<PAGE>
June 3, 1996
Via Federal Express
Charles C. Leber, Branch Chief
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Attn: Albert Yarashus, Esq.
Lou Canant, Staff Accountant
Re: Preliminary Proxy Materials
File No. 0-22574
Dear Mr. Leber:
Enclosed for filing on behalf of Leggoons, Inc. (the
"Company") please find two hard copies of the Preliminary Proxy
Statement of Management for the Annual Meeting. The foregoing will
be filed on EDGAR on or about June 3, 1996. We have marked the
copies showing changes made since the previous proxy materials were
filed with the Commission on April 12, 1996 as well as two copies
of the Company's responses to the staff's comment letter dated
March 1, 1996.
As you will recall we submitted supplementally with the filing
on April 12, 1996 a draft of Amended Form 10-KSB for the fiscal
year ended August 31, 1995 and a draft of Amended Form 10-QSB for
the period ended November 30, 1995. In order to insure that the
changes made to these reports are responsive to the Staff's
comments, we ask that you review them in conjunction with your
review of the Proxy Statement. The Company will file the amended
reports once the Staff has no further comments (and prior to or
contemporaneously with the filing of the Definitive Proxy
Statement). For ease of reference we enclose copies of those
reports and responses to the staff's last comment letter (March 1,
1996).
We have also included two copies each of the Addendum to Stock
Acquisition Agreement and the form of Opinion of Counsel regarding
the sale of assets as supplemental information. These likewise
will be filed via EDGAR.
<PAGE>
Charels C Leber, Branch Chief
Securities and Exchange Commission
June 3, 1996
Page 2
The changes made to the Proxy since the last filing entail
revisions required by the signing of the Addendum to the Stock
Acquisition Agreement. These changes include a reverse stock split
of 1 to 10 rather than 1 to 5 as well as the sale of all the assets
of the Company prior to the consummation of the Infinitron
Transaction.
The foregoing documents and other parts of the proxy materials
and supplemental documents are tabbed as follows:
1. Notice of Annual Meeting and Proxy Statement
2. Stock Acquisition Agreement
3. Addendum to Stock Acquisition Agreement
4. Form 10-K/A Leggoons - 8/31/95
5. Form 10-QSB Leggoons - 2/29/96
6. Audited Financial Statement - Infinitron Research
International - 5/31/95 and the unaudited financial
statements of Infinitron Investments International, Inc.
- August 31, 1995
7. Proforma Financial Statements
8. Form of Proxy
9. Response to Staff comment letter of March 1, 1996
10. Draft Opinion - Larry R. Demerath
11. Draft Assignment for Benefit of Creditors.
If you have any questions regarding this filing, please
contact Sharon M. Link at (303) 893-2300.
Very truly yours,
KRYS BOYLE GOLZ
REICH FREEDMAN & SCOTT, P.C.
By:
Thomas Boyle
TB/jab
c(w/enclosures): BDO Seidman LLP
Lawrence Assaly
James S. Clinton
<PAGE>
LEGGOONS, INC.
400 South Lindell
Vandalia, Missouri 63382
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of
Leggoons, Inc. (the "Company") will be held on June __, 1996 at the
Vandalia Country Club, Highway 54, Vandalia, Missouri at __:00 p.m. and at
any adjournments thereof on the following matters:
1. To elect the following three nominees as directors
of the Company until the next Annual Meeting of Shareholders and until
their respective successors shall be elected and qualified: James S.
Clinton, Benjamin A. Moglin and Robert Crompton;
2. To approve an amendment to the Articles of Incorporation to
change the name of the corporation to Infinitron, Inc.;
3. To approve an amendment to the Article of Incorporation to
increase the authorized common stock to 50,000,000 shares;
4. To approve an amendment to the Company's Bylaws to decrease the
minimum number of directors of the Company to three;
5. To approve a reduction in the amount of outstanding shares of
common stock by a one-for-ten reverse split of common stock;
6. To approve the licensing of the Leggoons trademark to Robert
Tamsky;
7. To ratify the sale of all the present assets of the Company to a
company controlled by James S. Clinton;
8. To approve the assumption by Leggoons, Inc. of the Infinitron
International Investments, Inc. Incentive Stock Option Plan;
9. To approve the reincorporation of the Company from the state of
Missouri to the state of Colorado;
9. To ratify the appointment of BDO SIEDMAN as the Company's
independent auditors for the current fiscal year; and, to consider on any
other matter that properly may come before the meeting or any adjournment
thereof.
Shareholders of record at the close of business on May 8, 1996 are
entitled to vote at the Annual Meeting or any
<PAGE>
adjournments thereof.
Your attention is called to the accompanying Proxy Card
and Proxy Statement.
A copy of the Company's Annual Report for its fiscal year ended
August 31, 1995, is enclosed herewith. If any Shareholder fails to
receive a copy of the Annual Report, one may be obtained by writing to the
Secretary of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
____________________, Secretary
Vandalia, Missouri
June __, 1996
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE DATE,AND SIGN THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE ENCLOSED.
<PAGE>
PRELIMINARY PROXY STATEMENT
LEGGOONS, INC.
400 South Lindell
Vandalia, Missouri 63382
(314) 594-6418
PROXY STATEMENT OF MANAGEMENT
for
Annual Meeting of Shareholders to be held June __, 1996
This Proxy Statement is furnished to shareholders at the
direction and on behalf of the Board of Directors of Leggoons,
Inc., a Missouri corporation (the "Company"), for the purpose of
soliciting proxies for use at the Annual Meeting of Shareholders of
the Company to be held at the Vandalia Country Club, Highway 54,
Vandalia, Missouri on June __, 1996 at 4:00 p.m.
The shares represented by the proxy will be voted in the
manner specified in the proxy. To the extent that no specification
is made as to the proposal set forth in the notice of meeting
accompanying this Proxy Statement, the proxy will be voted in favor
of such proposal. However, any proxy given pursuant to this
solicitation may be revoked at any time before it is exercised by
giving written notice of such revocation to the Secretary of the
Company, by appearing at the meeting and voting in person, or by
submitting a later dated proxy. Shareholder proposals must be
submitted to the Company not later than October 30, 1996, in order
to be included in those matters considered at the next Annual
Meeting of the Company to be held in January 1997.
The cost of preparing, assembling and mailing this Proxy
Statement, the Notice of Annual Meeting of Shareholders and the
accompanying Proxy is being borne by the Company. Brokers,
dealers, banks, or voting trustees, and their nominees, are
requested to forward soliciting materials to the beneficial owners
of shares and will be reimbursed for their reasonable expenses.
This Proxy Statement and accompanying proxy are first being mailed
to shareholders on or about June __ 1996.
VOTING SECURITIES
The record date of shareholders entitled to notice of and to
vote at the Annual Meeting of Shareholders is the close of business
on May 8, 1996. On such date, the Company had issued and
outstanding 2,787,000 pre-reverse shares of $.01 par value Common
Stock. Each share is entitled to one vote per share on any matter
which may properly come before the meeting and there shall be no
cumulative voting right on any shares.
1
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The presence at the meeting, in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding on
the record date will constitute a quorum at the meeting. Votes
withheld and abstentions will be counted in determining the
presence of a quorum but will not be voted. Broker non-votes will
not be counted in determining the presence of a quorum and will not
be voted. Pursuant to applicable state law, there are no
dissenter's or appraisal rights relating to the matters to be voted
on other than the sale of all the assets of the Company prior to
the transaction contemplated with Infinitron Investments
International, Inc. to a company controlled by the current
president of the Company, in consideration for the assumption of
all the liabilities of the Company prior to the transaction
contemplated with Infinitron Investments International, Inc.
Any shareholder who shall not have voted in favor of the sale
of all the assets of the Company and who at or prior to the meeting
shall file with the Company written objection thereto may, within
twenty days after the vote was taken, make written demand on the
Company for the payment to him of the fair value of his shares as
of the day prior to the date on which the vote was taken
authorizing the sale. See, Proposal 7, "Dissenting Shareholder
Rights"
All matters to be voted on require an affirmative vote of a
majority of the votes present at the meeting except for the sale of
all the assets of the Company which requires a two-thirds vote. As
management holds a majority of the outstanding shares as of the
record date and intends to vote in favor of all proposals, it is
anticipated that all proposals will pass except that management's
vote alone is insufficient to pass the proposal relating to the
sale of all the Company's present assets. However, Jasper Brouwer
has indicated to management that he will vote in favor of the
proposal and therefore it is anticipated that the proposal will
pass.
INFINITRON TRANSACTION
On September 5, 1995 the Company and Infinitron Investments
International, Inc. of Vancouver, B.C., Canada ("Infinitron"),
entered into an agreement (the "Stock Acquisition Agreement")
whereby the Company, on closing, is to acquire all of the
outstanding shares of common stock of Infinitron Investments
International, Inc. for 4,797,500 post-reverse split shares of
common stock of the Company, which 4,797,500 shares would represent
approximately 95% of the outstanding shares of common stock of the
Company on closing in the proposed transaction ("Infinitron
Transaction").
Consummation of the Infinitron Transaction is subject to
certain terms and conditions which are set forth in the Stock
Acquisition Agreement. There can be no assurance that the
Infinitron Transaction will be consummated. It is possible that if
any of the proposals covered by this proxy statement do not pass,
the management of
2
<PAGE>
Infinitron may decide not to proceed with the Infinitron Transaction or to do
so only after modification of the Infinitron Transaction terms described
herein.
Background
- ----------
The Company began looking at acquisition of other companies in
1995. At that time management believed that the only way the
Company could move forward as a successful public company was with
an infusion of capital from another company. Pursuant to this, in
April 1995, the Company entered into a Letter of Intent with Tutor
Time Child Care Centers, Inc. which provided for the issuance of
Company stock in exchange for shares of Tutor Time. However, as
the Company was unable to agree upon final terms with Tutor Time
and the required financing was not obtainable, the transaction was
never consummated.
After the negotiations with Tutor Time broke down, management
continued to review other opportunities but no other acquisition
discussions occurred or contacts were made prior to those with
Infinitron, which commenced in August 1995. The Company had no
relationship with Infinitron prior to such time. The parties were
introduced by Gene Hochevar of Mexco, Inc. and James Thiede. Gene
Hochevar was engaged by the Company and Mr. Thiede was familiar
with Infinitron. These finders provided introduction, references
and offered initial advice regarding the form of the transaction.
The finders will receive as compensation up to 300,000 shares of
the common stock of the Company.
During the first few weeks of negotiations, Messrs. Clinton,
and Moglin spent many hours on the telephone attempting to reach an
agreement. They were assisted in their discussions by Mr.
Hochevar. Once the form of transaction was agreed upon, Mr.
Hochevar was no longer involved and all subsequent discussions were
handled by James Clinton on behalf of the Company and Benjamin
Moglin on behalf of Infinitron. The due diligence review of the
operations of Infinitron and Infinitron Research consisted of a
review by the Company's management of all material contracts and
agreements of Infinitron and Infinitron Research, a review of all
corporate documents (minutes, incorporation materials) and tour of
Infinitron's and Infinitron Research's facilities. Because of the
Company's weak financial position, management concluded that it was
not in the Company's best interest to hire a consultant to advise
them on the technical nature of Infinitron's business and that the
terms of the Stock Acquisition Agreement would protect the Company
against any false claims regarding the business of Infinitron which
were not readily apparent to the Company.
The consideration to be paid was arrived at after much
negotiation and the exhaustive review of the business operations of
Infinitron and Infinitron Research by management of the Company.
It should be noted that the shares to be issued to Infinitron are
stated
3
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in a post reserve split amount. The amount to be issued pre-reverse split is
47,975,000.
In voting to proceed with the transaction, the Company's board
of directors gave substantial weight to the growth potential for
Infinitron as well as the current financial condition of the
Company and the need for increased revenues for the Company in
order to operate successfully as a public company.
Terms of the Transaction
- ------------------------
Upon closing of the Infinitron Transaction, the Company's name
is to be changed to Infinitron, Inc. and, pursuant to the Stock
Acquisition Agreement, James S. Clinton will resign as President
and Chief Executive Officer of the Company. Benjamin A. Moglin
will be appointed President and Treasurer, and Robert G. Schroeder
will be appointed Secretary. In addition, the Stock Acquisition
Agreement provides for the resignation of all present Leggoons,
Inc. directors except James S. Clinton and the election of Benjamin
A. Moglin and Robert G. Crompton as additional new directors of
Infinitron, Inc.
No third parties were hired by Management to independently
review the fairness of the transaction nor were any reports
prepared. It was the opinion of management of the Company that any
value to be derived from such evaluation or reports was
substantially less than the cost to the Company of hiring such
independent third party, especially in view of the Company's
current financial status.
Addendum to Stock Acquisition Agreement
- ---------------------------------------
As a result of the delay in having this Proxy Statement
cleared due to numerous accounting comments raised by the
Securities and Exchange Commission as well as an adverse change in
the financial condition of the Company, on April 16, 1996
Infinitron informed the Company that it was terminating the
Agreement. Over the ensuing six weeks, the two companies
discussed their concerns in going forward with the Infinitron
Transaction.
On May 22, 1996, Infinitron and the Company entered into an
Addendum to the Stock Acquisition Agreement (the "Addendum") which
provides that as long as the Proxy is cleared for distribution to
shareholders by July 22, 1996 the Infinitron Transaction will be
consummated. In addition, the Addendum states that in order for
the Infinitron Transaction to be closed, the sale of all the assets
to James Clinton, or a company controlled by Mr. Clinton, must
occur on or before June 21, 1996. An opinion of counsel to the
Company must be provided to Infinitron which states that the
current creditors of the Company have no legal right to bring
against Infinitron for the present liabilities of the Company.
See, "Sale of Assets to Leggoons President" The Addendum also
requires a reverse stock split of 1 to 10 rather than the original
1 to 10 reverse stock split called for in the Agreement.
