members act in the capacity of plan
administrators. The Committee has the authority to determine who will be granted
options, the time or times those selected persons will be granted and may
exercise all or any part of those options and the number of shares to be subject
to each option, the purchase price of the shares of Common Stock covered by each
option and the method of payment of such price. The Committee also has the
authority to construe and interpret the 1996 Plan, decide all questions and
settle all controversies and disputes which may arise in connection with the
1996 Plan and prescribe, amend and rescind rules and regulations relating to
administration of the 1996 Plan.
Eligibility
Only officers, employees and directors who are also employees of the
Company or any subsidiary are eligible to receive grants of ISOs. Officers,
employees and directors (whether or not they are also employees) of the Company
or any subsidiary, as well as consultants, independent contractors or other
service providers of the Company or any subsidiary are eligible to receive
grants of NSOs.
In determining (i) the number of shares to be covered by each option,
(ii) the purchase price for such shares and the method of payment of such price,
(iii) the individuals of the eligible class to whom options shall be granted,
(iv) terms and provisions of the respective Option Agreements, and (v) the times
at which such options shall be granted, the Committee shall take into account
such factors as it shall deem relevant in connection with accomplishing the
purpose of the 1996 Plan.
Grant of Options
Options granted under the 1996 Plan entitle optionees to purchase shares
of Common Stock at the exercise price specified in the Option Agreement. The
1996 Plan does not specify any maximum or minimum amount of options which may be
granted to any optionee. However, in no event shall ISOs be granted such that
the sum of (i) aggregate fair market value (determined at the time the ISOs are
granted) of the stock subject to all stock options granted under the 1996 Plan
which are first exercisable during the same calendar year plus (ii) the
aggregate fair market value (determined at the time the options are granted) of
all stock subject to all other incentive stock options granted to such optionee
by the Company, its parent and subsidiaries which are exercisable for the first
time during such calendar year, exceeds $100,000. Options may be granted for a
term up to ten (10) years from the date it is granted, and in the case of an
optionee owning at the time an ISO is granted more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiaries such ISO shall not be exercisable later than five (5) years after
the date of grant.
Exercise of Options
The exercise price per share for each share which the optionee is
entitled to purchase under an ISO shall be determined by the Committee but shall
not be less than the fair market value per share on the date of the grant of the
ISO; provided, however, that the exercise price shall not be less than one
hundred ten percent (110%) of the fair market value per share of Common Stock on
the date of grant of the ISO in the case of an individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or
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<PAGE> 10
any parent or subsidiary. The Committee determines the fair market value of
shares for this purpose.
The exercise price for each share which an optionee is entitled to
purchase under an NSO shall be determined by the Committee but shall not be less
than one-hundred percent (100%) of the fair market value per share on the date
of the grant of the NSO.
The consideration to be paid for the shares to be issued upon exercise
of an option, including the method of payment, shall be determined by the
Committee and may consist of cash, shares of common stock of the Company or such
other consideration and method of payment for the shares as may be permitted
under applicable state and federal laws.
Nontransferability
Options granted under the 1996 Plan are not transferable, otherwise than
by will or the laws of descent and distribution. During the lifetime of an
optionee, options are exercisable only by such optionee.
Termination of Employment
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary for any reason other than cause
or disability, all options granted to such optionee under the 1996 Plan will
terminate not later than three (3) months thereafter. If an optionee ceases to
be employed by, or ceases to have a relationship with, the Company or any
subsidiary by reason that the employment or relationship has been terminated by
the Company for cause, all options granted to such optionee shall expire
immediately; provided, however, the Committee may, in its sole discretion,
within thirty (30) days of such termination, waive the expiration of the Option.
Disability
If an optionee ceases to be employed by, or ceases to have a
relationship with, the Company or any subsidiary by reason of disability (as
defined in Section 22(e)(3) of the Code), an optionee will have the right,
during the one (1) year period following the date of such termination, to
purchase all or any part of the shares of Common Stock which such optionee would
have been entitled to purchase if exercised on the date of such termination,
except in no case shall an option be exercisable more than ten (10) years after
grant.
