FORM 10-K/A#1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM______________TO_________________
COMMISSION FILE NUMBER 0-26368
TRANSMEDIA ASIA PACIFIC, INC.
-----------------------------
(exact name of registrant as specified in its charter)
Delaware 13-3760219
----------------------- -----------------
(State or other jurisdiction of (I.R.S.
incorporation of organization) Identification No.)
11 ST. JAMES'S SQUARE, LONDON SW1Y 4LB, ENGLAND
-----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: U.K. 011-44-171-930-0706
Securities registered pursuant to Section 12(g) of the Act
Common Stock, par value $.00001 per share
-----------------------------------------
(Title of class)
Indicate by (X) whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days
Yes |_| No |X|
<PAGE>
This amendment to the Company's Annual Report on Form 10-K for the year ended
September 30, 1999 is being filed to include exhibits omitted in the original
filing.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are being filed as part of this Report.
(a)(1) Financial Statements:
Transmedia Asia Pacific, Inc.
See "Index to Financial Statements" contained in Part II, Item 8
(a)(2) Financial Statement Schedules:
II Schedule of Valuation and Qualifying Accounts
(a)(3) Exhibits:
3.1 Certificate of Incorporation of the Company.
3.2 By-laws of the Company.
4.1 Specimen Certificate of the Company's Common Stock.
10.1(a) Master License Agreement, dated March 21, 1994, by and between Network
and Conestoga.
10.1(b) Assignment and Assumption Agreement (of the Master License Agreement),
dated May 2, 1994 by and among Conestoga, the Company and Network.
10.1(c) Option Agreement, dated March 21, 1994, by and between the Company and
Conestoga.
10.1(d) Assignment and Assumption Agreement (of Option Agreement) dated May 2,
1994 by and among Conestoga, the Company and Network.
10.1(e) Employment Agreement, dated as of May 6, 1994, between the Company and
Paul L. Harrison.
10.1(f) Employment Agreement, dated as of May 6, 1994, between the Company and
Edward J. Guinan, III.
10.1(g) Software License Agreement, dated as of August 16, 1994, between
Transmedia Europe and the Company.
10.1(h) Letter Agreement, dated October 19, 1994 from John Fairfax Group Pty.
Limited and Transmedia Australia Pty Limited.
10.1(i) Sublease, dated August 31, 1994, between Cambooya Properties Pty.
Limited to Transmedia Australia Pty. Limited.
10.1(j) Form of Restaurant Operator Agreement (Contract with Participating
Restaurant).
10.1(k) 1994 Stock Option Plan of the Company.
10.1(l) Letter Agreement, dated June 16, 1995, from NWP to the Company.
10.1(m) Master License Agreement amendment, dated December 6, 1996, by and
between Network, the Company and Transmedia Europe, Inc.
10.1(n) Agreement and plan of reorganization dated February 10, 1997.
10.1(o) Service Agreement dated April 3, 1997 between Countdown and C.E.C.
Radbone.
10.1(p) Common Stock Purchase Warrant dated April 3, 1997 with J. Vittoria.
10.1(q) Loan Facility Agreement dated March 27, 1997 between the Company and J.
Vittoria.
10.1(r) Share Pledge Agreement dated April 3, 1997 between the Company and J.
Vittoria.
10.1(s) Master License Amendment dated December 20, 1996.
10.1(t) Registration Rights Agreement dated April 3, 1997 between the Company
and C.E.C. Radbone.
10.1(u) Agreement dated April 3, 1997 between the Company, Transmedia Europe,
Inc. and C. E. C. Radbone as to the acquisition of Countdown Holdings
Limited. (Exhibit to Form 8K filed April 18, 1997)
10.1(v) Master License Amendment dated May 15, 1997.
<PAGE>
10.2(a) Amendment to loan agreement by a director of the Company in connection
with a loan of $1,000,000 to facilitate the acquisition of Countdown
Holdings Limited. (Exhibit to 1997 Form 10K/A#2 filed March 6, 1998)
10.2(b) Lease on 1 Hurlingham Business Park, Sulivan Road, London SW6 3DU,
United Kingdom. (Exhibit to 1997 Form 10K/A#2 filed March 6, 1998)
10.2(c) Option in respect of the purchase of ICON Travel Pty Limited. (Exhibit
to 1997 Form 10K/A#2 filed March 6, 1998)
10.2(d) Agreement dated November 6, 1997 for the purchase of the business and
assets of NHS. (Exhibit to Form 8K filed December 17, 1997)
10.2(e) Lease Agreement dated September 23, 1998 between Cambooya Properties
Pty Limited and Transmedia Australia. (Exhibit to 1998 Form 10K filed
January 13, 1999)
10.2(f) Agreements for the acquisition of 100% of the issued share capital of
Porkpine Limited among Compass Trustees Limited, Transmedia Europe,
Inc. and Transmedia Asia Pacific, Inc. and Gavin Logan and Joanne
Logan, dated May 14, 1998. (Exhibit to Form 8K filed May 29, 1998)
10.2(g) Share sale agreement dated March 26, 1998 re acquisition of Breakaway
Travel Pty Limited. (Exhibit to Form 8K filed June 5, 1998)
10.2(h) Equity Purchase Agreement dated May 10, 1999 by and among DSS Direct
Connect L.L.C., William D. Marks, Donna M. Marks, Kevin R. Drewyer,
Direct Investors, Inc. , Transmedia Europe, Inc. and Transmedia Asia
Pacific, Inc., as amended June 11, 1999. (Exhibit to Form 8K filed July
1, 1999)
10.3(a) Employment Agreement, dated as of March 2, 1998, between the Company
and Edward J. Guinan, III. (Exhibit to 1998 Form 10K filed January 13,
1999)
10.3(b) *Employment Agreement, dated as of October 1, 1999, between the Company
and Michael R. Chambrello.