4
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Business of Infinitron
- ----------------------
Infinitron Research International, Inc., a predecessor of
Infinitron Investments International, Inc., was incorporated on
June 22, 1994 for purposes of developing a computer based system
that compiles, compresses and transmits data over the Internet
through a multimedia data base using a high-powered computer now
referred to as MIC (Multimedia Integration Centre) including
producing multi-media software and technologies unique to certain
industries for use on the Internet, Inc. communication system.
Infinitron has the unique ability through the MIC to provide a
multimedia data base to the Internet system which includes
pictures, graphics, CAS images and real-time video. While the
software systems were designed to be Internet-oriented multimedia
data based, they can work as stand alone technologies in any
environment.
The information highway explosion has created a number of
problems associated with the number of users and the amount of
information to be transmitted. Information providers must compete
in a very competitive market. Currently, such content developers
and information providers are handicapped by the narrow bandwidth
over which information is transmitted. The narrow bandwidth
limitations have forced several of these organizations to seek a
way to re-design their production so as to fit the limitations.
With Infinitron's technologies and software these bandwidths will
no longer be a problem. Not only will content designers and
providers who utilize Infinitron's technology be given a production
advantage but it is also anticipated that new applications will be
introduced.
From 1992 to June 1994, Infinitron Research International was
operated as an unorganized proprietorship. After Infinitron
Research International, Inc. was formed in 1994 it issued
convertible notes to 46 individuals with Canadian residences for
services rendered and contributions to capital provided to both the
prior entity and the newly formed company totalling $370,000.
Infinitron Investments International, Inc. subsequently assumed
such convertible notes on August 31, 1995 in consideration for the
assignment of all proprietary rights to Infinitron Research
International, Inc.'s computer programs. An assignment of all the
rights was negotiated rather than a direct sale of the assets of
Infinitron Research to Infinitron in order to preserve Infinitron
Research International, Inc.'s research and development status.
Under such status, Infinitron Research International, Inc. is
eligible for Saskatchewan Provincial rebates on all research and
development expenditures. Management of the Company and Infinitron
anticipates that approximately 274,000 shares of common stock of
Infinitron, Inc. will be issued to such noteholders pursuant to
such noteholders rights of conversion under the promissory notes.
Such shares which are slated to inure to the noteholders will be
allocated by Infinitron from the 4,979,500 shares issued to
Infinitron to complete full payment of said notes.
5
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Infinitron has represented to the Company that Infinitron
Research has developed approximately 42 computer programs designed
to create specific program applications for use in distinctive
industries. Management of Infinitron has represented to the
Company that such programs are intended to be uniquely suited to
specific industries' needs with respect to multi-media software and
technology. Examples include the real estate industry (allowing a
prospective renter to view an apartment in a distant location from
his computer), childfind (a data base of information on children
including dental charts, fingerprints, DNA, voice print and other
personal data), the resort industry (preview a visit any where in
the world by audio and video from your computer) and the securities
industry (multimedia information regarding various public
companies). It is not contemplated that such programs will compete
with major computer software manufacturers which are designed to
meet the needs of all users in general rather than the specific
needs of differing industries. Management of Infinitron
anticipates pursuing the development, marketing and sale of such
software as Infinitron, Inc. immediately subsequent to the closing
of the Infinitron transaction.
Infinitron management currently expects that the costs
associated with the development and marketing of the software will
be approximately $1,400,000. These costs represent approximately
$900,000 US needed for the construction of the Multimedia
Information Center (MIC) and $500,000 US to complete the
development of the support technologies or end user interfacing for
the various software applications, along with other software costs.
These funds will be utilized for the wages of additional
programmers, additional data entry personnel, systems
administrators and for hardware expenses incurred, as well as
software costs. Management of Infinitron is currently negotiating
with Digital Equipment as to the cost of their server (which will
become part of the MIC) and peripherals. Management of Infinitron
believes that after such negotiations, the price for the
construction of the MIC will be lower than $900,000 US. Infinitron
intends to use funds generated from licensing fees and/or royalties
derived from the use of its technologies modules along with the
proceeds from the anticipated Regulation S/Regulation D offering to
finance such costs.
While the financial statements of Infinitron and Infinitron
Research indicate that these companies liabilities exceeds their
assets, the majority of the liabilities of both companies are
outstanding notes which the holders have the right to, and intend
to, convert into shares of Infinitron, Inc. after the Infinitron
Transaction. Infinitron has informed the Company that since the
execution of the Stock Acquisition Agreement, it has raised
approximately $2,375,000 (US) through the sale of its stock to non-
US investors. This does not include the funds to be raised in the
anticipated Regulation S and Regulation D offering. For these
reasons the Company's management, in examining the financial
condition of Infinitron, concluded that the risk that Infinitron
would not be able
6
<PAGE>
to raise the funds necessary to complete the development and marketing of the
software was low.
Management of the Company has been informed that Infinitron
Research International, Inc., employs a staff of eighteen (18)
software and technical experts. Infinitron, Inc. anticipates
entering into joint venture agreements with individual or corporate
experts in those fields in which an individual program has been or
will be designed. It is anticipated Infinitron, Inc. will provide
technical support, computer expertise, and a specific program
application for use in such industry. The joint venture partners
will provide financing and expertise in the respective industry.
To date, Infinitron has entered into three joint venture
agreements with respect to specific program applications which are
either completed or in the design stage. See, "Joint Venture
Agreements"
A majority of the expenditures for the research and
development of the technological modules that combine to form the
multimedia database program took place prior to incorporation of
Infinitron Research in 1994. The May 31, 1995 audited financial
statements of Infinitron Research list expenses for software
research, development and testing in the amount of $172,721
(Canadian). An additional $20,050 (Canadian) was spent on
technical consulting fees. The December 31, 1995 unaudited interim
statements increase the software development expenditures by
$157,000 (Canadian) as well as $75,603 (Canadian) on computer
equipment and $17,887 (Canadian) on leasehold improvements. Such
leasehold improvements included network wiring, power supply backup
and static resistant carpet.
The multimedia databases being developed by Infinitron are a
new powerful database which take advantage of present multimedia
applications. It is believed that the present and future
applications of the databases within the virtual reality industry
are extensive. All multimedia databases have been constructed with
modules of the core group of technologies which have been developed
over the past four years. The Company has been informed that
Infinitron is currently in the process of applying for patents on
such technology modules. The technology modules are as follows:
New Picture Format ("NPF"). This module involves Infinitron's
proprietary picture format. By utilizing Infinitron's cubic-codex,
algorithms and methods it can achieve a significant reduction in
data size with minimal or no loss in picture quality. Actual file
size of the resultant NPF datafile is significantly smaller than
any other compression method (JPEG, Zip) currently available in the
industry. It is described as the algorithms for the compression of
a representation of NTSC (National Television Standards Council-
North American Standard) or PAL (Phase Alternation Line Video-
European/Japanese standards) electronically encoded moving or still
digital images. NPF allows for substantially greater compression
of still images and increased frame rates of video images over
regular telephone lines. New Video Format ("NVF") is Infinitron's
proprietary
7
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video format. Utilizing methods similar to those found in NPF, NVF
significantly reduces the size of video files. The reduction of the actual
datafile is so substantial that actual real-time video over regular telephone
lines is a reality. Initial test runs of this technology achieve 27.6 video
frames per second in real-time. According to Infinitron, NPF/NVF is 100%
complete and porting to hardware is all that is required.
Video Image Manipulation ("VIM"). This module involves
Infinitron's method of grooming a signal prior to applying its NVF
technology. VIM is defined as the process for mathematical
methodology and algorithm for the manipulation of digital encoded
representation of NTSC of PAL electrically digitized color images.
VIM combined with the New Picture Format and proprietary
compression algorithms allows real-time video playback over regular
phone lines, which is currently not otherwise possible. According
to Infinitron, VIM is 90% complete and the fine tuning of the color
cube codes is in the final stages. Infinitron anticipates that 40
hours of programming time is necessary to complete this module.
Polymorphic Encryption Technology ("PET"). This module
involves a new method of encryption. Unlike present encryption
methods, PET is, for all intents and purposes, unbreakable. PET is
defined as the process for mathematical methodology and algorithm
for the constantly changing encryption of binary data streams.
This technology combined with Internet Protocol Standard ("IPS") is
intended to provide the highest level of security possible today
for computer data transmission. According to Infinitron, PET is
100% complete.
Recursive Compression. This module involves Infinitron's
answer to the limited bandwidth of regular telephone lines.
Recursive compressions can be applied to virtually any bitstream,
repeatedly, to achieve compression rates of over twelve hundred and
fifty to one. Numerous passes with this compression method has
resulted in basically no-loss compression. Excessive application
is slightly lossy (i.e., minimal loss in data), but functional for
datastreams which require moderate accuracy. Such applications
include audio and video signals. A degradation of 0.5-2% in signal
quality for a regular telephone call is virtually undetectable to
the human ear, however, any loss in data transfers (via modems) can
be noticeable, therefore, data transfers (modems) presently utilize
error correction to circumvent any possible loss. According to
Infinitron, this module is 80% complete and requires an estimated
40 hours of experimental development in order to be completed.
The multimedia databases make use of the above technologies
combined with specific software modules that can be applied to
various projects. Each project is virtually identical at the first
stage of the program's life. Noticeable differences are realized
at the second stage of the program's life, the program prototype
stage. Finally, the completed projects are totally different
because of the varying nature of the industries for which the
program was developed.
8
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Management of Infinitron has concluded that it does not make economic sense
for Infinitron staff to become experts in each different industry for which
the multimedia databases will be utilized. Therefore, Infinitron enters
into joint venture agreements with such industries whereby Infinitron is
responsible for designing and tailoring the technologies for
specific use by the industry while the industry is responsible for
making experts available to Infinitron who can collect and collate
the information as well as market the database.
By entering into this type of joint venture agreement, the
staff of Infinitron Research can continue to be focused in the area
of computational algorithms, mathematical methodology and
applications programming. A team of three to five is needed to
input and maintain each database in the startup. Once the database
is active, only one technician is needed to maintain the system
allowing the other two to move on to the next project. Management
of Infinitron believes that a staff of ten in the first year is
sufficient to accomplish all database implementation goals.
Joint Venture Agreements
- ------------------------
The first joint venture agreement, dated December 15, 1995, is
with Stock Deck Communications, Inc. (Vancouver) and allows
Infinitron to benefit in reaching Stock Deck's subscribers while
Stock Deck will be utilizing Infinitron's Internet Multimedia
software and compression technologies to manipulate and then
disseminate information on public companies to its subscribers over
the Stock Deck Internet Stock System on its established web site.
Infinitron is only responsible for maintaining the web site, which
is controlled internally by the MIC. Stock Deck is responsible for
marketing the service to public companies and subscribers. A
company referred to as NEWCO has been formed by the parties in
which each of Stock Deck and Infinitron hold a 50% ownership
position. Infinitron will receive revenue by selling its Multi
Media Grids (MIGs) ("front door" to the MIA) on the Multimedia
Information Array (MIA) (multi media databases) to public companies
who wish to be included on the Internet Stock System and by the
subscription fees and usage charges charged to investors to be able
to access the information contained in the MIA.
Another Internet orientated project for which Infinitron has
completed a joint venture involves the area of Native Ethnological
archiving. A joint venture agreement was entered into with the
North American Native Ethnological Salvage Project (the "NANES
Project") on October 14, 1995. Infinitron owns 100% of NANES and
will receive 80% of the revenue generated from the project with the
remaining 20% going to the Amerind Society. North American Native
History will be archived in a multimedia database format, this
database will reside at the NANES web site on the Internet. A
substantial amount of data is being compiled by experts in the
industry regarding the business plan for the NANES Project. NANES
initial revenue producing project is to market native prints over
the Internet.
9
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Infinitron has also entered into a Definitive Joint Venture
Agreement with S.M.A.R.T. Security Systems Corporation (dated
December 15, 1995), in the area of remote video surveillance. A
company referred to as SMART Infinitron (BC) was formed by the
parties, with a 50% interest owned by each party, to implement
Infinitron's compression technologies solely for use in the
security and safety industries. It is anticipated that SMART
Infinitron (BC) will use Infinitron's technology to advance the
security systems developed by S.M.A.R.T. All contracts with users
will be managed and maintained by SMART Infinitron (BC).
Infinitron is currently negotiating with four other entities
regarding joint venture agreements.
Revenue will be realized on these joint ventures from the
construction of databases and from on-line charges for using the
databases in certain industries. In other industries the joint
venture will only receive revenue from the use of the database.
According to Infinitron, no revisions should need to be made to
completed, specific databases due to technological or competitive
changes. Revisions however, are always being made to the
underlying technologies developed by Infinitron.
Competition
- -----------
Infinitron is aware of many other companies that are working
towards real-time video. The following companies are presently
working on real-time video: AT&T, MCI, Zing Technologies and Array
Microsystems. Of these, Array Microsystems appears to be the most
advanced. Array has developed the VIDEOFLOW real-time video
compression technology. This newly developed technology was
displayed at COMDEX in Las Vegas in November 1995. The
demonstration, however, as witnessed by certain of Infinitron's
management, appeared to be choppy and distorted. Transmission of
Array's technology is through ISDN lines which are very expensive
to install on a large scale basis. The panel of experts on video
communications at the Las Vegas convention stated that the industry
is unlikely to see real-time video over twisted pair telephone
lines until after the year 2000. Contrary to that opinion,
Infinitron plans to launch that capability in 1996.
To the best of Infinitron's knowledge, the methodologies
employed by its competitors are not similar to those of Infinitron.
Therefore, similar products are not expected. However, certain of
the other companies working towards real-time video have
substantially more capital as well as research capabilities than
Infinitron and there can be no assurance that one of them will not
develop a technology superior to that of Infinitron.
Infinitron 1996 Incentive Stock Option Plan
- -------------------------------------------
On February 6, 1996, the Board of Directors of Infinitron
approved the adoption of a Incentive Stock Option Plan (the
"Plan").
10
<PAGE>
Infinitron shareholder approval of the Plan was obtained on February 8, 1996.
The Plan covers an aggregate of 650,000 shares of common
stock. The Plan is administered by the Stock Option Committee
which consists of two members, one of which must be a director.