Duration, Amendment and Termination
Unless previously terminated, the 1996 Plan will terminate on March 26,
2006 and no options may be granted after that date under the 1996 Plan (although
options granted before termination and exercisable afterwards will not be
affected). The Committee may at any time and from time to time modify, amend,
suspend or terminate the 1996 Plan. However, except in certain limited
circumstances, the Committee may not increase the maximum number of shares which
may be purchased pursuant to options granted under the 1996 Plan, either in the
aggregate or by an optionee; change the designation of the class of employees
eligible to receive ISO's; extend the term of the 1996 Plan or the maximum
option period thereunder; decrease the minimum ISO exercise price or permit
reductions of the price at which shares may be purchased for ISO's; or cause
ISO's issued under the 1996 Plan to fail to meet the requirements of incentive
stock options under Section 422 of the Code. No termination or amendment of the
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<PAGE> 11
1996 Plan may terminate an option or adversely affect an optionee's rights
without the optionee's consent.
Options Outstanding
As of October 12, 1998, options to purchase a total of 260,000 shares of
Common Stock at exercise prices ranging from $1.56 to $4.19 per share had been
granted.
OTHER PLAN STOCK AND STOCK OPTIONS
Continental Capital & Equity Corporation, a Florida corporation, has
entered into a Consulting Services Agreement ("Consulting Agreement") with the
Company dated April 15, 1998. Pursuant to the terms of the Consulting Agreement,
Continental Capital will receive 300,000 shares of Common Stock, as well as
options to purchase 50,000 shares of Common Stock at an exercise price of $2.00
per share ("$2.00 options") and options to purchase 50,000 shares of Common
Stock at an exercise price of $3.00 per share ("$3.00 options"). The $2.00
options shall vest at such time as, for thirty (30) consecutive trading days,
the Company's Common Stock as quoted on NASDAQ: (i) trades a minimum of 300,000
shares per day; and (ii) the Market Price of the Common Stock as quoted on
NASDAQ is equal to or greater than $10.00 per share. The $3.00 options shall
vest at such time as, for thirty (30) consecutive trading days, the Company's
Common Stock, as quoted on NASDAQ: (i) trades a minimum of 300,000 shares per
day and (ii) the Market Price is equal to or greater than $15.00 per share. The
term Market Price refers to the average of the reported closing bid and asked
price as reported by NASDAQ.
The Company has entered into written compensation contracts with 30
employees and consultants pursuant to which the Company has agreed to issue a
total of 1,500,000 shares of its Common Stock to the parties in consideration of
their services rendered to the Company. Pursuant to the compensation contracts,
the Company has agreed to issue shares of Common Stock at the rate of $0.40 per
share in lieu of cash payment to the employees and consultants at their standard
salary or hourly rate. The Company has also agreed that in the event the
employees and consultants are unable to resell their shares for a minimum price
of $0.40 per share, to issues additional shares as necessary to provide the
parties with proceeds equal to the number of shares originally issued to the
party multiplied by $0.40. In addition, the Company has agreed to pay on behalf
of the employees all payroll and withholding taxes associated with the stock
issuances.
FEDERAL INCOME TAX CONSEQUENCES
ISO's Under the 1991 Plan and the 1996 Plan
Grant and Exercise of ISO's. In general, an optionee realizes no income
upon the grant of 1991 Plan or 1996 Plan ISOs (assuming these options qualified
as "incentive stock options" under the Code when they were granted) or upon the
exercise of ISOs. But see, "Alternative Minimum Tax," below. The amount paid by
the optionee for the Common Stock received pursuant to the exercise of ISOs will
generally constitute his basis (or cost) for tax purposes. The holding period
for such Common Stock generally begins on the date the optionee exercises ISOs.
