SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NO.: 0-22954
THE WINNER'S EDGE.COM, INC.
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(Name of Small Business Issuer in its Charter)
Delaware 65-0952186
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1900 Corporate Boulevard, Suite 400 East, Boca Raton, FL 33431
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(Address of principal executive offices, including zip code)
(561) 988-3333
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(Issuer's telephone number)
UC'NWIN SYSTEMS CORPORATION
5601 North Powerline Road, Ft. Lauderdale, Florida 33309
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(Former Name, Former Address and Formal Fiscal Year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to 12(g) of the Act: None
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Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that
the Issuer was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ ] No [ x ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained herein, and will not
be contained, to the best of Issuer's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $14,762.00
The aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing sales price for the common
stock of $.10 per share on December 31, 1999, was $2,503,180.30.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS
Indicate whether the Issuer has filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 after the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ x ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the Issuer's classes
of common stock, as of the latest practicable date.
25,031,803 shares of Common Stock were outstanding as of December
31, 1999.
<PAGE>
THE WINNER'S EDGE.COM, INC. F/K/A
UC'NWIN SYSTEMS CORPORATION
TABLE OF CONTENTS
Page
PART I ----
Item 1. Business......................................... 3
Item 2. Properties....................................... 10
Item 3. Legal Proceedings................................ 10
Item 4. Submission of Matters to a
Vote of Security Holders....................... 10
PART II
Item 5. Market for Company's Common Equity
And Related Stockholder Matters................ 11
Item 6. Management's Discussion and
Analysis or Plan of Operations................. 12
Item 7. Financial Statements and Supplementary Date...... 14
Item 8. Change in and Disagreements
with Accountants on Accounting
and Financial Disclosure....................... 15
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act.............. 15
Item 10. Executive Compensation........................... 17
Item 11. Security Ownership of Certain
Beneficial Owners and Management............... 18
Item 12. Certain Relationships and Related Transactions... 19
Item 13. Exhibits, Financial Statement
Schedules and Reports on Form 8-K.............. 20
SIGNATURES
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PART I - FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. The
forward-looking statements contained in this Form 10-KSB are
subject to certain risks and uncertainties. Actual results could
differ materially from current expectations. Among the factors
that could affect the Company's actual results and could cause
results to differ from those contained in the forward-looking
statements contained herein is the Company's ability to implement
its business strategy successfully, which will depend on business,
financial, and other factors beyond the Company's control,
including, among others, prevailing changes in consumer
preferences, access to sufficient quantities of raw materials,
availability of trained laborers and changes in industry
regulation. There can be no assurance that the Company will
continue to be successful in implementing its business strategy.
Other factors could also cause actual results to vary materially
from the future results covered in such forward-looking statements.
Words used in this Form 10-KSB, such as "expects", "believes",
"estimates", and "anticipates" and variations of such words and
similar expressions are intended to identify such forward-looking
statements.
PART I
ITEM 1. BUSINESS
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INTRODUCTION
The Winner's Edge.com, Inc. f/k/a UC'NWIN Systems Corporation (the
"Company" or the "Registrant") was a publicly-held Canadian
corporation, organized in Canada in 1993 under the name FMG
Telecomputer, Ltd., and later reincorporated in Delaware on
December 11, 1995. The Company was engaged in the development,
manufacture, sale and marketing of its UC'NWIN System, an in-store
interactive informational solutions software program designed to be
furnished to corporations in the U.S., UK, Europe and Asia,
delivered through interactive kiosks and websites on the Internet.
Corporations were to use the software programs and delivery systems
to disseminate catalogs, product information, promotional offers,
to collect and collate consumer research data, and provide a direct
communications link with consumers. The software programs were
designed to serve as sales driven and value added vehicles that
would build consumer loyalty to manufacturer and retailer.
The Company, through its wholly-owned U.S. subsidiary, UC'NWIN
Systems, Inc., had licensed the worldwide rights (except for the
United States) to Winners All Ltd., to manufacture or lease the
UC'NWIN system. By agreement dated December, 1994, and as
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subsequently amended in June, 1995, the Company, through its wholly
owned U.S. subsidiary, UC'NWIN Systems, Inc. and Winners All Ltd.
(a wholly owned subsidiary of Winners All International, Inc.)
Created WIN Network, LLC., ("WinNet") a limited liability company,
registered under the laws of the State of New York, to exploit the
UC'NWIN system. The Company and Winners All Ltd. contributed the
tangible and intangible rights to the UC'NWIN System with the
Company owning fifty-one percent (51%) of WinNet and Winners All
Ltd. owning the remaining forty-nine percent (49%). The business
venture, however, never commenced business operations.
Beginning January, 1996, the Company investigated the
possibility of a business combination, but the Company lacked the
capital necessary to pursue any acquisition and, further, lacked a
sufficient revenue base to be an attractive takeover target.
Additionally, the Company did not possess the capital necessary to
prepare and file with the Securities and Exchange Commission (the
"Commission") all reports which the Company was required to file
under the Securities and Exchange Act of 1934, as amended (the
"1934 Act"). The Company had virtually no active business
operations since early 1996, and ceased operations on or about
November 30, 1996. Expenses for the fiscal year ended December 31,
1997, 1998 and 1999, consisted primarily of general administrative
expenses associated with the bankruptcy.
Beginning February, 1998, a group of five (5) investors led by
Anthony D'Amato loaned $125,000 to a New York corporation,
QuickPhone, Inc., which was represented to be a wholly-owned
subsidiary of the Company. The loan was secured by 3,000,000
shares of the common stock of the Company hypothecated and pledged
by Gary Robinson, the then President of the Company through his
company, SSR Group, Inc. After discovery by the investors that
QuickPhone, Inc. was not a subsidiary of the Company, and that
other material representations were inaccurate, the investors took
control of the 3,000,000 shares of the Company's common stock,
representing approximately five percent (5%) of the Company's then
issued and outstanding stock. Mr. D'Amato embarked upon a course
of conduct designed to take control of the Company to determine
whether any value could be salvaged for shareholders. Mr. D'Amato
solicited proxies sufficient to elect a new board of directors. On
May 20, 1998, the then serving Board of Directors of the Company
appointed four (4) new directors and then resigned.
On June 15, 1998, at the annual meeting of shareholders, a new
board of directors was elected consisting of Anthony D'Amato, C.
Wayne Baldridge, Jeffrey H. Morris and Michael E. Fasci. Prior to
their resignations, the old Board, at the direction of the new
Board, voted to cancel the issuance of approximately 30,000,000
shares of the Company's Common Stock to the then directors,
officers and consultants of the Company. The investigation by the
new Board revealed that the 30,000,000 shares were issued without
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consideration. Although the issuance was canceled, the Company was
unable to verify whether some of the canceled stock was, in fact,
issued. In addition, the current Board is unable to verify whether
other stock, in fact, had been issued without consideration.
The new Board inherited a company with virtually no records,
supporting documentation, or business operations. The Board
determined that the best course of action was to financially and
operationally cleanse the Company by reorganizing pursuant to
Chapter 11 of the Bankruptcy Code. The Company filed for relief on
April 28, 1999, and the Company's First Amended Plan of
Reorganization was confirmed on August 11, 1999. (See: Bankruptcy
Reorganization). The Plan provides the outline for the
commencement of operations for the Company to market software that
predicts the outcome of thoroughbred horseraces in North America.
(See: Bankruptcy Reorganization and Management's Discussion and
Analysis of Financial Condition and Plan of Operations).
Since the appointment of new Company management, certain
members of the Board of Directors have agreed to pay certain
obligations of the Company, including certain past due and current
accounting and legal fees, stock transfer agent fees, franchise
taxes, state and federal taxes, and other expenses incurred or to
be incurred in connection with bringing the Company current with
respect to reporting obligations under the 1934 Act. The Company
has received written authorization from the Commission to file one
(1) Form 10-KSB for the fiscal year ended December 31, 1999, in
order to bring the Company current in its filing obligations.
On November 12, 1998, the Board of Directors ratified certain
resolutions as follows:
a. WIN Network, LLC, has ceased all operations. Investments
in the joint ventures have no carrying value, no expected
future recovery and are to be written off.
b. UC'NWIN System Ltd., United Kingdom, has ceased all
operations. Investment in UC'NWIN System Ltd., United
Kingdom have no operations, value, expected future
recovery, and is to be written off.
c. Any and all licensing agreements were determined to have
no projected no value.
d. The Board reconfirmed that the Company terminated its
1996 agreement to merge with Winners All International,
Inc. Activities relating to this merger and any shares
of stock that were exchanged, during this period, were
negated, and all shares returned, including those
previously held for investment.
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BANKRUPTCY REORGANIZATION
On April 28, 1999, the Company filed a voluntary bankruptcy
petition in the United States Bankruptcy Court for the Southern
District of Florida seeking relief pursuant to 11 U.S.C. Chapter
11. The automatic stay provisions of the Bankruptcy Code prohibit
creditors from taking action against the Company without first
obtaining court approval. Further, the Company is permitted to
operate under Company management while the Company formulates a
plan of reorganization.
The Company's First Amended Plan of Reorganization (the
"Plan") was confirmed by the Bankruptcy Court on August 11, 1999.
The material terms of the Plan include the payment of certain court
approved and allowed claims as follows: (i) administrative costs in
the amount of $90,278.34, which claim was converted to 500,000
shares of the Company's Common Stock; (ii) each holder of an
allowed unsecured claim was entitled to receive shares of common
stock in the Reorganized Company, equal in number to the amount of
the holder's allowed unsecured claim divided by .058, the
determined average common share price; and (iii) existing pre-
petition shareholders, warrantholders, and optionholders had their
interests adjusted to reflect a one-for-four (1-for-4) reverse
stock split of securities issued by the Company pre-petition.
As a result of bankruptcy reorganization, the Company was able
to (i) cancel all of the pre-petition common stock and issue
pursuant to the terms of the Plan, new securities in the Company.
The cancellation of the pre-petition securities and issuance of new
securities enabled the Company to purge any remaining pre-petition
common shares which were issued without consideration; (ii) clean
up the Company's balance sheet by the elimination of pre-petition
creditors claims some of which were unknown due to the Company's
pre-1998 lack of record keeping; (iii) enter into an exclusive
Licensing Agreement with The Winner's Edge Licensing Corp. to
market software and related products to the thoroughbred horse
racing industry in the U.S. and its territories, thus providing the
Company with meaningful operations; and (iv) the Company settled
certain pending legal matters through the Plan which, when viewed
with the fact that the unsecured creditors converted debt to equity
in the Reorganized Company resulted in a significant reduction of
liabilities on the Company's post-reorganization balance sheet.
MARKETS
The Company is engaged in the business of providing
computerized handicapping information to thoroughbred horse racing
patrons. The Company's product is distinguished from others by
being more accurate as well as easier to follow, understand and
use. Therefore it has the potential of appealing to a broader
audience than competitive systems. To take advantage of these
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characteristics, the Company must market its handicapping services
to the widest possible audience. Fortunately, the product lends
itself particularly well to interactive electronic delivery which
the Company is attempting to accomplish through the use of
electronic kiosks. Ultimately, the product will be available at
the top 50 racetracks in North America, all premiere off-track
betting locations, and through the expanding use of its web site on
the Internet.
Attendance at horse tracks in the United States has steadily
declined for a number of years. This has prompted racetracks to
increasingly rely on revenues from simulcasting and off-track
wagering. The industry-wide focus on simulcasting and off-track
wagering has increased competition among racetracks for outlets to
simulcast their live races. Increasing competitive pressure has
driven many tracks to the point of questionable viability, making
them vulnerable to be taken over. Hence, the ownership of
racetracks is rapidly concentrating into the hands of a few
companies with strong promotional capabilities.
The most active corporations attempting to roll up racetracks
are Churchill Downs, Inc. and Magna Entertainment Corporation. The
most visible is Churchill Downs, Inc., which in addition to its
track at Churchill Downs, home of the Kentucky Derby, has in the
past two years acquired Hoosier Park in Indiana, Ellis Park in
Kentucky, Calder Race Course in Florida, and Hollywood Park near
Los Angeles. The other is Magna Entertainment Corporation which
recently acquired racetracks at Santa Anita near Los Angeles,
Golden Gate Fields near San Francisco, Gulfstream Park near Miami,
Thistledown in Ohio, Remington Park in Oklahoma, and has agreed to
acquire Great Lakes Downs in Michigan. Magna Entertainment
Corporation, a public company, is currently being spun off to
shareholders of its automotive parts parent company and has
received an S-1 registration for the public sale of shares in the
United States.
The horseracing industry plans to launch marketing campaigns
to attract larger audiences of younger race fans. As with all
racetracks, the marketing will focus on increasing off-track
betting handles by emphasis on simulcasting races to an increasing
audience of race fans who wager remotely from off-track betting
locations. Off-track wagering currently represents over 80% of the
total betting handle reported by the International Federation of
Horseracing Authorities in 1997 to have passed the $15 billion mark
in the United States.
The expansion of wagering participants, especially from remote
locations, depends on the presentation of a full complement of past
performance data and other handicapping information for each race
that is simulcast. The Company feels that it is well prepared to
play a leading role in improving the quality, ease of use, and
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local availability of such information. It further hopes to
materially help the industry attract growing numbers of younger
race fans.
All handicapping services rely on data pertaining to horses,
jockeys, trainers, and track surfaces. The core of this information
is a timing record of each horse in each race at a number of points
of call along the track. This information is currently imprecisely
calculated and recorded by hand and translated into charts for each
race. The Company purchases this information for input to its
handicapping process.
Most track owners want more reliable automated electronic
timing systems. Based on experience with automatic segment timing
systems at thoroughbred racetracks in other countries, the Company
notes that the real time display of race status on the simulcast
video or display board of a race at each check point can be made to
materially add to the excitement of the race. The Company believes
that the proper use of electronic timing data could enhance the
simulcast products offered at the racetracks, and so make it easier
for the tracks to market horse racing to a wider audience.
The Company is seriously exploring acquiring, installing and
operating electronic segment timing systems at principal race
tracks and marketing the use of its timing data to wholesale as
well as retail users of such information, while also providing more
precise input to its own handicapping system. Wholesale buyers
include a range of value added data vendors, including certain of
the Company's handicapping competitors.
STRATEGY
The mission of the Company is to establish itself as a world
leader in the processing, management, and distribution of a
comprehensive range of information needed to participate
internationally in horse racing and wagering. To this end, the
Company plans to use interactive electronic methods of
dissemination, including large-scale use of the Internet.
RISKS
The Company's plans rely on the assumption that its
handicapping product (which the Company believes demonstrates
exceptional accuracy in predicting the outcomes of thoroughbred
horse races in the United States) has yet to prove its
marketability to an audience that is largely set in its ways. The
Company has lacked the resources to validate its market as well as
the efficacy of its selected kiosk and Internet means of delivery.
Should additional research prove the Company's assumptions to be
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unrealistic, the economic viability of the enterprise could be
seriously affected.
The Company's hopes of introducing fractional electronic
timing to American horse tracks, and thereby obtaining access to a
new avenue of business closely related to its handicapping
activities, runs the risk of stiff opposition from entrenched
organizations using traditional methods of track-side charting. The
incumbent sole source of fractional timing data belongs to the
Jockey Club in association with other horseman associations and
some of the race tracks. Should political resistance overwhelm the
Company's track timing endeavors, it could negatively affect its
future financial performance.
The horse racing industry has steadily been losing market
share for leisure time activities and has so far largely failed in
its attempts to attract a fresh, younger audience. Further decline
in consumer interest in horse racing, a continued decrease in
attendance and on-track wagering, as well as increased competition
in the simulcast wagering market, could lead to an increase in the
Company's distribution costs, and may have a material adverse
effect on the overall profitability of the Company's handicapping
business.
The Company's long-range aspirations to actively provide on-
line wagering services on the Internet will depend on legislative
developments in the United States at the Federal and State levels.
The United States Congress is currently considering enacting the
Internet Gambling Prohibition Act, also known as the "Kyl" Bill,
which would amend the Interstate Wire Act to make it clear that
persons engaged in the United States in the business of betting or
wagering through the Internet as well as casual bettors who
knowingly use a communication facility for betting or gambling over
the Internet can be fined or imprisoned. Internet service providers
would be required to block-out gambling sites and would be subject
to state and federal authority. However, the Kyl Bill permits
telephone account, interactive television and Internet-based
account wagering on horse and Greyhound racing, but not other
sports. A similar piece of legislation was recently introduced in
the House of Representatives by Rep. Bob Goodlatte (R. Va.). The
Company cannot predict the final disposition of either piece of
legislation. Even if Federal legislation is amended to legalize
on-line wagering, State regulation could still inhibit or even
prohibit such activities in certain States.
PATENTS, TRADEMARKS AND LICENSES
The Company has a ten-year license, renewable for another ten
years, for exclusive use of a proprietary computer software program
to provide computerized handicapping for United States races to
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thoroughbred horse racing patrons worldwide. The software program
was developed and is being maintained by one of the Company's
principals. The Company has no royalty obligation for use of the
software.
RESEARCH AND DEVELOPMENT
The Company developed its own interactive electronic kiosks
and web site, and will continue to improve and expand both product
delivery methods. It will further conduct research and invest
development effort in the improvement of its licensed handicapping
software, as well as its prospective track timing business.
ITEM 2. PROPERTIES
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At present, the Company does not own or lease any property. The
Company maintains its business address at a minimal cost.
Administrative services, including the use of fixtures, furniture
and equipment, and the use of employees to provide reception,
secretarial, and bookkeeping services are provided to the Company
at no cost by the Company's current officers and directors.
ITEM 3. LEGAL PROCEEDINGS
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The Company filed a Voluntary Petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of Florida, Case No. 99-
32064-BKC-PGH, on April 28, 1999. On August 11, 1999, the U.S.
Bankruptcy Court confirmed the Company's First Amended Plan of
Reorganization.
Other than the aforesaid Bankruptcy Court proceeding, the
Company is not a party to any material legal proceeding, nor to the
knowledge of management, are any legal proceedings threatened
against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The Company's First Amended Plan of Reorganization was
submitted to a vote of securityholders (Class 4 - Interest Holders)
through a solicitation of votes in conjunction with the bankruptcy
confirmation process.
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PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
----------------------------------------------
The Common Stock is currently traded on the OTC Bulletin Board
under the symbol "WNNR". The following table sets forth, for the
fiscal periods indicated, the high and low bid prices for the
Common Stock on the Nasdaq SmallCap Market for the periods prior to
December 31, 1999, and the OTC Bulletin Board thereafter. This
information represents prices between dealers and does not reflect
retail mark-up or mark-down or commissions, and may not necessarily
represent actual market transactions.
<TABLE>
<CAPTION>
Fiscal Period High Bid Low Bid
<S> <C> <C>
1996:
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First Quarter........................... $1.09375 $ .375
Second Quarter.......................... 1.25 .375
Third Quarter........................... .90625 .17
Fourth Quarter.......................... .21 .035
1997:
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First Quarter........................... $ .1875 $ .1875
Second Quarter.......................... .17 .16
Third Quarter........................... .18 .15
Fourth Quarter.......................... .12 .09
1998:
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First Quarter........................... $ .125 $ .08
Second Quarter.......................... .08 .08
Third Quarter........................... .0625 .0625
Fourth Quarter.......................... .0625 .0625
1999:
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First Quarter........................... $ .11 $ .09
Second Quarter.......................... .06 .06
Third Quarter .......................... .11 .0625
Fourth Quarter.......................... .14 .10
</TABLE>
The closing bid price for the Company's Common Stock on the
OTC Bulletin Board on March 1, 2000 was $.23 per share.