16.1(a) Letter from the Company's former independent accountant, Arthur
Anderson. (Exhibit to Form 8K filed October 7, 1996)
16.1(b) Letter from the Company's former independent accountant, KPMG. (Exhibit
to Form 8K/A#1 filed October 16, 1997)
21.1 List of subsidiaries
99.1(a) Audited Consolidated Financial Statements for the years ended August
31, 1995 and 1996 for Countdown Holdings Limited and Pro-forma
financial information re Countdown Holdings Limited investment.
(Exhibit to Form 8K/A#1 filed June 17, 1997)
99.1(b) Revised Pro-forma financial information re Countdown Holdings Limited
investment. (Exhibit to Form 8K/A#1 filed January 21, 1999)
99.1(c) Consolidated Financial Statements for significant associate Countdown
Holdings Limited for the year ended September 30, 1997. (Exhibit to
1997 Form 10K/A#4 filed January 21, 1999)
99.1(d) Consolidated Financial Statements for significant associate Countdown
Holdings Limited for the year ended September 30, 1998. (Exhibit to
1998 Form 10K filed January 13, 1999)
99.2(a) Unaudited Financial Statements for the years ended June 30, 1995, 1996
and 1997 for Nationwide Helpline Services Pty Limited, former owner of
NHS and Pro-forma financial information re acquisition of NHS. (Exhibit
to Form 8K/A#1 filed December 14, 1998)
99.2(b) Revised Pro-forma financial information re acquisition of NHS. (Exhibit
to Form 8K/A#2 filed January 21, 1999)
99.3(a) Audited Financial Statements for Letville Holdings Limited for the year
ended March 31, 1998, Floracourt Limited for the 25 months ended March
31, 1998 and G. & J. Logan trading as Logan Leisure for the year ended
March 31, 1998 and Pro-forma financial information re Logan Leisure
investment. (Exhibit to Form 8K/A#1 filed July 31, 1998)
99.4(a) Audited Financial Statements for Breakaway Travel Club Pty Limited for
the years ended June 30, 1995, 1996 and 1997 and Pro-forma financial
information re acquisition of Breakaway Travel Club Pty Limited.
(Exhibit to Form 8K/A#1 filed July 31, 1998)
<PAGE>
99.5(a) Audited financial statements of DSS Direct Connect LLC. Covering the
period from inception on March 3, 1998 to September 30, 1998 and the
period October 1, 1998 to June 14, 1999 together with unaudited
pro-forma financial information.
99.5(b) *Audited Financial Statements for significant associate DSS Direct
Connect LLC for the period ended September 30, 1999.
* Filed herewith
(b) Reports on Form 8-K
None.
Exhibit 10.3(b)
Employment Agreement
AGREEMENT made as of the 1st day of October, 1999 by and between Transmedia
Europe, Inc., a Delaware corporation having offices at 11 St. James's Square
SW1Y 4LB, England (the "Company"), and Michael Chambrello residing at 504 Mt.
Vernon Road, Plantsville, Connecticut 06479 (the "Executive").
WHEREAS, the Company and the Executive wish to set forth the terms and
conditions of the Executive's employment by the Company from and after the date
hereof ("Effective Date")
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive in the
capacity herein after set forth, for the term specified in paragraph
2, and the Executive agrees to accept such employment, upon the
terms and conditions hereinafter set forth.
2. Term. This Agreement shall be for a term commencing on the Effective
Date and, unless this Agreement is sooner terminated under the
provisions hereof, expiring three years thereafter (the "Term").
3. Duties and Responsibilities.
(a) During the Term, the Executive shall serve as an officer of
the Company and shall have the title of President/Chief
Executive Officer.
(b) The Executive shall devote substantial business efforts to the
Company and to Transmedia Europe, Inc. ("TME"). Other business
activities of the Executive shall be limited in time and scope
and not conflict with the terms of this Agreement. The
Executive will (i) devote his best efforts, skill and ability
to promote the Company's interest; (ii) carry out his duties
in a competent and professional manner; (iii) work with other
employees of the Company in a competent and professional
manner and (iv) generally promote the best interests of the
Company.
(c) The Executive shall be permitted to serve as a Director and
President/Chief Executive Officer of TME.
4. Compensation.
(a) As compensation for services hereunder and in consideration of
his agreement not to compete as set forth in paragraph 10
below, during the Term, the Company shall pay the Executive in
accordance with the Company's normal payroll practices base
salary compensation at an annual rate of $150,000 (U.S.) less
required tax withholding amounts. The annual rate of salary
compensation may be reviewed and increased at the discretion
of the Board. Annual bonuses may be awarded at the sole
discretion of the Board.
(b) The Executive shall be entitled to receive, subject to
shareholder approval, non-qualified stock options having a
term of five years and covering a total of 1,250,000 shares of
the Company's common stock. Said options will be granted under
the terms of an Option Agreement dated the date hereof and
annexed hereto as Exhibit A at the exercises prices and on the
vesting terms set forth therein.
5. Expenses: Fringe Benefits.
(a) In addition to the compensation provided for under paragraph
4, the Company agrees to pay or to reimburse the Executive
during the Term for all reasonable, ordinary and
<PAGE>
necessary vouchered business or entertainment expenses
incurred in the performance of his services hereunder in a
manner established by the Company's policy as from time to
time in effect.
(b) During the Term the Executive shall be entitled to participate
in the health care, life insurance and 401K plans established
by the Company for the benefit of its employees generally and
currently in effect or put into effect subsequent to the date
of this Agreement.
(c) The Executive shall be entitled to a combined four (4) weeks
(20 business days) of paid vacation, including TME as well,
provided that no more than ten (10) consecutive days of
vacation shall be taken at any one time without the prior
approval of the Chairman of the Board.
6. Discharge by Company.
(a) The Company shall be entitled to terminate the Term and to
discharge the Executive for "cause". The term "cause" shall be
limited to the following.
(i) The Executive's failure or unreasonable refusal to
perform his duties and responsibilities under this
Agreement.
(ii) Dishonesty effecting the Company.
(iii) Conviction of a felony or of any crime involving
fraud or misrepresentations.