See below for a discussion of the exceptions to these general rules when the
optionee uses previously acquired stock of the Company to exercise ISOs.
Alternative Minimum Tax. ALTHOUGH NO CURRENT TAXABLE INCOME IS REALIZED
UPON THE EXERCISE OF ISOS, SECTION 56(b)(3) OF THE CODE PROVIDES THAT THE EXCESS
OF THE FAIR MARKET VALUE ON THE DATE OF EXERCISE OF THE COMMON STOCK ACQUIRED
PURSUANT TO SUCH EXERCISE OVER THE OPTION PRICE IS AN ITEM OF TAX ADJUSTMENT. AS
SUCH, THE EXERCISE OF ISOS MAY RESULT IN THE OPTIONEE BEING SUBJECT TO THE
"ALTERNATIVE MINIMUM TAX" FOR THE YEAR ISOS ARE EXERCISED. The "Alternative
Minimum Tax" is calculated on a taxpayer's adjusted gross income, subject to
special adjustments, plus specified items of tax preference minus specified
itemized deductions. The resulting amount is the alternative minimum taxable
income.
If the shares are disposed of in a "disqualifying disposition" -- that
is, within one year of exercise or two years from the date of the option grant
- - -- in the year in which the ISO is exercised, the maximum amount that will be
included as Alternative Minimum Tax income is the gain on the disposition of the
ISO stock. In the event there is a disqualifying disposition in
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<PAGE> 12
a year other than the year of exercise, the income on the disqualifying
disposition will not be considered income for Alternative Minimum Tax purposes.
In addition, the basis of the ISO stock for determining gain or loss for
Alternative Minimum Tax purposes will be the exercise price for the ISO stock
increased by the amount that Alternative Minimum Tax income was increased due to
the earlier exercise of the ISO. Alternative Minimum Tax incurred by reason of
the exercise of the ISO does not result, for regular income tax purposes, in an
increase in basis of the shares acquired upon exercise. The alternative minimum
tax attributable to the exercise of an ISO may be applied as a credit against
regular tax liability in a subsequent year, subject to certain limitations. The
gain recognized upon a sale or exchange of shares acquired through the exercise
of the ISO's will be limited to the excess of the amount received in the sale or
exchange over the fair market value of the shares at the time the ISO was
exercised.
The application of the Alternative Minimum Tax for each optionee will
depend on such optionee's total income and deductions for the year of exercise.
As such, the extent to which, if any, the tax adjustment item generated by the
exercise of ISO's in conjunction with any other tax adjustment items or
alternative minimum tax adjustments may result in an Alternative Minimum Tax
liability for any optionee cannot be determined. Accordingly, each optionee
should consult his own tax counsel to determine the potential impact of the
Alternative Minimum Tax on his exercise of ISO's.
Employment and Holding Requirements of ISO's. The Code requires that the
optionee remain an employee of the Company or its subsidiaries at all times
during the period beginning on the date that the ISOs are granted and ending on
the day three (3) months (or one (1) year in the case of permanent and total
disability) before the date that each ISO is exercised. Under both the 1991 Plan
and the 1996 Plan, upon termination of employment for any reason other than
cause or disability the options terminate three (3) months after the termination
date unless by their terms the options terminate earlier. If termination occurs
as a result of disability, the options will expire one (1) year after such
termination unless they expire before that date by their terms. Therefore, if
the options constituted incentive stock options at grant, permissible exercises
after termination automatically meet the employment requirements.
