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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
General Form For Registration of Securities
Of Small Business Issuers under
Section 12(b) or (g) of The Securities Exchange Act of 1934
LCS, Golf, Inc.
(Name of Small Business Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
11-3200338
(I.R.S. Employer Identification No.)
24 East 12th Street New York, NY 10003
(Address of principal executive offices) (Zip Code)
(212) 929-3376
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
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TABLE OF CONTENTS
Part I
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Item 1. Description of Business............................................4
Item 2. Management's Discussion and Analysis
or Plan of Operation..............................................12
Item 3. Description of Property...........................................14
Item 4. Security Ownership of Certain Beneficial
Owners and Management.............................................15
Item 5. Directors, Executive Officers, Promoters
and Control Persons...............................................16
Item 6. Executive Compensation............................................18
Item 7. Certain Relationships and Related Transactions....................19
Item 8. Description of Securities.........................................19
Part II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.......................21
Item 2. Legal Proceedings.................................................21
Item 3. Changes in and Disagreements with Accountants.....................21
Item 4. Recent Sales of Unregistered Securities...........................21
Item 5. Indemnification of Directors and Officers.........................25
Part F/S
Financial Statements......................................................F-1-F-18
Part III
Item 1. Index to Exhibits.................................................27
Item 2. Description of Exhibits...........................................27
Signatures................................................................28
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THIS REGISTRATION STATEMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES REFORM ACT OF 1995. THE REGISTRANT INTENDS
THAT SUCH FORWARD LOOKING STATEMENTS BE SUBJECT TO THE SAFE HARBORS CREATED
THEREBY. THESE FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS REGARDING (I) THE
REGISTRANT'S RESEARCH AND DEVELOPMENT PLANS, MARKETING PLANS, CAPITAL AND
OPERATIONS EXPENDITURES, AND RESULTS OF OPERATIONS; (II) POTENTIAL FINANCING
ARRANGEMENTS; (III) POTENTIAL UTILITY AND ACCEPTANCE OF THE REGISTRANT'S
EXISTING AND PROPOSED PRODUCTS; AND (IV) THE NEED FOR, AND AVAILABILITY OF,
ADDITIONAL FINANCING.
THE FORWARD LOOKING STATEMENTS INCLUDED HEREIN ARE BASED ON CURRENT EXPECTATIONS
AND INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ASSUMPTIONS REGARDING THE REGISTRANT'S BUSINESS AND
TECHNOLOGY WHICH INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
SCIENTIFIC, ECONOMIC, REGULATORY AND COMPETITIVE CONDITIONS, AND FUTURE BUSINESS
DECISIONS, ALL OF WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND
MANY OF WHICH ARE BEYOND THE CONTROL OF THE REGISTRANT. ALTHOUGH THE REGISTRANT
BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD LOOKING STATEMENTS ARE
REASONABLE, ANY OF THE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE, ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD LOOKING
STATEMENTS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD
LOOKING INFORMATION CONTAINED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD
NOT BE REGARDED AS ANY REPRESENTATION BY THE REGISTRANT OR ANY OTHER PERSON THAT
THE OBJECTIVES OR PLANS OF THE REGISTRANT WILL BE ACHIEVED.
PROSPECTIVE INVESTORS SHOULD READ THIS MEMORANDUM CAREFULLY BEFORE MAKING ANY
INVESTMENT DECISION REGARDING THE COMPANY, AND SHOULD PAY PARTICULAR ATTENTION
TO THE INFORMATION CONTAINED UNDER THE HEADING "RISK FACTORS." IN ADDITION,
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN ADVISORS IN ORDER TO UNDERSTAND
FULLY THE CONSEQUENCES OF AN INVESTMENT IN THE COMPANY.
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PART I
Item 1. Description of Business.
To simplify the language in this registration statement, references to "We,"
"Us" or the "Company" refer to LCS Golf, Inc. and its subsidiaries.
Business Development.
On October 8, 1997, we were incorporated in Delaware as Linkun Enterprise, Inc.
to operate in the business of the design, manufacture and distribution of golf
clubs and related products. On October 27, 1997, we amended our articles
changing our name to LCS Golf, Inc.
Pursuant to the terms of an agreement of merger, we reverse split our stock on
October 28, 1997, one (1) share for thirty (30) shares, for the shareholders of
record as of October 10, 1997. On the same day, we merged with LCS Golf, Inc.
(hereinafter "LCS New York"), a New York corporation, and we remained as the
surviving entity. Pursuant to this agreement, we exchanged eight-hundred fifty
thousand (850,000) shares of our common stock for all of the issued and
outstanding shares of LCS New York on a one-share for one-share basis .
On May 1, 1998, we entered into an agreement with Golf Universe, Inc.
(hereinafter "Golf Universe"). Golf Universe was incorporated in the state of
Florida on October 23, 1996. In this transaction, we exchanged four-hundred
thousand (400,000) shares of our common stock and one-hundred thousand dollars
($100,000.00) for all of the issued and outstanding shares of Golf Universe. As
a result of this transaction, Golf Universe became a subsidiary of our Company.
On November 17, 1998, we entered into a Stock Purchase Agreement with Milton
Besen who controlled all of the issued and outstanding common stock of Mr. "B"
III, Inc. (hereinafter "B III"). B III was incorporated in the state of Florida
on September 3, 1996. In this transaction, we exchanged one-hundred fifty
thousand (150,000) shares of our common stock and two-hundred fifty thousand
dollars ($250,000) for all of the issued and outstanding shares of B III. As a
result of this transaction, B III became a subsidiary of our Company.
On January 26, 1999, we entered into a common stock purchase agreement with Alex
Bruni, the holder of 100% of the issued and outstanding shares of Play Golf Now,
Inc. (hereinafter "Play Golf"). Play Golf was incorporated in the State of New
York on November 27, 1998. Pursuant to the terms of the agreement, we acquired
all of the issued and outstanding shares of Play Golf in exchange for
two-hundred thousand (200,000) shares of our common stock and an unconditional
option to purchase an additional two-hundred thousand (200,000) shares of our
common stock at a purchase price of $0.50 per share exercisable in whole or in
part on or before January 25, 2001.
On February 15, 1999, we entered into a common stock purchase agreement with
Leigh Ann Colguhoun, the holder of 100% of the issued and outstanding shares of
Golfpromo, Inc. (hereinafter "Golf Promo"). Golf Promo was incorporated in the
State of Florida on February 10, 1999.
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Pursuant to the terms of the agreement, we acquired all of the issued and
outstanding shares of Golf Promo in exchange for three-hundred fifty thousand
(350,000) shares of our common stock.
We have had no bankruptcy, receivership or similar proceeding.
Business of Issuer.
We currently operate through our four subsidiaries B III, Golf Promo, Golf
Universe and Play Golf.
1. B III.
Principal Products.
B III designs, manufacturers, markets and distributes various consumer
products. The core products include therapeutic magnet products and
specialty pillows.
B III sells magnetic products that are aimed at the homeopathic
treatment of various types of aches and pains throughout the body. B
III's magnetic products consist on nine (9) different therapeutic
magnets ranging in price from thirteen dollars and ninety-five cents
($13.95) to nineteen dollars and ninety-five cents ($19.95). These
products are a Moist Heat Pack & Microwave Safe Moist Heat Pack, Moist
Heat Pack Magnet and moist Heat Pack with Brushed Cotton/Vinyl Pouch,
Pack-Pac, Neck Pillow, Neck Cradle, Hand Pad, Bed Pad, Travel Pad and
Lumbar Pillow. We plan to market these B III therapeutic magnet
products through infomercials starring Joe Namath. (See below.)
Additionally, these items are available on the website of our
subsidiary, Golf Universe web site. (See below.)
B III also currently offers an assortment of decorative pillows in
approximately fifteen (15) different designs. These include dinosaur
head, rabbit head and puppy dog head cradle pillows as well as other
animal print pillows and storage pouches designed for children. These
pillows are shaped in the facial likenesses of animal characters. These
items are packaged with our label, "the Adorables."