(iv) The Executive's failure to adequately perform his
responsibilities.
(v) The commission of a willful or intentional act which
could injure the reputation, business or business
relationships of the Company.
(vi) Any material breach of this Agreement, if such breach
is not cured within 30 days after receipt by the
Executive of written notice thereof from the Company,
and
(vii) Disability pursuant to paragraph 7 hereof.
(viii) If Executives employment is terminated by the Company
without cause, in addition to the salary and benefits
accrued through the date of termination Executive
will receive as severance an amount equal to 18
months base salary. Such severance payment shall be
payable in equal installments or as mutually agreed
by the Executive and the Company in a lump sum
discounted using the prime rate then in effect at
Citibank, N.A. In addition to his base salary the
Company will pay Executive the cost of continuing
medical insurance. Termination without cause shall
include action by the Company without Executive's
consent pursuant to which his duties or title are
materially reduced; assignment of duties become
materially inconsistent with duties stated herein; or
permanent relation of greater than a 50 mile radius
become required to fulfill duties and
responsibilities Executive will receive as severance
an amount equal to 18 months base salary.
7. Disability, Death.
(a) If the executive shall be unable to perform his
duties hereunder by virtue of physical or mental
incapacity or disability (from any cause or causes
whatsoever) in substantially the manner and to the
extent required hereunder prior to the commencement
of such disability (all such causes being herein
<PAGE>
referred to as "disability") and the Executive shall
fail to have performed substantially such duti4es for
periods aggregating 90 days, whether or not
continuous, in any continuous period of 180 days, the
Company shall have the right to terminate the
Executive's employment hereunder as at the end of any
calendar month upon written notice to him. Said
notice of intention to terminate the Executive must
be given by the Company within 90 days following the
90th day of disability, in which case the Executive
shall be entitled to his base salary compensation to
the end of such calendar month and for a continuing
period of 3 months thereafter payable on the regular
payroll schedule.
(b) In the case of the death of the Executive, this
Agreement shall terminate and the company shall be
obligated to pay to the Executive's estate or as
otherwise directed by the Executive's duly appointed
and authorized legal representative, his then base
salary compensation and all accrued benefits through
the date of death.
8. Voluntary Termination. If the Executive voluntarily terminates his
employment prior to the term hereunder, he shall only be entitled to
receive compensation accrued through the date of termination and
shall not be entitled to any prorated amounts for vacation pay.
9. Confidential Information. The Executive recognizes that he will
occupy a position of trust with respect to business and technical
information of a secret or confidential nature which is the property
of the Company and which has been and will be imparted to him from
time to time in the course of his employment with the Company. In
light of this understanding, the executive agrees that:
(a) The Executive shall not at any time use or disclose,
directly or indirectly, any of the Company's
confidential information or trade secrets to any
person, except that he may use and disclose to
authorized Company personnel, licensees or franchises
in the course of his employment, and
(b) within three (3) days from the date upon which his
employment with the Company is terminated, for any
reason or for no reason, or otherwise upon the
request of the Company, he shall return to the
company any and all documents and materials which
constitute or contain the Company's confidential
information or trade secrets.
For purposes of this Agreement, the terms
"confidential information" or "trade secrets" shall
include all information of any nature and in any form
which is owned by the company and which is not
publicly available or generally known to persons
engaged in businesses similar to that of the Company.
10. Non-Competition.
(a) The Executive agrees that his services hereunder are
of a special character, and his position with the
Company places him in a position of confidence and
trust with the customers employees of the Company.
The Executive and the Company agree that in the
course of employment hereunder, the Executive has and
will continue to develop a personal acquaintanceship
and relationship with Company's customers, and a
knowledge of those customers' affairs and
requirements which may constitute the Company's
primary or only contact with such customers. The
executive consequently agrees that it is reasonable
and necessary for the protection of the goodwill and
business of the Company that the Executive makes the
convenants contained herein. Accordingly, the
executive agrees that while his is in the Company's
employ and for a period of 18 months thereafter the
Executive will not, without the prior written consent
of
<PAGE>
the Company, either directly or indirectly, or in any
capacity whether as a promoter, proprietor, partner,
joint venture, employee, agent, consultant, director,
officer, manager, shareholder (except as a
shareholder holding less than five percent (5%) of a
publicly traded company's issued and outstanding
capital stock, or otherwise) work for, act as a
consultant to or own any interest in any direct
competitor of the Company which operates in or
provides services essentially the same as the
Company. For purposes hereof, a "direct competitor"
is a business, or a division of a business, which is
engaged in providing discount dining or restaurant
services whether through use of barter, trade
credits, scrip or similar items or printing, selling,
distributing or soliciting of a charge card or
discount services and activities or promoting a
charge card or providing services the same or similar
to that sold or offered by the Company. The Executive
further agrees that he will not solicit, entice,
induce or persuade, either directly or indirectly,
any employee or customer of the Company to alter,
terminate or refrain from extending or renewing any
contractual or other relationship with the Company,
or commence a similar or substantially similar
relationship with the Executive or any direct
competitor of the Company.
(b) As used in this paragraph 10, the term "Company"
shall include subsidiaries of the Company and the
term "customer" shall mean:
(i) anyone who is then a customer of the company, or
(ii) anyone who was a customer at any time during the
one year period immediately preceding the date
of termination of the Executive's employment.
(c) the parties hereto agree that the duration and area
for which the covenant not to compete set forth
herein is to be effective is reasonable. In the event
that nay court determines that the time period or
area, or both of them, are unreasonable and that such
covenant to that extent unenforceable, the parties
hereto agree that the covenant shall remain in full
force and effect for the greatest time period and in
the greatest area that would not render it
unenforceable.
(d) If the Executive commits a breach or is about to
commit a breach, of any of the above provisions, the
Company shall have the right to temporary and
preliminary injunctive relief to prevent the
continuance or commission of such breach prior to any
hearing on the merits and to have the provisions of
this Agreement specifically enforced by any court
having equity jurisdiction without being required to
post bond or other security and without having to
prove the inadequacies of the available remedies at
law, it being acknowledges and agreed that any such
breach or threatened breach will cause irreparable
injury to the Company. In addition, the Company may
take all such other actions and remedies available to
it under law in equity and shall be entitled to such
damages as it can show it has sustained by reason of
such breach.