In order for an optionee exercising ISOs to qualify for the income tax
free treatment set forth in the preceding section such optionee must not dispose
of the Common Stock acquired pursuant to the exercise of ISOs within two (2)
years from the date the ISOs were granted, nor within one (1) year after the
exercise of the ISOs. If the optionee meets these employment and holding
requirements, any future gain or loss realized and recognized from the sale or
exchange of the Common Stock should be long-term capital gain or loss, if the
stock is held as a capital asset. If the optionee disposes of the shares of
Common Stock acquired upon exercise of an ISO within two years from the granting
of options or one year after the exercise of options (collectively, an "early
disposition"), any gain will constitute, in the year of disposition, ordinary
compensation income to the extent of the excess of the fair market value of the
Common Stock on its acquisition date over the price paid for it by the optionee.
Any additional gain will be treated as capital gain. If the optionee disposes of
the shares of Common Stock at a loss, such loss will be a capital loss.
For purposes of this section, the transfer of Common Stock by reason of
the optionee's death does not constitute a disposition of the Common Stock. In
addition, the transferee of the Common Stock is not subject to the holding and
employment requirements.
If the Recipient disposes of options instead of exercising them, the
incentive stock option rules discussed herein have no application. The
recipient-transferor will recognize either long or short-term capital gain or
loss and the purchaser will not be subject to any of these rules.
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<PAGE> 13
NSO's Under the 1991 Plan, the 1996 Plan and the Consulting Agreement
In general, an optionee who receives an NSO realizes income either at
the date of grant or at the date of exercise, but not at both. Unless the NSO
has a "readily ascertainable fair market value" at the date of grant, the
optionee recognizes no income on the date of grant and the compensatory aspects
are held open until the NSO is exercised. In this case, upon exercise, the
optionee will have compensation income to the extent of the difference between
the fair market value of the stock at the time of exercise and the exercise
price paid by the optionee.
An NSO is deemed to have a "readily ascertainable fair market value" if
(a) the NSO's are actively traded on an established market or (b) the fair
market value can be measured with reasonable accuracy which means that (i) the
NSOs are transferable, (ii) the NSO's are exercisable immediately in full, (iii)
the NSOs and underlying stock are not subject to restrictions which have a
significant effect on the NSOs value and (iv) the fair market value of the
"option privilege" is readily ascertainable.
Exercise of Options Through Use of Previously Acquired Common Stock of the
Company
Under both the 1991 Plan and the 1996 Plan, in some circumstances an
optionee may be allowed to use previously acquired Common Stock to exercise both
ISO's and NSO's. Such previously acquired Common Stock may include Common Stock
acquired pursuant to an earlier partial exercise of options. Generally the
Internal Revenue Service (the "Service") recognizes that an exchange of Common
Stock for other Common Stock does not constitute a taxable disposition of any
shares of Common Stock. The Service treats such exchanges as two transactions.
First, to the extent of the number of previously acquired shares of Common
Stock, a share for share exchange occurs with each new share of Common Stock
("Carryover shares") succeeding to the cost basis and holding period of the old
shares of Common Stock. Second, the remaining new shares of Common Stock are
deemed acquired at a zero cost with their holding period commencing on the date
of acquisition ("Noncarryover shares").
The foregoing rules generally apply to the use of previously acquired
Common Stock to acquire Common Stock under both the 1991 Plan and the 1996 Plan.
An optionee may use Common Stock owned at the date options are exercised to
acquire Common Stock upon exercise of the options. However, despite a
"carryover" holding period, all of the new shares of Common Stock are still
subject to the holding requirements discussed above. If optionee disposes of
such Common Stock acquired pursuant to the exercises of ISO's before the later
of two years from the granting or one year from exercise, an early disposition
occurs first to the extent of the Noncarryover shares and then to the extent of
the Carryover shares.
In addition, if an optionee uses Common Stock acquired through a
previous partial exercise of options ("First Stock") to acquire new Common Stock
through an exercise of options ("Second Stock") before the First Stock has met
the above holding requirements, the First Stock will be treated as having been
disposed of in an early disposition. Therefore, the optionee will have to
recognize ordinary compensation to the excess of the fair market value of the
First Stock on its acquisition dates over its price paid. Despite the early
disposition, any excess gain is not recognized, but is deferred and carried over
to the Second Stock. If the First Stock is used to acquire other Common Stock
which is not subject to either the 1991 Plan or the 1996 Plan, no early
disposition will generally occur and the tax free exchange rules may apply.