We also manufacture Satin and Lace decorative pillows, Buckwheat
pillows, potpourri scented pillows and other miscellaneous novelty
items such as window treatments and tissue box covers.
Distribution.
B III distributes its pillows and novelty items through various retail
stores in the United States. In 1998, we distributed through
approximately twenty (20) different retail stores, including Wal-Mart,
J.C. Penny and Montgomery Ward. These retailers purchase the products
at wholesale prices and determine their own retail prices for the sale
of the products to the public. Orders are placed by retailers over the
phone directly to the manufacturing plant. Once a purchase order is
completed, the product (s) are then shipped according to the
purchaser's specifications.
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B III medical magnet products are also available for sale on the
Internet through the Golf Universe web site. Orders are placed on the
Golf Universe web site and then forwarded to the manufacturing facility
to be filled. B III has no backlog of orders, as they have been able to
fill orders as they are placed, to date.
Status of Publicly Announced New Products.
There are currently no publicly announced new products or services for
this subsidiary.
Competititon.
We believe that the most important positive factor in our competitive
position for our pillows and novelty items is the distribution of our
products in major retail outlets such as Wal-Mart, J.C. Penny and
Montgomery Ward. However, B III consumer product categories are
extremely competitive. Competition is based upon price, quality, brand
name recognition, design innovation and the ability to provide products
on a timely basis, as well as marketing and distribution strategies. We
believe that our segment of the consumer product industry is highly
fragmented and that no one participant is dominant in the industry. It
is possible that new competitors or alliances between competitors and
vendors may emerge and rapidly acquire market share. Increased
competition is likely to result in reduced operating margins, loss of
market share which could materially adversely affect our business,
results of operations and financial condition.
Dependence on Suppliers or Raw Materials.
B III has several suppliers across the United States for each of the
component parts used in the manufacture of its products. We may, in the
future, experience shortages of components or periods of increased
price pressures, which could have a material adverse effect on our
business, operating results or financial condition. In addition,
failure to obtain adequate supplies or fulfill customer orders on a
timely basis could have a material adverse effect on our business,
operating results or financial condition. In the event B III is unable
to obtain component parts from any of its suppliers, we anticipate the
ability to obtain other suppliers for the required parts.
Dependence on Certain Consumers.
B III is dependent on Wal-Mart, J.C. Penny, Montgomery Ward and similar
stores as purchasers of its products for retail sale.
Intellectual Property.
As a result of the acquisition of B III, we own the patent to one B III
product which is an animal pillow with a pouch, serial number
29\073.138. This product is currently packaged under the label "the
Adorables." We do no have proprietary protection of this name.
Compliance with Governmental Regulation.
B III manufacturing facilities are subject to numerous federal, state
and local laws and regulations designed to protect the environment from
waste emissions and from hazardous
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substances. We are also subject to the Federal Occupational Safety and
Health Act and other laws and regulations affecting the safety and
health of employees in the production areas of our facilities. We are
not a party to any investigation or litigation by the Environmental
Protection Agency under the Comprehensive Environmental Response
Compensation and Liability Act of 1980 for clean-up costs associated
with any waste sites. We believe that we are in compliance in all
material respects with applicable environmental and occupational safety
regulations.
Certain of B III products are subject to the provisions of the Consumer
Product Safety Act, the Federal Hazardous Substances Act and the
Flammable Fabrics Act, and the regulations promulgated thereunder. The
Consumer Product Safety Act and the Federal Hazardous Substance Act
enable the Consumer Product Safety Commission (the "CPSC") to exclude
from the market consumer products that fail to comply with applicable
product safety regulations or otherwise create a substantial risk of
injury, and articles that contain excessive amounts of banned hazardous
substance. The Flammable Fabrics Act enables the CPSC to regulate and
enforce flammability standards for fabrics used in consumer products.
The CPSC may also require the repurchase by the manufacturer of
articles which are banned. Similar laws exist in some states and
cities. We maintain a quality control program to ensure product safety
compliance with the various federal, state and international
requirements.
Capital Factors Agreement.
On October 31, 1996, B III entered into a factoring agreement with
Capital Factors, Inc. (hereinafter "Capital") whereby B III appointed
Capital as their sole factor by selling all current rights to their
accounts and agreeing to sell future accounts and notes receivable for
the net invoice amount less a factoring commission of the greater of
one point seven five percent (1.75%) of the gross invoice amount or a
minimum commission of one-thousand, two-hundred and fifty dollars
($1,250.00) per month regardless of sales. For receivables for which
Capital has not given credit approval, B III retains the entire risk of
loss for the credit extended. Under the terms of this agreement with
Capital, B III may obtain advances on their receivables at an interest
rate of two percent (2%) plus the prime rate at the sole discretion of
Capital. The agreement is automatically renewable each year but may be
terminated at any time by B III with thirty (30) days written notice
provided to Capital. Further, Capital may terminate at the end of an
annual term by giving written notice at least thirty (30) but no more
than sixty (60) days prior to the end of such annual term. Dr. Michael
Mitchell has become the replacement guarantor on this agreement.
Namath Agreement.
We have a ten (10) year contract with Mr. Joseph Namath entitling us to
six (6) days a year of Mr. Namath's time to produce infomercials
containing Mr. Namath's endorsement for B III products. Consideration
paid to Mr. Namath for his services under such contract included
twenty-five thousand dollars ($25,000.00) paid upon the signing of the
contract with royalties of five percent (5%) of the gross sales price
of all endorsed products sold, to be paid by the twenty-fifth (25th)
day of each month. Mr. Namath was also paid six-hundred thousand
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(600,000) shares of our common stock. Further, we paid six-hundred
thousand (600,000) shares of our common stock to the licensor, Planned
Licencing, Inc. (having rights to the services of Mr. Namath), in
consideration for the use of Mr. Namath's services.
2. Golf Promo
Golf Promo operates a website at www.golfpromo.net where site visitors
may subscribe to receive targeted email and newsletters containing
information on golf, golf products, and golf related information. We
operate this email list service free of charge, whereby we email
information and newsletters related to golfing to the people within our
database to aid in the promotion of our Company. We currently have
approximately 150,000 subscribers to our targeted emails, and we have a
database of approximately 4.2 million golfers. We also maintain
databases of individuals associated with the travel, healthcare and
investment industries. We plan to earn revenues from the sale of
advertisements and classified ads which will be included in our
newsletters and other communications. There can be no assurance that we
will be able to obtain advertisers who are willing to pay for such
promotions.
3. Golf Universe, Inc.
Golf Universe operates a golf website at www.golfuniverse.com. To date,
Golf Universe has not generated any revenues. The Golf Universe web
site provides various golf-related hyperlinks to other web sites. These
links include information on approximately twenty-four thousand
(24,000) golf courses worldwide. The information can be obtained
through the search engine by course name, region, keyword or by map.
Links also provide travel information, including package discounts and
current specials; golf tips, facts, games, trivia, news and rules;
Florida real estate information; golf yellow pages with links to
various golf related resources; golf chat areas and golf products.
Golf Universe maintains a membership of courses who join Golf Universe
as a way to display and feature their courses, clubs and resorts for
golfers who visit the Golf Universe site. A course may become a member
by submitting an online form. The primary benefit of being a member is
the opportunity to use a relatively inexpensive advertising medium with
a targeted consumer audience. We plan to earn revenues from the sale of
advertisements and classified ads on the Golf Universe web site through
these memberships. There can be no assurance that we will be able to
attract advertisers who wish to use our site as a medium for promotion.
Revenues, if generated by the Golf Universe web site, will be by
e-commerce. The commission on sales received by Golf Universe will vary
depending on the number of sales made, the products sold and the
agreements we may obtain with vendors offering their products.