(e) The existence of any claim or cause of action of the
executive against the company, whether predicated on
this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of those
covenants and agreements.
(f) For purposes of this paragraph 10 but only with
respect to the period following the termination of
the Agreement the term direct competitor shall not
include a separate noncompetitive corporate
subsidiary of a company which is a direct competitor,
if the Executive is employed solely to perform
services for the
<PAGE>
noncompetitive subsidiary and does not engage in or
assist said directly competitive company in any
aspect of its business.
11. Change of Control. In the event of a "change in control" in the
Company, prior to the vesting date for any stock options provided to
the Executive under this Agreement, that adversely impacts
Executive's ability to vest in or to exercise such options, the
company shall either accelerate the vesting date of the options such
that the Executive may exercise them in timely fashion; or pay to
Executive the cash value of the options to him (fair market value of
shares less exercise price) immediately prior to the date of the
change of control; or make some financial arrangement making
executive whole that is mutually agreeable to the Company and the
Executive. A "change in control" shall be deemed to occur when, a
corporation, partnership, association or entity, directly or
indirectly (through a subsidiary or otherwise), (i) acquires or is
granted the right to acquire, directly or though merger or similar
transaction, a majority of the Company's outstanding voting
securities or shares, or (ii) all or substantially all of the
company's assets.
In addition, upon a change of control Executive shall have the
option, exercisable in writing within 30 days after the effective
date of the change in control, to terminate the Employment Agreement
and to receive as a severance payment an amount equal to 18 months
base salary. Such severance payment shall be payable in equal
monthly installments or, at the option of the Company, in a lump sum
payment discounted based on the then current prime rate of interest
of Citibank N.A. In addition to his base salary the Company will pay
Executive the cost of continuing medical insurance for the severance
period.
12. Resolution of Disputes. Any dispute by and among the parties hereto
arising out of or relying to this Agreement, the terms, conditions
or a breach thereof, or the rights or obligations of the parties
with respect thereto, shall be arbitrated in the City of New York,
New York before and pursuant to then applicable commercial rules and
regulations of the American Arbitration Association, or any
successor organization. The arbitration proceedings shall be
conducted by a panel of three arbitrators, one of whom shall be
selected by the Company, one by the Executive (or his legal
representative) and the third arbitrator by the first two chosen.
The parties shall use their best efforts to assure that the
selection of the arbitrators shall be completed within thirty (30)
days and the parties shall use their best efforts to complete the
arbitration as quickly as possible. In such proceeding, the
arbitration panel shall determine who is a substantially prevailing
party and shall award to such party its reasonable attorneys',
accounts' and other professionals' fees and its costs incurred in
connection with the proceeding. The award of the arbitration panel
shall be final, binding upon the parties and non-appealable and may
be entered in and enforced by any court of competent jurisdiction.
Such court may add to the award of the arbitration panel additional
reasonable attorneys' fees and costs incurred by the substantially
prevailing party in attempting to enforce the award.
13. Enforceability. The failure of either party at any time to require
performance by the other party of any provision hereunder in no way
shall affect the right of that party thereafter to enforce the same,
nor shall it affect any other party's right to enforce the same, or
to enforce any of the other provisions of this Agreement; nor shall
the waiver by either party of the breach of any provision hereof be
taken or held to be a waiver of any subsequent breach of such
provision or as a waiver of the provision itself.
14. Assignment. This Agreement is a personal contract and the
Executive's rights and obligations hereunder may not be sold,
transferred, assigned, pledged or hypothecated by the Executive. The
rights and obligations of the Company hereunder shall
15. Modification. This Agreement cannot be cancelled, changed, modified,
or amended orally, and no cancellation, change, modification or
amendment shall be effective or binding, unless it is in writing,
signed by both parties to this Agreement, and consented to in
writing to the Purchaser.
<PAGE>
16. Severability: Survival. If any provision of this Agreement is held
to be void and unenforceable by a court of competent jurisdiction,
the remaining provisions of this Agreement nevertheless shall be
binding upon the parties with same effect as though the void or
unenforceable part has been severed and deleted.
17. Notice. Notices given pursuant tot he provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight
courier, or by telex, telecopier or telegraph, charges prepaid, to
the following address:
To the Company
Transmedia Asia Pacific, Inc.
11 St. James's Square
London SW1Y 4LB
England
Fax: 011 44 171 839-5727
with a copy to:
Davis & Gilbert LLP
1740 Broadway
New York, NY 10019
Attention: Walter Epstein, Esq.
Fax: 212 468-4888
It the Executive
504 Mt. Vernon Road
Plantsville, CT 06479
Fax: 860 620-9326
18. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
19. No Conflict. The Executive represents and warrants that he is not
subject to any agreement, instrument, judgement order or decree of
any kind, or any other restrictive agreement of any character, which
would prevent him from entering into this Agreement or which would
be breached by the Executive upon his performance of his duties
pursuant to this Agreement.
20. Entire Agreement. This Agreement represents the entire agreement
between the Company and the Executive with respect to the subject
matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands and seals on and as of the
day and year first written above.
TRANSMEDIA ASIA PACIFIC, INC.
______________________________________
Joseph Vittoria
Chairman
EXECUTIVE
______________________________________
Michael Chambrello
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made as of October 1, 1999, by and between TRANSMEDIA ASIA
PACIFIC, INC., a Delaware corporation with its principal place of business at 11
St. James's Square, London SW1Y 4LB England (the "Company"), and the undersigned
(the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company considers it desirable and in its best interests that
the Optionee be encouraged to acquire an ownership interest in the Company, and
thereby have an added incentive to advance the interests of the Company, by the
grant of an option to purchase shares of the Company's common stock, par value
$.00001 per share (the "Common Stock"), on the terms and conditions hereinafter
set forth; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee, subject to shareholder
approval, the right, privilege and option (the "Option") to purchase 1,250,000
shares of the Company's Common Stock (the "Shares") at the exercise prices
("Exercise Prices") and on the vesting terms ("Vesting Terms") set forth in
Appendix A. Such number of Shares issuable upon exercise of the Option shall be
subject to adjustment as provided in Section 7 below. The Option is not intended
to be an incentive stock option meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Time of Exercise of Option.