Options granted under the Plan will include both incentive stock
options ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options.
Under the terms of the Plan all officers, directors and employees
may be eligible for ISOs. The Plan provides that no option may be
granted at an exercise price less than the fair market value of the
Common Stock of Infinitron on the date of the grant. Unless
otherwise specified, the options expire ten years from the date of
grant and may not be exercised during the initial six month period
from the date of grant. As of May 30, 1996, no options have been
granted pursuant to the Plan. However, it is anticipated that
Options to purchase 250,000 shares will be granted to employees of
Infinitron.
Licensing Agreement-Leggoons Trademark
- --------------------------------------
The Company has entered into a Licensing Agreement, dated
January 19, 1996 with Robert Tamsky, a current director and former
employee of the Company. Pursuant to the terms of the Licensing
Agreement, the Company grants to Mr. Tamsky effective January 1,
1996, the right to use the LEGGOONS trademark in connection with
the design, production, marketing, sales and sublicensing of all
clothing, wearing apparel and accessories bearing the "LEGGOONS"
symbol (the "Product"). This right will continue until December 31,
1998 and may be extended thereafter each year for an additional
year. In consideration for the license, Mr. Tamsky, according to
the Licensing Agreement, shall pay to the Company a royalty of five
percent (5%) of the net sales (gross sales less allowances,
returns, samples and seconds) of the Product. This payment shall
be based on monthly sales and shall be due thirty days after the
end of each month. The Licensing Agreement provides that the
Company will fulfill all its obligations for orders existing prior
to the date of the Agreement. The collection of the royalty is the
only apparel business the Company intends to engage in after such
current orders and obligations are fulfilled. There is no minimum
royalty. The ratification of this agreement will be voted on at
the meeting. See, "Proposal 6-Approval of Licensing of Leggoons
trademark to Robert Tamsky"
Sale of Leggoons Assets to President
- ------------------------------------
There have been discussions between Infinitron and the
Company's current President, James S. Clinton, regarding the
purchase by Mr. Clinton, or a corporation controlled by Mr.
Clinton, of all the present assets of Leggoons, Inc. in exchange
for the assumption of all the present liabilities of Leggoons, Inc.
On February 5, 1996, Mr Clinton presented a written proposal to
Infinitron wherein he stated that he was offering to purchase all
the assets of the Company,
11
<PAGE>
prior to the Infinitron Transaction, in consideration for the assumption of
all the liabilities of the Company, prior to the Infinitron Transaction.
Mr. Clinton presented his proposal to Infinitron as the Stock Acquisition
Agreement between the Company and Infinitron precludes such sale
without the prior consent of the Infinitron.
On March 15, 1996, Infinitron informed Mr. Clinton that it
would not object to the sale. On March 15, 1996, Mr. Clinton
presented his offer to the Company's board of directors and on
March 18, 1996 the disinterested members of the board accepted the
offer. According to the terms of the offer, Mr. Clinton formed a
new company, called Leggoons, Inc. which will purchase all the
assets of the Company outstanding at June 21, 1996 (approximately
$482,374 in current assets and $344,774 in other assets at February
29, 1996) for the consideration of the assumption of all
liabilities of the Company on such date (approximately $1,901,416
at February 29, 1996). The assets to be purchased by Mr. Clinton
include the "Leggoons" trademark as well the Licensing Agreement
between the Company and Mr. Tamsky.
It is anticipated that the sale of assets will close on June
__, 1996. As a requirement for the closing, the Company's legal
counsel must provide an opinion which states that the current
creditors of the Company have no legal right to bring an action
against Infinitron, Inc. for any liability incurred by the Company
prior to the sale of assets. In addition, the opinion will state
that as the sale of assets was for the benefit of creditors'
shareholder approval was not required prior to the consummation of
the sale.
The ratification of the sale of all the assets of the Company
immediately will be voted on at the annual meeting and the
affirmative vote of two-thirds of the shares entitled to vote
thereon is required to approve the transaction. Management intends
to vote in favor of this proposal. Management anticipates that
Jasper Brouwer will also vote in favor of the ratification of the
sale and that therefore the proposal will pass.
Any shareholder who shall not have voted in favor of the sale
of all the assets of the Company and who at or prior to the meeting
shall file with the Company written objection thereto may, within
twenty days after the vote was taken, make written demand on the
Company for the payment to him of the fair value of his shares as
of the day prior to the date on which the vote was taken
authorizing the sale. See, Proposal 7, "Dissenting Shareholder
Rights"
Conflict of Interest
- --------------------
A conflict of interest may arise as Mr. Clinton is the only
member of the board of directors who will retain his position after
the transaction with Infinitron is consummated and Mr. Clinton
holds a majority of the outstanding stock of the Company, prior to
the Infinitron Transaction. Mr. Clinton had no prior affiliation
with Infinitron. Contemporaneous with the closing of the
Infinitron
12
<PAGE>
Transaction, Mr. Clinton will be granted a five year option to purchase up to
100,000 shares of common stock of Infinitron, Inc on the same terms and
conditions as options which may be granted to the Advisory Board, at a price
not more than $5.00. Mr. Clinton is retaining his position on the board of
directors in order to continue to protect the rights of the Company's current
shareholders. All of these facts were taken into account by the board of
directors in reaching its unanimous decision to issue the shares to
Infinitron.
NO SHAREHOLDER VOTE REQUIRED ON INFINITRON TRANSACTION
The applicable law provides that the issuance of the Company's
shares to Infinitron does not require the approval of the
stockholders of the Company. As such, any vote for approval would
pass upon the vote of a majority of stockholders (which management
controls) and any dissenting stockholders would have no dissenting
shareholder rights. In concluding not to submit the transaction to
a shareholder vote, management considered that any stockholder who
disapproves of the transaction can sell his/her shares in the
public market. Therefore, this matter is not being submitted to a
vote of security holders and management of the Company is not
soliciting shareholders to approve the proposed Infinitron
Transaction. The Company's Board of Directors will pass on the
proposed Infinitron Transaction and the issuance of 4,797,500
shares (post reverse stock split) to Infinitron Investments
International, Inc. As part of the transaction it is contemplated
Infinitron will distribute the 4,797,500 shares (post reverse stock
split) to its shareholders (4,523,500 shares) and certain holders
of its convertible notes (274,000 shares). Shareholders of the
Company will, however, be asked to approve the Company's assumption
of Infinitron's Incentive Stock Option Plan upon closing of the
Infinitron Transaction.
PROPOSAL 1
----------
ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of five
members. The Company's Bylaws provide that directors are to serve
only until the next Annual Meeting of Shareholders or until their
successors are elected and qualified. As part of a Stock
Acquisition Agreement with Infinitron Investments International,
Inc. dated September 5, 1995 ("Stock Acquisition Agreement")
whereby control of the Company will change upon closing of that
Agreement, the Company's current board of directors will resign
with the exception of James S. Clinton and Infinitron's nominees
would fill the remaining positions. See "INFINITRON TRANSACTION"
above.
In the absence of instructions to the contrary, the proxies
solicited by the Board of Directors will be voted in favor of the
election of the three nominees listed below, one of whom is a
member of the present Board of Directors. If any nominee shall
withdraw or
13
<PAGE>
otherwise become unavailable, which is not expected,
the proxies will be voted for a substituted nominee who will be
designated by the Board of Directors.
The following table sets forth the name and certain other
information about the nominees for directors of the Company:
<TABLE>
<CAPTION>
Name, Principal Occupations
During Last Five Years and Director
Current Directorships Age Since
- -------------------------- --- --------
<S> <C> <C>
James S. Clinton, Chief Executive 55 1983
Officer and President of the Company
since 1983. Director of Eselco,
Inc., an investor owned electric
utility. Mr. Clinton will resign
as Chief Executive Officer and
President effective upon closing
of the Infinitron Transaction.
Benjamin A. Moglin, Chief 25 N/A
Executive Officer and President
of Infinitron Research
International, Inc. since 1994.
Sales representative of Sandoz
Pharmaceuticals from 1992 to
1994.
Robert G. Crompton, stock broker/ 69 N/A
since 1953. President and Director
of HMC Healthguard Marketing
since 1990. Director of McDermid,
St Lawrence Securities, Ltd.
between 1986 and 1990.
</TABLE>
Additional Information on Nominees for Director
Mr. Benjamin A. Moglin has been the President and Chief
Executive Officer of Infinitron Research International, Inc. since
1994. At the same time, Mr. Moglin also acted as a sales
representative for Sandoz Pharmaceuticals from 1992 to 1994. He
was awarded an Associate of Applied Sciences in Marketing and
Management from North Dakota State University in 1990; an Associate
of Applied Sciences in Computer Sciences from the University of
Minnesota in 1991; and a Bachelor of University Studies in Business
Psychology from the University of Minnesota in 1992.
Mr. Robert G. Crompton has been a stock broker and businessman
since 1953. Mr. Crompton was awarded a Bachelor of Arts Degree in
Commerce from the University of British Columbia in 1950. From
1986 to 1990 Mr. Crompton was employed as president and director of
McDermid, St. Lawrence securities, Ltd. Since 1990 Mr. Crompton has
14
<PAGE>
been president and a director of HMC Healthguard Marketing,
Inc., a company listed on the Vancouver Stock Exchange. Mr.
Crompton, since 1990, has held the positions of President and
Director of Water U.S.A., an inactive corporation 96% owned by HMC
Healthguard.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table shows, as of April 8, 1996, certain
information with respect to Leggoons, Inc. Common Stock
beneficially owned by directors and executive officers of the
Company. The holdings listed are stated in pre-reverse stock split
amounts. Unless otherwise noted, all shares are owned directly or
indirectly with sole voting and investment power.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership1 Class
- ---------------- --------------------- ----------
<S> <C> <C>
James S. Clinton2 1,416,000 50.8%
Larry D. Langston3 266,000 9.6%
Robert S. Tamsky3 90,000 3.2%
Steven D. Walters3 3,000 -0-
Richard Giannotti3 1,000 -0-
All Directors and
Officers as a Group 1,776,000 63.7%
____________________
</TABLE>
1 Shares reported include shares owned by spouses of officers
and directors. No options to acquire any Leggoons, Inc.
common stock from the Company are owned by any officer or
director. At the closing of the Infinitron Transaction, Mr.
Clinton will be granted a five year option to purchase up to
100,000 shares of common stock of Infinitron, Inc.
2 Includes shares held by a family trust for which Mr. Clinton
acts as trustee. Does not include 20,000 shares held by two
of Mr. Clinton's adult children.
3 Currently, directors and officers of the Company. Except for
Mr. Clinton, they are to resign effective with closing of the
Stock Purchase Agreement with Infinitron Investments
International, Inc.
Board Meetings and Committees
During the fiscal year ended August 31, 1995, there were two
meetings of the Board of Directors, all directors were present at
both meetings. All other business of the Board was conducted by
written unanimous consent as provided for in the Bylaws. The
Company's Board of Directors currently has no Audit Committee nor
Compensation Committee.
15
<PAGE>
The entire Board of Directors serves as the Nominating
Committee. There is no mechanism in place by which a shareholder
may submit a name to the board to be considered for a director's
position.
Each of the non-employee directors of the Company receives
$5,000 annual compensation for serving on the Board of Directors.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 8, 1996, the
beneficial ownership of the Company's Common Stock by each person
who is known by the Company to own beneficially more than 5% of the
issued and outstanding shares of the Company's Common Stock. The
holdings listed are stated in pre-reverse stock split amounts.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ------------------ ------------------- ----------
James S. Clinton 1,416,0001,2 50.8%
30 Ginger Cove Road
Valley, NE 68064
Larry D. Langston 266,0001 9.6%
301 W. Saint John
Vandalia, MO 63382
____________________
1 On January 24, 1996 Mr. Langston entered into an Option
Agreement with Steven Walters, the Chief Financial Officer of
the Company which grants Mr. Walters an option to purchase
261,500 of Mr. Langston's shares. The option price is
$100,000, the option may not be exercised prior to November
23, 1996 and expires on July 24, 1997. Mr. Walters, in turn,
has assigned the right to purchase 130,750 of such shares to
the Claude E. Clinton Family Trust for which Mr. Clinton, the
current President of the Company, acts as Trustee (Mr. Clinton
is not the beneficiary of the trust but has the right to vote
the shares) in consideration of $50,000 cash and a loan to Mr.
Walters in the amount of $50,000. It is anticipated that the
option will be exercised immediately after November 23, 1996
so long as the then market price of the stock is higher than
the option price.
2 Does not include option to purchase 100,000 shares of common
stock of Infinitron, Inc. to be granted to Mr. Clinton at
closing of Infinitron Transaction.
16
<PAGE>
COMPLIANCE WITH SECTION 16 REPORTING OBLIGATIONS
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, certain officers and persons holding 10%
of the Company's common stock to file reports regarding their
ownership and regarding their acquisitions and dispositions of the
Company's common stock with the Securities and Exchange Commission.
The Company is unaware that any required reports were not timely
filed.
EXECUTIVE COMPENSATION
Summary Compensation
<TABLE>
<CAPTION>
Long-term Compensation
----------------------
Awards Payouts
---------- --------
AnnualCompensation Other
Name and ------------------ Restricted Options/ Lttp Compen-
Principal Year Salary Bonus Other Stock SARS Payouts sation
Position ($) ($) ($) ($) (#) ($) ($)
---- ------ ----- ----- ------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James S.
Clinton, 1995 17,631 -0- -0- -0- -0- -0- -0-
President 1994 38,200 -0- -0- -0- -0- -0- -0-
and Chief 1993 -0- -0- -0- -0- -0- -0- -0-
Executive
Officer
</TABLE>
In accordance with SEC Rules, amounts of Other Annual
Compensation and All Other Compensation are excluded for the 1992
fiscal year. Perquisites and other personal benefits are omitted
because they do not exceed either $50,000 or 10% of the total of
annual salary and bonus for the named executive officer.
Employee Benefit Plans
The Company currently does not have any pension, profit-
sharing or other long-term incentive compensation plans.