In addition to providing an online venue for companies to sell their
products, Golf Universe provides hyperlinks for its visitors to other
web sites owned by outside Internet retailers. We
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believe that retailers who receive customers through the Golf Universe
hyperlinks will pay us a percentage of net sales made to consumers
originating from the Golf Universe web site. There can be no assurance
that this estimate or assumption is correct.
Distribution.
Golf Universe does not sell any of its own products on its sites. All
distribution is done by vendors through orders taken on their own
sites. Golf Universe merely provides links to these vendors. It
provides access to its "Universe Cyber Mall," at
www.universecybermall.com., where third party vendors can sell their
own products. The purchasers of these products order by means of a
credit card transaction, processed online by the vendors of the
products offered. At the Universe Cyber Mall web site, Golf Universe
sells products of B III, as well as for third party vendors such as
Humware, Digital River Products and MJ's Pro Golf Products. Golf
Universe maintains no inventory and is not responsible for any shipping
of the orders. All credit card transactions are processed by the
vendors whose products are displayed on the site.
Status of Publicly Announced New Products or Services.
There are currently no publicly announced new products or services.
Competition.
The electronic-commerce (hereinafter "e-commerce") market, particularly
on the Internet, is new, rapidly evolving and intensely competitive,
and we expect competition to intensify in the future. We currently or
will in the future compete with a variety of other companies. Some of
these competitors are or will be indirect competitors who specialize in
e-commerce or derive a substantial portion of their revenue from
e-commerce. Other competitors include or will include companies which
offer products similar to our own. These companies compete or will
compete with us through their retail locations and for sources of
supply. These companies may have or will potentially have substantial
customer bases.
The purchasing decisions of many golfers are often the result of highly
subjective preferences, which can be influenced by many factors,
including, among others, advertising, media, promotions and product
endorsements. We could therefore face substantial competition from
existing or new competitors that introduce and successfully promote
golf accessories that achieve market acceptance. Further, there can be
no assurance that our marketing strategy will not be emulated by
others, thereby diluting our message or forcing us to adopt a new
marketing strategy. Such competition could result in significant price
erosion or increased promotional expenditures, either of which could
have a material adverse effect on our business, operating results and
financial condition. There can be no assurance that we will be able to
compete successfully against current and future sources of competition
or that our business, operating results or financial condition will not
be adversely affected by increased competition in the markets in which
We operate.
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The golf accessory industry is highly competitive and is characterized
by numerous companies competing in various segments of the market. Many
of our competitors have greater name recognition, more extensive
engineering, manufacturing and marketing capabilities, and greater
financial, technological and personnel resources than we have. In
addition, certain companies in the golf accessory industry have
expanded their product lines in recent years as a result of
acquisitions. There can be no assurance that we will be able to compete
successfully in the future with existing or new competitors.
Dependence on Suppliers and Raw Materials.
Golf Universe does not manufacture any products and is not dependent
upon suppliers.
Dependence on the Internet.
Golf Universe is dependent upon the Internet. We do not own a gateway
onto the Internet, but instead rely on an Internet service provider to
connect our web site to the Internet. From time to time, we have
experienced temporary interruptions in the web site connection and also
our telecommunications access. Continuous or prolonged interruptions in
our web site connection or in our telecommunications access could have
a material, adverse effect on our business, results of operations and
financial condition. Our internally-developed software depends on
operating systems, database and server software that was developed and
produced by and licenced from third parties. We have, from time to
time, discovered errors and defects in the software from these third
parties and, in part, rely on these third parties to correct these
errors and defects in a timely manner. Accordingly, any service
interruptions experienced as a result of labor problems or otherwise
could have a material adverse effect on our business, results of
operations and financial condition.
Dependence on Certain Consumers.
Golf Universe is not dependant on a single customer or a limited group
of customers.
Intellectual Property.
Currently, Golf Universe has trademark protection on the following
domain names: golfuniverse.com, skiuniverse.com, junior-golf.com,
golfinformation.com, golfcourse-inc.com, targetmail.com and
holeinonesociety.com. There can be no assurance that the steps we take
in regard to the protection of our intellectual property rights will be
adequate to prevent misappropriation of proprietary property rights or
that competitors will not independently develop proprietary property
that is substantially equivalent or superior.
Compliance with Governmental Regulation.
Golf Universe is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses
generally and laws or regulations directly applicable to access to or
commerce on the Internet. However, due to the increasing popularity and
use of the Internet, it is possible that a number of laws and
regulations may be adopted with respect to the Internet, covering
issues such as user privacy, pricing, and characteristics and quality
of products and services. Furthermore, the growth and development of
the market
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for Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those companies
conducting business over the Internet. The adoption of any additional
laws or regulations may decrease the growth of the Internet, which, in
turn, could decrease the demand for our Internet products and increase
our cost of doing business or otherwise have an adverse effect on our
business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws in various jurisdictions
governing issues such as sales tax, libel and personal privacy is
uncertain and may take years to resolve.
In addition, as our service is available over the Internet in multiple
states and as we may sell to numerous consumers resident in such
states, such jurisdictions may claim that we are required to qualify to
do business as a foreign corporation in each such state and foreign
country. Our failure to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject our business
to taxes and penalties for failure to qualify. Any such existing or new
legislation or regulation, including state sales tax, or the
application of laws or regulations from jurisdictions whose laws do not
currently apply to our business, could have a material adverse effect
on our business, results of operations and financial condition.
Digital River Agreement.
On December 12, 1998, we entered into an agreement with Digital River,
Inc., to obtain the right to solicit orders for the sale of our
products on the website for a period of two (2) years. The terms of the
agreement will automatically renew for another two (2) years unless we
provide Digital River notice of our intent not to renew sixty (60) days
prior to the end of the agreement.
Digital River is an electronic distributor of our products on the
website. Digital River has the sole discretion to either add products
not listed or remove listed products in the agreement. Design, content,
format and graphics features of the website may be created with the
consultation and cooperation of Digital River, if they so request.
We have paid a one-time, set-up fee to Digital River for assistance
with the establishment of the website. Any additional costs associated
with website establishment are to be born by us at a specified hourly
rate. Site maintenance charges will be billed to us on a monthly
periodic basis. At the end of each month, Digital River will provide us
with a list of all customers for the month. Digital River maintains the
right to copy, distribute and use this list for any purpose without our
consent.
We will receive monthly commission payments based on a percentage of
the net sales for the preceding month. Commission amounts are subject
to returns, refunds, exchanges, subsequently discovered fraud and/or
criminal activity on the part of customers.
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4. Play Golf
Play Golf maintains a website at www.playgolfnow.com which offers
annual memberships for a price of $59.95 with a free 30 day trial
period to interested visitors of its website, among other things. To
date, most of our memberships have been obtained through corporate
plans, whereby a corporation obtains memberships for its employees. We
have approximately 50,000 members who obtained free memberships through
a promotion conducted prior to our acquisition of the company. These
memberships afford the holder the opportunity to obtain discounts at
golf courses, driving ranges, golf lessons and travel related items
through our network of associated companies and organizations.
Compliance with Environmental Laws.
We are currently not subject to compliance with any environmental laws, to the
best knowledge of our management, and we do not anticipate any significant costs
in maintaining compliance in the future.
Government Approval.
We are not subject to government approvals at this time to the best knowledge of
our management, and we do not anticipate any significant costs in maintaining
compliance in the future.
Research and Development.
We have not spent any amount on research and development in the past two fiscal
years.
Employees.
Golf Universe has eleven (11) full time and total employees, some of which
provide services for Golf Promo and Play Golf as needed. B III has approximately
sixteen (16) full-time and total employees. LCS Golf, Inc. has one (1) full-time
and total employee.
Other Commitments.
The agreements for the purchase of all of the outstanding shares of B III, Play
Golf, and Golf Promo all include provisions whereby we must issue additional
shares of stock to the parties to those contracts should our stock price fall
below $1.00 per share. Such additional shares shall be issued in an amount to
make the purchase price equivalent to that if such shares were trading at $1.00
per share.