Subject to the provisions of Section 4 below, the Option shall vest as
provided Appendix A, provided, however, that upon a Change in Control (as
defined in the Plan) of the Company, the Option shall be immediately
exercisable. To the extent the Option is not exercised by the Optionee when it
becomes exercisable, it shall continue in full force and effect until the
Expiration Date (as hereinafter defined).
3. Method of Exercise.
The Option shall be exercised by written notice in the form of Appendix B
hereto directed to the Company at the Company's address set forth above, duly
executed by the Optionee, specifying the number of shares being purchased and
accompanied by either (i) cash or check payable to the order of the Company in
full payment of the Purchase Price for the number of Shares being purchased, or
(ii) certificate(s), duly endorsed for transfer to the Company with signature
guaranteed, for that number of previously acquired Shares having an
<PAGE>
aggregate fair market value as determined in accordance with the Plan ("Fair
Market Value"), on the date of exercise equal to the full Purchase Price for the
number of Shares being purchased, or (iii) a combination of (i) and (ii).
The Option shall not be exercisable at any time in an amount less than 100
Shares (or the remaining fraction of a Share then covered by and purchasable
under the Option if less than 100 Shares).
4. Term of Options; Exercisability.
1. This Option shall expire 5 years from the date hereof of this Agreement
(the "Expiration Date"), subject to earlier termination as herein provided.
2. Except as otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated for any reason, the Option shall
terminate on the earlier of (i) three months after the date the Optionee's
employment is terminated, or (ii) the date on which the Option expires by its
terms.
3. If the Optionee's employment by, of, or to, the Company is terminated
by the Company for cause (as such term is defined in his employment agreement),
the Option will to the extent not terminated be deemed to have terminated on the
date immediately preceding the date the Optionee's employment by, or retention
as an agent, director of, or consultant to, the Company is terminated by the
Company and its subsidiaries.
4. If the Optionee's employment by the Company is terminated because of
disability or death, the Option shall terminate on the earlier of (i) one year
after termination, or (ii) the date on which the Option expires by its terms.
5. Non-Transferability.
The right of the Optionee to exercise the Option shall not be assignable
or transferable by the Optionee otherwise than by will or the laws of descent
and distribution, and the Option may be exercised during the lifetime of the
Optionee only by the Optionee. The Option shall be null and void and without
effect upon the bankruptcy of the Optionee or upon any attempted assignment or
transfer, except as hereinabove provided, including without limitation, any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition contrary to the provisions hereof, or levy of
execution, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
6. Representation Letter and Investment Legend.
A. Notwithstanding the provisions of Sections 3 and 4 hereof, the Option
cannot be exercised, and the Company may delay the issuance of the Shares
covered by the exercise of the Option and the delivery of a certificate for the
Shares, until one of the following conditions shall be satisfied:
<PAGE>
1. The Shares with respect to which the Option has been exercised are at
the time of the issuance of the Shares effectively registered or qualified under
applicable federal and state securities acts now in force or as hereafter
amended; or
2. Counsel for the Company shall have given an opinion, which opinion
shall not be unreasonably conditioned or withheld, that the issuance of the
Shares is exempt from registration and qualification under applicable federal
and state securities acts now in force or as hereafter amended.
B. In the event that for any reason the Shares to be issued upon exercise
of the Option shall not be effectively registered under the Securities Act of
1933, as amended (the "1933 Act"), upon any date on which the Option is
exercised in whole or in part, the Optionee shall give a written representation
to the Company in the form attached hereto as Exhibit A and the Company shall
place an "investment legend," so-called, as described in Exhibit A, upon any
certificate for the Shares issued by reason of such exercise. In the event that
the Company shall, nevertheless, deem it necessary or desirable to register
under the 1933 Act or other applicable statutes the Shares with respect to which
the Option shall have been exercised, or to qualify the Shares for exemption
from the 1933 Act or other applicable statutes, then the Company may take such
action and may require from the Optionee such information in writing for use in
any registration statement, supplementary registration statement, prospectus,
preliminary prospectus, offering circular or any other document that is
reasonably necessary for such purpose and may require reasonable indemnity to
the Company and its officers and directors from the Optionee against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
C. The Company shall be under no obligation to qualify the Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the issue of the Shares or
to cause the issuance of the Shares to be exempt from registration and
qualification under applicable federal and state securities acts now in force or
as hereinafter amended, except as otherwise agreed to by the Company in writing
in its sole discretion and, accordingly, the Company may delay the issuance of
the Shares covered by the exercise of the Option and the delivery of a
certificate for the Shares until the Company shall have determined that all
conditions to the issuance of the Shares shall have been satisfied.
7. Adjustment in and Changes in Common Stock.
Subject to the Plan, if the outstanding shares of the Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any reorganization, recapitalization,
reclassification, stock split, combination of shares, or dividends payable in
capital stock, appropriate and equitable adjustment shall be made by the Board
of Directors of the Company, in its sole discretion, in the number and kind of
shares as to which the Option or portion thereof then unexercised shall be
exercisable. Such adjustment in the Option shall be made without change in the
total price applicable to the unexercised portion of such the Option and with a
corresponding adjustment in the Option price per share.