Stock Options
The Company currently does not have any employee or director
stock option plans. However, Infinitron recently informed the
Company that as of February 6, 1996 it adopted an Incentive Stock
Option Plan. Pursuant to the Stock Acquisition Agreement, the plan
will be assumed by the Company and become the stock option plan of
the Company as of the date of the closing of the Infinitron
Transaction. See, Infinitron Incentive Stock Option Plan.
17
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The salient details of certain transactions which occurred
between the Company and its officers and directors are set forth
below. With respect to each such transaction, the Company believes
that the terms of each transaction were approximately as favorable
to the Company as could have been obtained from an unrelated third
party.
In July, 1994, the Company entered into a line of credit
agreement providing for maximum borrowings of $365,000 at an
interest rate of 2% above prime with Mr. James Clinton. At year
end the balance of these borrowings was $365,000. At August 31,
1995 the balance was $467,000.
In January, 1995, the Company authorized the issuance of
140,000 shares of restricted common stock to James Clinton. At
such time, Mr. Clinton was the President and a member of the Board
of Directors of the Company. Such issuance was in consideration of
the forgiveness by Mr. Clinton of $140,000 in debt owed by the
Company to Mr. Clinton. The Board of Directors of the Company, by
unanimous written consent, deemed the issuance of such shares to be
fair and equitable in view of the book value and market value of
the Company's common stock.
It is anticipated that, contemporaneous with the closing of
the Infinitron Transaction, Mr. Clinton will be granted a five year
option to purchase up to 100,000 shares of common stock of
Infinitron, Inc on the same terms and conditions as options which
may be granted to the Advisory Board, at a price not more than
$5.00.
The Company and its President, James Clinton, have engaged in
discussions concerning the sale of present assets of the Company to
Mr. Clinton. See, Sale of Leggoons Assets to President for
details.
PROPOSAL 2
AMENDMENT TO ARTICLES OF INCORPORATION AUTHORIZING
NAME CHANGE TO INFINITRON, INC.
As part of the agreement with Infinitron Investments
International, Inc. the Company has agreed to change its name to
Infinitron, Inc. See "INFINITRON TRANSACTION" above. The Board of
Directors recommends a yes vote, and members of management have
indicated they will vote in favor of this issue which requires a
majority vote. As management holds a majority of shares in the
Company, it is anticipated that this proposal will pass despite any
opposition from other shareholders.
18
<PAGE>
PROPOSAL 3
AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK TO 50,000,000 SHARES
The Company also seeks to increase the authorized common stock
of the Company from 10,000,000 to 50,000,000 shares. This
amendment is proposed in order to permit the Company to have more
flexibility in issuing shares in the future without incurring the
cost of another vote of the stockholders. If Proposals 3 and 5
pass, the Company will have, after the Infinitron Transaction but
prior to the Regulation S and Regulation D offering, 44,868,600
shares authorized but not issued. The effect on shareholders will
be that their interest in the Company may be further diluted to the
extent that additional shares are issued, especially at a price
less than that paid by current shareholders. The increase will
also afford the Company with anti-takeover protection as the Board
of Directors will have the ability to issue controlling shares
without requiring the Company to repurchase shares from its
stockholders. This action could be taken without shareholder
approval thereby precluding stockholders from participating in a
takeover. The Board of Directors recommends a yes vote, and
members of management have indicated they will vote in favor of
this issue which requires a majority vote. As management holds a
majority of shares in the Company, it is anticipated that this
proposal will pass despite any opposition from other shareholders.
PROPOSAL 4
RESOLUTION TO AMEND THE COMPANY'S BYLAWS TO DECREASE
THE MINIMUM NUMBER OF SEATS ON THE BOARD OF DIRECTORS TO THREE
As part of the agreement with Infinitron Investments
International, Inc., the existing directors of the Company,
exclusive of James Clinton, have agreed to resign upon consummation
of the Infinitron Transaction. The Company has further agreed that
(subject to shareholder approval) the Board of Directors would
subsequently consist of James Clinton, Benjamin Moglin and Robert
Crompton. See "Proposal 1" above. Pursuant to the Company's
Bylaws, the number of directors constituting the whole Board of
Directors of the Company is five. Such number may only be
decreased pursuant to a vote of the shareholders of the Company.
If this Proposal is approved by the Shareholders, the
Company's Bylaws will be amended in Article II, Section 2 to read
as follows: "The minimum number of Directors is three."
The purpose of reducing the number of directors from five to
three is to insure that the Company always operates with a complete
board. Requiring only three directors appears to be more
economical as well as practical for the Company. It is the present
intent
19
<PAGE>
Of the Board of Directors to require only three directors.
However, the proposed amendment only provides for a minimum of
three directors, the board may increase the number at any time it
deems appropriate for the successful operation of the Company. The
Board of Directors recommends a "yes" vote, and members of
management have indicated they will vote in favor of this issue
which requires a majority vote. As management holds a majority of
shares in the Company, it is anticipated that this proposal will
pass despite any opposition from other shareholders.
PROPOSAL 5
RESOLUTION TO REDUCE OUTSTANDING COMMON STOCK OF THE
COMPANY BY A REVERSE ONE-FOR-TEN SPLIT
On May 24, 1996 the Board of Directors by resolution
authorized the submission to the Company's shareholders of a
proposal for a reverse stock split pursuant to which one share of
stock will be issued for each ten shares previously outstanding.
Currently, 2,787,000 shares are outstanding. If the 1 for 10
reverse stock split is accomplished, 278,700 shares will be
outstanding before completion of the Infinitron transaction
("Infinitron Transaction") and 5,076,200 after completion thereof,
assuming it is completed. If the proposal is adopted, prior to the
Infinitron Transaction, each shareholder's percentage share of the
Company and its outstanding shares of common stock will be the same
as they were prior to the adoption except for minor differences in
the instances of fractional shares. In the event fractional shares
result from the proposed reverse split, the Company will round up
or down to the nearest number. Shareholders who have fractional
shares rounded down will not receive any form of compensation in
connection with such rounding down.
The Company presently is authorized under its Articles of
Incorporation to issue 10,000,000 shares of common stock and is
proposing to increase such authorization to 50,000,000 shares of
common stock (Proposal 2 above). Authorized common stock is not
affected by adoption of Proposal 5. If Proposals 2 and 5 are
adopted, the issued common stock will represent approximately 10%
of the Company's authorized common stock whereas it currently
represents approximately 27.9% of authorized common stock.
Management estimates that it will cost approximately $5,000 in
the aggregate to accomplish the exchange of one share for each ten
shares previously issued.
The Board of Directors is recommending the adoption of the
reverse stock split resolution for the following reasons:
1. According to available market information, as of May 28,
1996, the shares of common stock of the Company were traded by 8
market makers. The bid was $15/32 and the ask was $9/16 as
reported
20
<PAGE>
by the NASDAQ Bulletin Board. Management believes that if
the 1 for 10 reverse stock split were effected it could result in
the common stock trading at higher prices and it would be more
acceptable to stock brokerage firms which have historically
required higher priced securities to execute trades for customer
accounts. The Company's common stock is subject to the so-called
"Penny Stock Rules" under the Securities Exchange Act of 1934 and
as such is subject to substantial suitability clearance
requirements prior to completion of solicited customer orders to
purchase such shares by stock brokerage firms. Even if the
shareholders approve this proposal, however, the Company's common
stock may continue to be subject to the "Penny Stock Rules."
2. The present public float of the Company's common stock is
approximately 900,000 shares. It is management's position that
this number of shares may be large in relationship to the Company's
assets and history of operating losses, and constitutes a hindrance
in attracting a greater number of broker-dealers to trade shares of
the Company.
3. Further, to provide more market visibility for its common
stock, the Company would seek inclusion of the common stock on the
NASDAQ Small Cap System which requires, among other things, an
initial bid price of $3.00 per share. The proposed reverse split
is not expected to cause the stock to meet all the NASDAQ Small Cap
criteria in the foreseeable future and there is no assurance the
Company's shares will ever so qualify. The Company has plans to
make application for inclusion of the Company's common stock on
NASDAQ in the foreseeable future depending upon its ability to meet
all inclusion criteria, which include requirements to have a
minimum of $4 million in total assets and $2 million in capital and
surplus.
There were approximately 375 shareholders of record of the
Company as of April 8, 1996. If this resolution is adopted, it is
expected there will be no significant change in the number of its
shareholders. The Company has no plans for the cancellation or
purchase of its shares from individuals holding a nominal number of
such shares after the proposed reverse stock split is effected and
has no present intention to take the Company private through this
proposed reverse stock split or otherwise. The Company has plans
for the issuance of shares of its common stock in addition to the
4,797,500 shares contemplated in the Infinitron Transaction. It is
contemplated that either at the closing of the Infinitron
Transaction or prior thereto, the Company will issue up to
1,200,000 additional shares (post reverse split) of common stock
pursuant to Regulation S to Canadian citizens and pursuant to
Regulation D to U.S. citizens who are accredited investors. Such
additional shares shall be issued at no less than $2.50 per share
(U.S. dollars) or further consideration acceptable to the Board of
Directors. The issuance of such stock will dilute the present
shareholders voting rights.
It is possible that adoption of Proposal 5 will result in the
Company's common stock trading at substantially less than 5 times
21
<PAGE>
the current price of the common stock, thus reducing the market
value of the outstanding shares.
If this proposal is adopted, the Company does not intend to
require shareholders to exchange their stock certificates
representing pre-split shares for reissuance of new stock
certificates representing post-split shares. The Company merely
intends to notify the Company's transfer agent and its shareholders
of record by letter of the effective date of reverse stock split
and the adjustment to the number of shares represented by
certificates issued prior to that date.
With respect to Proposal 5 to effect a reverse split of all of
the outstanding shares of the Company on a one for ten basis, the
affirmative vote of a majority of the shares entitled to vote
thereon is required. As management holds a majority of shares in
the Company and intends to vote in favor of this proposal, it is
anticipated that the proposal will pass despite any opposition from
other shareholders.
Should Proposal 5 be approved and Proposal 3 not be approved,
the number of outstanding shares of common stock would be reduced
to 278,700 shares; however, the number of authorized shares of
common stock would remain 10,000,000. Thus, outstanding shares
would represent approximately .02% of authorized common stock
before the Infinitron Transaction and 50% after the Infinitron
Transaction instead of 1.1% and 10%, respectively, if both
Proposals 3 and 5 are approved.
PROPOSAL 6
RESOLUTION TO APPROVE THE LICENSING OF THE LEGGOONS TRADEMARK TO
ROBERT TAMSKY
The Company has negotiated a Licensing Agreement with Robert
Tamsky, a current director and former employee of the Company.
Pursuant to the terms of the Licensing Agreement, the Company will
grant to Mr. Tamsky effective January 1, 1996, the right to use the
LEGGOONS trademark in connection with the design, production,
marketing, sales and sublicensing of all clothing, wearing apparel
and accessories bearing the "LEGGOONS" symbol (the "Product"). This
right will continue until December 31, 1998 and may be extended
thereafter each year for an additional year. In consideration for
the license, Mr. Tamsky, according to the Licensing Agreement,
shall pay to the Company a royalty of five percent (5%) of the net
sales (gross sales less allowances, returns, seconds and samples)
of the Product. This payment shall be based on monthly sales and
shall be due thirty days after the end of each month. The
Licensing Agreement provides that the Company will fulfill all its
obligations for orders existing prior to the date of the Agreement.
The collection of the royalty is the only apparel business the
Company intends to engage in after such order and obligations are
fulfilled. There is no minimum royalty.
22
<PAGE>
The Company has not obtained a fairness opinion for this
transaction or any independent appraisal. It is the opinion of
management that the royalty being paid by Mr. Tamsky is
substantially similar to that which might have been obtained from
an independent third party. Management of the Company believes
that the licensing of the Leggoons trademark is in the best
interest of the Company as upon the consummation of the Infinitron
transaction and the election of the new directors provided in
Proposal One, the focus of management's attention will be on the
expansion of Infinitron's technology. By licensing the trademark
the Company is assured of receiving future revenue from apparel
sales without having to devote daily attention to such operations.
With respect to Proposal 6 to approve the licensing of the
LEGGOONS trademark to Robert Tamsky, the affirmative vote of a
majority of the shares entitled to vote thereon is required.
management recommends a "yes" vote. As management holds a majority
of shares in the Company and intends to vote in favor of this
proposal, it is anticipated that the proposal will pass despite any
opposition from other shareholders.
PROPOSAL 7
TO RATIFY THE SALE OF ALL THE ASSETS OF THE COMPANY TO A COMPANY
CONTROLLED BY THE CURRENT PRESIDENT OF THE COMPANY
On February 5, 1996, James S. Clinton, current president of
the Company presented a written proposal to Infinitron wherein he
stated that he was offering to purchase all the assets of the
Company, prior to the Infinitron Transaction in consideration of
the assumption of all the liabilities of the Company, prior to the
Infinitron Transaction. Mr. Clinton presented his proposal to
Infinitron as the Stock Acquisition Agreement between the Company
and Infinitron precludes such sale without the prior consent of the
Infinitron.
On March 15, 1996, Infinitron informed Mr. Clinton that it
would not object to the sale. On March 15, 1996, Mr. Clinton
presented his offer to the Company's board of directors and on
March 18, 1996 the disinterested members of the board accepted the
offer. According to the terms of the offer, Mr. Clinton formed a
new company, called Leggoons Corporation, a Nebraska corporation,
which will purchase all the assets of the Company outstanding as of
the date of the closing of the sale (approximately $482,374 in
current assets and $344,774 in other assets at February 29, 1996)
for the consideration of the assumption of all liabilities on such
date (approximately $1,901,416 at February 29, 1996). The assets
to be purchased by Mr. Clinton include the "Leggoons" trademark as
well the Licensing Agreement between the Company and Mr. Tamsky.