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As of March 1, 2000, there were approximately 3,815 record
holders of the Company's outstanding Common Stock. Moreover,
additional shares of the Company's Common Stock are held for
stockholders at brokerage firms and/or clearing houses, and
therefore the Company was unable to determine the precise number of
beneficial owners of Common Stock as of March 1, 2000.
The Company has never declared or paid cash dividends on its
capital stock and the Company's Board of Directors intends to
continue its policy for the foreseeable future. Earnings, if any,
will be used to finance the development and expansion of the
Company's business. Future dividend policy will depend upon the
Company's earnings, capital requirements, financial condition and
other factors considered relevant by the Company's Board of
Directors and will be subject to limitations imposed under Delaware
law.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
------------------------------------
PLAN OF OPERATION
INTRODUCTION
The Company's plan of operation for the next twelve (12)
months is to continue to aggressively market the Company's
revolutionary proprietary handicapping software (the "software")
which handicaps the outcome of Thoroughbred Horse races in the
United States and its Territories worldwide. This software yields
reports that the Company sells at racetracks, authorized betting
locations, via the Internet at the Company's web site located at
http://www.thewinnersedge.com and, where possible, as a printed
part of a race track's program. Additionally, the Company plans to
penetrate the growing market segment of broadcast racing
represented by such entities as TVG, The Racing Channel,
Trackpower.com, and YouBet.com.
The Registrant is presently a development stage Company. The
Company has become current in its reporting obligations under the
Securities Exchange Act of 1934 through the preparation and filing
of its 1999 annual report on Form 10-KSB. Since the Company has
become current in its reporting obligations and now that management
will be taking steps to secure the interim financing required to
build out the Company, plans are to remove the development stage
classification at fiscal year end.
The financial statements as of December 31, 1999 have been
prepared on the going concern basis. For the year ending December
31, the year-to-year comparisons show an increase in the net loss
of $369,909 from a loss of $55,798 in 1998 to a loss of $ 425,707
in 1999. Year to date the net loss increased from $55,798 in 1998
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to $481,505 in 1999. These loses were incurred due to increased
expenses in developing and marketing the Company's products.
The Company currently does not have the liquidity or capital
resources to fund The Winners Edge.com, Inc. without raising
capital either from debt or equity funding sources. For its
operations to date, the Company has borrowed approximately $150,000
from Drake Alexander and Associates, Inc., a venture capital firm
owned by two of the directors of the Company and has raised $10,000
through the private sale of restricted common stock. The Company
has engaged the services of merchant banking concern vanAar, Inc.
as a consultant to assist and advise in the management and
organizational development of the Company and to raise interim
financing in the amount of $2,000,000 through short-term lending,
private placement with accredited sophisticated investors, or both,
pending a possible later secondary public offering of common stock.
A detailed business plan outlining specific expenditures to enable
the Company to become self-sustaining is being completed by vanAar,
Inc.
CASH REQUIREMENTS
On estimated revenues of $2 million over the next twelve
months, the Company expects to lose approximately $850,000. To
generate the revenues, the Company will have to expand
significantly the Company's operations. The Company will require
additional working capital to operate at an expanding level of
activity, including the funding of a marketing budget of more than
$300,000. The Company estimates that it will require approximately
$4.5 million in additional capital in the course of the year. It
plans to fill this capital need through the proceeds of a $2
million private placement offering of debt or equity, and from the
proceeds of a secondary public offering on the order of $15 million
later in the year. Proceeds from the public offering will be used
to pay off debt and to fund the continuing growth of the company.
PRODUCT DEVELOPMENT
The Company plans to continue the development and refinement
of its handicapping software products, to expand the scope of its
services delivered via the Internet, and to integrate the
processing and delivery of track timing data into its flow of
information.
The Company is expanding its business by seeking to utilize
electronic, automotive-style race timing systems that have now been
successfully adapted to horse racing to more accurately record the
performance of horses at tracks of key importance. The
instantaneous display of fractional data on the video displays at
the racetrack can add measurably to the excitement of a race and
will also help tracks to sell their simulcasts more competitively.
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It will further aid in the promotion of horse racing to a broader
audience.
PURCHASE OF EQUIPMENT
The Company anticipates purchasing 111 new kiosks for
placement at various thoroughbred racetracks and off-track betting
locations as well as the acquisition and installation of electronic
timing systems at 18 racetracks. The Company estimates the
purchase of equipment to cost $2.5 million.
STAFFING
Consistent with its objective of making the transformation
from a startup enterprise to a fully operational business, the
Company plans during the next twelve (12) months to hire a
significant number of employees, including senior executives in key
management positions. Specifically, the Company plans to assemble
a team of twelve (12) key personnel to manage and operate the track
timing systems at a cost of about $550,000 during the first year;
a second team of twelve (12) key personnel at a cost of about
$350,000 to maintain and operate the kiosks at the tracks and off-
track betting locations, and a primary contingent to manage the
company at an estimated cost of $550,000, for an aggregate
estimated cost of $1,450,000.
YEAR 2000 COMPLIANCE BY THE COMPANY AND OTHERS
Year 2000 compliance concerns the ability of certain
computerized information systems to properly recognize date-
sensitive information, such as invoices for the Company's services,
as the year 2000 approached. Systems that did not recognize such
information could generate erroneous data or cause systems to fail.
The Company has received notifications from various vendors,
suppliers, and equipment manufacturers, of their Year 2000
compliant systems. The Company also has updated its computer
systems and hardware to be Year 2000 compliant.
The Company experienced a problem receiving information from
one of its key suppliers after January 1st, 2000 and had to modify
portions of its handicapping software to overcome this problem.
This caused the Company to miss publication of its reports for a
period of two weeks which affected its sales via the Internet and
at its kiosks at the Hollywood Park racetrack in Inglewood, CA and
the Texas Station casino in Las Vegas. On the positive side, the
program modifications improved the accuracy of the Company's
handicapping predictions.
ITEM 7. FINANCIAL STATEMENTS
--------------------
Financial information pursuant to this Item appear elsewhere
in this Report. See Item 13.
-14-
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AN FINANCIAL DISCLOSURE
------------------------------------------------
On January 12, 1996, the Registrant having emigrated from
Canada and become a Delaware corporation retained Mazars and
Company, LLP ("Mazars & Company"), Certified Public Accountants, of
140 East 45th Street, New York to audit the financial statements of
the Registration for the year ended December 31, 1995 and assist
management and legal counsel in preparing the Form 10-K and the
Management Discussion and Analysis. Prior audits of the financial
statements of the Registration had been completed by Iscove Gold &
Glatt, Chartered Accountants, of 45 Clair Avenue West, Suite 200,
Toronto, Ontario, Canada. At no time have their been any
disagreements with Iscove gold & Glatt on accounting or financial
matters.
The report of Mazars & Company on the Company's financial
statements for the fiscal year ended December 31, 1995 did not
contain an adverse opinion or disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope, or accounting
principles, except for a going concern uncertainty.
In connection with the audit of the Company's financial statements
for the fiscal year ended December 31, 1995, and in the subsequent
interim period, there were no disagreements, disputes, or
differences of opinion with Mazars & Company on any matters of
accounting principles or practices, financial statement disclosure,
or auditing scope and procedures, which, if not resolved to the
satisfaction of Mazars & Company would have caused Mazars & Company
to make reference to the matter in its report.
During the two (2) most recent fiscal years (1998 and 1999),
and for the fiscal years 1996 and 1997, the Company's financial
statements were not audited. The company has retained Radin, Glass
& Co., LLP, Certified Public Accountants, to audit the financial
statements contained herein for the fiscal years 1998 and 1999.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
----------------------------------------------------------
In connection with the Company's present effort to restructure
its operations, certain actions were taken with respect to the
composition of the Board of Directors. On May 20, 1998, the then
current Board of Directors, consisting of Niall Duggan, Edward
Fitzpatrick, Ivan Thornley Hall, and Gary Robinson, by unanimous
written consent without a meeting, pursuant to Section 141 of
General Corporation Law of the State of Delaware, resolved to
-15-
<PAGE>
increase the total number of directors to eight, appoint Anthony
D'Amato, Jeffrey Morris, Jeff Goldstein, and C. Wayne Baldridge as
new Directors, and then Niall Duggan, Edward Fitzpatrick, and Ivan
Thornley Hall resigned as directors, and Gary Robinson resigned as
a director and officer of the Company. Thereafter, the current
Board of Directors appoint Anthony D'Amato as Acting President,
Secretary and Treasurer of the Company. Any and all prior officers
and directors previously reported in the Company's SEC filings, no
longer hold such positions and are no longer affiliated with the
Company.
Each directors holds office until the next annual meeting of
stockholders and until his successor is duly elected and qualified,
or until death, resignation or removal. Officers serve at the
discretion of the Board of Directors.
The directors and executive officers of the Company as of the
date of this report are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
C. Wayne Baldridge 49 Chief Executive Officer,
President, and Director
Jeffrey H. Morris 26 Chief Financial Officer
and Director
Anthony D'Amato 29 Director
Michael E. Fasci 40 Director
</TABLE>
C. Wayne Baldridge joined the Company in June 1995, as a
director, and has served as the Chief Executive Officer and
President since January 1999. Since May, 1996, Mr. Baldridge has
served as the Chief Executive Officer of the Winners Edge Licensing
Corporation which develops and markets software relating to
thoroughbred horse racing. From February 1992 to May 1996, Mr.
Baldridge served as International Vice President of Sale and
Marketing for ET Solutions, Inc.
Jeffrey H. Morris joined the Company in June 1998 as a
director and has served as the Chief Financial Officer since
January 1999. Since May 1997, Mr. Morris has served with drake
Alexander & Associates, first as Director of Marketing, and since
1998, as Vice President of Operations. Prior to 1997, Mr. Morris
served as Director of Sales for Roma Industries, a manufacturer of
fine leather goods. Mr. Morris graduated from Rollins College in
1994 with a Bachelor of Arts degree in Psychology, with a minor in
Marketing.
Anthony D'Amato joined the Company in June 1998 as a director
and served from June 1998 through December 1998 as President of the
Company. Since May 1997, Mr. D'Amato has served with Drake
-16-
<PAGE>
Alexander & Associates, first as Director of Financial and, in
1998, as a corporate Vice President. Mr. D'Amato is now Chairman
of the Board of Directors of Drake Alexander & Associates. Since
1992, Mr. D'Amato has held various positions with KB Electronics,
Inc., a mid-size electronics manufacturing entity. Currently, Mr.
D'Amato serves as a director of KB Electronics, Inc. having been
elected in 1995.
Michael E. Fasci joined the Company in August, 1998, as a
director and has served as Chairman of the Company's Audit
Committee since January 1999. Mr. Fasci is the founder, President
and Chief Executive Officer of Process Engineering Services, Inc.,
which has its principal executive offices located in Raynham,
Massachusetts. Process Engineering Services, Inc. designs and
manufactures pollution recovery equipment for the manufacturing
industry with clients worldwide. Since founding the company in
1987, he has grown the company in each successive year to where it
is today with annual sales in excess of 1 million. In 1997, Mr.
Fasci qualified for, and currently maintains Enrolled Agent status
with the Internal Revenue Service. He also has developed a
financial consulting and tax practice that serves primarily
corporate clients. Mr. Fasci also currently owns and manages a
number of other small profitable businesses.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires the Company's officers and directors, and
persons who own more than ten percent of a registered class of the
Company's equity securities (collectively the "Reporting Persons")
to file reports and changes in ownership of such securities with
the Securities and Exchange Commission and the Company. Based
solely upon a review of (i) Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e), promulgated
under the Exchange Act, during the Company's fiscal year ended
December 31, 1991 and (ii) Forms 5 and any amendments thereto
and/or written representations furnished to the Company by any
Reporting Persons stating that such person was not required to file
a Form 5 during the Company's fiscal year ended December 31, 1991,
it has been determined that no Reporting Persons were delinquent
with respect to such person's reporting obligations set forth in
Section 16(a) of the Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
----------------------
The following table sets forth summary compensation
information with respect to compensation paid by the Company to the
Chief Executive Officer of the Company ("CEO") and the Company's
four most highly compensated executive officers other than the CEO,
who were serving as executive officers during the Company's fiscal
year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------- -------------------------------------
Awards Payments
-------------------------- ---------
Restricted Securities
Name of Individual Other Annual Stock Underlying/ LTIP All Other
and Principal Position Year Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
- ---------------------- ---- ------ ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Wayne Baldridge 1999 $15,000 $ -0- $ -0- -0- -0- -0- -0-
President
Denny Cashatt 1999 $ 7,500 $ -0- $ -0- -0- -0- -0- -0-
Vice President
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
---------------------------------------------------
The following table sets forth, as of December 31, 1999,
certain information concerning beneficial ownership of the
Company's Common Stock by (i) each person known to the Company to
own 5% or more of the Company's outstanding Common Stock, (ii) all
directors of the Company and (iii) all directors and officers of
the Company as a group:
<TABLE>
<CAPTION>
Shares
Name and Address Beneficially Percent of
of Beneficial Owner Owned (1) Class
- ------------------- ------------ ----------
<S> <C> <C>
C. Wayne Baldridge 6,106,585 24.4%
1900 Corporate Blvd.
Suite 400E
Boca Raton, FL 33431
Jeffrey H. Morris 3,216,152 12.8%
1900 Corporate Blvd.
Suite 400E
Boca Raton, FL 33431
Anthony D'Amato 1,675,972 6.7%
1900 Corporate Blvd.
Suite 400E
Boca Raton, FL 33431
Michael E. Fasci 1,707,419(1) 6.8%
1900 Corporate Blvd.
Suite 400E
Boca Raton, FL 33431
David A. Carter 1,253,645 5.0%
2300 Glades Road
Suite 210, West Tower
Boca Raton, FL 33431
All Directors and Executive
Officers as a Group (4 persons) 12,706,128 50.7%
</TABLE>
-18-
<PAGE>
________________________
(1) Includes 82,500 common shares owned by Process Engineering
Corporation, a private company owned by Mr. Fasci.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
On or about March, 1998, a group of five (5) investors led by
Anthony D'Amato and Jeffrey H. Morris, Directors of the Company,
acquired 750,000 shares of the Company's common stock from SSR
Group, Inc., a privately held company owned by the Company's then
president, Gary Robinson.
On August 11, 1999, the United States Bankruptcy Court for the
Southern District of Florida confirmed the Company's First Amended
Plan of Reorganization (the "Plan"). In accordance with the Plan,
the Company issued 1,849,040 common shares of the newly reorganized
Company to pre-petition unsecured creditors, administrative
claimants, and professionals who provided services in connection
with the bankruptcy.
In October, 1999, the Company issued 94,828 shares to Michael
E. Fasci, a director of the Company, in consideration for the
payment of $22,000 of the Company's accounting fees.
In December, 1999, pursuant to the Company's Plan, the Company
issued to The Winner's Edge Licensing Corp. ("WELC") 12,765,900
shares of the Company's common stock in consideration for the
transfer of assets, contracts, and the Licensing Agreement. WELC
subsequently transferred all of the shares among directors, Anthony
D'Amato, Jeffrey H Morris, C. Wayne Baldridge, and Michael E.
Fasci.
Since none of the company's current officers and directors
were in control of the Company during the fiscal years ended
December 31, 1996 and 1997, and a portion of fiscal 1998, and the
Company ceased operations during late 1996 and did not recommence
operations until late 1998, the disclosures regarding agreements of
the Company and financial information contained in this annual
report on Form 10-KSB were primarily reconstructed from books and
records of the Company as they currently exist. Therefore, while
the information set forth in this annual report is accurate and
complete to the best knowledge of the Company and its present
officers and directors, neither the Company nor its current
management can give assurances as to the fairness, accuracy or
completeness of the disclosures and financial information included
in this annual report on form 10-KSB.
-19-
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
---------------------------------------
(a)(1) The following documents are filed as part of this report
(i) Report of Certified Public Accountants
(ii) Balance Sheets at December 31, 1998 and December 31, 1999
(iii) Statements of Operation for the years ended December 31,
1998 and 1999
(iv) Statements of Cash Flows for the years ended December 31,
1998 and 1999
(v) Notes to Consolidated Financial Statements
(a)(3) The following Exhibits are filed as part of this report
3.1 Certificate of Incorporation [1]
3.2 By-laws [1]
3.3 Certificates of Amendment to Certificate of Incorporation
3.4 First Amended Plan of Reorganization
3.5 Order Confirming Debtor's First Amended Plan of
Reorganization
3.6 vanAar, Inc. Management Consulting Agreement
3.7 Licensing and Marketing Agreement
3.8 First Modification to Licensing and Marketing Agreement
_________________
[1] Filed as an exhibit to the Company's Registration
Statement on Form S-18 (File No: 33-13609-A) and
incorporated herein by reference.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended December 31, 1999.
-20-
<PAGE>
SIGNATURES
In accordance with the requirements of Section 13 and 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
UC'NWIN SYSTEMS CORPORATION
Dated: March 8, 2000 By:/s/ C. Wayne Baldridge
------------------------------
C. Wayne Baldridge
Chief Executive Officer and
President
In accordance with the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Company and in the capacities and on the dates
indicated.
Signature Capacity Date
- --------- -------- ----
Chief Executive Officer,
/s/ C. Wayne Baldridge President and Director March 8, 2000
- ----------------------
C. Wayne Baldridge
/s/ Jeffrey H. Morris Secretary/Treasurer March 8, 2000
- ---------------------- and Director
Jeffrey H. Morris
/s/ Anthony D'Amato Director March 8, 2000
- ----------------------
Anthony D'Amato
/s/ Michael E. Fasci Director March 8, 2000
- ----------------------
Michael E. Fasci
<PAGE> 21
SEC FILE NO. 0-22954
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
EXHIBITS
TO
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_______________________________
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OF
THE WINNER'S EDGE.COM, INC.
<PAGE> 22
FINANCIAL STATEMENTS FOR THE
PERIOD ENDING DECEMBER 31, 1999
<PAGE> 23
THE WINNER'S EDGE.COM. INC. F/K/A UC'NWIN SYSTEMS CORPORATION
CONTENTS
--------
PAGE F-1 - INDEPENDENT AUDITORS' REPORT
PAGE F-2 - BALANCE SHEET
PAGE F-3 - STATEMENT OF OPERATIONS
PAGE F-4 - STATEMENT OF DEFIENCY IN ASSETS
PAGE F-5 - STATEMENT OF CASH FLOWS
PAGE F-7 - NOTES TO FINANCIAL STATEMENTS
<PAGE> 24
INDEPENDENT AUDITOR'S REPORT
Shareholders and Directors
The Winners Edge.Com, Inc.
We have audited the accompanying balance sheet of The Winners
Edge.Com, Inc. ( a development stage enterprise) as of December 31,
1999, and the related statements of operations, deficiency in
assets, and cash flows for the period July 8, 1998 (inception) to
December 31, 1998 then ended and for the year ended December 31,
1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating principles used
and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
the Company as of December 31, 1999, and the results of its
operations and cash flows for the period July 8, 1998 (inception)
to December 31, 1998 then ended and the year ended December 31,
1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company has suffered from recurring losses from operations,
including a net loss of $425,707 for the year ended December 31.
1999, and has minimal working capital as of December 31, 1999.