Item 2. Management's Discussion and Analysis.
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION OR PLAN OF OPERATION OF THE
COMPANY SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
Results from Operations.
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A comparison of our financial information between our latest fiscal year and the
one prior, would not provide a meaningful representation of our operations since
our company was inactive until its acquisition of B III. For the year ending
February 28, 1999, we had sales of approximately $108,000, which were primarily
derived from B III, which we acquired on November 17, 1998. There were
insignificant revenues from Play Golf and Golf Universe and no revenues from
Golf Promo. The cost of sales, which is from B III operations, exceeded our
sales principally because of a change in management, manufacturing
inefficiencies and seasonality of the business.
Selling, general and administrative expenses, including expenses such as wages
and consulting fees, amounted to $5,551,559 for our latest fiscal year; these
expenses were primarily paid through issuances of our common stock, which
allowed us to operate with minimal debt.
Liquidity and Capital Resources.
In order for us to grow we will require additional funds, for which we are
exploring various alternatives. If adequate funds are not available, we believe
that our planned growth could be significantly reduced. Operations could
continue to be reliant upon the cash flow generated from operations and
continued short term borrowing for Dr. Mitchell or from other sources. From
March 1, 1999, through August 31, 1999. Dr. Mitchell has made additional net
advances in the amount of approximately $500,000.
Our independent auditors' report on the company's consolidated financial
statements for the year ended February 28, 1999, included an explanatory
paragraph stating that the Company has incurred significant losses from
operations and has relied on loans from a major stockholder, which raises
substantial doubt as to the Company's ability to continue as a going concern.
Effects of Inflation.
We believe that the results of our operations could be materially impacted by
inflation, including increases in the interest rates generally, if inflation
materially adversely affected the operations of the company's customers by
affording them less disposable income to spend on leisure time activities.
Year 2000 Compliance.
The Year 2000 ("Y2K") computer issue is the result of computer programs using a
two-digit format, as opposed to a four-digit format to indicate the year. Such
computer programs will be unable to recognize date information correctly when
the year changes to 2000. The Y2K issue poses risks for the company's
information technology systems.
Our information technology systems are based upon software licenses and software
maintenance agreements with third party software companies. Based upon the
companies internal assessments and communications with its software vendors, all
of the software utilized by us is Y2K compliant and tests in this regard have
yielded positive results.
We will continue to monitor our Y2K readiness. Also, we do not anticipate
difficulty in resolving issues related to imbedded technology in the equipment
provided to us by other manufacturers.
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Based on the foregoing, we believe that we will be Y2K compliant on a timely
basis and that the future costs relating to the Y2K issue will not have a
material impact on the company's consolidated financial position, results of
operations or cash flows. To date, we have encountered no expenses in our Y2K
compliance, but we may encounter such expenses in the future.
Forward-looking Information May Prove Inaccurate. The information within this
Form 10-SB contains certain forward looking statements and information relating
to the company that are based on the beliefs of management, as well as
assumptions made by and from information currently available to the company.
When used in this document, the word "anticipate", "believe", "estimate",
"expect", and "intends" and similar expressions, as they relate to the company,
are intended to identify forward looking statements. Such statements reflect the
current views of the company with respect to future events and are subject to
certain risks, uncertainties and assumptions, including the uncertainty
associated with the company's plans to obtain additional financing. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
Item 3. Description of Property
We do not own any real property. We occupy space, without charge, at 24 E. 12th
Street, New York, New York 10003 consisting of approximately four hundred (400)
square feet. This premises is leased to Greenwich Village Pediatrics, which is
the office of our President, Dr. Michael Mitchell.
B III occupies space in an industrial park where its products are manufactured
at 275 E. 10th Avenue, Hialeah, Florida 33010 consisting of approximately
fifteen thousand (15,000) square feet. The premises is leased to B III for
monthly base rental in the amount of four-thousand, two-hundred and fifty
dollars ($4,250.00). B III occupies this space on a month-to-month basis. The
renewal of the lease term is currently under discussion with the landlord.
Golf Universe operates out of office space leased to the Company at 809 North
Dixie Highway, Suite 200, West Palm Beach, Florida consisting of approximately
five-thousand (5000) square feet. The monthly rental for this premises is five
thousand dollars ($5,000.00) and the term of the lease is 3 years.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following tables set forth certain information with respect to the
anticipated beneficial ownership of our common stock by (a) each person known to
us to be the beneficial owner of more than five percent of our common stock, (b)
directors and executive officers both individually and as a group, as of
September 22, 1999. Unless otherwise indicated, we believe that the beneficial
owner had sole voting and investment power over such shares.
Page 14 of 28
<PAGE>
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Title Name and Address of Number of Beneficially Percentage
Beneficial Owner Owned Shares Ownership of Class
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President and Dr. Michael Mitchell 4,118,309(1) 20.75%
CEO 24 East 12th Street
New York, NY 10003
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Security Ownership of Management
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Title Name and Address of Number of Beneficially Percentage
Beneficial Owner Owned Shares Ownership of Class
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President and Dr. Michael Mitchell 4,118,309(1) 20.75%
CEO 24 East 12th Street
New York, NY 10003
- ----------------------------------------------------------------------------------------------------------------
Director Mr. John H. Flood, III 0 0%
24 East 12th Street
New York, NY 10003
- ----------------------------------------------------------------------------------------------------------------
Director Mr. Don Klosterman 0 0%
24 East 12th Street
New York, NY 10003
- ----------------------------------------------------------------------------------------------------------------
Director Mr. Charles Gargano 250,000 01.26%
633 3rd Ave., 37th Fl.
New York, NY 10017
- ----------------------------------------------------------------------------------------------------------------
Director Mr. Lawrence Slavin 50,000 00.25%
87 St. Jon's Road
Wilton, CT 06897
- ----------------------------------------------------------------------------------------------------------------
Chief Alex Bruni 550,000(2) 2.0%
Operating 24 East 12th Street
Officer New York, NY 10003
- ----------------------------------------------------------------------------------------------------------------
Director Mr. James Walsh 600,000 03.02%
5874 Deerfield Place
Lake Worth, FL 33463
- ----------------------------------------------------------------------------------------------------------------
All Executive Officers 5,418,309 27.31%
and Directors as a group
(6 people)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Page 15 of 28
<PAGE>
(1) This amount includes 200,000 shares earned by Lynn Mitchell, Dr.
Mitchell's wife, in providing services to the Company.
(2) This amount includes 200,000 shares which may be obtained at any time
by Mr. Bruni upon exercise of his outstanding options.
(c) Changes in Control.
We are unaware of any arrangements which may result in a change in
control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
(a) Directors and Executive Officers.
The following sets forth the names, ages, positions and terms of office
of our officers and directors. Our directors are elected annually by
the shareholders, and the officers are elected by the board at the
first meeting of the board following the annual meeting.
- --------------------------------------------------------------------------------
Name Age Position Term of Office
- --------------------------------------------------------------------------------
Dr. Michael Mitchell 44 President and CEO annual
- --------------------------------------------------------------------------------
Mr. Charles A. Gargano 64 Director annual
- --------------------------------------------------------------------------------
Mr. Lawrence J. Slavin 46 Director annual
- --------------------------------------------------------------------------------
Mr. Alex Bruni 41 Chief Operating Officer annual
- --------------------------------------------------------------------------------
Mr. James C. Walsh 58 Director annual
- --------------------------------------------------------------------------------
Mr. Don Klosterman 69 Director annual
- --------------------------------------------------------------------------------
Mr. John H. Flood, III 49 Director annual
- --------------------------------------------------------------------------------
Dr. Michael Mitchell
Dr. Mitchell obtained a degree in biology from Jacksonville University
in 1976. In 1980, he obtained his M.D. degree from the University of
Dominica. Since 1985, he has been a physician at Greenwich Village
Pediatrics. He is board certified in pediatrics and has memberships in
the Academy of Pediatrics and the New York County Medical Society.