-10-
<PAGE> 14
Stock Acquired Pursuant to the Consulting Agreement and Written Compensation
Contracts.
Under the Code, the shares of Common Stock ("Shares") issued to
Continental Capital pursuant to the terms of the Consulting Agreement and to the
employees and consultants pursuant to the written compensation contracts will be
taxed as ordinary income based upon their fair market value on the date of
grant. To the extent the Shares are subsequently sold at a price in excess of
the purchase price paid by the recipients for the Shares, the gain on the sale
of the shares will be treated as a capital gain. If the Shares are sold at a
price less than the purchase price paid by the recipients for the Shares, the
loss on the sale will be treated as a capital loss.
THE DISCUSSION REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF THE 1991
PLAN AND THE 1996 PLAN IS INTENDED ONLY AS A BROAD DISCUSSION OF THE GENERAL
RULES APPLICABLE TO THE GRANT AND EXERCISE OF OPTIONS AND THE ACQUISITION AND
DISPOSITION OF COMMON STOCK ACQUIRED PURSUANT TO THE EXERCISE OF OPTIONS.
SPECIFIC SITUATIONS MAY BE SUBJECT TO DIFFERENT RULES AND MAY RESULT IN
DIFFERENT TAX CONSEQUENCES. EACH OPTIONEE IS STRONGLY URGED TO CONSULT HIS OR
HER OWN TAX ADVISOR WITH SPECIFIC REFERENCE TO THE OPTIONEE'S TAX SITUATION.
RESTRICTIONS ON RESALE
The Company is subject to Section 16(b) of the Securities Exchange Act
of 1934, as amended. Section 16(b) permits recovery by the Company of any profit
realized by any officer or director of the Company from any purchase and sale,
or sale and purchase, of Common Stock within any period of less than six months.
For purposes of Section 16(b), the grant of an option, but not its exercise, is
a purchase of Common Stock. Further, affiliates of the Company who acquire
shares of Common Stock of the Company pursuant to an option described in this
prospectus will not be able to resell such shares of Common Stock in reliance
upon this prospectus. Accordingly, affiliates of the Company exercising options
must insure that any resale of shares of the Company's Common Stock acquired
upon exercise complies with an available exemption from the registration
provisions of the Federal securities law, such as Rule 144 under the Securities
Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
are being passed upon for the Company by Oppenheimer Wolff & Donnelly LLP,
Newport Beach, California.
EXPERTS
The financial statements of XXsys Technologies, Inc. as of September 30,
1997 and 1996 and for each of the years in the three year period ended September
30, 1997 incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of Feldman Sherb Ehrlich & Co., P.C.
(Formerly Feldman Radin & Co., P.C.),independent public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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<PAGE> 15
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
AVAILABLE INFORMATION
XXsys Technologies, Inc. (the "Company") is subject to the information
requirements of the Securities and Exchange Act of 1934 and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copies can be made at the
office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of this material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. This Prospectus
does not contain all the information set forth in the Registration Statement and
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Act"), to which reference is hereby
made.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference the following documents on
file with the Commission:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1997.
All documents hereafter filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, subsequent to the
date of this Prospectus and prior to the sale of all of the Common Stock offered
hereby, shall be deemed to be incorporated herein by reference and to be a part
hereof from the respective dates of filing thereof.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated herein by reference,
excluding the exhibits thereto. Requests for such documents should be directed
by mail to Gregory P. Hanson, Chief Financial Officer, XXsys Technologies, Inc.,
4619 Viewridge Avenue, San Diego, California 92123, or by telephone (619)
974-8200.