These factors raise substantial doubt the Company's ability to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
RADIN, GLASS & CO, LLP
/s/ Radin, Glass & Co. LLP
Certified Public Accountants
New York, New York
February 29, 2000
<PAGE> 25
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 1999
ASSETS
CURRENT ASSETS:
Cash $ 2,873
---------
TOTAL CURRENT ASSETS 2,873
EQUIPMENT, net of
accumulated depreciation
of $24,736 82,519
---------
$ 85,392
=========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES:
Account payable and accrued liabilities $ 71,917
Due to officers and employees 188,597
---------
TOTAL CURRENT LIABILITIES 260,514
---------
COMMITMENTS AND CONTINGENCIES
DEFICIENCY IN ASSETS:
Common shares,$.01 par value,
60,000,000 shares authorized,
26,955,941 issued and outstanding 269,559
Additional paid in capital 38,500
Accumulated deficit (483,181)
---------
TOTAL DEFICIENCY IN ASSETS (175,122)
---------
$ 85,392
=========
See accompanying notes to financial statements.
F-2
<PAGE>
THE WINNER'S EDGE.COM.INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period July 8, 1998 Period July 8, 1998
(Inception) to Year Ended (Inception) to
December 31,1998 December 31, 1999 December 31, 1999
-------------------- ----------------- -------------------
<S> <C> <C> <C>
SALES $ 584 $ 14,762 $ 15,346
EXPENSES:
Selling general
and administrative 53,156 390,339 443,495
Stock based
compensation - 36,250 36,250
Advertising 3,226 13,880 17,106
----------- ----------- ----------
TOTAL EXPENSES 56,382 440,469 496,851
----------- ----------- ----------
NET LOSS $ (55,798) $ (425,707) $ (481,505)
=========== ----------- ----------
NET LOSS PER SHARE $ (.00) $ (.02)
=========== ===========
Number of shares
used in computation 13,252,971 18,288,729
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF DEFICIENCY IN ASSETS
<TABLE>
<CAPTION>
Common Stock Additional
par value Paid-in Accumulated
Shares $0.01 Capital Deficit Total
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - July 8, 1998
(Inception) 13,252,971 $ 132,530 $ - $ (402,045) $ (269,515)
Net Income (Loss) - - - (55,798) (55,798)
---------- ---------- ---------- ----------- ----------
Balance -
December 31, 1998 13,252,971 132,530 - (457,843) (352,313)
Common stock issued
to creditors pursuant
to bankruptcy in
exchange for debt 2,261,109 22,610 60,069 400,369 483,048
Common shares issued for
litigation settlement 50,000 500 11,100 - 11,600
Common stock issued for
services pre-reverse
merger 700,000 7,000 28,000 - 35,000
Common shares issued for
reverse merger 9,916,900 99,169 (99,169) - -
Common shares issued for
services post-reverse
merger 725,000 7,250 29,000 - 36,250
Common stock sold 50,000 500 9,500 - 10,000
Net Loss - - - (425,707) (425,707)
---------- ---------- ---------- ----------- ----------
Balance -
December 31, 1999 26,955,941 $ 269,559 $ 38,500 $ (483,181) $ (175,122)
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period Period
July 8, 1998 July 8, 1998
(inception) to Year Ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
-------------- ------------ --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (55,798) $ (425,707) $ (481,505)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Depreciation 1,192 23,544 24,736
Stock based compensation - 36,250 36,250
Changes in assets and liabilities:
Accounts payable and accrued
liabilities - 71,917 71,917
Due to officers and employees (86,250) 274,847 188,597
Other current assets (19,420) 19,420 -
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES (160,276) 271 (160,005)
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment (26,526) (80,729) (107,255)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (26,526) (80,729) (107,255)
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock 187,886 82,247 270,133
---------- ---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 187,886 82,247 270,133
NET INCREASE IN CASH 1,084 1,789 2,873
---------- ---------- ----------
CASH AT BEGINNING OF THE YEAR - 1,084 -
---------- ---------- ----------
CASH AT THE END OF THE YEAR $ 1,084 $ 2,873 $ 2,873
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
THE WINNER'S EDGE.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period Period
July 8, 1998 July 8, 1998
(inception) to Year Ended (inception) to
December 31, December 31, December 31,
1998 1999 1999
-------------- ------------ --------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ - $ - $ -
Taxes - - -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ - $ 36,250 $ 36,250
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
NOTE 1 - BUSINESS
--------
The Winner's Edge. Com, Inc. ("the Company") formerly
known as UC'NWIN Systems Corporation "UC'NWIN" is engaged
in the business of providing computerized handicapping to
thoroughbred horse racing patrons. The Company markets
directly to patrons via website on the Internet and by
installation of interactive kiosks at racetracks and off-
track betting locations. For accounting purposes, UC'NWIN
was acquired by The Winner's Edge Licensing Corp.
("WELC") with the business of WELC being the successor
entity upon ratification of the First Amended Plan of
Reorganization on August 11, 1999 by the United States
Bankruptcy Court, Southern District of Florida. The
acquisition has been accounted for as a reverse
acquisition as discussed herein with the management of
WELC controlling and operating the Company. The
financial statements presented primarily represent the
operations of WELC from inception July 8, 1998 to
December 31, 1999. The legal entity WELC will continue
to be privately held by certain officers and directors of
the Company, which the sole purpose of the entity is to
own and license the proprietary software currently
licensed to the Company in the United States. See notes
on recapitalization and reorganization of company.
NOTE 2 - SUMMARY OF SIGNIFICANT OF ACCOUNTING POLICIES
---------------------------------------------
Recapitalization - On August 11, 1999 the Company
acquired WELC and issued 13,252,971 shares or 50.1% for
all of the assets, liabilities and contracts except for
the handicapping software which was licensed to the
Company by the shareholders of WELC. The Company had no
significant operations for three years prior to August
11, 1999, while being operated as UC'NWIN. ( See note
Reorganization of Company). Accordingly, the transaction
has been accounted for as a reverse acquisition by WELC.
The capital structure of WELC has been recapitalized to
account for the equity structure subsequent to the
acquisition, as if WELC had been the issuer of the common
stock for all periods presented.
Going Concern - Due to the start up nature of the
business, the financial statements are being presented as
a development stage enterprise pursuant to Statement of
Financial Accounting Standards No. 7. In addition, the
accompanying financial statements have been prepared
assuming the Company will continue as a going concern.
F-7
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT OF ACCOUNTING POLICIES (Cont'd)
---------------------------------------------
The Company has suffered recurring losses amounting to
approximately $425,000. The Company intends to raise
additional financing through debt or equity financing in
the near future to enable the Company to continue
operations for at least one year.
Basis of Presentation Due to the start-up nature of the
business, the financial statements are being presented as
a development stage enterprise pursuant to Statement of
Financial Accounting Standards No. 7.
Revenue Recognition - The Company recognizes revenues as
such related services are performed.
Equipment - Equipment is stated at cost and is
depreciated on a straight line basis using estimated
lives with range from three to seven years.
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.
Loss per share - The Company has adopted SFAS 128,
"Earnings per Share." Earnings per common share are
computed by dividing income available to common
shareholders by the weighted average number of common
shares outstanding during the period. The earnings per
common share, assuming dilution, computation gives effect
to all dilative potential common shares during the
period. The computation assumes that the outstanding
stock options and warrants were exercised and that the
proceeds were used to purchase common shares of the
Company.
Reverse stock split - On August 11, 1999, the Company
declared a four for one reverse stock split. All common
share data and per share data have been retroactively
adjusted to reflect such reverse stock split.
F-8
<PAGE>
NOTE 3 - EQUIPMENT - Equipment consists of the following at
--------- December 31, 1999
Kiosks $ 74,627
Computer equipment 20,714
Software 5,305
Furniture & Fixtures 6,609
----------
107,255
Accumulated depreciation (24,736)
----------
$ 82,519
==========
NOTE 4 - REORGANIZATION OF COMPANY
-------------------------
The predecessor company UC'NWIN formerly know as UC'NWIN
SYSTEMS Ltd., was a publicly-held Canadian corporation,
organized in Canada in 1993 under the name FMG
Telecomputer, Ltd., and later reincorporated in Delaware
on December 11, 1995. The company was engaged in the
development, manufacture, sale and marketing of its
UC'NWIN System, and in-store interactive informational
solutions software program designed to be furnished to
corporations in the U.S., UK, Europe and Asia, delivered
through interactive kiosks and websites on the Internet.
UC'NWIN through its wholly-owned U.S. subsidiary, UC'NWIN
Systems, Inc., had licensed the worldwide rights (except
for the United States) to Winners All Ltd., to
manufacture or lease the UC'NWIN system. By agreement
dated December, 1994, and as subsequently amended in
June, 1995, the Company, thorough its wholly owned U.S.
subsidiary, UC'NWIN Systems, Inc. and Winners All Ltd. (a
wholly owned subsidiary of Winners All International,
Inc.) created WIN network, LLC., ("WinNet") a limited
liability company, registered under the laws of the State
of New York, to exploit the UC'NWIN System. The Company
and Winners All Ltd. Contributed the tangible and
intangible rights to the UC'NWIN System with the Company
owning fifth-one percent (51%) of WinNet and Winners All
Ltd. Owing the remaining forty-nine percent (49%).
On June 15, 1998, the then serving Board of directors of
the Company appointed four (4) new directors and then
resigned. Prior to their resignations, the Board voted to
cancel the issuance of approximately 30,000,000 shares of
the Company's common Stock to directors, officers, and
consultants of the Company. Since January 1996, the
Company investigated the possibility of a business
combination, but the Company lacked the capital necessary
to pursue any acquisition and, further, lacked sufficient
F-9
<PAGE>
NOTE 4 - REORGANIZATION OF COMPANY (Cont'd)
-------------------------
revenue base to be an attractive takeover target.
Additionally, the Company did not possess the capital
necessary to prepare and file reports which the Company
was required to file under the Securities Exchange Act of
1934, as amended (the "1934 Act"). The company had
virtually no active business operations since early 1996,
and ceased operations on or about November 30, 1996.
On or about June 1998, a group of investors (the
"Investors"), including some of the Company's current
management, obtained 750,000 shares of common stock in
the Company due to a default on a $125,000 loan to the
previous management of the Company. Additionally, in
1998, another 700,000 shares of common stock were issued
to a law firm for legal services rendered. On November
12, 1998, the Board of Directors ratified certain
resolutions as follows:
a. WIN Network, LLC, has ceased all operations.
Investments in the joint ventures have not carrying
value, no expected future recovery and are to be
written off.
b. UC'NWIN System Ltd., United Kingdom, has ceased all
operations. Investment in UC'NWIN System Ltd.,
United Kingdom have no operations, value, expected
future recovery, and is to be written off.
c. Any and all licensing agreements were determined to
have no projected and have no value.
d. The Board reconfirmed that the company terminated
its 1996 agreement to merge with Winners All
International, Inc. Activities relating to this
merger and any shares of stock that were exchanged,
during this period, were negated, and all shares
returned, including those previously held for
investment.
NOTE 5 - PETITION FOR RELIEF UNDER CHAPTER 11
AND BASIS OF PRESENTATION
------------------------------------
Reorganization and Basis of Presentation On April 29,
1999, the Company filed a petition for relief with the
United States Bankruptcy Court, Southern District of
Florida, under the provisions of Chapter 11 of the
F-10
<PAGE>
NOTE 5 - PETITION FOR RELIEF UNDER CHAPTER 11
AND BASIS OF PRESENTATION (Cont'd)
------------------------------------
Bankruptcy Code. In accordance with AICPA Statement of
Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code", UC'NWIN had
adopted "fresh-start reporting", but due to the reverse
acquisition by the Company such financial data is not
applicable and has not been presented. The carrying value
of the liabilities were reduced as a result of the
adoption of fresh start reporting and the balance of the
deficit was offset against paid in capital, to the extent
available.
Pursuant to the terms of the bankruptcy by the Company
All shareholders with an aggregate of 50,000 shares or
more of common stock had to file with the Clerk of the
Bankruptcy Court a proof of interest in such common
shares, otherwise such common shares would be
extinguished. Common shareholders with less than 50,000
shares of common stock were not required to provide such
proof. There were 5,800,000 of such shares cancelled due
to the lack of adequate proof of interest.
NOTE 6 - LICENSE AGREEMENT
-----------------
Pursuant to the terms of the license agreement WELC was
issued 13,252,971 shares of common stock or 50.1% of the
Company to transfer all of the assets and contracts of
WELC and enter into a license agreement with WELC for the
exclusive and non-transferable right to use the
handicapping thoroughbred horse racing software in the
United States. The license agreement also required the
payment of royalties in the amount of 15% of the gross
revenues generated from the licensed software. In
December 1999 the Company increased the license to ten
years with an option to renew the license for another ten
years, the royalty was reduced to 0% and the territorial
limitation was removed by the shareholders of WELC for
the assumption of $148,752 of liabilities.
NOTE 7 - EQUITY TRANSACTIONS
-------------------
a. Pursuant to the terms of the bankruptcy the Company
implemented a one for four reverse stock split. All
common stock disclosure have been retroactively
adjusted to reflect such stock split.
F-11
<PAGE>
NOTE 7 - EQUITY TRANSACTIONS (Cont'd)
-------------------
b. Certain investors whom loaned $125,000 to the
previous management of the Company, obtained
750,000 shares of common stock pursuant to a
collateral agreement for the monies loaned.
c. The Company issued 1,425,000 shares of common stock
in 1999 for legal services rendered. The legal
services performed for the common stock was
recorded at $71,250.
d. There were 1,799,040 shares issued to creditors
pursuant to the bankruptcy in 1999 for the payment
of $ 284,149 of outstanding liabilities. An
additional 50,000 shares were issued to settle
litigation by Raymond Kalley discussed hereafter,
valued at $11,600.
e. Pursuant to the terms of the bankruptcy the
shareholders of WELC were issued 13,252,971 shares
of common stock, which have been recorded as a
recapitalization of the company.
f. There were 50,000 shares of common stock sold for
$10,000 in November 1999.
g. In January 2000, the Company issued 225,000 shares
of common stock to settle a disputed claim from the
UC'NWIN bankruptcy in the amount of $52,200. This
transaction has been recorded as of the date of the
ratification of the bankruptcy plan.
h. In February 2000, the remaining claim of $55,000
has been settled with the issuance of 237,069
shares of common stock. This transaction has been
recorded as of the date of the ratification of the
bankruptcy plan.
NOTE 8 - INCOME TAXES
------------
The Company accounts for income taxes according to
Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for income Taxes". Under the liability
method specified by SFAS No. 109, a deferred tax asset or
liability is determined based on the difference between
the financial statement and tax basis of assets and
liabilities as measured by the enacted rates which will
be in effect when these differences reverse.
F-12
<PAGE>
NOTE 8 - INCOME TAXES (Cont'd)
------------
The net operating loss carry forwards are subject to
limitation in any given year in the event of certain
events, including significant changes in ownership. The
Company has not given recognition to these tax benefits
in the accompanying financial statement. At December 31,
1999, the Company had available net operating loss
carryforwards for tax purposes of approximately
$12,500,000 mostly expiring through 2009 with some
smaller net operating loss carryforwards expiring in
2013. Substantially all of the carryforwards are subject
to limitations on annual utilization because upon
completion of the reverse merger there was an "equity
structure shift" involving 5% stockholder (as these terms
are defined in Section 382 of the Internal Revenue Code)
which have resulted in a more than 50% change in
ownership. The annual limitation is based on the value
of the Company as of the date of the ownership change
multiplied by the applicable Federal Long- Term Tax-
Exempt Bond Rate. In August 1999, the Company triggered
a Section 382 net operating loss limitation on the
cumulative net operating loss carryforwards of
approximately $12,000,000. Utilization of such net
operating losses is limited to approximately $500,000 per
annum. The net operating loss carryforwards result in an
estimated $4,000,000 deferred tax asset against which the
Company has taken a valuation reserve for the same amount
due to the lack of assured taxable income.
NOTE 9 - LEGAL PROCEEDINGS
-----------------
Raymond Kalley, as Trustee of the EB Trust and the PB
Trust vs. Allen Manus, Elizabeth (Libby) Manus, UC'NWIN
Systems Corporation, a Delaware corporation, f/k/a
UC'NWIN System, Inc., a Florida cooperation, and Winners
All International, Inc., a Delaware corporation (United
States District Court for the Southern District of
Florida, Case No. 96-0780-CIV-GRAHAM).
On or about March 22, 1996, Raymond Kalley, as Trustee
for EB Trust and the PB Trust filed suit (the "Kalley
Complaint") in the United States District Court for the
Southern District of Florida against several defendants,
including UC'NWIN. The litigation arose out of the sale
of securities by Defendants Allen Manus and Elizabeth
Manus to two- (2) foreign trust s established for the
benefit of Pauline Braathen an Egil Braathen.
F-13
<PAGE>
NOTE 9 - LEGAL PROCEEDINGS (Cont'd)
-----------------
The Complaint alleges against UC'NWIN violations of
Section 10(b) of the Securities Exchange Act of 1934 and
Rule10b-5 promulgated thereunder (Count I), violations of
Section 12(2) of the Securities Act of 1933 (Count II),
state security violations pursuant to Sections 517.310
and 517.211, Fla. Stat. (Court III), and common law fraud
(Court IV).
On March 9, 1998, a default judgment was entered, largely
based upon allegations of plaintiff Raymond Kalley the
defendant UC'NWIN had failed to participate in scheduled
depositions, had failed to participate in the preparation
of the pre-trial stipulation, and had failed to appear at
the pre-trial conference.
On or about August 10, 1998, Kalley and Defendant
Winner's All International, Inc. ("Winner's All") entered
into a stipulation for settlement whereby Winners All
issued to Kalley 350,000 restricted shares of Winner''
All common stock with Kalley having the option to resell
to Winner's All the shares for the sum of $150,000 under
certain terms and conditions as set forth in the
Stipulation for Settlement.
The Company has been settled this lawsuit for 50,000
shares of common stock, valued at $11,600.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
-----------------------------
In November, 1999, the Company entered into a consulting
agreement for a third party company to "staff up and
manage the Company" as well as raise interim financing
and manage a public offering for the Company. The
consulting agreement provided for the following types of
compensation; a five percent (5%) commission on all
interim financing proceeds; reimbursement of certain
management costs, upon the closing of a public offering
1,500,000 shares of common stock or more if the public
offering is greater than $20 million, and a Lehman
formula contingency fee for other capital transactions
such as selling, buying or merging with another company.
F-14
<PAGE>
EXHIBIT 3.3
Certificate of Amendment to Certificate of Incorporation
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UC'NWIN SYSTEMS CORPORATION
UC'NWIN SYSTEMS CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, does certify:
FIRST: pursuant to the Company's First Amended Plan of
Reorganization approved and confirmed by the United States
Bankruptcy Court of the Southern District of Florida on August 11,
1999, the Board of Directors of the Corporation is effecting a one-
for-four (1 for 4) reverse stock split of the issued and
outstanding shares of capital stock of the Corporation pursuant to
which all holders of shares of capital stock of the Corporation as
of the Record Date, as defined below, will receive one (1) share of
capital stock of the Corporation for each four (4) shares of
capital stock then held and, for the purpose of effecting such
stock split, to amend the Articles of Incorporation of the
Corporation; and be it further
SECOND: that as a result of such amendments to the Articles of
Incorporation, the par value of the shares of capital stock of the
Corporation shall remain at $.01 par value per share, and the
number of authorized shares of the Corporation shall be reduced to
15,000,000 shares as a result of the one-for-four reverse stock
split; and be it further
<PAGE> EX 3.3 - Pg. 1
THIRD: pursuant to the Company's First Amended Plan of
Reorganization dated August 11, 1999, that the Board of Directors
of the Corporation is effecting a name change to "The Winner's
Edge.com, Inc." and, for the purpose of effecting such name change,
to amend the Articles of Incorporation of the Corporation; and be
it further
RESOLVED, that in furtherance of and in connection with the
name change of the Corporation, the Board of Directors deems
it desirable to delete Article I to the Certificate of
Incorporation of the Corporation and to insert the following
in its place and stead:
"The name of the Corporation is The Winner's Edge.com, Inc."