Mr. Charles A. Gargano
Mr. Gargano earned his B.S. and M.B.A. degrees from Fairleigh Dickinson
University and an M.S. in civil engineering from Manhattan College. He
served under Presidents Reagan and Bush as the Ambassador to the
Republic of Trinidad and Tobago. Since 1995, Mr. Gargano has served as
the Commissioner for the New York State Department of Economic
Page 16 of 28
<PAGE>
Development, while simultaneously serving his appointment as Chairman
of Empire State Development, Inc. Mr. Gargano is a licensed
Professional Engineer and a Civil Engineer.
Mr. Lawrence J. Slavin
In 1974, Mr. Slavin received his history degree at Hofstra University.
He then received his M.A. in Healthcare Administration at C.W. Post
College in 1977. From 1991 through 1996, he worked as Executive
Director and Managing Partner of Hartsdale Diagnostic & Women's Imaging
Service in Hartsdale, New York. In 1996, Mr. Slavin became Vice
President of Business Development and Marketing at U.S. Management
Systems, Inc., a healthcare management service company, where he
developed and managed sales and marketing plans for entities in the
healthcare industry. In 1998, Mr. Slavin began service as the President
of Slavin Consulting, LLC, a healthcare consulting firm in Wilton,
Connecticut, where he focuses on the development of strategic growth
plans for healthcare related facilities.
Mr. Alex Bruni.
Mr. Bruni serves the Company as the Chief Operating Officer. He
obtained a BBA in Accounting and a MS in Taxation from Hofstra
University. From 1988 through 1998, Mr. Bruni worked at American
Express as the Director of International Taxes, managing a staff of
five tax accountants while managing and planning American Express
international operations. In addition, Mr. Bruni worked as a tax
manager for Nomura Securities from 1986 through 1988 and as a tax
specialist for Wertheim Schroder from 1984 through 1986.
Mr. James C. Walsh
Mr. Walsh received his B.S. and J.D. degrees from the University of
Alabama. He is admitted to practice law in Louisiana and New York,
where he has been practicing since 1966. Mr. Walsh practices in his own
firm, specializing in the representation of entertainers and
professional athletes. He is also the President of Namanco Productions,
Inc. specializing in the marketing and management of athletes. Mr.
Walsh is a Director of Sportsline, USA, Inc., a NASDAQ publicly traded
company under the symbol "SPLN." This company is an Internet based
sports media company.
Mr. Don Klosterman
Mr. Klosterman graduated from Loyola University of Los Angeles in 1952.
He is a former Chairman of the Board and currently Director for the
public television company NTN (an AMEX company). He also serves as
Director for Aldila, a golf shaft manufacturing company traded on
NASDAQ, Director for the National Registry, Inc., a software
development company traded on NASDAQ, and as a Director of the Bel-Air
Country Club.
Mr. John H. Flood, III
Mr. Flood received his A.B in Psychology from Harvard College in 1975.
He obtained his J.D. from the University of Virginia School of Law in
1978. Mr. Flood is currently the President of Oldron Sports &
Entertainment Company, which operates doing professional sports team
marketing and consulting. Prior to his current position, Mr. Flood
directed and
Page 17 of 28
<PAGE>
managed the National Football League Properties, Inc. for eleven years.
There, he held the positions of Director of Legal and Business Affairs,
Executive Vice President, General Counsel, and president.
(b) Significant Employees.
We currently have no significant employees not mentioned above.
(c) Family Relationships.
As of the date of this registration statement, there are currently no
family relationship among our directors, executive officers or persons
nominated for such positions.
(d) Involvement in Certain Legal Proceedings.
As of the date of this registration statement, no events have occurred
during the past five years which would be material to an evaluation of
the ability or integrity of any director, officer or persons nominated
for such positions.
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ----------------------------------------------------------------------------------------------------------------------------------
Name Year Salary Bonus Other Annual Restricted Securities LTIP All Other
and ($) ($) Compensation Stock Underlying Payouts Compensation
Principle ($) Award(s) Options/SARs ($) ($)
Position ($) (#)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael 1997 0 0 0 0 0 0 0
Mitchell, 1998 0 0 0 1,925,000 0 0 0
M.D.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Michael Mitchell, M.D.
On June 1, 1998, we entered into an employment agreement with Dr. Michael
Mitchell for his services as our President and Chief Operating Officer. The
agreement is for a term of five (5) years. There may be termination for cause
ninety (90) days after a written demand for services by the board of directors
has been provided. Termination without cause requires at least three (3) months
notice to Dr. Mitchell. Dr. Mitchell's duties include all those customary for
such positions, as well as any duties reasonably imposed or removed from such
customary duties under our discretion. Dr. Mitchell is to preform such services
at least twenty (20) hours per week. As consideration for these services, we
have agreed to pay Dr. Mitchell an annual salary of two-hundred, sixty thousand
dollars
Page 18 of 28
<PAGE>
($260,000.00) payable in weekly installments for five-thousand dollars
($5,000.00). This salary is to be increased each year by at least four percent
(4%) during the term of the agreement.
Alex Bruni.
Pursuant to the terms of the agreement in which we purchased all of the
outstanding shares of Play Golf, we agreed to employ Alex Bruni for a period of
two-years from May 26, 1999 as Chief Operating Officer of Play Golf and Golf
Universe at an annual salary of $104,000 payable in bi-weekly installments.
Eric Reinertsen.
Pursuant to the terms of the agreement in which we purchased all of the
outstanding shares of Golf Promo, we agreed to employ Eric Reinertsen for a
period of one-year from the date of the agreement at an annual salary of $60,000
payable in bi-weekly installments. This agreement is renewable at the mutual
option of the parties.
Item 7. Certain Relationships and Related Transactions.
(a) Transactions
In January 1999, as compensation in lieu of salary due under his
employment contract for the period from June 1, 1998 through
December 31, 1998, Dr. Michael Mitchell received two-million
(2,000,000) shares of our common stock.
In September of 1998, we issued 200,000 shares of our common stock to
Lynn Mitchell, wife of Dr. Michael Mitchell, for services rendered to
the Company.
In addition, Dr. Mitchell periodically makes short-term loans to the
Company for operations without specific repayment terms. See Financial
Statements.
Other than those described therein, we have no transactions which
involved or are planned to involve a direct or indirect interest of a
director, nominee, executive officer, 5% shareholder or any family of
such parties.
(c) Parents of the Company.
We are not a subsidiary of any other company.
(d) Transactions with Promoters.
As of the date of this registration statement, we have not entered into
any transactions with promoters.
Item 8. Description of Securities.
(a) Common Stock.
In General. We are authorized to issue fifty million (50,000,000)
shares of common stock, par value $0.001 per share, of which nineteen
million, eight hundred and forty-six
Page 19 of 28
<PAGE>
thousand, seven hundred and twenty-five (19,846,725) shares were issued
and outstanding as of September 24, 1999. All of the issued and
outstanding common stock is fully paid and nonassessable.
Voting. Each share of our common stock entitles the holder thereof to
one vote per share in the election of directors and in all other
matters upon which stockholders are entitled to vote. The holders of
shares of common stock do not have cumulative voting rights, which
means that the holders of more than fifty percent (50%) of such
outstanding shares voting for the election of directors can elect all
of the directors to be elected, if they so choose. In such event the
holders of the remaining shares will not be able to elect any of our
directors.
Dividends. Each share of common stock entitles the holder thereof to
receive cash dividends as the Board of Directors may declare from funds
legally available therefor. However, we do not intend to declare any
dividend on our common stock in the foreseeable future.
Preemptive Rights. There are no preemptive rights with respect to the
common stock. Upon liquidation, dissolution or winding up of our
affairs, and after payment of creditors, the assets legally available
for distribution will be divided ratably on a share-for-share basis
among the holders of the outstanding shares of common stock.