23
<PAGE>
It is anticipated that the sale of assets will close on June
__, 1996. As a requirement for the closing, the Company's legal
counsel must provide an opinion which states that the current
creditors of the Company have no legal right to bring an action
against Infinitron, Inc. for any liability incurred by the Company
prior to the sale of assets. In addition, the opinion will state
that as the sale of assets was for the benefit of creditors'
shareholder approval was not required prior to the consummation of
the sale.
The Company has not obtained a fairness opinion for this
transaction or any independent appraisal. It is the opinion of
management that the consideration being paid by Mr. Clinton is
substantially similar to that which might have been obtained from
an independent third party. Management of the Company believes
that the sale of the present assets of Leggoons in consideration
for the present liabilities of Leggoons is in the best interest of
the Company as upon the consummation of the Infinitron Transaction
and the election of the new directors provided in Proposal One, the
focus of management's attention will be on the expansion of
Infinitron's technology and not on the apparel operations.
In the exercise of abundant caution, the Company decided to
seek ratification of the transfer of assets to Leggoons
Corporation. Proposal 7, to ratify the sale of all the assets of
the Company is expected to occur immediately prior to the
Infinitron Transaction. The affirmative vote of two-thirds of the
shares entitled to vote thereon is required for this proposal.
Management intends to vote in favor of this proposal and recommends
a "yes" vote. In addition, Management has been advised that Jasper
Brouwer, holder of ________ shares of common stock of the Company,
intends to vote in favor of the Proposal in which case the Proposal
will pass.
Dissenting Shareholder Rights.
- -----------------------------
Any shareholder who intends to vote against this proposal may
exercise dissenting shareholder rights under the following
provisions of Missouri Corporation Act:
Any shareholder who shall not have voted in favor of the sale
of all the assets of the Company and who at or prior to the meeting
at which said sale or exchange is submitted to a vote shall file
with the corporation written objection thereto may, within twenty
days after the vote was taken, make written demand on the
corporation for the payment to him of the fair value of his shares
as of the day prior to the date on which the vote was taken
authorizing the sale or exchange. Such demand shall state the
number and class of the shares owned by such dissenting
shareholder. Any shareholder failing to make demand within the
twenty-day period shall be conclusively presumed to have consented
to the sale or exchange and shall be bound by the terms thereof.
24
<PAGE>
If, within thirty days after the date on which such vote was
taken, the value of such shares is agreed upon between the
dissenting shareholder and the Company, the Company shall make
payment of the agreed value within ninety days after the date on
which the vote was taken authorizing the sale or exchange, upon the
surrender of his certificate or certificates representing said
shares. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares or in
the Company.
If within such period of thirty days the shareholder and the
Company do not so agree, then the dissenting shareholder may,
within sixty days after the expiration of the thirty-day period,
file a petition in any court of competent jurisdiction within the
county in which the registered office of the Company is situated
asking for a finding and determination of the fair value of such
shares, and shall be entitled to judgment against the Company for
the amount of such fair value as of the day prior to the date on
which such vote was taken, together with interest thereon to the
date of such judgment. The judgment shall be payable only upon and
simultaneously with the surrender to the corporation of the
certificate or certificates representing said shares. Upon the
payment of the judgment, the dissenting shareholder shall cease to
have any interest in such shares or in the Company. Unless the
dissenting shareholder shall file such petition within the time
herein limited, such shareholder and all persons claiming under him
shall be conclusively presumed to have approved and ratified the
sale or exchange and shall be bound by the terms thereof.
The rights of a dissenting shareholder to be paid the fair value
of his shares as herein provided shall cease if and when the
Company shall abandon the sale or exchange or the shareholders
shall revoke the authority to make such sale or exchange.
PROPOSAL 8
TO APPROVE THE ASSUMPTION OF THE INFINITRON INVESTMENTS
INTERNATIONAL, INC INCENTIVE STOCK OPTION PLAN
Infinitron recently informed the Company that as of February
6, 1996 it adopted an Incentive Stock Option Plan (the "Plan").
Pursuant to the Stock Acquisition Agreement, the Plan will be
assumed by the Company and become the stock option plan of the
Company as of the date of the closing of the Infinitron
Transaction.
The Plan covers an aggregate of 650,000 shares of common
stock. The Plan is administered by the Stock Option Committee.
Options granted under the Plan will include both incentive stock
options ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and non-qualified stock options.
Under the terms of the Plan all officers, directors and employees
may be eligible for ISOs. The Plan provides that no option may be
granted
25
<PAGE>
at an exercise price less than the fair market value of the
Common Stock of Infinitron on the date of the grant. Unless
otherwise specified, the options expire ten years from the date of
grant and may not be exercised during the initial six month period
from the date of grant. As of May 30, 1996, no options have been
granted pursuant to the Plan. However, it is anticipated that
Options to purchase 250,000 shares will be granted to employees of
Infinitron.
With respect to Proposal 7 to approve the assumption of the
Infinitron Incentive Stock Option Plan, the affirmative vote of a
majority of the shares entitled to vote thereon is required.
Management recommends a "yes" vote. As management holds a majority
of shares in the Company and intends to vote in favor of this
proposal, it is anticipated that the proposal will pass despite any
opposition from other shareholders.
PROPOSAL 9
TO APPROVE THE CHANGE IN THE STATE OF INCORPORATION FOR THE COMPANY
FROM MISSOURI TO COLORADO
Management of the Company has concluded that following the
consummation of the transactions contemplated in this proxy, it
would be in the best interests of the Company and its shareholders
to reincorporate in the state of Colorado. The Company is
presently a Missouri corporation. Once the Licensing Agreement has
been ratified and the sale of assets completed, the Company will
cease to have any operations within the state of Missouri. Legal
counsel for the Company along with a substantial number of its
current (pre-Infinitron Transaction) shareholders reside in the
state of Colorado. In addition, the Company anticipates opening an
office in Colorado. The most significant difference between
Missouri corporation law and Colorado is that Colorado allows the
bylaws to be amended without shareholder approval. Management
believes this flexibility would be beneficial to the Company and
its shareholders. The reincorporation will be achieved through the
merger of the Company into a wholly owned subsidiary incorporated
in the state of Colorado.
With respect to Proposal 9 to approve the change in the state
of incorporation for the Company from Missouri to Colorado, the
affirmative vote of two thirds of the shares entitled to vote
thereon is required. Management intends to vote in favor of this
proposal.
PROPOSAL 10
RATIFICATION OF SELECTION OF BDO SEIDMAN, LLP AS INDEPENDENT
ACCOUNTING FIRM FOR THE COMPANY FOR THE CURRENT FISCAL YEAR
BDO Seidman, LLP issued the report for the Company's audited
financial statements for the fiscal year ended August 31, 1995.
The
26
<PAGE>
Board of Directors has approved a resolution to retain BDO
Seidman, LLP as the Company's independent accounting firm for the
current fiscal year. A representative of BDO Seidman, LLP will be
present at the Annual meeting.
With respect to Proposal 10 to ratify the selection of BDO
Seidman, LLP as the Company's independent accounting firm for the
current fiscal year, the affirmative vote of a majority of the
shares entitled to vote thereon is required. As management holds a
majority of shares in the Company and intends to vote in favor of
this proposal, it is anticipated that the proposal will pass
despite any opposition from other shareholders.
OTHER BUSINESS
The management of the Company knows of no other matters to
come before the meeting. However, if any matter requiring a vote
of the Stockholders should arise, it is the intention of the
persons named in the enclosed form of proxy to vote in accordance
with their best judgment.
PRINCIPAL SECURITY HOLDERS OF THE COMPANY
AFTER THE INFINITRON TRANSACTION
Listed below are the names and addresses of all persons
expected to hold 5% or more of the shares of the Company following
completion of the proposed Infinitron Transaction.
Name and Address Percentage Ownership
---------------- --------------------
Randall Currey 6.9%
#203 - 283 Davie Street
Vancouver, B.C. V6B 5C6
Jim Thiede 7.8%
#203 - 283 Davie Street
Vancouver, B.C. V6B 5C6
Robert Schroeder 5.9%
428 - West 58th Avenue
Vancouver, B.C. V5X 1V5
Benjamin A. Moglin 36.6%1
#203 - 283 Davie Street
Vancouver, B.C. V6B 5C6
Does not include shares the directors (to be elected at the anual meeting)
intend to purchase in the offering of 1.2
27
<PAGE>
million shares of the company's common stock pursuant to Regulations S AND D.
RECENT DEVELOPMENTS
Effective January 19, 1996, the Company adopted a plan to
discontinue the designing, selling, manufacturing and distribution
of its apparel products as a result of entering into the Licensing
Agreement with Robert Tamsky. As part of such plan, the Company
expects to discontinue production by May 31, 1996 and liquidate the
assets during the next six to twelve months following the end of
production. The pro forma financial statements included with these
proxy materials reflects a write-down of the Company's assets to
their estimated net realizable values and to accrue for operating
losses through the anticipated phase-out period.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the fiscal year ended
August 31, 1995 were audited by BDO Seidman, LLP. The Board of
Directors has approved a resolution to retain BDO Seidman, LLP as
the Company's auditor for the current fiscal year. A
representative of BDO Seidman, LLP will be present at the Annual
meeting.
In September 1995 the Company's former accountant's, KMPG Peat
Marwick, LLP, declined to stand for re-election. The Company
thereafter engaged BDO Seidman, LLP as its certified public
accountant. KMPG Peat Marwick's report on the financial statements
for the fiscal year ended August 31, 1994 contains a going concern
qualification but otherwise does not contain any adverse opinion or
a disclaimer of opinion. The decision to change accountants was
approved by the Company's Board of Directors. There were no
disagreements with KMPG Peat Marwick, LLP during the Company's two
most recent fiscal year's or any interim period on any matter of
accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
FINANCIAL STATEMENTS
The audited financial statement for the fiscal years ended
August 31, 1995 and August 31, 1994 are incorporated by reference
to the Amended Form 10-K/A for the fiscal year ended August 31,
1995 filed with the Securities and Exchange Commission on June __,
1996. The unaudited financial statements for the Company for the
period ended November 30, 1995 are incorporated by reference to the
Amended Form 10-QSB/A for such period filed by the Company with the
Securities and Exchange Commission on June __, 1996. The unaudited
financial statements for the Company for the period ended February
29, 1996
28
<PAGE>
are incorporated by reference to Form 10-QSB for the period ended
February 29, 1996 filed with the Commission on or about April 16, 1996.
Attached are audited financial statements of Infinitron
Research International, Inc. at May 31, 1995 stated in Canadian dollars.
Attached are the unaudited combined financial statements of
Infinitron Investments International, Inc. for the three months
ended August 31, 1995 stated in U.S. dollars.
Attached are pro forma financial statements of the Company and
Infinitron all stated in U.S. dollars.
DOCUMENTS INCORPORATED BY REFERENCE
The information contained in the Amended Form 10-K/A for the
Company for the fiscal year ended August 31, 1995 including the
financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operation, to be filed with the
Securities an Exchange Commission on June ___, 1996 are hereby
incorporated by reference. A copy of the Amended Form 10-K/A to be
filed with the Commission is included with these proxy materials.
(\files\leggoon\proxy.7)
29
<PAGE>
ADDENDUM TO STOCK ACQUISITION AGREEMENT
OF
SEPTEMBER 5, 1995
WHEREAS, Leggoons, Inc. ("Leggoons") and Infinitron Investments
International, Inc. ("Infinitron") entered into a Stock Acquisition
Agreement of September 5, 1995 (the "Agreement"), and
WHEREAS, Leggoons and Infinitron wish to amend said Agreement.
THEREFORE, in consideration for the promises set forth
IT IS AGREED as follows:
1. Provided that the proxy statement of Leggoons, Inc.
presently filed with the Securities and Exchange Commission
("SEC") with amendments thereto, is cleared within the time
period contemplated by this addendum or if the Agreement is
terminated as contemplated by section 6 of this addendum,
Infinitron disavows and/or disclaims all claims and/or
allegations set forth in its letter of April 16, 1996 and will
proceed to reasonably complete the transactions contemplated by
the Agreement and any additional amendments set forth herein.
2. Leggoons will use its best efforts to obtain clearance
by the Securities and Exchange Commission ("SEC") of its proxy
statement by July 22, 1996, and Leggoons will obtain all other
required approvals to the Agreement and the transactions
contemplated by it and will complete such transactions with
Infinitron by August 5, 1996.
3. Infinitron will use its best efforts to fully cooperate
with Leggoons in obtaining clearance by the SEC of Leggoons'
proxy statement, including prompt submission of all reasonable
information and/or documents requested by the SEC.
4. Leggoons will transfer all of its present assets and
liabilities from the corporation to a third party assignee for
the benefit of creditors prior to June 21, 1996 in order that no
creditors or claimants of whatever nature, either present or
future, will be able to make a successful claim against Leggoons
for whatever reason. Leggoons will provide a legal option from
Larry R. Demerath, Esq. that this has been accomplished on or
before June 21, 1996 and that Leggoons is not under any resulting
and/or remaining legal obligation for such assets and/or
liabilities as a result of such transfer. Leggoons shall provide
Infinitron continual updates on the progress of the transfer as
referred to herein and of the progress in clearing the proxy
statement with the SEC.
<PAGE>
5. James S. Clinton and the third party assignee referred
to in section 4 will defend and hold harmless and indemnify
Leggoons and Infinitron from any loss or damage that may arise
out of the transactions contemplated by the Agreement by section
4 of this addendum.
6. Absent further agreement, if all of the transactions
contemplated by this agreement do not take place on or before the
times indicated, the Agreement will without further action be
terminated and will no longer be in force or effect.
7. Provided Infinitron complies with the terms hereof,
Leggoons will not seek legal or equitable remedies against
Infinitron in the event that the Agreement is terminated as
contemplated by section 6.
8. Provided Leggoons complies with the terms hereof,
Infinitron will not seek legal or equitable remedies against
Leggoons in the event that the Agreement is terminated as
contemplated by section 6.
9. As a condition precedent to the completion of
Agreement, Leggoons shall reduce the common stock of the
corporation by a reverse one for ten split in lieu of the reverse
split presently contemplated by Proposal 5 of the proxy
statement.