RESOLVED, that in furtherance of and in connection with the
reverse split of the capital stock of the Corporation, the
Board of Directors deems it desirable to delete Article IV to
the Certificate of Incorporation of the Corporation and to
insert the following in its place and stead:
"The total number of shares of stock which the
Corporation shall have authority to issue is fifteen
million (15,000,000). All such shares are to be common
stock, par value of one cent ($.01), and are to be of one
class."
and it be further
RESOLVED, that the name change and one-for-four (1-for-4)
reverse stock split of the capital stock of the Corporation,
is effective on November 1, 1999 (the "Payable Date") to the
record holders of the capital stock of the Corporation at the
close of business on October 29, 1999 (the "Record Date").
<PAGE> EX 3.3 - Pg. 2
FOURTH: that in lieu of a meeting and vote of stockholders,
and in accordance with the provisions of Section 303 of the General
Corporation Law of the State of Delaware, the Board of Directors of
said corporation, by the unanimous written consent of its members,
as necessary to effectuate the Company's First Amended Plan of
Reorganization dated August 11, 1999, adopted a resolution
proposing and declaring advisable the amendments to the Certificate
of Incorporation of said Corporation.
FIFTH: that the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IT WITNESS WHEREOF, UC'NWIN SYSTEMS CORPORATION has caused this
Certificate to be signed by Jeffrey Morris, its Secretary, this 13th
day of October, 1999.
UC'NWIN SYSTEMS CORPORATION
By: /s/ Jeffrey Morris
Jeffrey Morris, Secretary
<PAGE> EX 3.3 - Pg. 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE WINNER'S EDGE.COM, INC.
THE WINNER'S EDGE.COM, INC. (f/k/a UC'NWIN Systems Corporation),
a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, does certify:
FIRST: that pursuant to the Order Confirming the Company's First
Amended Plan of Reorganization of August 11, 1999, and pursuant to
the unanimous written consent of the Board of Directors of said
corporation, the Board adopted a resolution dated August 31, 1999,
amending Article Four to the Articles of Incorporation of the
Company to fix the aggregate number of shares of Capital Stock that
the Company shall have authority to issue at Fifteen Million
(15,000,000) shares.
SECOND: that in lieu of a meeting and vote of stockholders, and
in accordance with the provisions of Section 303 of the General
Corporation Law of the State of Delaware, the Board of Directors of
said corporation, by the unanimous written consent of its members,
as necessary to effectuate the Company's First Amended Plan of
Reorganization of August 11, 1999, adopted a resolution proposing
and declaring advisable the following amendment to the Certificate
of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of The
Winner's Edge.com, Inc. be amended by deleting Article Four to
the Articles of Incorporation of the Company and to insert the
following in its place and stead:
<PAGE> EX 3.3 - Pg. 4
"The total number of shares of stock which the
Corporation shall have authority to issue is sixty
million (60,000,000). All such shares are to be common
stock, par value of one cent ($.01), and are to be of one
class."
THIRD: that the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IT WITNESS WHEREOF, The Winner's Edge.com, Inc. has caused this
Certificate to be signed by Jeffrey Morris, its Secretary this 1st
day of November, 1999.
THE WINNER'S EDGE.COM, INC.
By:/s/ Jeffrey Morris
Jeffrey Morris, Secretary
<PAGE> EX 3.3 - Pg. 5
Exhibit 3.4
First Amended Plan of Reorganization
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
WEST PALM BEACH DIVISION
In re: Case No.
UC'NWIN SYSTEMS CORPORATION, Chapter 11
Debtor.
____________________________/
DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION
---------------------------------------------
UC'NWIN SYSTEMS CORPORATION, debtor and debtor-in-possession
(the "Debtor"), submits and proposes this First Amended Plan of
Reorganization (the "Plan"), pursuant to 11 U.S.C. Sec. 1121.
<PAGE> EX 3.4 - Pg. 1
TABLE OF CONTENTS
Page
ARTICLE I Definitions. . . . . . . . . . . . . . . . . . . 1-4
ARTICLE II Classification of Claims and Interests . . . . 5
2.1, Class 1 Claims. . . . . . . . . . . . . . . . . . 5
2.2, Class 2 Claims. . . . . . . . . . . . . . . . . . 5
2.3, Class 3 Claims. . . . . . . . . . . . . . . . . . 5
2.4, Class 4 Claims. . . . . . . . . . . . . . . . . . 5
ARTICLE III Treatment of Administrative Claims
And Priority Tax Claims. . . . . . . . . . . . . . . . . 5
3.1, Administrative Expense Claims are not
impaired. . . . . . . . . . . . . . . . . . . . . 5,6
3.2, Tax Claims are not impaired . . . . . . . . . . . 6
ARTICLE IV Treatment of Classes of Claims and
Interests . . . . . . . . . . . . . . . . . . . 6
4.1, Class 1. Provisions for Treatment of
Allowed Priority Claims; Class 1 Claims
Are Not Impaired. . . . . . . . . . . . . . . . . 6
4.2, Class 2. Provisions for Treatment of
Allowed Unsecured Claims; Class 2 Claims
Are Impaired. . . . . . . . . . . . . . . . . . . 7
4.3, Class 3. Provisions for Treatment of
Allowed Subordinated Claims; Class 3 Claims
Are Impaired. . . . . . . . . . . . . . . . . . . 7
4.4, Class 4. Provisions for Treatment of
Allowed Interests; Class 4 Interests Are
Impaired. . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V-Means for Execution of the Plan. . . . . . . . . 7
5.1, The Reorganized Debtor. . . . . . . . . . . . . . 7
5.2, Winner's Edge Agreement . . . . . . . . . . . . . 7,8
5.3, Directors of the Reorganized Debtor
Upon the Effective Date . . . . . . . . . . . . . 8
5.4, Officers of the Reorganized Debtors . . . . . . . 8
5.5, Exemption from Registration of New
Stock . . . . . . . . . . . . . . . . . . . . . . 8
5.6, Disputed Claims and Interests . . . . . . . . . . 8,9
5.7, Exemption from Stamp and Transfer Taxes . . . . . 9
<PAGE> EX 3.4 - Pg. 2
5.8, Unclaimed Property. . . . . . . . . . . . . . . . 9
5.9, Cramdown. . . . . . . . . . . . . . . . . . . . . 9
5.10, Distribution to Holders of Allowed Claims
Allowed Interests. . . . . . . . . . . . . . . . 9,10
5.11, Withdrawal of the Plan . . . . . . . . . . . . . 10
5.12, Surrender of Old Common Stock. . . . . . . . . . 10
Article VI-Effect of the Plan on Claims
and Interests . . . . . . . . . . . . . . . . . 10
6.1, Terms and Binding . . . . . . . . . . . . . . . . 10
6.2, Revesting and Vesting . . . . . . . . . . . . . . 10
6.3, Automatic Stay Provisions and Effect
of Confirmation . . . . . . . . . . . . . . . . . 10,11
6.4, Retention and Enforcement of Claims . . . . . . . 11
6.5, Objections to Claims and Interests. . . . . . . . 11
6.6, Discharge . . . . . . . . . . . . . . . . . . . . 11
Article VII-Executory Contracts and Unexpired Leases . . . 11
Article VIII-Conditions to Confirmation and
Consummation. . . . . . . . . . . . . . . . . 12
8.1, Conditions to Confirmation. . . . . . . . . . . . 12
8.2, Conditions to Consummation. . . . . . . . . . . . 12
8.3, Waiver of Conditions to Confirmation
and Consummation. . . . . . . . . . . . . . . . . 12,13
8.4, Effect of Nonoccurrence of the Conditions
to Consummation . . . . . . . . . . . . . . . . . 13
Article IX-Administrative Provisions . . . . . . . . . . . 13
9.1, Retention of Jurisdiction. . . . . . . . . . . . 13,14
9.2, Governing Law . . . . . . . . . . . . . . . . . . 14
9.3, Corporate Action. . . . . . . . . . . . . . . . . 14,15
9.4, Effectuating Documents and Further
Transaction . . . . . . . . . . . . . . . . . . . 15
9.5, Limitation of Liability. . . . . . . . . . . . . . 15
<PAGE> EX 3.4 - Pg. 3
9.6, Amendments. . . . . . . . . . . . . . . . . . . . 15,16
9.7, Successors and Assigns. . . . . . . . . . . . . . 16
9.8, Confirmation Order and Plan Control . . . . . . . 16
9.9, Rules of Construction . . . . . . . . . . . . . . 17
<PAGE> EX 3.4 - Pg. 4
ARTICLE I
DEFINITIONS
-----------
As used in this Plan, the capitalized terms set forth
below shall have the following meanings. Such meanings shall be
equally applicable to the singular and plural forms of the terms
defined unless the context requires otherwise. Unless otherwise
defined herein, the terms used in the Plan have the same meaning
as defined in the Bankruptcy Code, and if not defined in the
Bankruptcy Code, then as defined in the Bankruptcy Rules:
1.1 "Administrative Expense Claim" means an expense
entitled to administrative status under Sec. 503(b) of the
Bankruptcy Code that is entitled to treatment under Sec. 507(a)(1)
of the Bankruptcy Code.
1.2 "Affiliate" means as that term is defined in Sec. 101(2)
of the Bankruptcy Code.
1.3 "Allowed Claim" means a Claim to the extent such Claim
is: (a) either: (i) scheduled by the Debtor pursuant to the
Bankruptcy Code and Bankruptcy Rules in a liquidated amount and
that is not listed as contingent, unliquidated, or disputed; or
(ii) proof of which has been timely filed with the Court, or
deemed timely filed with the Court pursuant to an Order of the
Court, or late filed with leave of Court after notice and a
hearing, except, however, a proof of claim so filed shall
supersede any scheduling of such Claim under Sec. 521(1) of the
Bankruptcy Code; and (b) either (i) not objected to within the
period prescribed by the Bankruptcy Code, Bankruptcy Rules or
applicable orders of the Court; or (ii) that has otherwise been
allowed by a Final Order of the Court, or this Plan.
1.4 "Allowed Interest" means an Interest (a) for which a
timely proof of interest has been timely filed with the Court, or
deemed timely filed with the Court, pursuant to an Order of the
Court, or late filed with leave of the Court after notice and a
hearing; and (b) either (i) not objected to within a period
prescribed by the Bankruptcy Rules or applicable Orders of the
Court; or (ii) has been allowed by a Final Order of the Court or
this Plan.
1.5 "Average Share Price" means the average of the mean of
the per share closing price of the Debtor's Old Common Stock as
listed on the OTC Bulletin Board for the five (5) trading days
preceding two (2) business days prior to the date of the
Confirmation Hearing.
1.6 "Bankruptcy Code" or "Code" means Title 11 of the
United States Code, 11 U.S.C. Sec. 101 et seq., as now in effect or
hereafter amended.
1.7 "Bankruptcy Court" means the United States Bankruptcy
Court for the Southern District of Florida having jurisdiction
over the Reorganization Cases or any proceedings therein.
<PAGE> EX 3.4 - Pg. 5
1.8 "Bankruptcy Rules" means the Federal Rules of
Bankruptcy Procedure and the Local Rules of the Bankruptcy Court
(including any applicable local rules of the United States
District Court for the Southern District of Florida), as now in
effect or hereafter amended.
1.9 "Business Day" means any day except a Saturday, Sunday,
or "legal holiday" as such term is defined in Bankruptcy Rule
9006(a).
1.10 "Cash" means cash, negotiable instruments, documents of
title, securities, deposit accounts, accounts receivable, or
other cash equivalents whenever acquired, and includes the
proceeds, products, offspring, rents, or profits, including, but
not limited to bank deposits, checks, and other similar items,
whether held by a Debtor or an affiliate or designee of a Debtor,
and whether held in a designated account, and whether existing
before or after the Petition Date.
1.11 "Claim" means as that term is defined in Sec. 101(5) of
the Bankruptcy Code.
1.12 "Class" means a group of Claims or Interests consisting
of one or more Claims or Interests substantially similar to each
other as classified under this Plan.
1.13 "Confirmation Date" means the date and time on which
the Clerk of the Bankruptcy Court enters the Confirmation Order
on its docket.
1.14 "Confirmation Hearing" means the hearing for the Court
to consider confirmation of this Plan.
1.15 "Confirmation Order" means the Order entered by the
Bankruptcy Court confirming the Plan pursuant to Sec. 1129 of the
Bankruptcy Code.
1.16 "Court" means the United States Bankruptcy Court for
the Southern District of Florida, or any other court exercising
competent jurisdiction over the Debtor's Reorganization Case or
any proceedings therein.
1.17 "Debtor" means UC'NWIN Systems Corporation, the debtor
and debtor-in-possession.
1.18 "Disbursing Agent" means the entity or entities
designated in the Confirmation Order to disburse Cash
Distributions pursuant to this Plan.
1.19 "Disputed" means with respect to a Claim or Interest: a
Claim or Interest (a) the allowance of which, in whole or in
part, is the subject of a timely objection filed by the Debtor or
party in interest, with standing to object to Claims or Interest
herein; or (b) held by a party against whom the Debtor has
asserted a claim that has the effect under Sec. 502(d) of the
Bankruptcy Code of precluding distribution on such Claim or
Interests.
<PAGE> EX 3.4 - Pg. 6
1.20 "Distribution" means the Cash or other consideration to
be distributed under the Plan to the holders of Allowed Claims or
Interest.
1.21 "Effective Date" means the earlier of (a) the date the
Reorganized Debtor or the Disbursing Agent commenced making
Distributions under the Plan; or (b) the date that is forty-five
(45) days following the Confirmation Date.
1.22 "Entity" means as that term is defined in Sec. 101(15) of
the Bankruptcy Code.
1.23 "Final Order" means an order or judgment of the Court,
or other court of competent jurisdiction, as entered on the
docket of such court that has not been reversed, stayed, modified
or amended, and as to which: (a) the time to appeal, seek review
or rehearing, or petition for certiorari has expired and no
timely-filed appeal or petition for review, rehearing, remand or
certiorari is pending; or (b) any appeal taken or petition for
certiorari filed has been resolved by the highest court to which
the order or judgment was appealed or from which certiorari was
sought.
1.24 "FSC&F" means Ferrell Schultz Carter & Fertel, P.A.,
bankruptcy counsel for the Debtor, whose retention was approved
by Order of the Court, dated May 5, 1999.
1.25 "Insider" means as that term is defined in Sec. 101(31) of
the Bankruptcy Code.
1.26 "Interest" means the legal, equitable, and contractual
rights of a holder of an equity security, which is issued and
outstanding as of the Petition Date in a Debtor.
1.27 "New Common Stock" means the new voting common stock of
the Reorganized Debtor to be distributed hereunder, issued on or
after the Effective Date.
1.28 "Old Common Stock" means the preconfirmation common
stock of the Debtor as of the Petition Date in the approximate
amount outstanding of thirty (30) million shares.
1.29 "Petition Date" means April 28, 1999, the date on which
the Debtor commenced this Reorganization Case by filing its
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code.
1.30 "Plan" means this Debtor's First Amended Plan of
Reorganization in its present form or as it may be modified,
amended, or supplemented from time to time and approved by the
Court.
1.31 "Priority Claim" means a Claim, if allowed, entitled to
priority pursuant to Sec. 507(a) of the Bankruptcy Code, other than:
(a) an Administrative Expense Claim; or (b) a Tax Claim entitled
to priority treatment pursuant to Sec. 507(a)(8) of the Bankruptcy
Code.
<PAGE> EX 3.4 - Pg. 7
1.32 "Reorganized Debtor" means the Debtor, or its successor
corporation, on or after the Effective Date, as reorganized
pursuant to this Plan.
1.33 "Secured Claim" means a Claim, secured by a valid lien,
security interest, or other charge against or interest in
property in which a Debtor has an interest, or which is subject
to setoff under Sec. 553 of the Bankruptcy Code, to the extent of
lesser of (i) the amount of such claim; or (ii) the value of the
Debtor's interest in the property as determined by the Court
pursuant to Sec. 506(a) of the Bankruptcy Code, or (b) Agreement
between the Debtor and the holder of the Secured Claim or (iii)
to the extent of the amount subject to setoff, as the case may
be. That portion of such Claim exceeding the value of the
security held therefor shall be an Unsecured Claim.
1.34 "Subordinated Claim" shall mean any Claim, including
without limitation, the claim of Raymond Kelley, Trustee of the
EB Trust and PB Trust, arising from rescission of a purchase or
sale of a security of the Debtor or an affiliate of the Debtor,
for damages arising from the purchase or sale of such a security,
or for reimbursement or contribution allowed under Sec. 502 of the
Bankruptcy Code on account of such a Claim, which Claims are
subject to subordination, pursuant to Sec. 510(b) of the Bankruptcy
Code.
1.35 "Tax Claim" means a Claim of a governmental unit
entitled to priority treatment under Sec. 507(a)(8) of the
Bankruptcy Code.
1.36 "Unsecured Claim" means any Claim that is not an
Administrative Expense Claim, Priority Claim, or Secured Claim
1.37 "Winner's Edge LC" means the Winner's Edge Licensing
Corp.
1.38 "Winner's Edge Agreement" means that certain Agreement,
between Winner's Edge LC and the Debtor, as amended, a copy of
which is appended to the Disclosure Statement as Exhibit "2".
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
--------------------------------------
Generally, a Claim or Interest is classified in a particular
Class for voting and distribution purposes only to the extent the
Claim or Interest qualifies within the description of that Class,
and is classified in another Class to the extent any remainder of
the Claim or Interest qualifies within the description of such
other Class. Administrative Expense Claims entitled to priority
treatment pursuant to Sec. 507(a)(1) and 507(a)(2) and Priority Tax
Claims entitled to priority treatment pursuant to Sec. 507(a) are
not classified pursuant to Sec. 1123(a)(1) and are treated as
provided in Article III of this Plan. For purposes of the Plan,
Claims and Interest are Classified as Follows:
<PAGE> EX 3.4 - Pg. 8
2.1 Class 1 Claims. Class 1 Claims shall consist of all
Allowed Priority Claims.
2.2 Class 2 Claims. Class 2 Claims shall consist of all
Allowed Unsecured Claims.
2.3 Class 3 Claims. Class 3 Claims shall consist of all
Allowed Subordinated Claims.
2.4 Class 4 Claims. Class 4 shall consist of all Allowed
Interests.