(b) Debt Securities.
As of the date of this registrations statement, we have no debt
securities outstanding.
(c) Other Securities.
As of the date of this registration statement, we have 200,000 options
outstanding and we are not authorized to issue preferred stock. We have
50 warrants outstanding which are eligible to be exercised for 7 shares
at $0.35 per share.
Page 20 of 28
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
(a) Market Information.
Since mid-1998, our common stock has been traded on the NASDAQ
Over-The-Counter Bulletin Board under the symbol "LCSG." The following
chart sets forth the high and low sales prices for each quarter since
listing of the Company's common stock.
High Low
1998 Quarter
July 1 - September 30 $0.50 $0.20
October 1 - December 31 $1.49 $0.25
1999 Quarter
January 1 - March 31 $2.75 $0.75
April 1 - June 30 $3.62 $2.25
No prediction can be made as to the effect, if any, that future sales
of shares of common stock or the availability of common stock for
future sale will have on the market price of the common stock
prevailing from time-to-time. Sales of substantial amounts of common
stock on the public market could adversely affect the prevailing market
price of the common stock.
(b) Holders.
As of September 22, 1999, there were approximately 420 holders of
common stock.
(c) Dividends.
We have not paid a cash dividend on the common stock since the arrival
of our current management and we do not plan to declare a dividend in
1999. Management anticipates that all funds available will be
reinvested in our business. The payment of dividends may be made at the
discretion of our Board of Directors and will depend upon, among other
things, our operations, capital requirements, and overall financial
condition.
Item 2. Legal Proceedings
Currently, there are no legal proceedings pending against us. However, from time
to time we could be subject to suits arising in the ordinary course of business.
Item 3. Changes In and Disagreements With Accountants
We have not had any changes in or disagreements with our accountants on any
accounting and financial disclosure issue.
Item 4. Recent Sales of Unregistered Securities.
Issuances for Mergers and Acquisitions.
Page 21 of 28
<PAGE>
On October 14, 1997, we issued 10,279,216 shares of common stock to Linkun
Holding Company in exchange for certain assets of Linkun Holding Company. On
October 17, 1997, we transferred these assets to WMF Holding Company in exchange
for services valued at fifteen hundred dollars ($1,500.00).
On October 28, 1997 we issued eight-hundred fifty thousand (850,000) shares of
our common stock in our merger with LCS New York.
On May 1, 1998, we issued four-hundred thousand (400,000) shares of our common
stock in our acquisition of Golf Universe.
On November 17, 1998, we issued one-hundred fifty thousand (150,000) shares of
our restricted common stock in our acquisition of B III.
On January 26, 1999, we issued two-hundred thousand (200,000) shares of our
common stock and an options to purchase an additional 200,000 shares of our
common stock in our acquisition of Play Golf.
On March 8, 1999, we issued three-hundred fifty thousand (350,000) shares of
our common stock in connection with our acquisition of Golf Promo on
February 15, 1999.
The aforementioned share issuances were all made in reliance upon the exemption
from registration provided in Section 4(2) of the Securities Act of 1933. No
commissions were paid in any of these transactions.
Other Issuances.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Date # of Shares Consideration Exemption Relied Upon
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9/21/98 25,000 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 700,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 25,000 Printing Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 25,000 Financial Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 47,000 Technology Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 5,000 Bookkeeping Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 25,000 Management Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 70,000 Business Consulting Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
</TABLE>
Page 22 of 28
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9/21/98 20,000 Market Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 33,000 Administrative Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
9/21/98 50,000 Management Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
10/6/98 22,000 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
10/6/98 20,000 Administrative Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
10/15/98 18,000 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
10/22/98 12,000 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
10/22/98 125,000 Management Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
10/23/98 15,000 Business Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
11/3/98 34,200 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
11/6/98 35,000 Business Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
11/12/98 35,000 Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
11/15/98 16,500 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
11/19/98 50,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
11/23/98 20,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
11/30/98 11,800 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/7/98 75,000 Repayment of Debt Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
12/7/98 100,000 Shareholder Relations Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/7/98 25,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/9/98 250,000 Management Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/9/98 100,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/10/98 11,100 General Legal Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/11/98 100,000 Business Consulting Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
12/11/98 15,000 Technology Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/11/98 40,000 Business Consulting Services Regulation D, Rule 504
- -------------------------------------------------------------------------------------------
12/11/98 15,000 Administrative Services Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
12/15/98 200,000 Licensing Fee Section 4(2) of 1933 Act
- -------------------------------------------------------------------------------------------
</TABLE>
Page 23 of 28
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/15/98 400,000 Licensing Fee Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
12/16/98 7,000 General Legal Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
12/21/98 60,000 Business Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
12/21/98 7,200 General Legal Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
12/21/98 50,000 Internet Consulting Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
12/22/99 35,000 Management Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
1/4/99 15,000 Public Relations Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/5/98 2,000,000 Management Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/7/98 1,200,000 Licensing Fee Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 150,000 Business Consulting Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 25,000 General Legal Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
1/26/99 10,000 Public Relations Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 20,000 Internet Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 25,000 Administrative Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 25,000 Advertising Fee Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 150,000 Products Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 100,000 Licensing Expense Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 80,000 Business Consulting Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/26/99 155,000 Administrative Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
1/27/99 300,000 Executive Consulting Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
2/17/99 265,000 Consulting Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
3/1/99 20,000 General Legal Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
3/1/99 125,000 Public Relations Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
3/1/99 80,000 Management Services Section 4(2) of 1933 Act
- ---------------------------------------------------------------------------------------------
3/1/99 50,000 Financial Consulting Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
3/3/99 20,000 Business Consulting Services Regulation D, Rule 504
- ---------------------------------------------------------------------------------------------
</TABLE>
Page 24 of 28
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3/4/99 7,500 General Legal Services Regulation D, Rule 504
- --------------------------------------------------------------------------------------------
3/4/99 20,000 Computer Engineering Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
3/8/99 30,000 Business Consulting Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
3/25/99 5,000 Business Consulting Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
3/25/99 75,000 Promotional Expenses Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
4/9/99 115,000 General Legal Regulation D, Rule 504
- --------------------------------------------------------------------------------------------
4/9/99 15,000 Administrative Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
4/21/99 50,000 General Legal Regulation D, Rule 504
- --------------------------------------------------------------------------------------------
5/21/99 30,000 Financial Consultant Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
6/1/99 50,000 Financial Consultant Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
6/24/99 125,000 Executive Management Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
6/28/99 200,000 Business Consultant Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
7/27/99 200,000 Business Consultant Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
8/23/99 275,000 Consulting Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
9/23/99 3,000 Consulting Services Section 4(2) of 1933 Act
- --------------------------------------------------------------------------------------------
</TABLE>
On December 1, 1998, we completed the sale of 200,000 units, each comprised of 1
share of common stock and 2 warrants for the purchase 7 shares of common stock
at an exercise price of $0.35, at $0.10 per unit pursuant to an offering under
Regulation D of the Securities Act of 1933, Rule 504. No commission was paid
with respect to the offering, as the shares were sold by our officers and
directors. We raised $993,752.50 in cash proceeds from the offering.
Item 5. Indemnification of Directors and Officers
Our bylaws provide that we shall indemnify each of our directors and officers
against all costs and expenses actually and necessarily incurred by him or her
in connection with the defense of any action, suit or proceeding in which he or
she may be involved or to which he or she may be made a party by reason of his
or her being or having been such director or officer, except in relation to
matters as to which he or she shall be finally adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the performance of duty.
Page 25 of 28
<PAGE>
PART F/S
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999 AND 1998
Page 26 of 28
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999 AND 1998
TABLE OF CONTENTS
Page
----
Independent Auditors' Reports F-1-2
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Changes in Stockholders' Equity F-5-F-6
Consolidated Statements of Cash Flows F-7-F-8
Notes to Consolidated Financial Statements F-9-F-18
<PAGE>
Independent Auditors' Report
To the Shareholders
LCS Golf, Inc.