10. In all other respects the Agreement remains in force
and effect.
11. Notwithstanding the terms of the Agreement, the
directors and officers of Leggoons after completion of the
transactions contemplated will be nominated by Infinitron in its
sole discretion.
EXECUTED this 22nd day of May, 1996.
INFINITRON INVESTMENTS LEGGOONS, INC.
INTERNATIONAL, INC.
By/s/ Benjamin Moglin By/s/ James S. Clinton
Title President Title President
(\files\leggoon\addendum.agt)
<PAGE>
LEGGOONS, INC.
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet as of
February 29, 1996, and unaudited pro forma condensed combined statements of
operations for the six months ended February 29, 1996, and for the year ended
August 31, 1995, reflect the pro forma condensed combined balance sheet and
the pro forma condensed combined statements of operations of Leggoons, Inc.
(Leggoons or the Company) giving effect to the pro forma adjustments described
herein as though the reverse stock split, the plan to discontinue the apparel
operations, the extinguishment of certain liabilities, the sale of assets of
the Company to a newly formed company controlled by the current president of
the Company and the Infinitron Transaction had been consummated at February
29, 1996, for the pro forma condensed combined balance sheet and at September
1, 1994, for the pro forma condensed combined statements of operations. The
unaudited pro forma condensed combined balance sheet combines Leggoons balance
sheet and Infinitron's combined balance sheet as of February 29, 1996, and
November 30, 1995, respectively, and the unaudited pro forma condensed
combined statements of operations combine the results of operations of
Leggoons and Infinitron for the fiscal years ended August 31, 1995, and May
31, 1995, and for the six month periods ended February 29, 1996, and November
30, 1995, respectively. The unaudited pro forma combined balance sheet data
for Infinitron has been prepared in conformity with U.S. generally accepted
accounting principles and is comprised of the combined Infinitron Investments
International, Inc. and Infinitron Research International, Inc. unaudited
balance sheets as of November 30, 1995, and the unaudited pro forma combined
statements of operations data for Infinitron has been prepared in conformity
with U.S. generally accepted accounting principles and is comprised of the
combined Infinitron Investments International, Inc. and Infinitron Research
International, Inc. unaudited statements of operations for the fiscal year
ended May 31, 1995, and the six month period ended November 30, 1995. The
unaudited pro forma condensed combined statements of operations data for the
periods ended August 31, 1995, and February 29, 1996, do not reflect
operational results of Infinitron after May 31, 1995, and November 30, 1995,
respectively. The unaudited pro forma condensed combined balance sheet does
not reflect activities, other than certain equity transactions, of Infinitron
after November 30, 1995. The unaudited pro forma condensed combined financial
statements should be read in connection with the notes thereto and with the
historical financial statements of Leggoons, together with the related notes
thereto, included elsewhere herein, as well as the historical financial
statements of Infinitron, together with the related notes thereto, included
elsewhere herein. The unaudited pro forma condensed combined statements of
operations are not necessarily indicative of operating results that would
have been achieved had the Infinitron Transaction, the discontinuance of the
apparel operations and the sale of assets of the Company to a newly formed
company controlled by the current president of the Company actually been
consummated as of the assumed date (i.e, September 1, 1994) and should not be
construed as indicative of future operations.
Under the terms of the Stock Acquisition Agreement, the Company is to
acquire all of the outstanding shares of common stock of Infinitron for
4,797,500 post-reverse split shares of ommon stock of the Company. Upon
completing this transaction, the stockholders of Infinitron will control
approximately 95% of the outstanding shares of common stock of the Company.
Under the proposed terms of the sale of assets of the Company to a newly
formed company controlled by the current president of the Company the present
assets of the Company would be exchanged for the assumption of all the present
liabilities of the Company.
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Infinitron Accounts
Infinitron Equity Infinitron Leggoons Payable
11/30/95 Transactions Pro Forma 2/29/96 Settlement
--------- ------------ ---------- -------- ----------
ASSETS
<S> <C> <C> <C> <C> <C>
Current
Cash "$10,127" "$2,375,000"(1) "$2,385,127" "$19,799"
Receivables "7,047 " "7,047" "232,188"
Inventories 0 0 "230,387"
Deferred
Charges 0 0 0
Prepaid
Expenses "61,326 " "61,326" 0
-------- --------------- --------- --------- -----------
Total
Current
Assets "78,502" "2,375,000" "2,453,502" "482,374"
-------- --------------- ---------- --------- ------------
Property,
Plant and
Equipment "53,196" "53,196" "81,442"
Other Assets
Trademarks 0 0 "240,726"
Investment
in and
Advances to
Partnership 0 0 "22,606"
Incorporation
Costs "8,855" "8,855" 0
--------- --------------- -------- --------- -----------
Total Other
Assets "8,855" "8,855" "263,332"
--------- --------------- ------- --------- ----------
"$140,552" "$2,375,000" "$2,515,552" "$827,148" $0
========== ============= =========== ========= ==========
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Leggoons ProForma
Reverse Leggoons Sale to Reflecting
Stock Split ProForma Clinton Clinton Sale
----------- -------- ------- ------------
ASSETS
<S> <C> <C> <C> <C>
Current
Cash "$19,799" "($19,799)"(5) $0
Receivables "$232,188" "(232,188)"(5) 0
Inventories "230,387" "(230,387)"(5) 0
Deferred Charges 0 0 (5) 0
Prepaid Expenses 0 0 (5) 0
Total Current --------- --------- --------- -----------
Assets "482,374" "(482,374)" 0
--------- --------- ----------- -----------
"Property, Plant
and Equipment "81,442" "(81,442)"(5) 0
---------- --------- ----------- -----------
Other Assets
Trademarks "240,726" "(240,726)"(5) 0
Investment in
and Advances
to Partnership "22,606" "(22,606)"(5) 0
Incorporation Costs 0
----------- --------- ----------- ------------
Total Other Assets "263,332" "(263,332)" 0
---------- --------- ---------- ------------
$0 "$827,148" "($827,148)" $0
========== ========= ========== ============
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Infinitron Infinitron Inc.
Merger ProForma
----------- -------------
ASSETS
<S> <C> <C>
Current
Cash "$2,385,127"
Receivables "7,047"
Inventories 0
Deferred Charges 0
Prepaid Expenses "61,326"
Total Current ----------- -----------
Assets 0 "2,453,502"
----------- -----------
"Property, Plant
and Equipment "53,196"
----------- -----------
Other Assets
Trademarks 0
Investment in
and Advances
to Partnership 0
Incorporation Costs "8,855"
----------- ------------
Total Other Assets 0 "8,855"
---------- ------------
$0 "$2,515,552"
============ ============
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Infinitron Accounts
Infinitron Equity Infinitron Leggoons Payable
11/30/95 Transactions Pro Forma 2/29/96 Settlement
--------- ------------ ---------- --------- ----------
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
(DEFICIT)
<S> <C> <C> <C> <C> <C>
Current
Notes Payable "$224,681" "$224,681" "$484,681"
Notes Payable
to Related
Party 0 0 "682,847"
Accounts
Payable "38,678" "38,678" "319,891" "($60,000)"
Accrued
Expense "19,605" "19,605" "86,622"
Estimated
Loss on
Discontinued
Operation 0 0 "150,000"
Current
Maturities
of Long-Term
Debt 0 0 "177,375"
Total
Current -------- --------- ------------ ---------- ----------
Liabilities "282,964" "282,964" "1,901,416" "(60,000)"
--------- -------- ----------- ---------- --------
Stockholders'
Equity
(Deficit)
Common Stock,
$.01 par 0 "47,975"(2) "47,975" "27,870"
value,
authorized
50,000,000
shares;
issued and
outstanding:
5,076,200
shares"
Share Capital "3,625" "7,235"(1) 0
"(10,860)"(2) 0
Additional
Paid-In
Capital "272,338" "2,367,765" 2,602,988" "2,390,070"
(1)
"(37,115)"
(2)
Accumulated
Deficit "(418,375)" "(418,375)" "(3,492,208)" "60,000"
(3)
--------- ---------- --------- --------- ---------
Total
Stockholders'
Equity
(Deficit) "(142,411)""2,375,000" "2,232,589" "(1,074,268)" "60,000 "
----------- ---------- ----------- ---------- --------
"$140,552""$2,375,000" "$2,515,552" "$827,148" $0
========= ========= =========== ========== ========
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Leggoons ProForma
Reverse Leggoons Sale To Reflecting
Stock Split Pro Forma Clinton Clinton Sale
----------- --------- ------- ------------
LIABILITIES AND
STOCKHOLDERS'
EQUITY (DEFICIT)
<S> <C> <C> <C> <C>
Current
Notes Payable "$484,681" "($484,681)"(5) $0
Notes Payable to
Related Party "682,847" "(682,847)"(5) 0
Accounts Payable "259,891" "(259,891)"(5) 0
Accrued Expenses "86,622" "(86,622)"(5) 0
Estimated Loss on
Discontinued
Operations "150,000" "(150,000)"(5) 0
Current Maturities
of Long-Term Debt "177,375" "(177,375)"(5) 0
Total Current ------------ --------- --------------- ------------
Liabilities "1,841,416" "(1,841,416)" 0
Stockholders'
Equity (Deficit)
"Common Stock,
$.01 par " "($25,083)"(4) "2,787" "2,787"
"value,authorized
50,000,000"
shares;
issued and
outstanding:
5,076,200
shares"
Share Capital 0
Additional
Paid-In Capital "25,083"(4) "2,415,153" "1,014,268"(5) "3,429,421"
Accumulated
Deficit "(3,432,208)" "(3,432,208)"
----------- ------------ ----------- -----------
Total
Stockholders'
Equity (Deficit) 0 "(1,014,268)" "1,014,268 " 0
------------ ------------- ------------- ----------
$0 "$827,148" "($827,148)" $0
============ ============ ============ ==========
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED BALANCE SHEET
"FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION> Infinitron Infinitron Inc.
Merger ProForma
------------- -----------------
LIABILITIES AND
STOCKHOLDERS'
EQUITY (DEFICIT)
<C> <C>
Current
Notes Payable "$224,681 "
Notes Payable to
Related Party 0
Accounts Payable "38,678 "
Accrued Expenses "19,605 "
Estimated Loss on
Discontinued
Operations 0
Current Maturities
of Long-Term Debt 0
Total Current ----------- ------------
Liabilities 0 "282,964 "
----------- -------------
Stockholders'
Equity (Deficit)
"Common Stock,
$.01 par " "50,762 "
"value,authorized
50,000,000"
shares;
issued and
outstanding:
5,076,200 shares"
Share Capital
Additional
Paid-In Capital "($3,432,208)"(6) "2,600,201 "
Accumulated
Deficit "3,432,208"(6) "(418,375)"
-------------- ----------
Total
Stockholders'
Equity (Deficit) 0 "2,232,589 "
------------- --------------
$0 "$2,515,552 "
============= ==============
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
Pro Forma Condensed Combined Balance Sheet Presentation
- -------------------------------------------------------
The pro forma condensed combined balance sheet is presented in U.S.
dollars. The Company converted the Infinitron November 30, 1995, unaudited
combined balance sheet from Canadian dollars to U.S. dollars using the
exchange rate in effect at the balance sheet date.
Principles of Combination
- -------------------------
The unaudited combined balance sheet of Infinitron includes the accounts
of Infinitron Investments International, Inc. and Infinitron Research
International, Inc., a predecessor which is under common control and
ownership. All significant intercompany transactions have been eliminated
in the combination. The Infinitron November 30, 1995, unaudited combined
balance sheet has been prepared using US GAAP.
Accounting Treatment
- --------------------
The proposed Infinitron merger transaction has been treated as a
recapitalization of Infinitron followed by an issuance of shares by
Infinitron. The November 30, 1995, unaudited combined balance sheet of
Infinitron reflects pro forma adjustments to provide for the recapitalization
of Infinitron's stockholders' equity to reflect the capital structure of the
Company and the issuance of the shares in the transaction. See Pro Forma
Adjustments (2) and (6).
Valuation
- ---------
The total value assigned to the Infinitron merger transaction is $0.
The basis for such valuation is the value of the Company's net assets after
the sale of all assets of the Company to a newly formed company controlled
by the current president of the Company in exchange for the assumption of
present liabilities of the Company. The Company will essentially be a shell
after the completion of, the transaction with its president.
Development Stage Operations
- ----------------------------
Infinitron Research International, Inc. and Infinitron Investments
International, Inc. were formed on June 22, 1994 and May 1, 1995,
respectively. Operations to date have primarily been devoted to developing
Internet oriented multimedia database programs, raising capital, obtaining
financing and performing administrative functions.
Pro Forma Adjustments
- ---------------------
(1)- Reflects the issuance of 723,500 shares of Infinitron common stock
for $2,375,000 (U.S. $) subsequent to August 31, 1995.
(2)- Reflects the recapitalization of Infinitron to reflect 4,797,500
shares of $.01 par value common stock.
(3)- Reflects the modification of the terms of certain accounts payable
by Leggoons under agreements which provide for payment of approximately 25%
of the face value of those liabilities.
<PAGE>
(4)- Reflects the reduction of Leggoons outstanding common stock
resulting from a one-for-ten reverse split. Common stock is reduced by
$25,083 and additional paid-in capital is increased by $25,083.
(5)- Reflects the sale of all assets of Leggoons to a newly formed
company controlled by the current president of the Company in exchange for
the assumption of present liabilities of the Company prior to the Infinitron
Transaction.
(6)- To reflect the acquisition of Leggoons by Infinitron.