ARTICLE III
TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS
----------------------------------------------------------
3.1 Administrative Expense Claims Are Not Impaired. Each
holder of an Allowed Administrative Expense Claim shall be paid
in full in Cash on the Effective Date or as soon thereafter as is
practicable in accordance with the legal, equitable, and
contractual rights of the holder of such Allowed Administrative
Expense Claim, unless otherwise agreed; provided, however, that
with respect to the Allowed Administrative Claim of FSC&F the
Debtor shall have the option of electing to either pay FSC&F's
Allowed Administrative Claim (less the prepetition fee and cost
retainer received by FSC&F in the amount of $20,800, which shall
be applied by FSC&F to reduce the amount of FSC&F's Allowed
Administrative Claim) in full in cash or issue FSC&F 500,000
shares of New Common Stock in full satisfaction of FSC&F's
Allowed Administrative Claim. The Reorganized Debtor shall
further pay to the United States Trustee the appropriate sums
required pursuant to 28 U.S.C. Sec. 1930(a)(6) for the periods
subsequent to the confirmation of the Plan within the time period
set forth therein, until the earlier of the entry of a final
<PAGE> EX 3.4 - Pg. 9
decree closing this case or the entry of an Order dismissing this
case or converting this case to another chapter of the Code, and
simultaneously with the payment of these fees the Reorganized
Debtor shall provide to the United States Trustee an appropriate
affidavit indicating the cash disbursements for the relevant
period, to the extent the Reorganized Debtor was not required to
file the debtor-in-possession reports.
3.2 Tax Claims Are Not Impaired. The Debtor's books and
records do not reflect any outstanding Allowed Tax Claims
entitled to priority under 11 U.S.C. Sec. 507(a)(8). If, however,
there are subsequent Allowed Tax Claims entitled to a priority
under 11 U.S.C. Sec. 507(a)(8), such allowed Tax Claims shall be
paid in full in Cash over a period not exceeding six (6) years
from the respective dates of assessments as follows: seventy-two
equal monthly installments of principal, plus accrued interest
from the unpaid allowed amount of such Claims at seven (7%)
percent per annum, beginning on the tenth Business Day of the
first month after the Distribution Date and continuing on the
same date each month thereafter until such Allowed Claims are
paid in full. The foregoing amortization will result in the
payment in full of the allowed amount of the Tax Claims by the
end of the sixth year. Notwithstanding anything to the contrary
contained elsewhere in this Plan, however, the allowed amount of
each Tax Claim together with accrued and unpaid interest thereon
at seven (7%) percent per annum shall be paid in full not later
than the date that is six (6) years following the date of the
assessment of the tax.
<PAGE> EX 3.4 - Pg. 10
ARTICLE IV
TREATMENT OF CLASSES OF CLAIMS AND INTERESTS
--------------------------------------------
The treatment afforded holders of Allowed Claims and Allowed
Interest under this Article of the Plan shall be in full
settlement, release, and discharge of their Allowed Claims and
Allowed Interests. Holders of Allowed Claims in Class 1 of the
Plan are not impaired under the Plan. Holders of Claims or
Interests in Classes 2, 3 and 4 of the Plan are impaired.
4.1 Class 1. Provisions for Treatment of Allowed Priority
Claims; Class 1 Claims Are Not Impaired. Each holder of an
Allowed Priority Claim entitled to priority under 11 U.S.C. Sec.
502(a)(3), 507(a)(4), 507(a)(5), or 507(a)(6), shall be paid by
the Reorganized Debtor: (i) the full amount of such Allowed
Priority Claim, in cash, without interest, on the later of (a)
the Effective Date or as soon thereafter as is practicable, or
(b) the date on which Allowed Priority Claim becomes due and
payable pursuant to the terms of the agreement upon which such
Allowed Priority Claim is based, or applicable Final Order; or
(ii) in such amount and on such date and under such terms as
agreed upon between the holder of such Allowed Priority Claim and
the Reorganized Debtor or as may be contained in a Final Order.
The Debtor's books and records do not reflect the existence of
any Class 1 Priority Claims.
4.2 Class 2. Provisions for Treatment of Allowed Unsecured
Claims; Class 2 Claims Are Impaired. Each holder of an Allowed
Unsecured Claim shall receive shares of New Common Stock equal in
number to the amount of the holder's Allowed Unsecured Claim
<PAGE> EX 3.4 - Pg. 11
divided by the Average Share Price, which number shall then be
divided by four (4) to reflect a four (4) to one (1) reverse
stock split of the Old Common Stock.
4.3 Class 3. Provisions for Treatment of Allowed
Subordinated Claims; Class 3 Claims Are Impaired. Each holder of
an Allowed Subordinated Claim shall receive shares of New Common
Stock, the number of which shall equal the number of shares of
the Old Common Stock held by each holder divided by four (4) to
reflect a four (4) to one (1) reverse stock split of the Old
Common Stock.
4.4 Class 4. Provisions for Treatment of Allowed
Interests; Class 4 Interests Are Impaired. Each holder of an
Allowed Interest shall receive shares of New Common Stock equal
in number to the shares of Old Common Stock held by each holder
divided by four (4), which shall reflect a four (4) to one (1)
reverse stock split of the Old Common Stock. To participate in
the treatment afforded holders of Allowed Class 4 Interest, each
holder, who holds in aggregate 50,000 shares or more of the
Debtor's Common Stock, must file with the Clerk of the Bankruptcy
Court and serve on counsel for the Debtor a proof of interest
form on or before the expiration of the proof of interest bar
deadline set by separate order of the Bankruptcy Court. Any such
holder of a Class 4 Interest who fails to timely file a proof of
interest shall be barred from participation in Distributions
under the Plan and shall have their alleged Class 4 Interest
extinguished. Each holder, who holds in aggregate less than
50,000 shares, is not required to file a proof of interest.
<PAGE> EX 3.4 - Pg. 12
ARTICLE V
MEANS FOR EXECUTION OF THE PLAN
-------------------------------
5.1 The Reorganized Debtor. All of the Old Common Stock
shall be canceled upon the Effective Date. The Reorganized
Debtor shall be renamed "The Winner's Edge.Com." The business of
the Reorganized Debtor, initially at least, shall consist
exclusively of the marketing of the software and related products
provided by Winner's Edge LC to the Reorganized Debtor on the
Effective Date, pursuant to the Winner's Edge Agreement, a copy
of which is appended Exhibit "2" to the Disclosure Statement.
5.2 Winner's Edge Agreement. Pursuant to the terms and
conditions of the Winner's Edge Agreement, Winner's Edge LC shall
grant the Reorganized Debtor an exclusive license to market "The
Winner's Edge" software and related products in the United States
and its territories. To effectuate the marketing thereof,
Winner's Edge LC shall also transfer ownership of all kiosks and
related assets as well as assign all contracts relating thereto
to the Reorganized Debtor upon the Effective Date.
In exchange for the transfer and assignment of the above
assets and contracts to the Reorganized Debtor as provided for in
the Winner's Edge Agreement, Winner's Edge LC shall receive not
less than ten (10) million shares of New Common Stock or fifty
percent (50%) of the New Common Stock Distribution under this
Plan, whichever is higher, to effectuate the Plan. In addition,
the Reorganized Debtor shall pay Winner's Edge a twenty percent
(20%) royalty fee on gross sales of the Winner's Edge software
and related products. The remaining ten (10) million shares of
New Common Stock authorized to be issued by the Reorganized
Debtor to the extent necessary shall be distributed to holders of
Classes 2 and 3 Claims and Class 4 Interests as provided for in
Article IV of the Plan.
<PAGE> EX 3.4 - Pg. 13
5.3 Directors of the Reorganized Debtor upon the Effective
Date. The existing Board of Directors consisting of C. Wayne
Baldridge, Jeffrey H. Morris, Anthony D'Amato, and Michael E.
Fasci shall continue in office upon the Effective Date. A duly
noticed meeting of shareholders may be scheduled after the
Confirmation Date at which time a new Board of Directors shall be
elected pursuant to the applicable provisions of the Reorganized
Debtor's by-laws.
5.4 Officers of the Reorganized Debtors. C. Wayne
Baldridge shall continue to serve as Chief Executive Officer and
President, and Jeffrey H. Morris shall continue to serve as
Treasurer and Michael E. Fasci shall continue to serve as
Secretary until such time as the shareholders meeting as required
by Sec. 5.3 above is held and new officers may be appointed by the
Board of Directors, pursuant to the Reorganized Debtor's by-laws.
The salaries of the officers shall be established by the Board of
Directors at the shareholder's meeting with at least fifty
percent (50%) of the shareholders present.
5.5 Exemption from Registration of New Common Stock.
Pursuant to Sec. 1145 of the Bankruptcy Code, the distribution of
the New Common Stock as provided for under this Article shall be
<PAGE> EX 3.4 - Pg. 14
exempt from registration. All New Common Stock shall be freely
tradable upon issuance.
5.6 Disputed Claims and Interests. No Distribution shall
be made in respect of a Disputed Claim until such Claim or
Interest becomes an Allowed Claim or Allowed Interest by Final
Order determining the allowable amount of the Claim or Interest
or approving a compromise of the Claim or Interest. The
Reorganized Debtor shall review and file objections to claims in
accordance with Local Rule 307 or as otherwise ordered by the
Court.
5.7 Exemption from Stamp and Transfer Taxes. Any sale,
transfer, securities issuance or distribution or other
transaction conducted pursuant to this Plan shall be exempt,
pursuant to Sec. 1145 and Sec. 1146 of the Bankruptcy Code, from
any law imposing stamp tax or similar tax.
5.8 Unclaimed Property. In the event any funds or shares
as the case may be remain unclaimed for a period of one (1) year
after the Distribution Date, the allowed amount of such Claim or
Interest, the payment or shares for which was unclaimed, shall be
reduced then to zero dollars and such unclaimed Distribution
shall revert to the Disbursing Agent who shall immediately turn
over the unclaimed Distribution to the Reorganized Debtor.
A distribution of funds or shares is unclaimed, if, without
limitation, the holder of a Claim or Interest entitled thereto
does not cash a check or if the check or shares mailed to the
holder at the address set forth in the Debtor's schedule of
creditors having priority, creditors holding security, or
<PAGE> EX 3.4 - Pg. 15
creditors having unsecured claims without priority or set forth
in the proof of claim filed by such holder is returned by the
United States Postal Service as undeliverable.
Unless the holder of a Claim advises the Reorganized Debtor
or the Disbursing Agent of a change of address, all Distributions
or notices shall be sent to such holder at the address stated in
the Debtor's bankruptcy schedules or in a properly filed proof of
claim or proof of interests. The Debtor, the Disbursing Agent,
and any professionals retained by them shall have no obligation
to locate the holder of a Claim or Interest whose distribution or
notice is properly mailed by nevertheless returned.
5.9 Cramdown. If any impaired Class of Claims or Interests
fails to accept the Plan in accordance with Sec. 1126 of the
Bankruptcy Code, and all of the applicable requirements of Sec.
1129(a) of the Bankruptcy Code, other than subsection (8)
thereof, are found to have been met with respect to the Plan, the
Debtor may seek confirmation of the Plan pursuant to Sec. 1129(b)
of the Bankruptcy Code, known as the Cramdown Provisions.
PURSUANT TO THE CRAMDOWN PROVISIONS, THE DEBTOR MAY SEEK TO HAVE
THE PLAN CONFIRMED OVER THE REJECTION OF ANY VOTING CLASS WHICH
DOES NOT ACCEPT THE PLAN. For purposes of seeking confirmation
under the Cramdown Provisions, should that alternative means of
confirmation prove to be necessary, the Debtor reserves the right
to modify or vary the treatment of the Claims or Interests of the
rejecting classes, in order to comply with the requirements of
Sec. 1129(b), provided such modifications or amendments are filed
<PAGE> EX 3.4 - Pg. 16
with the Court and served on all parties in interest entitled to
receive notice, pursuant to Bankruptcy Rules 2002 and 3019.
5.10 Distribution to Holders of Allowed Claims and Allowed
Interests. On the Effective Date, or as soon thereafter as is
practicable, the Reorganized Debtor shall make the Distributions
of New Common Stock to holders of Class 2 and 3 Allowed Claims
and Class 4 Allowed Interest. The Disbursing Agent shall make
all cash distributions required under the Plan. The Reorganized
Debtor shall establish a sufficient reserve of New Common Stock
to allow distribution to said disputed holders if the disputed
Claims or Interests becomes subsequently allowed. No fraction of
shares of New Common Stock shall be distributed, rather all such
fractions shall be rounded to the nearest whole number.
5.11 Withdrawal of the Plan. The Debtor reserves the right
to modify or revoke the right to modify or revoke and withdraw
this Plan, at its sole option at any time before the Confirmation
Date or if the Debtor for any reason is unable to consummate the
Plan after the Confirmation Date. The Debtor reserves the right
to make non-substantive modifications to the Plan prior to
Confirmation.
5.12 Surrender of Old Common Stock. Each holder of Old
Common Stock shall surrender such security to the Reorganized
Debtor with a duly executed letter of transmittal. No
Distribution hereunder shall be made to any holder of such
Interest unless such instrument is received or the
nonavailability of such instrument is established to the
<PAGE> EX 3.4 - Pg. 17
satisfaction of the Reorganized Debtor. Notwithstanding anything
to the contrary, any such holder of a Disputed Claim or Disputed
Interest shall not be required to surrender the instrument until
final resolution of the dispute.
ARTICLE VI
EFFECT OF THE PLAN ON CLAIMS AND INTERESTS
------------------------------------------
6.1 Terms are Binding. All of the provisions of this Plan,
including all appendices and other documents substantially in the
form of the Exhibits hereto, shall be binding on the Debtor, the
Debtor's estate, all holders of Claims or Interests, and all
other Entities who are affected in any manner by the Plan.
6.2 Revesting and Vesting. All assets of the Debtor's
estate shall be transferred to and shall vest in the Reorganized
Debtor, free and clear of all liens, claims, encumbrances, and
interests in accordance with and as contemplated in Article V of
this Plan and the appendices and other documents related hereto,
and in substantially the form of the Exhibits hereto. As of the
Effective Date, other than those restrictions expressly imposed
by the Plan and the Confirmation Order, the Reorganized Debtor
may operate its business and use, acquire, and dispose of
property and compromise Claims or Interests without supervision
of the Bankruptcy Court.
6.3 Automatic Stay Provisions and Effect of Confirmation.
The automatic stay provisions and effect of confirmation set
forth in Sec. 362 and Sec. 1141 of the Bankruptcy Code shall
remain in full force and effect until the Effective Date,
provided, however, that such automatic stay and effect of
<PAGE> EX 3.4 - Pg. 18
confirmation shall remain in force as to Disputed Claims until
a Final Order has been entered in respect of such Disputed
Claims.
6.4 Retention and Enforcement of Claims. The Reorganized
Debtor shall retain any Claims or Interests belonging to the
Debtor, and all such Claims and Interests shall vest in the
Reorganized Debtor upon entry of the Confirmation Order,
including all Claims and powers of the Debtor which may exist
pursuant to Sec. 544, 545, 547, 548, 549, 550, and 553 of the
Bankruptcy Code, and all prepetition causes of action owned by
the Debtor (whether asserted or unasserted), and after the
Effective Date, the Reorganized Debtor may continue to enforce
such claims, powers and causes of action. The Debtor is not
aware of any, but reserves the right to pursue such Claims if any
are discovered.
6.5 Objections to Claims and Interests. The Debtor shall
object to the allowance of Claims or Interests in accordance with
Local Rule 307 unless such time shall have been extended by order
of the Bankruptcy Court. The failure of any party in interest
other than the Debtor to object to or examine any Claims or
Interests for the purpose of voting on this Plan shall not be
deemed a waiver of the rights of any party in interest to object
to or reexamine such Claim or Interest in whole or in part.
6.6 Discharge. In accordance with Sec. 1141(d)(1) of the
Bankruptcy Code, entry of the Confirmation Order acts as a
discharge effective as of the Effective Date of all debts, claims
against, liens or interests in the Debtor, their assets, or
property, which debts, claims, liens, and interests arose at any
<PAGE> EX 3.4 - Pg. 19
time before the entry of the Confirmation Order. The discharge
of the Debtor shall be effective as to each Claim or Interest,
regardless of whether a proof of claim or interest therefor was
filed, whether the Claim or Interest is an Allowed Claim or
Allowed Interest, or whether the holder thereof votes to accept
the Plan. On the Effective Date, as to every discharged Claim
and Interest, any holder of such Claim or Interest shall be
precluded from asserting against the Debtor any obligation with
respect to such Claim or Interest, or against the Debtor's
asserts or properties any other or further Claim or Interest
based upon any document, instrument, act, omission, transaction,
or other activity of any kind or nature that occurred before the
Confirmation Date.
ARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
----------------------------------------
7.1 At the election of the Debtor, any monetary defaults
under each executory contract and unexpired lease to be assumed
under this Plan shall be satisfied pursuant to Sec. 365(b)(2) of the
Bankruptcy Code, in one of the following ways: (a) by payment of
the default amount in Cash on the Effective Date; (b) by payment
of the default amount in equal quarterly installments commencing
on the Effective Date and continuing for one year (with simple
interest payable with the final installment at the rate of 8% per
annum and with principal prepayable at any time with no penalty
or premium); or (c) on such other terms as agreed to by the
parties to such executory contract or unexpired lease. In the
event of a dispute regarding: (i) the amount of any cure
<PAGE> EX 3.4 - Pg. 20
payments; (ii) the ability of the Debtor that is a party thereto
to provide adequate assurance of future performance under the
contract or lease to be assumed; or (iii) any other matter
pertaining to assumption, the cure payments required by Sec.
365(b)(1) of the Bankruptcy Code shall be made following the
entry of a Final Order resolving the dispute and approving
assumption.
7.2 All executory contracts or unexpired leases, if any,
shall be rejected under this Plan.
ARTICLE VIII
CONDITIONS TO CONFIRMATION AND CONSUMMATION
-------------------------------------------
8.1 Condition to Confirmation. This Plan may not be
confirmed unless the Disclosure Statement Order shall have been
entered and be a Final Order.
8.2 Conditions to Consummation. This Plan may not be
consummated unless each of the conditions set forth below is
satisfied. Except as provided in section 10.03 below, any one or
more of the following conditions may be waived at any time by the
Debtor:
1 The Confirmation Order shall have been entered and be a
Final Order.
2 The Reorganized Debtor shall have sufficient Cash on
hand to make timely Distributions of Cash required hereunder.
3 The thirty (30) million of New Common Stock is
sufficient to make all required stock distributions hereunder.
8.3 Waiver of Conditions to Confirmation and Consummation.
Each of the conditions to confirmation or consummation of this
<PAGE> EX 3.4 - Pg. 21
Plan or the occurrence of the Confirmation Date or the Effective
Date is for the sole benefit of the Debtor. Other than the
requirement that the Disclosure Statement Order and the
Confirmation Order must be entered, the requirement that a
particular condition be satisfied may be waived in whole or part
by the Debtor in their sole discretion, without notice and a
hearing, and the relevant Debtor's benefits under the "mootness
doctrine" shall be unaffected by any provision hereof. The
failure to satisfy or waive any condition may be asserted by the
Debtor regardless of the circumstances giving rise to the failure
of such condition to be satisfied (including, without limitation,
any act, action, failure to act or inaction by any of the
Debtor). The failure of the Debtor to exercise any of the
foregoing rights shall not be deemed a waiver of any other rights
an each such right shall be deemed an ongoing right that may be
asserted or waived (as set forth herein) at any time or from time
to time.