Any statement contained in a document incorporated by reference herein
as set forth above shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
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<PAGE> 16
Inapplicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Inapplicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
California Statutes
SECTION 317. INDEMNIFICATION OF CORPORATE "AGENT".
(a) for the purposes of this section, "agent" means any person who is or
was a director, officer, employee or other agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise, or was a director, officer, employee or agent of a
foreign or domestic corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of the predecessor
corporation; "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" includes without limitation attorneys' fees and any expenses of
establishing a right to indemnification under subdivision (d) or paragraph (4)
of subdivision (e).
(b) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the corporation to procure a judgment in its favor)
by reason of the fact that the person is or was an agent of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
(c) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that the person is or was an agent of the
corporation, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of the action if the person acted in
good faith, in a manner the person believed to be in the best interests of the
corporation and its shareholders.
No indemnification shall be made under this subdivision for any of the
following:
(1) In respect of any claim, issue or matter as to which the person
shall have been adjudged to be liable to the corporation in the performance of
that person's duty to the
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<PAGE> 17
corporation and its shareholders, unless and only to the extent that the court
in which the proceeding is or was pending shall determine upon application that,
in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for expenses and then only to the extent that
the court shall determine.
(2) Of amounts paid in settling or otherwise disposing of a pending
action without court approval.
(3) Of expenses incurred in defending a pending action which is settled
or otherwise disposed of without court approval.
(d) To the extent that an agent of a corporation has been successful on
the merits in defense of any proceeding referred to in subdivision (b) or (c) or
in defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
(e) Except as provided in subdivision (d), any indemnification under
this section shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in subdivision (b) or (c), by any of the following:
(1) A majority vote of a quorum consisting of directors who are not
parties to such proceeding.
(2) If such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion.
(3) Approval of the shareholders (Section 153), with the shares owned by
the person to be indemnified not being entitled to vote thereon.
(4) The court in which the proceeding is or was pending upon application
made by the corporation or the agent or the attorney or other person rendering
services in connection with the defense, whether or not the application by the
agent, attorney or other person is opposed by the corporation.
(f) Expenses incurred in defending any proceeding may be advanced by the
corporation prior to the final disposition of the proceeding upon receipt of an
undertaking by or on behalf of the agent to repay that amount if it shall be
determined ultimately that the agent is not entitled to be indemnified as
authorized in this section. The provisions of subdivision (a) of Section 315 do
not apply to advances made pursuant to this subdivision.
(g) The indemnification authorized by this section shall not be deemed
exclusive of any additional rights to indemnification for breach of duty to the
corporation and its shareholders while acting in the capacity of a director or
officer of the corporation to the extent the additional rights to
indemnification are authorized in an article provision adopted pursuant to
paragraph (11) of subdivision (a) of Section 204. The indemnification provided
by this section for acts, omissions, or transactions while acting in the
capacity of, or while serving as, a director or officer of the corporation but
not involving breach of duty to the corporation and its shareholders shall not
be deemed exclusive of any other rights to which those seeking indemnification
may
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<PAGE> 18
be entitled under any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise, to the extent the additional rights to indemnification
are authorized in the articles of the corporation. An article provision
authorizing indemnification "in excess of that otherwise permitted by Section
317" or "to the fullest extent permissible under California law" or the
substantial equivalent thereof shall be construed to be both a provision for
additional indemnification for breach of duty to the corporation and its
shareholders as referred to in, and with the limitations required by, paragraph
(11) of subdivision (a) of Section 204 and a provision for additional
indemnification as referred to in the second sentence of this subdivision. The
rights to indemnity hereunder shall continue as to a person who has ceased to be
a director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of the person. Nothing contained in this
section shall affect any right to indemnification to which persons other than
the directors and officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section,
except as provided in subdivision (d) or paragraph (4) of subdivision (e), in
any circumstance where it appears:
(1) That it would be inconsistent with a provision of the articles,
bylaws, a resolution of the shareholders, or an agreement in effect at the time
of the accrual of the alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnification.