We have audited the accompanying consolidated balance sheet of LCS
GOLF, INC. AND SUBSIDIARIES as at February 28, 1999 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
year then ended. 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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of LCS
Golf, Inc. and Subsidiaries as at February 28, 1999 and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred significant losses from operations for the
year ended February 28, 1999 and has relied on loans from its major stockholder.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans regarding this matter are also described in
Note A. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
CORNICK, GARBER & SANDLER, LLP
-----------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
New York, New York
September 1, 1999
F-1
<PAGE>
Independent Auditors' Report
LCS Golf, Inc.
New York, New York
We have audited the accompanying statements of operations,
stockholders' equity and cash flows of LCS Golf, Inc. for the year ended
February 28, 1998. 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 financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
LCS Golf, Inc. for the year ended February 28, 1998 in conformity with generally
accepted accounting principles.
J.T. SHULMAN & COMPANY, P.C.
----------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
Carle Place, New York
May 19, 1998
F-2
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT FEBRUARY 28, 1999
ASSETS
------
<TABLE>
<CAPTION>
Pro forma
Historical (Note I)
---------- ----------
<S> <C> <C>
Current assets:
Cash $ 289,029 $ 289,029
Due from factor (Note C) 94,584 94,584
Inventory (Note D) 73,377 73,377
Prepaid and other current assets 335,617 335,617
Loans to stockholder - officer (Note E) 26,515 26,515
----------- -----------
Total current assets 819,122 819,122
Fixed assets - at cost, less accumulated depreciation
and amortization (Note F) 43,050 43,050
Prepaid license fee (Note G) 1,546,912 1,546,912
Intangible assets (Note A) 1,522,886 1,522,886
Security deposits 10,200 10,200
----------- -----------
TOTAL $ 3,942,170 $ 3,942,170
=========== ===========
LIABILITIES
-----------
Current liabilities:
Accounts payable and accrued expenses $ 156,762 $ 156,762
Other current liabilities 41,928 41,928
----------- -----------
Current liabilities before liabilities subsequently
paid with common stock 198,690 198,690
----------- -----------
Liabilities subsequently paid with common stock (Note H) 1,830,796
-----------
Commitments (Notes H and I)
STOCKHOLDERS' EQUITY
--------------------
(Notes A, B, G, H and I)
Common stock - $.001 par value each - authorized
20,000,000 shares; issued and outstanding 17,519,225
shares - historical (18,826,725 shares - pro forma) 17,519 18,827
Additional paid-in capital 7,617,880 9,447,368
Deficit (from November 1, 1997 date of quasi-reorganization) (5,722,715) (5,722,715)
----------- -----------
Total stockholders' equity 1,912,684 3,743,480
----------- -----------
TOTAL $ 3,942,170 $ 3,942,170
=========== ===========
</TABLE>
The notes to financial statements are made a part hereof.
F-3
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
February 28,
---------------------------
1999 1998
----------- ----------
<S> <C> <C>
Sales $ 107,840
Cost of sales 191,872
-----------
Balance (84,032)
Selling, general and administrative expenses
(includes $5,141,680 and $3,916, respectively,
of expenses paid with common stock) 5,551,559 $ 21,100
----------- ---------
(Loss) from operations (5,635,591) (21,100)
Other income (expense):
Other income 22,910
Interest expense (5,602) (2,204)
----------- ---------
NET (LOSS) $(5,618,283) $ (23,304)
=========== =========
Net (loss) per share $(.63) $(.01)
=========== =========
Weighted average number of shares outstanding 8,961,285 3,615,735
=========== =========
</TABLE>
The notes to financial statements are made a part hereof.
F-4
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 28, 1999 and 1998
(NOTES A, B, G, H AND I)
<TABLE>
<CAPTION>
Total
Stockholders'
Common Shares Additional Equity
-------------------- Paid-in (Capital
Shares Amount Capital Deficit Deficiency)
------ -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances - March 1, 1997 988,250 $ 988 $ 276,268 $(405,526) $(128,270)
Additional shares provided to existing
shareholders prior to recapitalization 364,750 365 (365)
Recapitalization and reorganization:
(Note A)
Investments in majority stock of acquired
company applied to additional paid-in capital (50,000) (50,000)
Issued and outstanding shares of acquired
company 10,279,216 10,279 (10,279)
Reverse split of 30-to-1 on common shares
of acquired company (660,000 shares not
subject to reverse split) (9,298,312) (9,298) 9,298
Common stock issued at par value in exchange
for services rendered in connection with acquisition 3,916,360 3,916 3,916
Contribution of stockholder loans to
additional paid-in capital 223,180 223,180
Effects of quasi reorganization (448,102) 324,398 (123,704)
Net loss for year ended February 28, 1998 (23,304) (23,304)
---------- ------- --------- --------- ---------
Balances - March 1, 1998 (carry forward) 6,250,264 6,250 -- (104,432) (98,182)
</TABLE>
F-5
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 28, 1999 and 1998
(NOTES A, B, G, H AND I)
<TABLE>
<CAPTION>
Total
Stockholders'
Common Shares Additional Equity
-------------------- Paid-in (Capital
Shares Amount Capital Deficit Deficiency)
------ ------ ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances - March 1, 1998 (brought forward) 6,250,264 $ 6,250 $ (104,432) $ (98,182)
Shares issued In Regulation D offering 2,982,150 2,982 $ 976,722 979,704
Shares issued in connection with
acquisitions 1,500,000 1,500 1,302,450 1,303,950
Options issued in connection with
acquisition 169,755 169,755
Shares issued for services 6,786,811 6,787 5,168,953 5,175,740
Net (loss) for the year ended
February 28, 1999 (5,618,283) (5,618,283)
---------- ------- ---------- ----------- -----------
BALANCES - FEBRUARY 28, 1999 17,519,225 $17,519 $7,617,880 $(5,722,715) $ 1,912,684
========== ======= ========== =========== ===========
</TABLE>
The notes to financial statements are made a part hereof.
F-6
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
February 28,
---------------------
1999 1998
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net (loss) $(5,618,283) $ (23,304)
Adjustments to reconcile results of operations
to net cash effect of operating activities:
Depreciation and amortization 80,206
Issuance of common stock for services 5,141,680 3,916
Changes in assets and liabilities, net of effects of
acquisition of businesses:
Due from factor 178,539
Inventory (21,573)
Prepaid and other current assets (30,223)
Prepaid licensing fee (25,000)
Accounts payable and accrued expenses 71,543 (95)
Other current liabilities (2,148)
----------- ---------
Net cash used for operating activities (225,259) (19,483)
----------- ---------
Cash flows from investing activities:
Payment for purchases of businesses (369,446) (50,000)
Loans to officer/stockholder (26,515)
----------- ---------
Net cash used for investing activities (395,961) (50,000)
----------- ---------
Cash flows from financing activities:
Net proceeds from issuance of shares in Regulation D offering 979,704
Proceeds from officer/stockholder's loans 70,450
Repayment of officer/stockholder's loans (70,450)
----------- ---------
Net cash provided by financing activities 909,254 70,450
----------- ---------
NET INCREASE IN CASH 288,034 967
Cash - March 1 995 28
----------- ---------
CASH - FEBRUARY 28 $ 289,029 $ 995
=========== =========
</TABLE>
(Continued)
F-7
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
February 28,
---------------------
1999 1998
---- ----
<S> <C> <C>
Supplementary disclosures of cash paid
during the year for:
Interest $ 5,602
===========
Income taxes $ 333
=========
</TABLE>
The notes to financial statements are made a part hereof.