8.4 Effect of Nonoccurrence of the Conditions to
Consummation. If each of the conditions to consummation and the
occurrence of the Effective Date has not been satisfied or duly
waived on or before the first Business Day that is more than 179
days after the Confirmation Date, or by such later date as is
proposed by the Debtor and approved, after notice and a hearing,
by the Court, upon motion by any party in interest made before
the time that each of the conditions has been satisfied or duly
waived, the Confirmation Order may be vacated by the Court'
provided, however, that notwithstanding the filing of such a
<PAGE> EX 3.4 - Pg. 22
motion, the Confirmation Order shall not be vacated if each of
the conditions to consummation is either satisfied or duly waived
before the Court enters an order granting the relief requested in
such motion. If the Confirmation Order is vacated pursuant to
this section, the Plan shall be null and void in all respects,
and nothing contained in the Plan shall: (a) constitute a waiver
or release of any Claims against or Interests in the Debtor; or
(b) prejudice in any manner the rights of any of the Debtor,
including (without limitation) the right to seek a further
extension of the exclusivity periods under Sec. 1121(d) of the
Bankruptcy Code.
ARTICLE IX
ADMINISTRATIVE PROVISIONS
-------------------------
9.1 Retention of Jurisdiction. Notwithstanding
confirmation of this Plan or occurrence of the Effective Date,
the Court shall retain jurisdiction for the following purposes:
1 Determination of the allowability of Claims and
Interests upon objection to such Claims or Interests by a Debtor,
the Reorganized Debtor, or any other party in interest and the
validity, extent, priority and nonavoidability of consensual and
nonconsensual liens and other encumbrances;
2 Determination of tax liability or entitlement of the
Reorganized Debtor to the benefit of any Net Operating Loss
Carryforwards ("NOLS"), pursuant to Sec. 505 of the Bankruptcy Code;
3 Approval, pursuant to Sec. 365 of the Bankruptcy Code, of
all matters related to the assumption, assumption and assignment,
<PAGE> EX 3.4 - Pg. 23
or rejection of any executory contract or unexpired lease of any
of the Debtors;
4 Determination of requests for payment of administrative
expenses entitled to priority under section 507(a)(1) of the
Bankruptcy Code, including compensation of parties entitled
thereto;
5 Resolution of controversies and disputes regarding the
interpretation of this Plan;
6 Implementation of the provisions of this Plan and entry
of orders in aid of confirmation and consummation of this Plan,
including, without limitation, appropriate orders to protect the
Debtor and their successors from actions by creditors and/or
Interest holders of the Debtors or any of them and resolving
disputes and controversies regarding property of the Estate and
the Reorganized Debtor that is subject to restructuring
negotiations on and after the Confirmation Date;
7 Modification of the Plan pursuant to Sec. 1127 of the
Bankruptcy Code;
8 Adjudication of any causes of action that arose
preconfirmation or in connection with the implementation of this
Plan, including avoidance actions, brought by a Debtor, or
Reorganized Debtor;
9 Entry of a Final Order closing the Reorganization
Cases;
10 Resolution of disputes concerning any Disputed Claims
or the administration thereof and Claims for disputed
Distributions; and
<PAGE> EX 3.4 - Pg. 24
11 The resolution of any disputes concerning whether a
person or entity had sufficient notice of the Reorganization
Cases, the applicable claims bar date, the hearing on the
approval of the Disclosure Statement as containing adequate
information, the hearing on the confirmation of this Plan for the
purpose of determining whether a Claim or Interest is charged
hereunder or for any other purpose.
9.2 Governing Law. Except to the extent the Bankruptcy
Code, Bankruptcy Rules, or other federal laws apply and except
for Reinstated Claims governed by another jurisdiction's law, the
rights and obligations arising under the Plan shall be governed
by the laws of the State of Florida, without giving effect to
principles of conflicts of law.
9.3 Corporate Action. The adoption of any new or amended
and restated certificates of incorporation and by-laws of the
Reorganized Debtor and the other matters provided for under the
Plan involving the corporate or entity structure of any Debtor,
Reorganized Debtor or corporate action, as the case may be, to be
taken by or required of any Debtor or Reorganized Debtor, as the
case may be, shall be deemed to have occurred and be effective as
provided herein and shall be authorized and approved in all
respects, without any requirement of further action by stock
holders or directors of any of the Debtor or Reorganized Debtor,
as the case may be. Without limiting the foregoing, the
Reorganized Debtor shall be authorized, without any further act
or action required, to issue all New Common Stock, any other
securities and any instruments required to be issued hereunder,
<PAGE> EX 3.4 - Pg. 25
including sufficient New Common Stock. All New Common Stock
shall be voting shares.
9.4 Effectuating Documents and Further Transaction. The
Debtor and Reorganized Debtor shall be authorized to execute,
deliver, file, or record such documents, contracts, instruments,
releases, and other agreements and take such other action as may
be necessary to effectuate and further evidence the terms and
conditions of the Plan.
9.5 Limitation of Liability. Neither the Debtor, the
Reorganized Debtor, any of their respective officers, directors,
employees or agents (acting in such capacity), nor any
professional persons employed by any of them shall have or incur
any liability to any entity for any action taken or omitted to be
taken in connection with or related to the formulation,
preparation, dissemination, implementation, confirmation, or
consummation of the Plan, the Disclosure Statement, or any
contract, release, or other agreement or document created or
entered into, or any other action taken or omitted to be taken in
connection with the Plan; provided, however, that the provision
of this section shall have no effect on the liability of any
entity that would otherwise result from any action or omission to
the extent that such action or omission is determined in a Final
Order to have constituted gross negligence or willful misconduct.
6 Amendments.
1 Preconfirmation Amendment. The Debtor may modify the
Plan at any time prior to the entry of the Confirmation Order
<PAGE> EX 3.4 - Pg. 26
provided that the Plan, as modified, and the disclosure statement
pertaining thereto meet applicable Bankruptcy Code requirements.
2 Postconfirmation Amendment Not Requiring
Resolicitation. After the entry of the Confirmation Order, the
Debtor may modify the Plan to remedy any defect or omission or to
reconcile any inconsistencies in the Plan or in the Confirmation
Order, as may be necessary to carry our the purposes and effects
of the Plan, provided that: (i) the Debtor obtains approval of
the Court for such modification, after notice and a hearing; and
(ii) such modification shall not materially and adversely affect
the interests, rights, treatment, or Distributions of any Class
of Allowed Claims or Allowed Interests under the Plan.
3 Postconfirmation/Preconsummation Amendment Requiring
Resolicitation. After the Confirmation Date and before
substantial consummation of the Plan, the Debtor may modify the
Plan in a way that materially or adversely affects the interests,
rights, treatment, or Distributions of a class of Claims or
Interests provided that: (i) the Plan, as modified, meets
applicable Bankruptcy Code requirements; (ii) the Debtor obtain
Court approval for such modification, after notice and a hearing;
(iii) such modification is accepted by at least two-thirds in
amount, and more than one-half in number, of Allowed Claims or
Allowed Interests voting in each class affected by such
modifications; and (iv) the Debtor comply with Sec. 1125 of the
Bankruptcy Code with respect to the Plan as modified.
9.7 Successors and Assigns. The rights, benefits, and
obligations of any person or entity named or referred to in the
<PAGE> EX 3.4 - Pg. 27
Plan shall be binding upon, and shall inure to the benefit of,
the heir, executor, administrator, successor, or assign of such
person or entity.
9.8 Confirmation Order and Plan Control. To the extent the
Confirmation Order and/or this Plan is inconsistent with the
Disclosure Statement, or any other agreement entered into between
the Debtor and any third party, this Plan controls the Disclosure
Statement and any such agreements and the Confirmation Order (and
any other orders of the Court) controls this Plan.
9 Rules of Construction.
1 Undefined Terms. Any term used herein that is not
defined herein shall have the meaning ascribed to any such term
used in the Bankruptcy Code and/or the Bankruptcy Rules, if used
therein.
2 Miscellaneous rules. (i) The words "herein," "hereof,"
"hereunder," and other words of similar import refer to this Plan
as a whole, not to any particular section, subsection, or clause,
unless the context requires otherwise; (ii) whenever it appears
appropriate from the context, each term stated in the singular or
the plural includes the singular and the plural, and each pronoun
stated in the masculine, feminine, or neuter includes the
masculine, feminine, and the neuter; (iii) captions and headings
to articles and sections of the Plan are inserted for convenience
or reference only and are not intended to be a part or to affect
the interpretation of the Plan; and (iv) the rules of
construction set forth in Sec. 102 of the Bankruptcy Code shall
apply, unless superseded herein or in the Confirmation Order.
Respectfully submitted,
By:/s/ Jeffrey Morris
Jeffrey Morris
Member of the Board of
Directors
Secretary and Treasurer
<PAGE> EX 3.4 - Pg. 28
Exhibit 3.5
Order Confirming Debtor's First Amended Plan of Reorganization
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
In re: Case
No. 99-32064-BKC-PGH
UC'NWIN SYSTEMS CORPORATION, Chapter 11
Debtor.
____________________________/
ORDER CONFIRMING DEBTOR'S
FIRST AMENDED PLAN OF REORGANIZATION
------------------------------------
A hearing was held on August 11, 1999, at 9:30 a.m., to
consider the confirmation of the Debtor's First Amended Plan of
Reorganization, dated July 8, 1999, filed by UC'WIN SYSTEMS
CORPORATION, the debtor and debtor-in-possession (the "Debtor"),
under Chapter 11 of the Bankruptcy Code (the "Plan").
The Plan having been transmitted to creditors and
equity security holders and all other parties in interest; and
The Court, after hearing on notice at which the Court
considered the confirmation affidavit of Mr. Anthony D'Amato, the
Chairman of the Board of Directors of the Debtor, makes the
following findings of fact and conclusions of law:
Findings of Fact
----------------
1. The Plan has been accepted in writing by the
creditors and equity holders whose acceptance is required by law;
and
- ---------------------
[1] Defined terms herein are given the same meaning as provided
for such terms in the Plan and Debtor's Amended Disclosure
Statement (the "Disclosure Statement").
<PAGE> EX 3.5 - Pg. 1
2. The provisions of Chapter 11 of the Bankruptcy
Code have been complied with and the Plan has been proposed in
good faith and not by any means forbidden by law; and
3. All payments made or promised by the Debtor or by
a person issuing securities or acquiring property under the Plan
or by any other person for services or for costs and expense in,
or in connection with, the Plan and incident to the case, have
been fully disclosed to the Court and are reasonable or, if to be
fixed after confirmation of the Plan, will be subject to approval
of the Court; and
4. The identity, qualifications, and affiliations of
the persons who are to be directors or officers, or voting
trustees, if any, of the Debtor, after confirmation of the Plan,
have been fully disclosed, and the appointment of such persons to
such offices, or their continuance therein, is equitable and
consistent with the interests of the creditors and equity
security holders and with public policy; and
5. The identity of any insider that will be employed
or retained by the Debtor and compensation to such insider has
been fully disclosed; and
6. The confirmation of the Plan is not likely to be
followed by the liquidation, or the need for further financial
reorganization, of the Debtor or any successor to the Debtor
under the Plan, unless such liquidation or further reorganization
is proposed in the Plan; and
IT IS THEREFORE:
1. ORDERED that the Plan is confirmed, and it is
further;
<PAGE> EX 3.5 - Pg. 2
2. ORDERED that the Court shall retain jurisdiction
as provided in the Plan to among other things resolve objections
filed by the Debtor to claims or interests; and it is further;
3. ORDERED that the Debtor, the Trustee or the Escrow
Agent shall pay the United States Trustee the appropriate sum
required pursuant to 28 U.S.C. Sec. 1930(a)(6) within ten (10) days
of the entry of this order for preconfirmation periods; and it is
further;
4. ORDERED that because the Debtor intends to elect
to pay counsel for the Debtor through the issuance of 500,000
shares of stock in the reorganized debtor the aggregate amount of
fees and costs awarded to counsel does not appear to affect the
Debtor's estate and therefore a hearing on the application does
not appear necessary absent a written objection; accordingly
counsel for the Debtor shall file a fee application on or before
Friday, August 13, 1999, and serve notice of the fee application
to parties in interest, which notice shall provide that any party
who wishes to object to the application must file and serve a
written objection within 20 days of the date of notice or be
deemed to have consented to the application, if no objection is
timely filed counsel for the debtor shall then file a certificate
of no response and a proposed order awarding the fees and costs
without further notice or hearing; and it is further
5. ORDERED that the Debtor is authorized to file
appropriate documents with the Secretary of State of the State of
Florida or the official records office of each county where
applicable evidencing the discharge of any claims, liens, or
judgments including without limitation the judgment held by
<PAGE> EX 3.5 - Pg. 3
Raymond Kelley, trustee of the EB Trust and PB Trust, which
claims, liens, or judgments are discharged pursuant to this
Order, the Plan, and 11 U.S.C. Sec. 1141(d).
DONE and ORDERED in the Southern District of Florida,
this 11th day of August, 1999.
/s/ Paul G. Hyman, Jr.
Paul G. Hyman, Jr.
United States Bankruptcy Judge
Conformed copy furnished to:
Gary M. Murphree, Esq.
[Attorney Murphree is directed to immediately mail a conformed
copy of this Order to all parties entitled to notice]
<PAGE> EX 3.5 - Pg. 4
Exhibit 3.6
vanAar, Inc. Managing Consulting Agreement
<PAGE>
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
Johan A. Wassenaar
President
11 January, 2000
Michael Fasci
Process Engineering Services
295 Broadway
Taunton MA 02780
Anthony D'Amato & Jeffrey Morris
Drake Alexander & Associates, Inc.
1900 Corporate Blvd., Suite 400 East
Boca Raton FL 33431
C Wayne Baldridge
The Winner's Edge.Com
6900 Westcliff Drive, Suite 608
Las Vegas NV 89145
Cc:
John Ramljak
Re: vanAar, Inc. Engagement Terms.
Dear Mike, Anthony, Jeff and Wayne:
VanAar, Inc. in association with John Ramljak ("vanAar") will
undertake to staff up and manage thewinnersedge.com ("Company")
for a period of six months or more to bring about the Company's
transition from a startup to a fully operating condition.
Interim Financing:
In the course of this endeavor, vanAar will undertake to
raise, at a minimum, approximately $1 million (one million
dollars) of interim financing to develop the company to where it
is able to launch a secondary public offering. The proceeds of
this offering will be used to repay the interim debt and to
satisfy the long-term capital requirements of the Company. vanAar
will manage the public offering, including the engagement of
suitable underwriters, investment bankers and market makers.
In addition vanAar will introduce the added service of
electronically obtaining timing information at as many of the one
hundred and thirty two US horse racing tracks as possible to
commercially disseminate the resulting race horse performance
statistics. Financing the installed equipment systems for this
function is to be part of the secondary public offering.
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 1
<PAGE> EX 3.6 - Pg. 1
Authority and Responsibility:
vanAar will have full authority and turn-key management
responsibility, reporting to the Chairman of the Board, and
coordinating with the Board of Directors. Any acquisitions,
capital commitments or other material changes will be approved in
writing by the Board of Directors.
During the course of this engagement the Company agrees not to
encumber itself with additional debt, future obligations, or to
issue additional shares without prior knowledge and agreement of
vanAar.
Duration:
The project commenced following acceptance by the company on
November 22nd, 1999 of the agreement which is herewith amended
and will terminate once the Company has become self-perpetuating
to the satisfaction of both parties.
Reporting:
Progress will be reported in writing every second week. Either
direct or electronic meetings with the Company's Board of
Directors will be held monthly.
Compensation:
All compensation ( including compensation defined in exhibits A,
B, and C) is dependant upon vanAar raising an initial one million
dollars ($1,000,000 USD) for thewinnersedge.com within a
reasonable period of time after the company reaches full
compliance with SEC reporting requirements.
vanAar will receive a commission of five percent (5%) on all
proceeds raised for the purpose of interim financing. In
addition, vanAar will be compensated out of the funds raised for
its organizational and management efforts (see EXHIBIT C for
rates) and reimbursed for its expenses as duly accounted for and
invoiced in twice-monthly intervals. If the company endeavors to
take any actions without the consultation and agreement of
vanAar, which subsequently prevent vanAar from raising this
interim funding, its fees and expenses shall become payable by
the company in full.
In recognition of essential management services being provided
by vanAar to thewinnersedge.com, the Board of Directors of
thewinnersedge.com authorizes the stock bonus package for
management services provided to thewinnersedge.com as stated
below:
Phase I- For developing a comprehensive business plan for
thewinnersedge.com and insuring that the company is
properly capitalized to implement Phase I activities.
Some of these activities will include the selling of
thewinnersedge.com program and ancillary items through
its kiosk program and the initial research and
development of the electronic timing system:
500,000 shares of common stock (Restricted under Rule
144).
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 2
<PAGE> EX 3.6 - Pg. 2
Phase II- For managing the company successfully to complete a
secondary offering as well as to actively seek to acquire
or partner with other related businesses with the goal of
increasing shareholder value:
A number of shares geared to the results achieved as
measured in gain of company net worth at a rate of
500,000 shares for each $10 million of net worth gain up
to the first $20 million, and at a rate of 750,000 shares
for each $10 million of additional net worth gain
thereafter. These shares are subject to Rule 144
regulations.
Terms of Engagement:
The terms of engagement shall be as set out in EXHIBIT A
attached hereto and entitled "vanAar, Inc. Standard Terms of
Engagement" as marked up specifically for this engagement.
Yours Very Truly,
/s/Johan A. Wassenaar
Johan A. Wassenaar
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 3
<PAGE> EX 3.6 - Pg. 3
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
EXHIBIT A
---------
vanAar, Inc. Standard Terms of Engagement
THIS AGREEMENT is made this 11 day of January, 2000 between
thewinnersedge.com, hereinafter known as "Client" and vanAar,
Inc., hereinafter known as Financial "Advisor".
WHEREAS, Client desires to retain Advisor under the terms and
conditions set forth herein to provide various advisory and
management services to Client and Advisor desires to provide
those services to Client.
NOW THEREFORE, in consideration of the mutual terms and
conditions contained herein, the parties hereto agree as follows:
1. Advisory Services to be Provided
--------------------------------
a. Client hereby retains Advisor to consult with and
advise Client regarding its business and business plan
and contemplated business operations and, in
particular, to provide those terms set forth in the
covering letter hereto. As part of its services
hereunder, Advisor shall advise the Client, using its
best efforts to locate potential sources of financing
willing to provide any desired debt and/or equity
financing to Client, introduce any such interested
financing sources to the Client and assist the Client
in preparing any materials that may be required by the
financing sources.
b. Advisor has the right to refuse to perform any other
services for Client other than those specifically set
forth herein.
c. If required, Advisor will assist the Client to obtain
the services of any engineers, appraisers, attorneys,
accountants or other professionals whose services are
necessary for the Client to obtain financing. The
Client understands that any fee arrangements between
the Client and such professionals shall be entered into
between the Client and the professionals. Advisor shall
not be responsible for the payment of those fees nor
are those fees included in the fees payable to Advisor
hereunder.
d. Client acknowledges that the employees of Advisor are
not necessarily licensed attorneys or certified public
accountants and, therefore, may not be authorized to
provide legal or accounting advice. The Client
understands that any decision as to whether a financing
source located by Advisor will provide financing to
Client will be made by the financing source and not by
Advisor. Accordingly, Client acknowledges that,
although Advisor will use its best efforts to obtain
the desired financing for Client, there can be no
assurance that those efforts will be successful.
e. Advisor will determine the method, details, and means
of performing the above-described services.
f. Advisor may, at the Advisors' own expense, employ such
assistants as Advisor deems necessary to perform the
services required of Advisor by this Agreement. Advisor
assumes full and sole responsibility for the payment of
all compensation and expenses of these assistants and
for all state and federal withholding taxes which may
be applicable.
g. Advisor shall perform the services required by this
Agreement at any place or location, and at such times,
as Advisor shall determine. Advisor will supply all
equipment and supplies required to perform the services
under this Agreement. Advisor is not obliged to
purchase or rent any equipment, supplies or services
from the Client.