(2) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
(i) A corporation shall have power to purchase and maintain insurance on
behalf of any agent of the corporation against any liability asserted against or
incurred by the agent in that capacity or arising out of the agent's status as
such whether or not the corporation would have the power to indemnify the agent
against that liability under this section. The fact that a corporation owns all
or a portion of the shares of the company issuing a policy of insurance shall
not render this subdivision inapplicable if either of the following conditions
are satisfied: (1) if the articles authorize indemnification in excess of that
authorized in this section and the insurance provided by this subdivision is
limited as indemnification is required to be limited by paragraph (11) of
subdivision (a) of Section 204; or (2)(A) the company issuing the insurance
policy is organized, licensed, and operated in a manner that complies with the
insurance laws and regulations applicable to its jurisdiction of organization,
(B) the company issuing the policy provides procedures for processing claims
that do not permit that company to be subject to the direct control of the
corporation that purchased that policy, and (C) the policy issued provides for
some manner of risk sharing between the issuer and purchaser of the policy, on
one hand, and some unaffiliated person or persons, on the other, such as by
providing for more than one unaffiliated owner of the company issuing the policy
or by providing that a portion of the coverage furnished will be obtained from
some unaffiliated insurer or reinsurer.
(j) This section does not apply to any proceeding against any trustee,
investment manager, or other fiduciary of an employee benefit plan in that
person's capacity as such, even though the person may also be an agent as
defined in subdivision (a) of the employer corporation. A corporation shall have
power to indemnify such a trustee, investment manager, or other fiduciary to the
extent permitted by subdivision (f) of Section 207.
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<PAGE> 19
Articles of Incorporation
The Company's Articles of Incorporation, as amended, provide that the
liability of the directors of the Company for monetary damages shall be
eliminated to the fullest extent permissible under California law. The Company's
Articles of Incorporation authorize the Company to provide indemnification of
agents for breach of duty to the Company and its shareholders through bylaw
provisions, or through agreements with its agents, or both, in excess of the
indemnification otherwise permitted by Section 317 of the California
Corporations Code, subject only to applicable limits set forth in Section 204 of
the California Corporations Code.
Bylaws
Section II of the Company's Bylaws gives the Company the power to
indemnify any person who is or was an agent of the Company as provided in
Section 317 of the California General Corporation Law.
Indemnity Agreements.
The Company has entered into an Indemnity Agreement with each of its
directors and officers, pursuant to which the Company has agreed to indemnify
each director and officer to the fullest extent permitted by California law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Inapplicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Description
- - -------------- -----------
<S> <C>
4.1(1) Certificate of Determination for Registrant's Series A Preferred Stock.
5.1 Opinion of Oppenheimer Wolff & Donnelly LLP re: legality of shares.
10.4(2) 1991 Stock Option Plan dated December 14, 1991, as amended.
10.39(3) Consulting Services Agreement between the Company and Continental
Capital & Equity Corporation dated April 15, 1998.
10.41(4) 1996 Stock Option Plan dated March 29, 1996.
10.42 [Forms of] Employee/Consultant Compensation Contract
23.1 Consent of Oppenheimer Wolff & Donnelly LLP (filed as Exhibit 5.1 herein).
23.2 Consent of Feldman Sherb Ehrlich & Co., P.C. (Formerly
Feldman, Radin, & Co., P.C.)
</TABLE>
Notes:
(1) Incorporated by reference to Form 8-K dated May 12, 1994.
(2) Incorporated by reference to Form 10-KSB for the year ended September
30, 1997.
(3) Incorporated by reference to Form 10-QSB for the quarter ended March 31,
1998.
(4) Incorporated by reference to Form S-8 registration statement
dated June 4, 1998
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<PAGE> 20
ITEM 9. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes to file during
any period in which offers or sales of the securities are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed or
any material change to such information set forth in the Registration Statement.