<PAGE>
8. Effect on Other Rights.
This Agreement shall in no way affect the Optionee's participation in or
benefits under any other plan or benefit program maintained or provided by the
Company. Nothing in this Agreement shall be construed to give the Optionee any
right to any additional options other than in the sole discretion of the Board
of Directors of the Company or to confer on the Optionee any right to continue
in the employ of the Company or any subsidiary thereof or to continue to be
retained as an agent, director of, or consultant to, the Company, or to be
evidence of any agreement or understanding, express or implied, that the Company
will employ or continue to retain the Optionee in any particular position or at
any particular rate of remuneration, or for any particular period of time or to
interfere in any way with the right of the Company or a subsidiary thereof (or
the right of the Optionee) to terminate the employment or retention of the
Optionee at any time, with or without cause, notwithstanding the possibility
that the Option may thereby be terminated entirely.
9. Rights as a Stockholder.
The Optionee shall have no rights as a stockholder with respect to any
Shares which may be purchased by exercise of the Option until (x) the Option
shall have been exercised with respect thereto (including payment to the Company
of the Purchase Price), and (y) the earlier to occur of (i) delivery by the
Company to the optionee of a certificate therefor or (ii) the date on which the
Company is required to deliver a certificate pursuant to the Plan and this
Agreement. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date such certificate is issued or required to be issued in accordance
with the Plan.
10. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY THEREIN WITHOUT
REFERENCE TO CONFLICT OF LAWS PRINCIPLES.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of the Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all federal, state and local withholding tax requirements,
if any, prior to the delivery of any certificate or certificates for such
Shares. The Company may agree to permit the Optionee to withhold Shares
purchased upon exercise of this Option to satisfy the above-mentioned
withholding requirement.
<PAGE>
12. Headings.
The headings contained in this Agreement are for convenience of reference
only and in no way define, limit or describe the scope or intent of this
Agreement or in any way affect this Agreement.
13. Binding Effect.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
TRANSMEDIA ASIA PACIFIC, INC.
By: /s/ Joseph Vittoria
----------------------------------------
Title: Chairman and director
OPTIONEE:
/s/ Michael R. Chambrello
--------------------------------------------
Michael Chambrello
<PAGE>
APPENDIX A
TO STOCK OPTION AGREEMENT
Options granted and vesting period:
Set forth below are the options granted to the Optionee and the vesting schedule
with respect thereto.
Number of Shares Exercise Price Vesting Date
- ---------------- -------------- ------------
250,000 $0.875 10/1/1999
250,000 $0.875 10/1/2000
187,500 110% of market price 2/1/2000 2/1/2001
187,500 110% of market price 2/1/2000 2/1/2002
187,500 110% of market price 2/1/2001 2/1/2002
187,500 110% of market price 2/1/2001 2/1/2003
<PAGE>
APPENDIX B
TO STOCK OPTION AGREEMENT
Date:______________________
Transmedia Asia Pacific, Inc.
11 St. James's Square
London SW1Y 4LB
England
Ladies and Gentlemen:
I hereby elect to purchase ____ shares of the Common Stock, par value
$.00001 per share, of Transmedia Asia Pacific, Inc. (the "Company") under the
option granted to me pursuant to the Stock Option Agreement, dated October 1,
1999.
Enclosed is [cash] [a check] in the amount of $______.___ [______ shares
of the Company's Common Stock] in full payment of the shares being purchased
($________ per share x shares).
Please deliver certificates representing the shares being purchased to me
at:
_____________________________
_____________________________
_____________________________
I hereby acknowledge that I have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant
to the exercise of said option have not been registered under the Securities Act
of 1933, as amended (the "1933 Act"), and accordingly, must be held indefinitely
unless such shares are subsequently registered under the 1933 Act, or an
exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144, if
applicable, under the 1933 Act can be made only after the holding period and in
limited amounts in accordance with the terms and conditions provided by that
Rule, and in any sale to which that Rule is not applicable, registration or
compliance with some other exemption under the 1933 Act will be required.
<PAGE>
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144, if applicable, is dependent upon adequate
current public information with respect to the Company being available and, at
the time that I may desire to make a sale pursuant to the Rule, the Company may
neither wish nor be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge, transfer or otherwise dispose
of such shares in the absence of an effective registration statement covering
the same, except as permitted by the provisions of Rule 144, if applicable, or
some other applicable exemption under the 1933 Act. In view of this
representation and warranty, I agree that there may be affixed to the
certificates for the shares to be issued to me, and to all certificates issued
hereafter representing such shares (until in the opinion of counsel, which
opinion must be reasonably satisfactory in form and substance to counsel for the
Company, it is no longer necessary or required) a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and
were acquired by the registered holder, pursuant to a representation and
warranty that such holder was acquiring such shares for his or her own
account and for investment, with no intention to transfer or dispose of
the same, in violation of the registration requirements of the Act. These
shares may not be sold, pledged, transferred or otherwise disposed of in
the absence of an effective registration statement under the Act, or an
opinion of counsel, which opinion is reasonably satisfactory to counsel to
the Company, to the effect that registration is not required under the
Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
______________________________
Optionee:
Exhibit 99.5(b)
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Financial Statements
For the Period from June 15, 1999 through September 30, 1999
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
================================================================================
Financial Statements
For the Period from June 15, 1999 through September 30, 1999
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Contents
================================================================================
Independent Auditor's Report.......................... 1
Balance Sheet......................................... 2
Statement of Operations............................... 3
Statement of Shareholder's Equity .................... 4
Statement of Cash Flows............................... 5
Notes to Financial Statements......................... 6 - 9
<PAGE>
Independent Auditors' Report
To The Shareholder of
DSS Direct Connect, L.L.C.
We have audited the accompanying balance sheet of DSS Direct Connect, L.L.C. (a
wholly owned subsidiary of Transmedia Group) as of September 30, 1999 and the
related consolidated statement of operations, shareholder's deficit, and cash
flows for the period from June 15, 1999 through September 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of DSS Direct Connect,
L.L.C. (a wholly owned subsidiary of Transmedia Group) as of September 30, 1999,
and the results of their operations and their cash flows for the period from
June 15, 1999 through September 30, 1999, in conformity with generally accepted
accounting principles.