2. Independent Contractor Status of Advisor
----------------------------------------
a. It is the express intention of the parties that in
providing its services to the Client hereunder, Advisor
is acting as an independent contractor and not as
employee, agent, joint venture or partner of the
Client. Nothing in this Agreement shall be interpreted
or construed as creating or establishing the
relationship of employer and employee between Client
and Advisor or any employee or agent of Advisor. This
Agreement is not exclusive. Advisor shall retain the
right to perform services for other clients during the
term of this Agreement. Advisor has no authority to
bind or speak for the Client except as may be
specifically requested and authorized in writing by the
Client.
b. Because Advisor is not an employee of Client, Advisor
shall be responsible for and shall fully discharge all
federal, state and local taxes that may be due with
respect to any payments made by Client to Advisor
hereunder. Client will not withhold any taxes or
unemployment or worker's compensation insurance
contributions from Advisor's payments. All American
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 4
<PAGE> EX 3.6 - Pg. 4
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
Clients shall be responsible for preparing and filing
Form 1099 and other documents required by US Federal or
State tax agencies as a consequence of payments made to
Advisor.
3. Compensation to be paid to Advisor
----------------------------------
In consideration of the services performed by Advisor as
shown in the covering letter, the Client agrees to pay
Advisor the fees (EXHIBIT C) and payments specified in
and expenses listed in EXHIBIT B and in Section 4(b)
below. Advisor shall submit invoices for all services
rendered to the Client on a twice-monthly basis. The
Client agrees to pay Advisor's invoices within 7 days of
receipt. Any invoices not paid in full when due will bear
interest at the rate of 15% per annum.
4. Payment of Advisor's Expenses
-----------------------------
a. Advisor shall be responsible for all costs and expenses
incidental to the performance of services for the
Client, including but not limited to, all costs of
equipment provided by Advisor, all fees, fines,
licenses, bonds or taxes required of or imposed against
Advisor and all other of Advisor's costs of doing
business.
b. The Client shall not be responsible any unauthorized
expenses incurred by Advisor in performing services for
Client with exception of such expenses as are agreed to
by the Client in advance.
c. Advisor does not accept responsibility for the payment
of any refundable or non refundable deposits or
prepayment that may be requested by any financing
sources or its agents.
5. Indemnification By Advisor
--------------------------
Advisor shall indemnify and hold the Client harmless
against any and all liability imposed or claimed,
including attorney's fees and other legal expenses,
arising directly or indirectly from any act or failure of
Advisor's assistants, employees or person or damage to
any property.
6. Cooperation to be Provided by Client
------------------------------------
The Client agrees to comply with all reasonable requests
of Advisor (and provide access to all documents
reasonably) necessary for the performance of Advisor's
duties under this Agreement. Accordingly, the Client
agrees, at its expense, to furnish any authentication,
information, documents, certificates, evidence, title
insurance, plans and specification, financial statement,
projections, appraisal, mortgage insurance, or any other
information that Advisor, or any financing source located
by Advisor may require. The Client understands that
without full cooperation of the Client, its agents and or
assigns, Advisor cannot perform in full accordance with
this Agreement.
7. Advisor's Reliance Upon Information Provided by Client
------------------------------------------------------
The Client affirms that all assertions, statements and
representations to be made or furnished to Advisor
hereunder will be true and will be made with intent and
purpose of influencing Advisor to act in accordance with
the terms of this Agreement and to induce financing
sources located by Advisor to provide financing to the
Client. It is further understood that Advisor is under no
obligation to verify any matter submitted to Advisor by
the Client, and the truth or veracity of any such matter
submitted by Advisor to prospective financing sources
shall be the sole responsibility of the Client. The
Client also agrees to hold Advisor, its officers,
directors, employees and agents harmless from and against
any, every and all claims which may hereinafter be made
or asserted against Advisor, its officers, directors,
employees or agents arising out of or resulting from any
misrepresentations or omissions of facts by the Client,
its agents or assigns to Advisor or whomsoever. The
Client also agrees to promptly reimburse Advisor for all
expenses incurred by Advisor as the result or any false,
incomplete or misleading information provided by the
Client or its agent to Advisor hereunder.
8. Conflicts and Confidentiality
-----------------------------
a. It is understood that this Agreement is not exclusive
and that Advisor provides similar services to other
clients. It is agreed, however, that Advisor shall not
provide similar services to any other client that can
reasonably be viewed as conflicting in a direct and
material way with Advisor's obligations to the Client.
b. Advisor agrees that it shall treat any and all
information received from Client as confidential and
shall not release such information nor communicate it
to any third party without the prior permission of
Client. Client also agrees to treat the relationship
with Advisor and this Agreement as confidential and not
to disclose it to any third party without the prior
permission of Advisor unless such disclosure is
required to be made pursuant to the regulations of a
government agency or a Court of Law.
9. Confidential Information of Advisor
-----------------------------------
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 5
<PAGE> EX 3.6 - Pg. 5
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
a. The Client hereby agrees and acknowledges that
Advisor's financing sources and contracts are the
foundation of Advisor's financial services. The Client
fully agrees not to discuss or disclose the identity of
any of Advisor's sources of financing to any person and
agrees not to communicate with those sources for any
reason whatsoever, without Advisor's prior agreement.
Furthermore, the Client agrees that its employees,
agents or Advisors will not deal with any financing
sources or agents introduced to Client by Advisor
without using Advisor as their intermediary.
b. In addition, the Client agrees to contact or transact
business with financing sources referred to Client by
Advisor only with the prior knowledge and written
consent of Advisor. This provision shall apply for each
and every such contract or transaction within a period
of three (3) years from the date hereof, unless
released by Advisor. The Client shall make this
Agreement a part of any financing request submitted as
a result of Advisor's advice and referral. Any such
resultant funding shall not be consummated unless and
until the fee to be paid to Advisor is allocated for
payment to Advisor from the net proceeds to the Client.
Said finder's fee shall be paid to Advisor each item a
full or partial disbursement is made for the Client's
benefit, and upon any additions to or extensions of any
transaction which results from Advisor's advice and
referral.
10. Equitable Relief
----------------
Because Advisor does not have an adequate remedy at law
to protect its interest in its lists of sources of funds
or clients, trade secrets, privileged, proprietary or
confidential information and similar commercial assets,
Advisor shall be entitled to injunctive relief, in
addition to such other remedies and relief that would, in
the event of a breach of this Agreement, be available to
Advisor. In the event of such a breach, in addition to
any other remedies, Advisor shall be entitled to receive
from Client payment of, or reimbursement for, its
reasonable attorneys' fees and disbursements incurred in
enforcing and such provision.
11. Term
----
This Agreement will continue in effect until completion
to the satisfaction of both parties, unless earlier
terminated in accordance with the provisions of Section
12 of this Agreement. The termination of this Agreement
shall not effect:
a. Advisor's right pursuant to Sections 3 and 4 to be paid
for its services and expenses incurred prior to the
date of termination;
b. Advisor's right to receive a finder's fee pursuant to
Section 9(b) for any financing obtained by the Client
within three years from the date hereof from funding
sources that were located by Advisor and referred to
the Client; or
c. The Client's confidentiality obligations pursuant to
Sections 8(b) and 9(a).
12. Termination
-----------
a. This Agreement shall terminate automatically on the
occurrence of any of the following events;
i. bankruptcy or insolvency of either party;
ii. sale of the business of either party.
b. Should either party breach any of the material
provisions of this Agreement, which breach shall not be
cured within ten days after notice of that breach given
by the other party, the non-breaching party may
terminate this Agreement by giving written notification
of termination to the breaching party.
c. Should Client fail to pay Advisor all or any part of
the compensation set forth in Section 3 of this
Agreement on the date due, Advisor, at the Advisor's
option, may terminate this Agreement if the failure is
not remedied by Client within 10 days from the payment
due date.
13. Notices
-------
Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in
writing or by mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices
shall be addressed to the parties at the addresses set
forth below their signature hereto, but each party may
change the address by written notice in accordance with
this Section. Notice delivered personally will be deemed
communicated as of actual receipt; mailed notices will be
deemed communicated as of three days after mailing.
14. Entire Agreement
----------------
This Agreement supersedes any and all agreements, either
oral or written, between the parties hereto with respect
to the rendering of services by Advisor to the Client and
contains all the covenants and agreements between the
parties with respect to the rendering of such services in
any manner whatsoever. Each party to the Agreement
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 6
<PAGE> EX 3.6 - Pg. 6
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
acknowledges that no representation, inducements,
promises, or agreements, orally or otherwise, have been
made by any party, or anyone acting on behalf of any
party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this
Agreement shall be valid or binding. Any modification of
this Agreement will be effective only if it is in writing
and signed by both parties.
15. Severability
------------
If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions will nevertheless
continue in full force without being impaired or
invalidated in any way.
16. Attorneys' Fees
---------------
If any action at law or in equity, including an action
for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the
prevailing party will be entitled to reasonable
attorneys' fees, which may be set by the court in the
same action or in a separate action brought for that
purpose, in addition to any other relief to which that
party may be entitled.
17. Governing Law
-------------
THIS AGREEMENT will be governed by and construed in
accordance with the laws of the State of California
without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first set forth above.
WITNESS: ____________________________________
vanAar, Inc.
_____________________________ By:_________________________
Its Address:
_____________________________
_____________________________
Company:_____________________
_____________________________ By:_________________________
Its Address:
_____________________________
_____________________________
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 7
<PAGE> EX 3.6 - Pg. 7
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
EXHIBIT B
Retainer Fee:
At commencement, the client shall pay vanAar, Inc. a retainer for
the engagement of $_NONE_
(depending on size and involvement, this pre-paid retainer ranges
from $25,000 to $150,000)
Engagement Fees:
At two-weekly intervals vanAar, Inc. shall bill the client for
services rendered at vanAar's standard hourly rates (see EXHIBIT
C) for the professionals involved, and shall also bill the client
for reimbursement of out-of-pocket expenses plus a 10 percent
administrative fee for which a full accounting shall be rendered.
The client agrees to reimburse vanAar, Inc. for business class
travel expenses.
Contingency Fees:
In addition to engagement fees, for engagements involving raising
capital, acquiring companies or assets, merging with other
businesses, selling businesses or similar transactions the client
shall reward vanAar, Inc. according to the Lehman formula, which
is:
- - 5 percent of the first $million,
- - 4 percent of the second $million,
- - 3 percent of the third $million,
- - 2 percent of the fourth $million, and
- - 1 percent of the fifth $million and above in transaction
value.
- - Closing of the transaction shall be contingent upon vanAar
receiving all contigency fees.
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 8
<PAGE> EX 3.6 - Pg. 8
PRIVATE AND CONFIDENTIAL
[CORPORATE LOGO]
vanAar, Inc.
EXHIBIT C (Revised 11/20/99)
----------------------------
VanAar, Inc. Hourly Rates for The Winner's Edge.Com
Personnel Level Hourly Rate - US$/hr
- --------------- -----------
Managing Principal $225
Senior Executive $200
Project Manager $150
Senior Consultant $125
Consultant $100
Analyst $ 75
I will act as principal investigator on this assignment at a
daily flat rate of $1,200 per day for the period that it
absorbs virtually all of my workday, which looks like it may
last for a few months. To save money, I intend to work
toward delegating as much of the work as possible to Wayne,
Denny and the people we hire. However, as my involvement
becomes more supervisory in nature and begins to demand less
than 5 hours per day, I propose switching to hourly billing
at a discounted rate of $225 per hour.
I believe that John Ramljak and Roy Salisbury will spend
less time on the project than I, although there will be
periods of greater intensity of effort for each of them.
More specifically, John will be handling the contractual
arrangements for the track timing systems, and Roy will be
focusing on negotiating the best possible terms for the
interim financing.
Later on when we get seriously involved in the secondary
public offering, all three of us may have to be more
available for a period of several weeks.
It would be best if they also followed the method of billing
at a flat daily rate, in this case $1,000/day above the five
hour per day mark and below 5 hours to bill at a $200 hourly
rate.
1510 Cantera Avenue - Santa Barbara - CA -93110
Phone: (805) 682-6318 - Fax: (805) 898-0864 - E-mail: [email protected]
------------------
Page 9
<PAGE> EX 3.6 - Pg. 6
Exhibit 3.7
Licensing and Marketing Agreement
<PAGE>
LICENSING AND MARKETING AGREEMENT
THIS LICENSING AND MARKETING AGREEMENT (the "Agreement") is
entered into by and between The Winner's Edge Licensing Corp. (the
"Winner's Edge" or "Licensor"), a Delaware corporation having
principal offices at Las Vegas, Nevada, and UC'NWIN Systems
Corporation ("UC'NWIN" or "Licensee"), a Delaware corporation
having principal offices at Boca Raton, Florida to set forth the
rights and licenses granted to the Licensee, including the right
to distribute the Licensed Product (hereinafter defined) to
Customers (hereinafter defined).
1. Definitions. As used in this Agreement, the following
definitions shall apply:
(a) "Licensed Product" shall mean collectively the
Licensed Software designed by the Winner's Edge.
(b) "Licensed Software" shall mean the software
identified on Schedule A, attached hereto and made a part
hereof, in the form and content existing as of the date of
this Agreement and all updates, revisions and enhancements
thereto supplied by the Licensor during the term hereof.
(c) "Customers" shall mean the thoroughbred horse
racing patrons who purchase the racing forms generated by the
Licensed Software.
(d) "Contracts" shall mean the agreements between
Winner's Edge and racetracks or off-track betting locations
for the placement of interactive kiosks.
(e) "Court" shall mean the United States Bankruptcy
Court for the Southern District of Florida.
(f) "Bankruptcy Case" shall refer to the Chapter 11
bankruptcy filed by UC'NWIN, Case No. 99-32064-BKC-PGH
presently pending in Court.
(g) "United States" shall mean the United States and
all U.S. Territories.
(h) "Effective Date" shall be the date the Order
confirming the Plan of Reorganization of UC'NWIN becomes a
Final Order.
<PAGE> EX 3.7 - Pg. 1
2. Existing Operations of Parties.
(a) The Winner's Edge is a closely-held Delaware
corporation registered to do business in the states of Nevada
and Florida. The Winner's Edge is engaged in the business of
developing software to provide computerized handicapping to
thoroughbred horse racing patrons. Currently, Winner's Edge
markets directly to patrons via websites on the Internet and
by installation of interactive kiosks at racetracks and off-
track betting locations. The Winner's Edge has entered into
contracts with certain racetracks and off-track betting
locations for the placement of interactive kiosks which sell
racing forms predicting the results of certain thoroughbred
horse races at North American racetracks, a schedule of the
contracts being appended as Exhibit 2(a) (the "Contracts").
(b) UC'NWIN is a publicly traded Delaware corporation
registered to do business in the state of Florida. UC'NWIN
was engaged in the development, manufacture, sale and
marketing of its UC'NWIN System, an in-store interactive
informational solutions software program designed to be
marketed to domestic and foreign corporations, and delivered
through interactive kiosks and websites on the Internet.
UC'NWIN has had virtually no active business operations since
early 1996, and ceased operations on or about November 30,
1996.
On April 29, 1999, UC'NWIN filed for bankruptcy
relief in the Southern District of Florida pursuant to 11
U.S.C. Chapter 11, Case No. 99-32064-BKC-PGH, seeking to
reorganize the Company. UC'NWIN seeks to gain court approval
to enter into this Agreement to market the Winner's Edge
Licensed Product.
3. License.
(a) Licensor hereby grants to the Licensee, and the
Licensee hereby accepts an exclusive and nontransferable
license to market and demonstrate, during the term hereof,
the Licensed Product to Customers.
(b) The exclusive license granted hereunder shall
encompass the United States.
(c) Licensee shall market the Licensed Product to
Customers subject to the terms and conditions of the
Agreement.
(d) The license is nontransferable and shall not vest
in Licensee any ownership interest whatsoever in the Licensed
<PAGE> EX 3.7 - Pg. 2
Product. This Agreement only licenses UC'NWIN to market the
Licensed Product in the United States.
(e) The license is contingent upon and subject to
approval by the Court of the Plan of Reorganization (the
"Plan") of UC'NWIN Systems Corporation, Case No. 99-32064-
BKC-PGH.
4. License Fees and Taxes.
(a) As soon as reasonable after approval by the Court
of the Plan, Licensor will convey to Licensee all of
Licensor's right, title, and interest in and to Licensor's
existing contracts to market the Licensed Product and all the
kiosks owned by Licensor.
(b) As soon as reasonable after approval by the Court of
the Plan, in consideration for the exclusive right to market
the Licensed Product in the United States, the assignment to
Licensee of Licensor's existing contracts, and the conveyance
of all kiosks to Licensee, Licensee will transfer to Winner's
Edge ten million (10,000,000) shares of UC'NWIN Common Stock,
par value, $.001, which Common Stock, when transferred, shall
be fully paid and non-assessable and without liens or
encumbrances subject to the Securities Act of 1993, as
amended; and
(c) Licensee will pay to Licensor a twenty percent
(20%) licensing fee (the "fee") based upon all gross revenues
generated by Licensee's marketing of the Licensed Product,
said fee to be paid by Licensee on or before the 20th day of
the month following the month in which the gross revenues are
generated; and
(d) Licensee shall be solely responsible for the
payment of all costs and expenses associated with the
marketing of the Licensed Product including, but not limited
to, the design, manufacture, repair, and maintenance of all
kiosks.
(e) Licensee shall pay all tangible and intangible
taxes, if any, and all taxes based on or in any way measured
by this Agreement, relating to the Licensed Product or any
portion thereof, or any services related thereto, excluding
taxes based on the net income of the Licensor. If Licensee
elects to challenge the applicability of any such taxes, it
shall pay the same to the Licensor and the Licensee may
thereafter challenge such taxes and seek a refund thereof.
<PAGE> EX 3.7 - Pg. 3
5. Term of Agreement and License.
(a) Unless otherwise terminated or cancelled as
provided herein, the term of the license granted to the
Licensee hereunder shall commence on the effective date and
shall continue for a period of two (2) years. Licensor may
thereafter extend this Agreement for additional one-year
periods until terminated or cancelled by either party upon
ninety (90) days prior written notice.
6. Duties of Licensee.
(a) During the term hereof, Licensee shall use its best
efforts to market, demonstrate, and distribute the Licensed
Product to Customers.
(b) During the term of this Agreement and for a period
of two (2) years thereafter, Licensee shall maintain accurate
records of all Customers of the Licensed Product and make
such records available to Licensor for inspection and copying
during normal business hours.
(c) Licensee shall promptly inform Licensor of any
unauthorized use by Customers or others of the Licensed
Software or Licensed Product or any portion thereof and
assist Licensor in the enforcement of any rights Licensor may
have against such Customers or others.
7. Licensee's Obligation to Market, Support, and Train.
(a) Licensee shall employ and maintain a staff of
capable sales or technical personnel to promote the Licensed
Product and to provide accurate information to customers
concerning the features and capabilities thereof.