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
D. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE> 21
SIGNATURES
The Registrant
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on October 12, 1998.
XXSYS TECHNOLOGIES, INC.,
a California corporation
By: /s/ GLORIA C.L. MA
-------------------------------------
Gloria C.L. Ma
Chief Executive Officer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ----------- ----- ----
<S> <C> <C>
/s/ GLORIA C.L. MA Chairman, Chief Executive October 12, 1998
- --------------------------------- Officer, Chief Financial
GLORIA C.L. MA Officer and Director
/s/ WALTER GEER Director October 12, 1998
- ---------------------------------
WALTER GEER
/s/ WILLIAM J. DALE Director October 12, 1998
- ---------------------------------
WILLIAM J. DALE
</TABLE>
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<PAGE> 1
EXHIBIT 5.1
OPPENHEIMER WOLFF & DONNELLY LLP
500 Newport Center Drive
Suite 700
Newport Beach, California 92660
(949) 719-6000
(949) 719-6040 (Fax)
October 12, 1998
XXsys Technologies, Inc.
4619 Viewridge Avenue
San Diego, California 92123
Re: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
As counsel for XXsys Technologies, Inc., a California corporation (the
"Company"), we have examined its Articles of Incorporation, as amended, Bylaws
and such other corporate records, documents and proceedings, and such questions
of law as we have deemed relevant for the purpose of this opinion. We have also,
as such counsel, examined the Post-Effective Amendment No.1 to Registration
Statement on Form S-8 of the Company as filed with the Securities and Exchange
Commission, covering the registration under the Securities Act of 1933, as
amended, of a total 3,450,000 shares of no par value common stock ("Common
Stock"), including the exhibits and form of Prospectus (the "Prospectus")
pertaining thereto, and any amendments thereto (collectively, the "Registration
Statement").
Upon the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing in
good standing under the laws of the State of California, with all requisite
power to conduct the business described in the Registration Statement.
2. The shares of the Company's Common Stock registered pursuant to the
Registration Statement have been duly and validly authorized and, subject to the
payment therefor pursuant to the terms contemplated in the final Prospectus,
such shares of Common Stock will be duly and validly issued as fully paid and
non-assessable securities of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ OPPENHEIMER WOLFF & DONNELLY LLP
<PAGE> 1
EXHIBIT 10.42
[FORM OF WRITTEN COMPENSATION CONTRACT]
September 9, 1998
_____________________________
_____________________________
_____________________________
Dear _____________:
As we discussed recently, you have indicated you would accept XXsys
Technologies, Inc. freely trading common stock in payment for some or all of the
amount currently owed to you by our Company. As of today, our records show that
amount to be $___________.
Please fill out the information below to indicate the amount you are willing to
accept in this alternate form of payment and return it to me at your earliest
convenience. As soon as we have your signed consent, we will undertake the
filing with the SEC of the S-8 Registration Statement required to register the
necessary stock. Freely trading shares will be issued as soon as possible
thereafter (normally about 4-6 weeks). The number of shares to be issued will be
based on the market price on the day you receive your shares. If you have
questions, please contact me.
Sincerely yours,
Gloria C.L. Ma, Ph.D.
Chairman
________________________________________________________________________________
Yes, I agree to accept freely trading company stock in exchange for _____% of
the amount owed to me as specified above.
Name:__________________________________________________________________
Company:_______________________________________________________________
Title:_________________________________________________________________
Signature:_____________________________________________________________
Date:__________________________________________________________________
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 1 to the
Registration Statement on Form S-8 of our report dated December 30, 1997
relating to the financial statements of XXsys Technologies, Inc., as of
September 30, 1997 and 1996 and for each of the years in the three year period
ended September 30, 1997.
/s/ Feldman Sherb Ehrlich & Co., P.C.
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
(Formerly Feldman Radin & Co., P.C.)
New York, New York
October 13, 1998