BDO Seidman, LLP
Seattle, Washington
January 11, 2000
1
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Balance Sheet
================================================================================
<TABLE>
<CAPTION>
September 30, 1999
=================================================================================
<S> <C>
ASSETS
Current Assets
Accounts receivable $ 15,230
Prepaid and other assets 113,009
Inventory 36,462
- ---------------------------------------------------------------------------------
Total Current Assets 164,701
Security Deposits 57,087
Contributions Receivable 1,175,000
Furniture and Equipment, net of accumulated depreciation of $22,875 227,011
- ---------------------------------------------------------------------------------
TOTAL ASSETS $ 1,623,799
=================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Checks in excess of deposits $ 40,224
Accounts payable 391,247
Accrued liabilities 412,600
- ---------------------------------------------------------------------------------
TOTAL LIABILITIES 844,071
- ---------------------------------------------------------------------------------
Shareholder's Equity
Common stock, $1 par value; 10,000 shares authorized, 5,000
issued and outstanding 5,000
Paid in capital 3,000,000
Accumulated deficit (2,225,272)
- ---------------------------------------------------------------------------------
Total Shareholder's Equity 779,728
- ---------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 1,623,799
=================================================================================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Statement of Operations
================================================================================
For the period from June 15, 1999 through September 30, 1999
- --------------------------------------------------------------------------------
REVENUES $ 702,751
COST OF SALES 508,029
- --------------------------------------------------------------------------------
Gross Profit 194,722
- --------------------------------------------------------------------------------
OPERATING EXPENSES
Selling expenses 44,262
General and administrative 925,825
- --------------------------------------------------------------------------------
Total Operating Expenses 970,087
- --------------------------------------------------------------------------------
Loss from Operations (775,365)
- --------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 1,587
Other expense (26,758)
- --------------------------------------------------------------------------------
Total Other Expense (25,171)
- --------------------------------------------------------------------------------
Net Loss $(800,536)
================================================================================
Net Loss per Share - Basic and Diluted $ 160.11
================================================================================
See accompanying notes to financial statements.
3
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Statement of Shareholder's Equity
================================================================================
<TABLE>
<CAPTION>
Common Stock
---------------------- Paid In Accumulated
Shares Amount Capital Deficit Total
========================================================================================================
<S> <C> <C> <C> <C> <C>
Balance, June 15, 1999 5,000 $ 5,000 $ -- $(1,424,736) $(1,419,736)
Contributions -- -- 3,000,000 -- 3,000,000
Net Loss -- -- -- (800,536) (700,536)
- --------------------------------------------------------------------------------------------------------
Balance, September 30, 1999 5,000 $ 5,000 $ 3,000,000 $(2,225,272) $ 779,728
========================================================================================================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Statement of Cash Flows
================================================================================
INCREASE (DECREASE) IN CASH
For the period from June 15, 1999 through September 30, 1999
================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (800,536)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 11,555
Changes in assets and liabilities:
Accounts receivable 17,315
Inventory 17,883
Prepaid and other assets (108,409)
Security deposits (55,000)
Contributions receivable (1,175,000)
Checks in excess of deposits 40,224
Accounts payable 333,764
Accrued liabilities (80,156)
- --------------------------------------------------------------------------------
Net Cash Used in Operating Activities (1,798,360)
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of furniture and equipment (89,368)
- --------------------------------------------------------------------------------
Net Cash Used in Investing Activities (89,368)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable (1,115,000)
Contributions from parent 3,000,000
- --------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 1,885,000
- --------------------------------------------------------------------------------
Net (Decrease) in Cash (2,728)
Cash, beginning of period 2,728
- --------------------------------------------------------------------------------
Cash, end of period $ --
================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid with cash $ 119,806
================================================================================
See accompanying notes to financial statements.
5
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Notes to Financial Statements
================================================================================
NOTE 1: Description of Business - DSS Direct Connect, L.L.C.
Description of ("DSS" or the "Company") was formed on March 3, 1998 for
Business and Summary the purpose of selling and installing direct broadcast
of Significant satellite system receivers, on behalf of DirecTV, to end
Accounting Policies users. The Company obtained a non-exclusive license to
sell these systems to single family users in specified
markets or cities in Arizona, California, Illinois,
Nevada, Oregon, Texas and Washington. The Company is
currently operating in Washington and Illinois.
The licensing agreement began on April 1, 1998 and has
an initial term of 5 years. Within three months of the
expiration of the agreement, either party may notify the
other of its desire to continue the agreement beyond the
initial term. Terms of any extension will be negotiated
by the parties at that time.
On June 15, 1999, DSS entered into an equity purchase
agreement with Transmedia Europe, Inc. and Transmedia
Asia, Inc. (collectively "Transmedia Group") to sell and
transfer all of the outstanding equity of the Company in
exchange for common stock of Transmedia Group.
Additionally Transmedia Group agreed to provide
additional working capital up to $3 million in the form
of cash and assumption of certain liabilities.
Inventory - Inventories are valued at the lower of cost
or market, which approximates the first-in, first-out
method.
Furniture and Equipment - Furniture and equipment are
stated at cost. Depreciation is computed for financial
reporting purposes using the straight-line method over
estimated useful lives of primarily 3 to 7 years.
Replacements and improvements that significantly extend
asset lives are capitalized. Leasehold improvements are
amortized over 5 years using the straight-line method.
Maintenance and repairs are charged to expense as
incurred.
Revenue Recognition - The Company recognizes revenue
when a receiver system is sold to the consumer. The
Company also receives a commission when the consumer
opens a new account with DirecTV, which is recognized as
revenue when received from DirecTV, as the Company's
earning process is completed at that time.
If the consumer does not fulfill their obligations under
the equipment purchase and subscription agreements, the
Company will be charged back by DirecTV and the consumer
is required to reimburse the Company for any amounts
charged back related to their account.
An allowance for potentially uncollectible charge backs
has been provided based on the Company's past history.