(b) Licensee agrees to coordinate with Licensor,
Licensee's activities to market Licensed Product to
Customers, by among other things:
(i) Submitting on an annual basis a marketing plan
to Licensor, in a mutually agreed upon format.
(ii) Providing Licensor with quarterly written
status reports in a mutually agreed upon format.
(iii) Providing Licensor with the name of each
website and location of each Licensed Product licensed
by upon reasonable notice to Licensee by Licensor, in a
<PAGE> EX 3.7 - Pg. 4
mutually agreed upon format. Reasonable notice shall be
defined as three (3) business days.
(iv) Determining the minimum price at which the
racing forms will be sold at the interactive kiosks and
websites.
(d) Licensee agrees that the marketing, support, and
training to be provided by Licensee hereunder is a material
consideration of Licensor in entering into this Agreement.
If during the term of this Agreement, Licensee fails to
perform its obligation hereunder, and fails to cure said
defaults within 60 days of receipt of written notice from
Licensor thereof, Licensor may terminate this Agreement.
8. Protection of Licensed Product. The Licensed Software
is Licensor's exclusive property and constitutes a valuable trade
secret of Licensor.
(a) Proprietary Information. Licensee recognizes that
due to the nature of this Agreement, Licensee will have
access to information of a proprietary nature owned by
Licensor including, but not limited to, any and all computer
programs (whether or not completed or in use), any and all
operating manuals or similar materials that constitute the
licensed software, policies and procedures, methods of doing
business developed by Licensor, administrative, advertising
or marketing techniques, financial affairs, and other
information utilized by Licensor. Consequently, Licensee
acknowledges and agrees that Licensor has a proprietary
interest in all such information and that all such
information constitutes confidential and proprietary
information and the trade secret property of Licensor.
Licensee hereby expressly and knowingly waives any and all
rights, title and interest in and to such trade secrets and
confidential information and agrees to return all copies of
such trade secrets and confidential information related
thereto to Licensor at Licensee's expense, upon the
expiration or earlier termination of this Agreement.
(b) Non-Disclosure. Licensee further acknowledges and
agrees that Licensor is entitled to prevent Licensor's
competitors from obtaining and utilizing its trade secrets
and confidential information. Therefore, Licensee agrees to
hold Licensor's trade secrets and confidential information in
the strictest confidence and to not disclose them or allow
them to be disclosed, directly or indirectly, to any person
or entity other than those persons or entities who are
employed by or affiliated with Licensor or Licensee, without
the prior written consent of Licensor. During the term of
this Agreement, Licensee shall not disclose to anyone, other
than persons or entities who are employed by or affiliated
<PAGE> EX 3.7 - Pg. 5
with Licensee or Licensor, any confidential or proprietary
information or trade secret information obtained by Licensee
from Licensor, except as otherwise required by law. After
the expiration or earlier termination of this Agreement,
Licensee shall not disclose to anyone any confidential or
proprietary information or trade secret information obtained
from Licensor, except as otherwise required by law or upon
the prior written consent of Licensor. Licensee shall cause
a substantially similar non-disclosure covenant to be
included in any agreements to which it may be a party.
(c) Equitable Relief. Licensee acknowledges and agrees
that a breach of this Section will result in irreparable harm
to Licensor and that Licensor cannot be reasonably or
adequately compensated in damages and, therefore, Licensor
shall be entitled to equitable remedies including, but not
limited to, injunctive relief, to prevent a breach and to
secure enforcement thereof in addition to any other relief or
award to which Licensor may be entitled.
9. Reproduction and Modification of Licensed Product.
Licensee shall not reproduce or modify the Licensed Product or any
portion thereof.
10. Negation of Warranty. THE LICENSED PRODUCT IS PROVIDED
ON AN "AS IS" BASIS, AND THERE ARE NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE. THE LICENSEE
SHALL BE SOLELY RESPONSIBLE FOR THE SELECTION, INSTALLATION, USE,
EFFICIENCY, AND SUITABILITY OF THE KIOSKS AND LICENSED PRODUCT AND
LICENSOR SHALL HAVE NO LIABILITY WHATSOEVER.
11. Negation of Proprietary Rights Indemnity. LICENSOR
SHALL HAVE NO LIABILITY TO LICENSEE FOR THE INFRINGEMENT OF
PROPRIETARY RIGHTS BY THE LICENSED PRODUCT OR ANY PORTION THEREOF.
12. Termination/Cancellation.
(a) Licensor may terminate/cancel this Agreement if:
(i) Licensee fails to pay Licensor any amount due
Licensor hereunder; or
(ii) Licensee is in default of any provision
hereof and such default is not cured within sixty (60)
days after Licensor gives Licensee written notice
thereof.
(b) In the event of any termination or cancellation of
this Agreement, Licensee will cease all further
<PAGE> EX 3.7 - Pg. 6
demonstration, marketing, and distribution of the Licensed
Product without the prior written consent of Licensor.
(c) The foregoing rights and remedies of Licensor shall
be cumulative and in addition to all other rights and
remedies available to Licensor in law and in equity.
13. Limitation of Liability/Indemnification.
(a) In no event shall Licensor be liable to Licensee or
for any damages resulting from or related to any failure of
the software product, including, but not limited to, loss of
data, or delay of Licensor in the delivery of the Licensed
Product or in the performance of this Agreement.
(b) In no event shall Licensor be liable to Licensee for
any indirect, special, or consequential damages or lost
profits, arising out of or related to this Agreement or the
performance or breach thereof, even if Licensor has been
advised of the possibility thereof. Licensor's liability to
Licensee, if any, shall in no event exceed the total of the
license fees paid to Licensor hereunder by Licensee.
(c) Licensee shall indemnify and hold harmless Licensor
against any and all liability for personal injury and
property damage arising out of or related to the performance
of this Agreement by Licensee or its employees, agents or
representatives.
(d) Licensee shall indemnify and hold Licensor harmless
against any and all liability relating to Licensees marketing
of the Licensed Product including, but not limited to, claims
of customers.
14. Representations and Warranties of Licensee
Licensee represents and warrants the following to Licensor:
(a) Licensee is an organization, duly organized and
validly existing under the laws of the State of Delaware and
is authorized to do business in the State of Florida, and is
duly empowered to enter into this transaction.
(b) Licensee has the financial wherewithal to close the
transaction and can operate the business following the
conclusion of the transaction described hereunder.
(c) The execution, delivery and performance of this
Agreement by Licensee is not in violation of any other
<PAGE> EX 3.7 - Pg. 7
agreement or instrument to which the Licensee is a party or
by which the Licensee is bound.
(d) No litigation or claims of any nature whatsoever
are pending or threatened against or involving the Licensee
which would in any way interfere with Licensee's marketing of
the Licensed Product, except as set forth in Exhibit 14(d).
(e) The foregoing representations and warranties shall
be true on the closing date.
15. Representations and Warranties of Licensor. Licensor
represents and warrants the following to Licensee:
(a) Licensor is an organization, duly organized and
validly existing under the laws of the State of Delaware and
is authorized to do business in the states of Nevada and
Florida, and is duly empowered to enter into this
transaction.
(b) The execution, delivery and performance of this
Agreement by Licensor is not in violation of any other
agreement or instrument to which the Licensor is a party or
by which the Licensor is bound.
(c) Licensor is the owner of all copyrights, licensed
software, and kiosks free and clear of all liens and
encumbrances to be transferred to Licensee pursuant to this
Agreement.
(d) No litigation or claims of any nature whatsoever
are pending or threatened against or involving the Licensor
which would in any way interfere with Licensee's marketing of
the Licensed Product. Licensor does not know of any basis
for any such action or claim.
(e) The representations and warranties of Licensor
shall be true as of the date of closing.
16. Conduct of Business Prior to Closing. Between the date
of this Agreement and the Effective Date, Licensor shall operate
and maintain its operations in the usual course, and will use its
best efforts to preserve intact the business relationships with
suppliers, customers, and employees. Further, Licensor shall take
no action with respect to the operations out of the ordinary.
17. Assignment. This Agreement and all rights and
obligations of Licensee hereunder may not be assigned,
subcontracted, or transferred by Licensee without the prior
written consent of Licensor.
<PAGE> EX 3.7 - Pg. 8
18. Notices. All notices required to be given pursuant
hereto shall be deemed given when actually delivered, if delivered
in person, or three days after being deposited in the United
States mails, postage prepaid and addressed to the receiving party
as follows:
If to Licensee: UC'NWIN Systems Corporation
1900 Corporate Boulevard
Suite 400E
Boca Raton, FL 33431
If to Licensee: The Winner's Edge Licensing Corp.
6900 Westcliff Drive, Suite 608
Las Vegas, Nevada 89128
With a copy to: David A. Carter, P.A.
2300 Glades Road
Suite 210, West Tower
Boca Raton, Florida 33431
19. Entire Agreement. This Agreement constitutes the entire
Agreement of the parties and may not be amended or modified
except in writing signed by all parties. All prior understandings
and Agreements among the parties are merged in this Agreement,
which alone fully and completely expresses their understanding.
Any prior agreements among any of the parties to this Agreement
concerning the subject hereof are hereby declared null and void.
20. Severability. If any provision, paragraph, or
subparagraph of this Agreement is adjudged by any court to be void
or unenforceable in whole or in part, this adjudication shall not
affect the validity of the remainder of the Agreement, including
any other provision, paragraph, or subparagraph. Each provision,
paragraph, and subparagraph of this Agreement is separable from
every other provision, paragraph, and subparagraph, and
constitutes a separate and distinct covenant.
22. Applicability. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties and their
respective successors, assigns, executors, administrators, and
personal representatives.
23. Captions. The captions of this Agreement are for
convenience and reference only and in no way define, describe,
extend or limit the scope or intent of this Agreement or the
intent of any provision in it.
24. Invalidity of Provisions. The unenforceability, for any
reason, of any term, condition, covenant or provision of this
Agreement shall neither limit nor impair the operation,
enforceability or validity of any other terms, conditions,
provisions or covenants of the Agreement.
<PAGE> EX 3.7 - Pg. 9
25. Surviving Provisions. In the event of any expiration,
termination or cancellation of this Agreement, the provisions
hereof which are intended to continue and survive shall so
continue and survive.
26. Construction. This Agreement shall not be construed
against either party regardless of who is responsible for its
drafting.
27. Mediation. In the event that any dispute arises under
this Agreement which cannot be resolved between the parties, the
parties hereto stipulate and agree to submit such dispute to non-
binding pre-suit mediation. The parties shall select a mediator
from the list of certified Circuit Court mediators maintained by
the office of the Palm Beach County Circuit Court and no suit
shall be filed until ten (10) days after the mediator has declared
an impasse.
28. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
The parties agree that any action brought by any party against
another party in connection with any rights or obligations arising
out of this Agreement shall be instituted properly in a federal or
state court of competent jurisdiction with venue only in the
Fifteenth Judicial Circuit Court in and for Palm Beach County,
Florida or the United States District Court for the Southern
District of Florida, West Palm Beach Division. A party to this
Agreement named as a Defendant in any action brought in connection
with this Agreement in any court outside of the above named
designated county or district shall have the right to have the
venue of said action changed to the above designated county or
district or, if necessary, have the case dismissed, requiring the
other party to refile such action in an appropriate court in the
above designated county or federal district. If a party is not a
resident of or does not maintain a presence in the above
designated state in which the designated county of venue is
situated, then such party hereby consents to personal jurisdiction
of a court of competent subject matter jurisdiction located in the
above-designated state and county of federal district. The
parties acknowledge that this Agreement is executed in, and that a
material portion of each party's obligations under this Agreement
are to be performed in, the above designated State and county and
federal district.
29. Good Faith Efforts and Further Steps. The parties to
this Agreement covenant to use their best efforts in good faith to
comply with the provisions of this Agreement, both before and
after execution of this Agreement or any documents required by
this Agreement. In this regard the parties agree to take such
further steps and execute such documents as are reasonably
required by another party. The parties also acknowledge that each
has had opportunity to consult with counsel of their choice and
have signed this document of its own volition.
<PAGE> EX 3.7 - Pg. 10
30. Attorneys' Fees. In connection with any litigation
arising out of this Agreement, the prevailing Party shall be
entitled to recover all costs incurred including attorney's fees
for services rendered in connection with any enforcement or breach
of agreement, including bankruptcy, appellate proceedings and post
judgment proceedings. In connection with any legal fees for the
transaction herein contemplated, Licensee and Licensor will each
pay their own legal fees and costs.
31. Modification. No alteration of or modification to any
of the provisions of this Agreement shall be valid unless made in
writing and signed by both parties.
32. Headings. The headings have been inserted for
convenience only and are not to be considered when construing the
provisions of this Agreement.
33. Successors. This Agreement shall be binding on and
inure to the benefit of the parties and their respective
successors, assigns and personal representatives.
34. Tax Consequences. The parties acknowledge that the
transaction contemplated herein may involve legal and tax
consequences, and that they have been advised to seek independent
professional legal and tax advice to carefully analyze the
consequences, risks, and merits of this transaction, if any.
35. Counterparts. This Agreement may be signed in
counterparts, but all such counterparts shall be considered as a
single document.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement by their duly authorized representatives and have caused
this Agreement to become effective as of the date first above
written.
WINNER'S EDGE LICENSING CORP. UC'NWIN SYSTEMS CORPORATION
By: _________________________ By:__________________________
Title: ______________________ Title: ______________________
Date: _______________________ Date:________________________
<PAGE> EX 3.7 - Pg. 11
LICENSING AND MARKETING AGREEMENT
EXHIBIT 2(a)
------------
<PAGE> EX 3.7 - Pg. 12
LICENSING AND MARKETING AGREEMENT
EXHIBIT 14(d)
-------------
1. Raymond Kalley, as trustee of the EB Trust and PB Trust vs.
Allen Manus, Elizabeth (Libby) Manus, UC'NWIN Systems
Corporation, a Delaware corporation f/k/a UC'NWIN Systems,
Ltd., a Canadian corporation, UC'NWIN Systems, Inc., a
Florida corporation, and Winners All International, Inc., a
Delaware corporation (United States District Court for the
Southern District of Florida, case no. 96-0780-CIV-GRAHAM).
NOTE: (a) Judgment entered, joint and several against all
defendants in the amount of $1,075,000 plus
interest at the statutory rate from and after March
13, 1997.
(b) Collection of the judgment is stayed until such
time as the Court approves the treatment of the
judgment under UC'NWIN's Plan.
<PAGE> EX 3.7 - Pg. 13
Exhibit 3.8
First Modification to Licensing and Marketing Agreement
<PAGE>
FIRST MODIFICATION
TO
LICENSING AND MARKETING AGREEMENT
DATED APRIL 30, 1999
--------------------
THIS FIRST MODIFICATION (the "Modification") is made and
executed this 8th day of February, 2000, to memorialize that
certain understanding (as specifically set forth below) reached on
and effective as of December 31, 1999, by and between The Winner's
Edge Licensing Corp. (the "Licensor" or "Licensing Corp.") and The
Winner's Edge.com, Inc. f/k/a UC'NWIN Systems Corporation (the
"Licensee" or the "Winner's Edge").
R E C I T A L S
WHEREAS, on April 30, 1999, Licensing Corp. and the Winner's
Edge entered into a two (2) year Licensing and Marketing Agreement
(the "Agreement", the terms and conditions of said Agreement being
incorporated herein by reference) wherein the Winner's Edge
acquired the exclusive license to market certain Licensed Product
of Licensing Corp. in the United States and all U.S. Territories;
and
WHEREAS, the Winner's Edge seeks to expand the application
and marketing of the Licensed Product, which expansion will
require the Company to raise monies from the public; and
WHEREAS, the Winner's Edge desires to modify the terms of the
Agreement prior to the raising of additional public monies; and
WHEREAS, the Licensing Corp. is amenable to the modifications
proposed by The Winner's Edge.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and the sum of Ten Dollars ($10.00) and
other good and valuable consideration made by each of the parties
to the other, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto mutually agree as follows:
<PAGE> EX 3.8 - Pg. 1
MODIFICATION TERMS
------------------
1. Each of the statements contained in the foregoing
recitals is true and correct and is incorporated herein by
reference.
2. As a condition precedent to induce the Licensing Corp.
to extend the term of the Agreement, expand the marketing scope of
the Agreement, and eliminate the royalty payment, the Winner's
Edge agrees to assume and fully pay the outstanding liabilities of
Licensing Corp. as of December 31, 1999, in the aggregate amount
of $148,751.74 (the "outstanding liabilities").
3. Conditioned upon the assumption and payment of the
outstanding liabilities referenced above by the Winner's Edge, the
Agreement is hereby modified as follows:
(a) The term of the license granted to Licensee shall
commence on the effective date and shall continue for a
period of ten (10) years. Licensor may, thereafter, extend
the Agreement for one (1) additional ten (10) year period.
(See" Agreement, paragraph 5[a]).
(b) The Licensee will pay to Licensor a zero percent
(0%) licensing fee. (See: Agreement, paragraph 4[c]).
(c) The Licensee shall have the exclusive license to
market the reports obtained from the Licensed Product
relative to the United States worldwide. (See: Agreement,
paragraph 3[d]).
4. Except as herein modified, all terms and conditions of
the Agreement are hereby ratified, affirmed, and approved in all
respects and shall remain in full force and effect.
5. Licensee hereby acknowledges, represents and confirms to
Licensor that (a) Licensee waives and releases any and all
defenses, claims, counterclaims, cross actions, equities, and
setoffs with respect to the Agreement prior to the date of this
Modification; (b) the Agreement is valid, binding, and free from
any defect of any nature whatsoever, and is enforceable against
the Licensee in accordance with the Agreement's respective terms;
(c) no waiver or modification of the Agreement shall be valid or
enforceable against the Licensor or Licensee unless in writing and
signed by a duly authorized representative of each party; and (d)
by entering into this Modification, Licensee acknowledges and
agrees that all prior discussions, representations, commitments
and undertakings with respect thereto shall be deemed to have
merged into the Agreement, and the Agreement and the Modification
<PAGE> EX 3.8 - Pg. 2
shall constitute the sole statement of agreement between the
parties hereto.
6. This Modification is effective as of December 31, 1999.
7. WAIVER OF TRIAL BY JURY: LICENSEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT LICENSEE MAY HAVE
TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THE AGREEMENT OR
MODIFICATION, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER ORAL OR WRITTEN), OR ACTION OF LICENSOR. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LICENSOR ENTERING INTO THIS
MODIFICATION.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification as of the day and year first above written.
LICENSOR:
THE WINNER'S EDGE LICENSING CORP.
By:________________________________
Its:_______________________________
LICENSEE:
THE WINNER'S EDGE.COM, INC.
f/k/a UC'NWIN SYSTEMS CORPORATION
By:________________________________
Its:_______________________________
<PAGE> EX 3.8 - Pg. 3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto
incorporated in Part II, Item 7. of this Form 10-KSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,873
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,873
<PP&E> 107,255
<DEPRECIATION> (24,736)
<TOTAL-ASSETS> 85,392
<CURRENT-LIABILITIES> 260,514
<BONDS> 0
0
0
<COMMON> 269,559
<OTHER-SE> (175,122)
<TOTAL-LIABILITY-AND-EQUITY> 85,392
<SALES> 14,762
<TOTAL-REVENUES> 14,762
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 440,469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (425,707)
<INCOME-TAX> 0
<INCOME-CONTINUING> (425,707)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (425,707)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