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
"FOR THE YEAR ENDED AUGUST 31, 1995"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons Leggoons
Infinitron Leggoons Discontinued Reverse
5/31/95 8/31/95 Operations Stock Split
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Sales $0 "$2,260,872" "($2,260,872)"(1)
Cost of Sales 0 "2,012,543" "(2,012,543)"(1)
------------ ---------- -------------- ------------
Gross Profit 0 "248,329" "(248,329)"
"Selling,
general and"
administrative
expenses "184,004" "1,523,547" "(1,401,656)"(1)
----------- ---------- ------------- ------------
Operating
income (loss) "(184,004)" "(1,275,218)" "1,153,327"
----------- ----------- ------------ ----------
Other expense
(income):
Interest
expense 0 "(130,046)"
Other 0 "(1,719)" "1,719"(1)
----------- ------------- ------------- ------------
Income (loss)
before
income taxes "(184,004) "(1,406,983)" "1,155,046"
Income tax
benefit "46,455" 0
Income (loss)
from continuing ----------- ------------- ------------ -------------
operations "($137,549)" "($1,406,983)" "$1,155,046"
Income (loss)
from continuing
operations
per share ($0.03) ($0.51)
======= =======
Weighted
average shares
outstanding "4,797,500" "2,734,500" (2,461,050)(2)
</TABLE> ========== ========== =============
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
"FOR THE YEAR ENDED AUGUST 31, 1995"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Pro Forma
Leggoons Sale to Reflecting
Pro Forma Clinton Clinton Sale
----------- ------------ ---------------
<S> <C> <C> <C>
Sales $0 $0 $0
Cost of Sales 0 0 0
------------ ------------ ---------------
Gross Profit 0 0 0
"Selling,
general and"
administrative
expenses "121,891" "($106,891)"(3) "15,000"
------------ -------------- ----------------
Operating
income (loss) "(121,891)" "106,891" "(15,000)"
Other expense
(income):
Interest expense "(130,046)" "130,046"(3) 0
Other 0 0 0
----------- -------------- ----------------
Income (loss)
before
income taxes "(251,937)" "236,937" "(15,000)"
Income tax
benefit 0 0
Income (loss)
from continuing ------------ ------------ ------------
operations "($251,937)" "$236,937" "($15,000)"
============ =========== ============
Income (loss)
from continuing
operations per
share ($0.92) ($0.05)
========== ==========
Weighted average
shares outstanding "273,450" "273,450"
========== ==========
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
"FOR THE YEAR ENDED AUGUST 31, 1995"
(Unaudited US $)
<TABLE>
<CAPTION>
Infinitron Infinitron Inc.
Merger Pro Forma
------------ ---------------
<S> <C> <C>
Sales $0
Cost of Sales 0
------------ ---------------
Gross Profit 0
"Selling,
general and"
administrative
expenses "($15,000)"(4) "184,004"
-------------- ----------------
Operating
income (loss) "15,000" "(184,004)"
Other expense
(income):
Interest expense 0
Other 0
------------- ----------------
Income (loss)
before
income taxes "15,000" "(184,004)"
Income tax
benefit "46,455"
Income (loss)
from continuing ------------ ------------
operations "$15,000" "($137,549)"
============ ===========
Income (loss)
from continuing
operations per
share ($0.03)
========== ==========
Weighted average
shares outstanding" "5,250" "5,076,200"
========== ==========
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OFOPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
Pro Forma Condensed Combined Statement of Operations Sheet Presentation
- -----------------------------------------------------------------------
The pro forma condensed combined statement of operations is presented in
U.S. dollars. The Company converted the Infinitron May 31, 1995, unaudited
combined statement of operations from Canadian dollars to U.S. dollars using
average exchange rates that prevailed during the period.
Principles of Combination
- -------------------------
The unaudited combined statement of operations of Infinitron Investments
International, Inc. includes the accounts of Infinitron Research
International, Inc., a predecessor which is under common control and
ownership. All significant intercompany transactions have been eliminated in
the combination. The Infinitron May 31, 1995, unaudited combined statement of
operations has been prepared using US GAAP.
Development Stage Operations
- ----------------------------
Infinitron Research International, Inc. and Infinitron Investments
International, Inc. were formed on June 22, 1994 and May 1, 1995,
respectively. Operations to date have primarily been devoted to developing
Internet oriented multimedia database programs, raising capital, obtaining
financing and performing administrative functions.
Weighted Average Shares Outstanding
- -----------------------------------
The Leggoons pro forma weighted average shares outstanding represents
the average number of shares of Leggoons, Inc. common stock outstanding
during the period, as restated for the one-for-ten reverse stock split. The
Infinitron, Inc. pro forma weighted average shares outstanding reflects
Infinitron's historical weighted average shares outstanding, as adjusted for
the recapitalization in connection with the merger plus the 278,700 shares to
be issued to Leggoons stockholders.
Pro Forma Adjustments
- ---------------------
(1)- Eliminate the apparel operations activity of Leggoons, Inc. for the
fiscal year ended August 31, 1995, due to the discontinued operations plan
adopted by management in January 1996. All administrative expenses associated
with the remaining shell, amortization of the cost of the trademark for which
there is no disposal plan, other than the "sale to Clinton" discussed in
adjustment (3), and debt service expenses have been retained.
(2)- Reflect the reduction of the weighted average number of shares of
Leggoons, Inc. common stock outstanding resulting from the one-for-ten reverse
stock split.
(3)- Eliminate the pro forma operations activity of Leggoons, Inc. for
the fiscal year ended August 31, 1995, due to the sale of assets of the
Company to a newly formed company controlled by the current president of the
Company with an assumed consummation date of September 1, 1994.
(4)- Eliminate the pro forma shell operations activity of Leggoons, Inc.
for the fiscal year ended August 31, 1995, due to the completion of the
Infinitron merger with an assumed consummation date of September 1, 1994.
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
"FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Infinitron Leggoons Reverse Leggoons
11/30/95 2/29/96 Stock Split Pro Forma
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Sales $0 $0 $0
Cost of Sales 0 0 0
Gross Profit 0 0 0
"Selling,
general and"
administrative
expenses "284,330" "75,945" "75,945 "
--------- --------- ---------
Operating
income (loss) "(284,330)" "(75,945)" "(75,945)"
Other expense
(income):
Interest expense 0 "(54,531)" "(54,531)"
Other "(13,263)" 0 0
--------- --------- ----------
Income (loss)
before
income taxes "(297,593)" "(130,476)" "(130,476)"
Income tax benefit "21,500" 0 0
Income (loss) from
continuing
operations "($276,093)" "($130,476)" "($130,476)"
========== ========== =========
Income (loss) from
continuing operations
per share ($0.06) ($0.05) ($0.47)
======= ======== ========
Weighted average shares
outstanding "4,797,500" "2,787,000" "(2,508,300)"
========== ========== ==========
</TABLE>
<PAGE>
"LEGGOONS, INC."
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
"FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996"
(Unaudited US $)
<TABLE>
<CAPTION>
Leggoons
Pro Forma
Sale To Reflecting Infinitron Infinitron Inc.
Clinton Clinton Sale Merger Pro Forma
---------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Sales $0 $0
Cost of Sales 0 0
---------- ------------ ------------ -------------
Gross Profit 0 0
"Selling,
general and"
administrative
expenses "($63,945)"(2) "12,000" "($12,000)"(3) "284,330"
Operating
income (loss) "63,945" "(12,000)" "12,000" "(284,330)"
Other expense
(income):
Interest expense "54,531"(2) 0 0
Other "(13,263)"
Income (loss)
before ---------- ---------- -------- -----------
income taxes "118,476" "(12,000)" "12,000" "(297,593)"
Income tax
benefit 0 "21,500 "
Income (loss)
from continuing
operations "$118,476" "($12,000)" "$12,000" "($276,093)"
========= ========= ======= ==========
Income (loss)
from continuing
operations
per share ($0.04) ($0.05)
========= ========
Weighted average
shares outstanding "278,700" "5,076,200"
========== ===========
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OFOPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996
Pro Forma Condensed Combined Statement of Operations Sheet Presentation
- -----------------------------------------------------------------------
The pro forma condensed combined statement of operations is presented in
U.S. dollars. The Company converted the Infinitron November 30, 1995,
unaudited combined statement of operations from Canadian dollars to U.S.
dollars using average exchange rates that prevailed during the period.
Principles of Combination
- -------------------------
The unaudited combined statement of operations of Infinitron Investments
International, Inc. includes the accounts of Infinitron Research
International, Inc., a predecessor which is under common control and
ownership. All significant intercompany transactions have been eliminated in
the combination. The Infinitron November 30, 1995, unaudited combined
statement of operations has been prepared using US GAAP.
Development Stage Operations
- ----------------------------
Infinitron Research International, Inc. and Infinitron Investments
International, Inc. were formed on June 22, 1994 and May 1, 1995,
respectively. Operations to date have primarily been devoted to developing
Internet oriented multimedia database programs, raising capital, obtaining
financing and performing administrative functions.
Weighted Average Shares Outstanding
- -----------------------------------
The Leggoons pro forma weighted average shares outstanding represents
the average number of shares of Leggoons, Inc. common stock outstanding during
the period, as restated for the one-for-ten reverse stock split. The
Infinitron, Inc. pro forma weighted average shares outstanding reflects
Infinitron's historical weighted average shares outstanding, as adjusted for
the recapitalization in connection with the merger plus the 278,700 shares to
be issued to Leggoons stockholders.
Pro Forma Adjustments
- ---------------------
(1)- Reflect the reduction of the weighted average number of shares of
Leggoons, Inc. common stock outstanding resulting from the one-for-ten
reverse stock split.
(2)- Eliminate the pro forma operations activity of Leggoons, Inc. for
the six months ended February 29, 1996, due to the sale of assets of the
Company to a newly formed company controlled by the current president of the
Company with an assumed consummation date of September 1, 1994.
(3)- Eliminate the pro forma shell operations activity of Leggoons, Inc.
for the six months ended February 29, 1996, due to the completion of the
Infinitron merger with an assumed consummation date of September 1, 1994.
<PAGE>
P R O X Y
LEGGOONS, INC.
Annual Meeting of Shareholders To Be Held June __, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James S. Clinton and Steven D. Walters,
or either of them, as proxies of the undersigned, with full power of
substitution, and hereby authorizes them to represent and to vote at the
Annual Meeting of Shareholders of Leggoons, Inc. (sometimes hereinafter
referred to as the "Company") to be held on June __, 1996, as designated
below, all of the Common Shares of Leggoons, Inc. held of record by the
undersigned on June __, 1996, at the Vandalia Country Club, Highway 54,
Vandalia matter that properly may come before the meeting or any adjournment
thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY to
below vote for all nominees
listed below
James S. Clinton Benjamin A. Moglin Robert Crompton
2. PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE
CORPORATION TO INFINITRON, INC.
FOR AGAINST ABSTAIN
3. PROPOSAL TO AMEND TO INCREASE THE AUTHORIZED COMMON STOCK TO 50,000,000
SHARES.
FOR AGAINST ABSTAIN
4. PROPOSAL TO AMEND THE COMPANY'S BYLAWS TO DECREASE THE MINIMUM NUMBER OF
DIRECTORS OF THE COMPANY TO THREE.
FOR AGAINST ABSTAIN
5. TO EFFECT A REDUCTION IN THE AMOUNT OF OUTSTANDING SHARES OF COMMON STOCK
BY A ONE-FOR-TEN REVERSE SPLIT OF COMMON STOCK
FOR AGAINST ABSTAIN
6. TO APPROVE THE LICENSING OF THE LEGGOONS TRADEMARK TO ROBERT TAMSKY
FOR AGAINST ABSTAIN
7. TO RATIFY THE SALE OF ALL THE ASSETS OF THE COMPANY TO A COMPANY
CONTROLLED BY JAMES CLINTON IN EXCHANGE FOR THE ASSUMPTION OF ALL LIABILITIES
FOR AGAINST ABSTAIN
8. TO APPROVE THE ASSUMPTION BY LEGGOONS INC. OF THE INFINITRON
INTERNATIONAL INVESTMENTS INC INCENTIVE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
9. TO APPROVE THE REINCORPORATION OF THE COMPANY FROM THE STATE OF MISSOURI
TO THE STATE OF COLORADO
FOR AGAINST ABSTAIN
10. TO RATIFY THE SELECTION OF BDO SIEDMAN AS THE COMPANY'S INDEPENDENT
ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR.
FOR AGAINST ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS GIVEN, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS SET FORTH ABOVE.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders of Leggoons, Inc. to be held on June __, 1996 and the Proxy
Statement of such meeting.
Dated:______________, 1996 _______________________________
_______________________________
(Signature of Shareholder)
Note: Please sign exactly as name appears on
stock certificate (as indicated on reverse side).
All joint owners should sign. When signing as
personal representative, executor, administrator,
attorney, trustee or guardian, please give full
title as such. If a corporation, please sign in
full corporation name by President or other
authorized person. If a partnership, please
sign in partnership name by a partner.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. (proxy.crd)
<PAGE>
D DEMERATH LAW OFFICES
____________________________________________________________
____________________________________________________________
__________________
40 GINGER COVE ROAD
VALLEY, NEBRASKA 68064-3000
(402) 359-5656 FAX (402) 359-5304
June 4,1996
LAURENCE B ASSALY
ATTORNEY AT LAW
10TH FLOOR
1199 WEST HASTINGS STREET
VANCOUVER BC V6E 3T5
GARY DUNN
ATTORNEY AT LAW
1655 WEST BROADWAY AVENUE
VANCOUVER BC V6J 1X1
Re: Infinitron Investments International, Inc.
Stock Acquisition Agreement
Gentlemen:
As a part of the Stock Acquisition Agreement by and between
Leggoons, Inc. ("Leggoons") and your client Infinitron
Investments International, Inc. ("Infinitron") dated
September 5, 1995, and the subsequent Amendment dated May
22, 1996, Leggoons as a prerequisite, among other things, is
required to deliver to Infinitron a public corporate shell
which is free and clear of any debt and/or liability of any
nature and/or kind. Moreover, under the above referenced
Amendment, this eradication of debt and/or liabilities of
Leggoons is to be accomplished by no later than June 21,
1996.
As we have discussed, this will be accomplished by a concept
known as "Assignment for the Benefit of Creditors."