6
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Notes to Financial Statements
================================================================================
NOTE 1: Income Taxes - The Company accounts for income taxes in
Description of accordance with the provisions of Statement of Financial
Business and Accounting Standards No. 109, "Accounting for Income
Summary of Taxes," ("SFAS 109"). SFAS 109 requires the recognition
Significant of deferred tax assets and liabilities for the expected
Accounting future income tax consequences of events that have been
Policies (continued) recognized in a company's financial
statements or tax return. Under this method, deferred
tax assets and liabilities are determined based on the
temporary differences between the financial statement
carrying amounts and their tax basis using enacted tax
rates in effect in the years in which the temporary
differences are expected to reverse. Valuation
allowances are provided when management determines that
the realization of deferred tax assets fails to meet the
more likely than not standard imposed by SFAS 109.
Advertising Expense - The cost of advertising is
expensed as incurred. The Company incurred $21,156 in
advertising costs for the period from June 15, 1999
through September 30, 1999.
Concentration of Credit Risk and Financial Instruments -
The Company buys its product from local and national
companies and distributors throughout the United States
and internationally. Net purchases from the Company's
two largest vendors represented 99% of net purchases for
the period from June 15, 1999 through September 30,
1999.
Use of Estimates - The Company's financial statements
are prepared in conformity with generally accepted
accounting principles which requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results
could differ from the estimates.
Loss per Share - SFAS 128, issued in February 1997,
requires presentation of basic and diluted earnings per
share. Basis earnings per share are computed by dividing
net income by the weighted average number of common
shares outstanding.
The Company has no common stock equivalents or options
outstanding at September 30, 1999.
7
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Notes to Financial Statements
================================================================================
NOTE 1: Recent Accounting Pronouncements - New accounting
Description of pronouncements having relative applicability to the
Business and Company include SFAS 130, " Reporting Comprehensive
Summary of Significant Income", SFAS 131, "Disclosures about Segments of an
Accounting Policies Enterprise and Related Information", SFAS 133,
(continued) "Accounting for Derivative Instruments and Hedging
Activities", SFAS 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement 133 (an amendment of
FASB Statement 133). Adoption of these statements did
not impact the Company's financial position, results of
operations or cash flows and any effect was limited to
the form and content of its disclosures.
NOTE 2: Furniture and Equipment is comprised of the following:
Furniture and
Equipment
1999
-------------------------------------------------------
Computer equipment $ 88,134
Equipment 19,756
Furniture and Fixtures 102,144
Leasehold improvements 39,852
-------------------------------------------------------
249,886
Accumulated depreciation (22,875)
-------------------------------------------------------
Furniture and Equipment, net $ 227,011
=======================================================
NOTE 3: As of September 30, 1999, the Company had net deferred
Income Taxes tax assets of approximately $721,000 primarily due to
loss carryforwards, which begin to expire in 2018 and
are available to offset future taxable income.
Utilization of $483,000 of these loss carryforwards is
subject to limitation due to the change is control of
the Company upon acquisition by Transmedia Group. A 100%
allowance has been recorded against the deferred tax
asset as management has yet to establish that recovery
of this asset is more likely than not.
NOTE 4: The Company conducts its business operations from
Operating Leases facilities that are leased under agreements which expire
at various dates. The Company also pays a pro rata
portion of all common area charges including property
taxes, insurance, and maintenance charges. Annual
minimum rental commitments under operating leases that
have initial or remaining noncancelable lease terms are
as follows:
8
<PAGE>
DSS Direct Connect, L.L.C.
(A wholly owned subsidiary of Transmedia Group)
Notes to Financial Statements
================================================================================
NOTE 4: Operating
Operating Leases September 30, Leases
(continued) --------------------------------------------------------
2000 $ 395,320
2001 367,792
2002 369,914
2003 372,098
2004 361,140
--------------------------------------------------------
Future net minimum payments $1,866,264
========================================================
Rent expense under operating leases was approximately
$86,000 for the period June 15, 1999 through September
30, 1999.
NOTE 5: Included in prepaid and other assets is $10,859 due from
Related Party shareholders.
Transactions
Included in accounts payable is $15,000 due to a
shareholder. Included in accrued liabilities is a
short-term advance from a shareholder in the amount of
$5,000.
Certain operating expenses are paid by related parties,
which in turn are reimbursed by the Company. For the
period ended September 30, 1999 these expenses totaled
$21,891.
NOTE 6: A former employee has filed a claim against the Company
Commitments and for termination benefits. At September 30, 1999, the
Contingencies Company has accrued $100,000 with respect to the claim,
based on the Company's current estimate of the most
likely amount of losses that it believes will be
incurred.
NOTE 7: Like other companies, DSS Direct Connect, LLC could be
Year 2000 adversely affected if the computer systems its suppliers
(Unaudited) or customers use do not properly process and calculate
date-related information and data from the period
surrounding and including January 1, 2000. This is
commonly known as the "Year 2000" issue. Additionally,
this issue could impact non-computer systems and devices
such as production equipment, elevators, etc. While the
Company's project to assess and correct Y2K related
issues regarding the year 2000 has been completed, and
the Company has not experienced any significant Y2K
related events, interactions with other companies'
systems make it difficult to conclude there will not be
future effects. Consequently, at this time, management
cannot provide assurances that the year 2000 issue will
not have an impact on the Company's operations.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized
TRANSMEDIA ASIA PACIFIC, INC.
(Registrant)
Date: March 31, 2000 /s/ Grant White
-------------------------------------------
Grant White
Chief Executive Officer and Principal
Financial Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the date indicated.
Date: March 31, 2000 /s/ Grant White
-------------------------------------------
Grant White
Chief Executive Officer and Principal
Financial Officer
Date: March 31, 2000 /s/ Joseph Vittoria
-------------------------------------------
Joseph Vittoria
Chairman and Director
Date: March 31, 2000 /s/ William D. Marks
-------------------------------------------
William D. Marks
Director
Date: March 31, 2000 /s/ James J. Fyfe
-------------------------------------------
James J. Fyfe
Director
Date: March 31, 2000 /s/ Ellis Varejes
-------------------------------------------
Ellis Varejes
Director