Moreover, in the state of Missouri (Leggoons state of
incorporation and domicile) the same can be accomplished
statutorily (Mo. Stat. 426.010 et seq.) and/or under a
common-law right. In this particular case, Leggoons has
chosen to use the common-law approach. Under St. Louis
Catering Co. v. Glancy, 242 S.W. 392, 397, it is stated:
There is nothing in...law itself; there
is nothing in the history of the
legislature on this subject; there is
nothing in the adjudications of this
Court that gives countenance to the
<PAGE>
June 4, 1996
Page 2
idea that a debtor, insolvent or
otherwise, who is desirous of
appropriating his property to the
payment of his debts, is compelled
to resort to the statutory proceedings
to accomplish his purpose....The statute
does not, and was not intended,
to any further extent, to abolish
or abridge his common-law right,
whether solvent or insolvent, in good
faith to sell, deliver in payment,
mortgage or pledge the whole or any part
of his property for the benefit of one
or more of his creditors....
...[a]n assignment for the benefit of
creditors is more than a security for
the payment of debts, it is absolute
appropriation of property to their
payment. It does not create a lien in
favor of creditors upon property which
in equity is still regarded as the
assignors' but it passes both the legal
and equitable title to the property
absolutely beyond the control of the
assignors. (Italics, ours.)
Simply put, the Missouri courts have interpreted the
statutes concerning such transfers as "regulatory" and not
"mandatory." (See also Jones v. Fidelity Nat. Bank & Trust
Co., 362 Mo. 712, 243 S.W.2d 970, 975 (1951.)
Secondly, the question in a corporate environment is, who
must approve such a transfer -- the shareholders and/or the
board of directors. The question is answered in Calumet
Paper Co. v. Haskell Show-Printing Co., 144 Mo. 331, 45 S.W.
115, 116 (1898):
An assignment for the benefit of
creditors by an insolvent corporation
must be by resolution of the board, and
it cannot be done by a resolution passed
when a minority only of the board of
directors are present.
At common-law, in order to make a transfer for the benefit
of creditors, the debtor voluntarily transfers all of its
assets and liabilities to an assignee. The assignee then
liquidates the assets and distributes the proceeds to the
creditors, pro rata, and according to the priority of their
respective properly secured interests (6 Am. Jur.2d,
Assignment for Benefit of Creditors, 9, 10, 18). Both
courts and creditors favor bonafide assignments for the
benefit of all creditors, since such assignments uphold the
freedom to contract, and such assignments generally yield a
greater return for the creditors than a formal bankruptcy (6
Am. Jur.2d, Assignment for Benefit of Creditors, 1, 4).
Also, when a corporation makes an assignment for benefit of
creditors, the corporation acts in the same capacity as an
individual. Hutchinson v. Green, 91 Mo. 367, 1 S.W. 853,
857 (1886) and Adam Roth Grocery Co. v. Hotel Monticell Co.
148 Mo. App., 128 S.W. 542, 546 (1910).
<PAGE>
June 4, 1996
Page 3
At common-law, no particular form is required to constitute
an assignment by a corporation for the benefit of its
creditors. To be valid, an assignment must give the
assignee absolute legal and equitable title to all of the
debtor's assets, and additionally, transfer all liabilities.
Additionally, the transfer must be complete and
unconditional on its face, and free from fraud. [See 15A
Fletcher Cyc. Corp. 7394, 19A Fletcher Cyc. Corp. 6, 11
(1990, Supp. 1995).]
Finally, and of some importance is whether or not the
transferor (assignor) in the assignment can condition
creditor's participation in the distribution of proceeds on
a release of debtor's liability. The answer to the question
is in the negative, since courts do not favor debtors who
institute quasi bankruptcy proceedings on their own terms
and conditions. [See ML Barrett & Co. v Chilton, 304 Mo.
679, 264 S.W. 802, 807 (1924).]
Fourthly, the question is whether or not Leggoons would
retain any liability, subsequent to the transfer, which
would attach to Infinitron once the acquisition has been
completed. The better case law regarding transfer for
benefit of creditors states that any judgment recovered
against an insolvent debtor serves only as evidence of the
amount due to the creditor from the assignee's liquidation
fund. Thus, a judgment in persona enables the creditor to
only take part in the distribution amongst creditors. [See
Riehle v. Margolies, 279 U.S. 218, 226-227 (1929)], where
that case cited from Central Trust Co. v. D'Arcy, 238 Mo.
676, 142 S.W. 294 (1911).
The sentiments of Riehle and Central Trust have been echoed
in other Missouri cases, specifically in State ex rel
Auchincloss, Parker, & Redpath, Inc. v. Harris, 349 Mo. 190,
159 S.W.2d 799, 803, where that court stated:
...[t]he general rule seems to be that
when the suit is brought to reach assets
in the hands of a third party, the
decree will not go beyond those assets;
and a personal judgment will not be
rendered, except in a substitutionary
way, or in enforcement of its decree (as
by requiring the execution of an
assignment or conveyance of a property),
or where the defendant has consumed or
appropriated the property.
In summary, in order to be effective, and to eliminate
liability for Leggoons it will be necessary to transfer each
and every asset (or the fair market value for same) and each
and every liability of any kind or nature, to a third party
(assignee), which in this instance, will be a Nebraska
corporation. If any value, however small, is left in the
shell corporation, the transfer will be ineffective. Stated
yet another way, in order to insure the desired results the
"Assignment for Benefit of Creditors" will have to harmonize
with the guidelines of the Bankruptcy Code (Chapter 7) in
providing each and every creditor the maximum distribution.
<PAGE>
June 4,1996
Page 4
Provided that all of the foregoing requirements are
successfully accomplished, it is our opinion that no further
liability will remain with Leggoons and/or Infinitron once
the acquisition has been completed. While the cases cited
herein are quite old, "Shepardization" of same indicates
that they still represent good law in Missouri. [See also 6
Am. Jur.2d, Assignment for Benefit of Creditors; and Leslie
R. Horowtiz and John A. Papinski, Assignment for the Benefit
of Creditors, 16 Los Angeles Lawyer 21 (May 1993), copy of
later attached.] Finally, enclosed please find a copy of
the the proposed document titled Assignment for Benefit of
Creditors.
Thank you for your kind consideration. As additional
material and documents are produced they will be forwarded.
Sincerely,
LARRY R. DEMERATH
LD34B.76
<PAGE>
ASSIGNMENT FOR BENEFIT OF CREDITORS
THIS ASSIGNMENT is made and entered into on June
______, 1996, by and between LEGGOONS, INC., a corporation
organized and existing under the laws of Missouri, with its
principal place of business at 400 South Lindell Street,
Vandalia, Audrain County, Missouri, 63382, herein after
referred to as "Debtor," and LEGGOONS CORPORATION, organized
and existing under the laws of Nebraska, with its principal
office located at 40 Ginger Cove, Valley, Douglas County,
Nebraska, 68064, herein after referred to as "Assignee."
RECITALS
A. Debtor is in such financial condition that it is
unable at the present time to pay the claims and demands of
its secured and unsecured creditors.
B. It is desirable that an arrangement be made,
without the intervention of legal proceedings, namely
Bankruptcy, for the liquidation of debtor's assets, whereby
all its creditors shall share and share like without any
preference or priority, other than that provided by law and
by the terms and provisions of this Agreement.
In consideration of the matters described above, and of
the mutual benefits and obligations set forth in this
Agreement, the parties hereto agree as follows:
SECTION ONE
ASSIGNMENT
Debtor sells, assigns, transfers, sets-over and
delivers to Assignee all of Debtor's property of every kind
and nature whatsoever and where so ever located, including,
but not by way of limitation, the following (See Exhibit A):
A. All of debtor's equipment, fixtures and trade
fixtures, furniture, furnishings, tools and appliances,
together with all affixed accessions and parts.
B. All goods, wares, merchandise and all inventory of
whatsoever kind, type or nature, including, but not limited
to, goods and property that (1) are held by Debtor
1
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for sale or lease or (2) are furnished or are to be
furnished
by Debtor under any contract of service or (3) are held
by
Debtor as work in process or materials used or consumed in
its business, and all proceeds of the sale or other
disposition of the sale.
C. All Debtor's books of account and accounting
records of every kind and nature, without limitation.
D. All Debtor's corporate records and bylaws of
incorporation and all other corporate documents of every
kind and nature.
E. All rights of every kind to payment of money owed
to Debtor, whether due or to become due.
F. All accounts and all proceeds of accounts.
G. All chattel paper, instruments, documents, general
intangibles and their proceeds; all money, including cash on
deposit and cash on hand; all bank accounts and all deposits
maintained with any person, including, but not limited to,
funds on deposit with financial institutions and utility
companies.
H. Real property located in Missouri, more
particularly described on schedule attached as Exhibit A and
incorporated by reference, which real property debtor agrees
to convey forthwith to assignee by good and sufficient
quitclaim deeds.
SECTION TWO
CONDITIONS
A. Under Exhibit B, attached hereto and made a part
hereof by this reference, debtor has provided assignee a
written schedule listing the name and address of each and
every known creditor, together with the amount and nature of
each creditor's claim.
B. Nothing in this assignment is intended to change
or modify any legal rights, liens or security interests that
Debtor's creditors may have. Assignee accepts this
assignment and takes Debtor's property subject to all valid,
enforceable and perfected security interests or other liens.
C. Subject to the related contract rights of any
secured creditors, Assignee shall convert Debtor's property
into cash for the benefit of the creditors of Debtor.
Except as provided by the laws of the United States and/or
Missouri, that are applicable to
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the administration, liquidation and distribution of insolvent
estates that are not in proceedings initiated in the United
States Bankruptcy Courts, the proceeds of the subject
property are to be distributed in accordance with the
applicable provisions of, in the amounts limited by, and in
the order of priority established by, the Act of Congress
known as Bankruptcy Reform Act of 1978, as amended by the
Bankruptcy Amendments and Federal Judgeship Act of 1984,
and more particularly those statutory provisions, to the
extent applicable, contained in Title 11 of the United States
Code, 502, 503, 507 and 726, which are incorporated herein
by reference.
D. No claims shall be allowed and paid unless filed
in writing with Assignee within the time fixed by Assignee,
WHICH SHALL NOT BE LATER THAN JULY 5, 1996. Tardily filed
claims shall be allowed to participate in and to receive a
distribution in accordance with the provisions relating to
tardily filed claims under Title 11 of the United States
Code, 726.
E. To the extent any property held subject to a
security interest or lien is sold by Assignee, the proceeds
of the sale, after deducting expenses of the sale, shall be
paid by Assignee to the secured party in accordance with the
terms and provisions of such security agreements for
application on the secured party's indebtedness.
F. Notwithstanding any provision contained in this
Agreement to the contrary, the claim of Assignee for its
services rendered in connection with this Agreement, to the
extent it shall not otherwise be compensated for its
services from its fees and commissions as provided below,
together with all costs and expenses incurred by it in
connection with such services, including fees of accountants
and attorneys who shall render professional services to
assignee and debtor in connection with this assignment,
shall be paid in full before any distribution is made to
Debtor's unsecured creditors.
G. Debtor represents that the schedule of creditors
to be furnished to Assignee by Debtor will list all the
claims known to be owing by Debtor that are to participate
in the distribution provided for under this agreement.
Assignee agrees to allow any other bona fide creditor of
Debtor not listed in the schedule to participate under this
assignment in accordance with the provisions of Paragraph D
of this Section Two. Assignee shall not be liable for all
or any part of the claim of any creditor who has failed to
file a claim with
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assignee in accordance with the provisions
of Paragraph D. If any dividends to creditors shall remain
unclaimed for a period of one year after issuance by
Assignee of the final dividend checks, a reasonable amount
of the dividends shall become the property of Assignee and
used to supplement its fees for services rendered in
administering this agreement, and the balance shall be
distributed to those creditors whose claims shall remain
unpaid.
H. After all costs and expenses, including attorney
fees and accountants' fees and those claims of other persons
rendering professional services in connection with the
administration of this agreement, have been paid in full,
and after all claims for services rendered and all
commissions and fees of Assignee have been paid in full, and
after all claims of creditors have been paid in full, the
balance of the proceeds of the liquidation of the assets of
Debtor, if any, shall be paid by Assignee to Debtor.
I. It is expressly covenanted and agreed that
assignee shall operate Debtor's business, if at all, only
for such period of time and in such manner as Assignee, in
its sole and absolute discretion, shall determine to be in
the best interests of Debtor and its creditors and
consistent with the orderly liquidation of Debtor's assets.
J. Debtor irrevocably appoints and constitutes
Assignee as its attorney-in-fact, authorizing it in the name
of Debtor or in its own name, or otherwise, as the case may
require, to do any and all acts, matters and things to carry
into effect the intent, meaning and spirit of this
assignment. Without limiting the foregoing, and subject to
prior rights of secured creditors, Debtor expressly
authorizes assignee to sign the name of Debtor to any check,
draft, promissory note or other instrument or commercial
paper, which is payable to the order of debtor or to which
debtor is a party, and in debtor's name, and to apply for
any refunds or deposits, or enforce any claims whenever in
the sole and absolute discretion of Assignee it shall be
necessary to carry into effect the purposes of this
assignment.
K. Debtor will, from time to time, make, execute and
deliver to assignee, such conveyances, assignments and other
instruments in writing as assignee may request, and Debtor
will take all steps and do all things requested by Assignee
to put Assignee in full ownership, possession and control
of all of Debtor's assets, subject to the rights of
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secured creditors as set forth in Paragraph B of this
Section Two, and will assist and cooperate with Assignee in every
way requested by it in carrying out this Agreement.
L. Assignee accepts the trust created pursuant to
this agreement, and agrees that it will faithfully and
without delay execute the trust according to the best of its
skill, knowledge and ability.
M. Assignee shall be compensated for its assumption
of the trust created by this Agreement and shall receive
reasonable compensation for its services.
IN WITNESS WHEREOF, each party to this Agreement has
caused it to be executed as indicated below.
EXECUTED THIS _______ day of June, 1996.
LEGGOONS', INC.
By: ___________________________________________
EXECUTED THIS _______ day of June, 1996.
LEGGOONS, CORPORATION
By: ____________________________________________
LD34B.77
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