F-8
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Description of Business and Summary of Significant Accounting Policies
The Company
On October 28, 1997, LCS Golf, Inc. (the Company), an inactive New York
corporation, was merged into an inactive Delaware corporation with the
same name ("LCS Delaware") in exchange for 4,904,610 shares of LCS
Delaware's common stock, which includes 3,916,360 shares issued to
certain existing shareholders of the Company for services rendered in
connection with the merger. LCS Delaware had originally been
incorporated on October 8, 1997 as Linkun Enterprise Inc. and had
issued 320,904 common shares (after giving effect to a 1-for-30 reverse
split on certain outstanding shares immediately prior to the merger)
for certain assets of another company which were then sold shortly
thereafter for $1,500. For financial accounting purposes, the merger on
October 28, 1997 has been treated as the acquisition of LCS Delaware by
the Company. However, no value has been ascribed to the common stock
held by the LCS Delaware shareholders or to the additional shares
issued to the Company's shareholders for services rendered in
connection with the merger because at the date of merger both companies
were inactive and their common shares were not actively traded.
The Company was formed under the laws of the State of New York on March
8, 1994. On October 26, 1994, the Company commenced business operations
with the purchase of substantially all of the assets and the assumption
of specific liabilities of Bert Dargie Golf, Inc., a Tennessee
corporation engaged in the business of designing, assembling and
marketing golf clubs and related accessories.
In August, 1996, the Company conveyed, assigned, transferred and
delivered substantially all of its business assets to Dargie Golf Co.
(the "Purchaser") in exchange for the: i) cancellation of the remaining
debt owed to the Purchaser arising from the October 26, 1994 purchase,
ii) sale by Herbert A. Dargie III of his 5 percent ownership interest
in the Company to the Company and, iii) the assumption of certain
liabilities of the Company by the Purchaser.
The Company retained all of its rights to the specialty golf club known
as the "Rattler." Additionally, the Purchaser granted to the Company a
license to use the "Dargie" name in connection with the marketing of
the "Rattler" utility club outside a 200 mile radius of Memphis,
Tennessee for a term of no less than eighteen months.
Effective November 1, 1997, the stockholders of the Company approved a
plan of informal quasi reorganization whereby intangible and other
assets aggregating $123,704 were written off to accumulated deficit.
Additionally, accumulated deficit and additional paid-in capital were
each reduced by $448,102. The $50,000 cash acquisition cost of LCS
Delaware, which was initially credited to additional paid-in capital,
was subsequently offset against accumulated deficit in the quasi
reorganization described above.
(Continued)
F-9
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Description of Business and Summary of Significant Accounting
Policies (Continued)
The Company (Continued)
After the acquisitions described in Note B, the Company is primarily
engaged in the acquisition and operation of companies which provide
products and services to the golf playing public. These products and
services include magnetic therapeutic devices, discounted greens fees
and other services, and a golf website (http:www. golfuniverse.com)
which provides various golf-related hyperlinks to other golf websites
and golf course previews.
Principles of Consolidation
The consolidated financial statements include the accounts of LCS and
its subsidiaries, all of which are wholly owned. All material
intercompany accounts and transactions have been eliminated in
consolidation.
Basis of Presentation
The accompanying consolidated financial statements have been prepared
on a going concern basis which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
Through February 28, 1999, the Company has not been able to generate
significant revenues from its operations to cover its costs and
operating expenses. Although the Company has been able to issue its
common stock for a significant portion of its expenses or has obtained
cash advances from its principal shareholder (Note E), it is not known
whether the Company will be able to continue this practice or be able
to obtain continuing cash advances or if its revenue will increase
significantly to be able to meet its cash operating expenses.
This, in turn, raises substantial doubt about the Company's ability to
continue as a going concern. Management believes that the subsidiaries
acquired during the current year will begin to generate higher revenues
and that the Company will be able to raise additional funds through an
offering of its common stock or alternative sources of financing.
However, no assurances can be given as to the success of these plans.
The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
Inventories
Inventories are valued at the lower of cost determined on a first-in,
first-out basis or market.
(Continued)
F-10
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Description of Business and Summary of Significant Accounting
Policies (Continued)
Depreciation of Equipment
Depreciation is provided utilizing the straight-line method over the
estimated useful lives of the related assets. For income tax purposes,
accelerated depreciation methods are utilized for certain assets.
Deferred Income Taxes
Deferred income taxes are reported using the liability method. Deferred
tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
As a result of the Company's recent re-commencement of operations and
its net losses to date, the Company has provided a valuation allowance
of $2,169,000 against the income tax benefit attributable to its net
operating loss carryforwards and other temporary differences which
aggregate approximately $5,618,000 at February 28, 1999. Almost all
of such temporary differences relate to the Company's net operating
loss carryforwards which expire substantially in 2019.
Intangible Assets
Intangible assets which are comprised of the goodwill, customer lists
and website costs relating to acquisitions (Note B) are being amortized
on a straight-line basis over ten years.
The Company plans to evaluate these assets for impairment on the basis
of whether their cost is recoverable from projected, undiscounted net
cash flows for each related business.
Concentrations
Financial instruments which potentially subject the Company to
concentration of credit risk consist of accounts receivable and cash
deposits. Cash balances are held principally at one financial
institution and many exceed Federal Deposit Insurance Corporation
insured amounts.
(Continued)
F-11
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Description of Business and Summary of Significant Accounting
Policies (Continued)
Concentrations (Continued)
For the year ended February 28, 1999, sales to two customers accounted
for approximately 89% of total sales, the largest of which represented
approximately 73% of the total.
Advertising Costs
The Company expenses its advertising costs when incurred. However,
$10,000 of expenses relating to an infomercial which is being produced
as of February 28, 1999 are included in prepaid expenses and will be
expensed upon the first showing of the infomercial.
Advertising costs were $6,688 for the year ended February 28, 1999.
Loss Per Share
Loss per share has been computed by dividing the net loss by the
weighted average number of common shares outstanding during each year.
The effect of outstanding stock options is not included in the per
share calculations as it would be antidilutive.
The pro forma per share effect of the shares issued subsequent to
February 28, 1999 in payment of liabilities owed at that date (Note H)
is to reduce the net loss per share by $.01.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE B - Acquisitions
The results of operations of the following acquisitions are included in
the attached consolidated statements of operations and cash flows from
their respective dates of acquisition.
(Continued)
F-12
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - Acquisitions (Continued)
Golf Universe, Inc.
On May 1, 1998, the Company acquired, in a purchase transaction, the
outstanding common stock of Golf Universe, Inc., which operates a golf
website that provides hyperlinks to other golf related websites. The
purchase price was $245,250, which included the issuance of 400,000
shares of the Company's common stock with a market value of $128,500
and a note payable of $100,000 which was paid prior to February 28,
1999. The purchase price also includes $16,750 in expenses.
Mr. B III, Inc.
On November 17, 1998, the Company acquired, in a purchase transaction,
the outstanding common stock of Mr. B III, Inc. ("B III"), which
designs, manufactures, markets and distributes therapeutic magnetic
products and specialty pillows. The purchase price was approximately
$679,000, which included a cash payment of $250,000, the issuance of
150,000 shares of the Company's common stock with a market value of
$71,250 and a cash payment of $250,000. The purchase price also
includes expenses of approximately $358,000, which includes the
issuance of 150,000 shares of the Company's common stock with a market
value of approximately $355,000.
Play Golf Now, Inc.
On January 26, 1999, the Company acquired, in a purchase transaction,
the outstanding common stock of Play Golf Now, Inc., which sells
memberships that enable the holder to play at specified golf courses
across the country at reduced greens fees and entitle the holder to
receive various other discounts from participating vendors on golf
related items. The purchase price was approximately $602,000, which
included the issuance of 200,000 shares of the Company's common stock
to the seller and 250,000 shares of common stock to consultants with a
market value aggregating approximately $432,000. The seller also
received non-qualified stock options to purchase to January 25, 2001,
200,000 shares of the Company's common stock at $.50 per share. The
value of these options at grant date utilizing the Black-Scholes
option-pricing model, was approximately $170,000. The assumptions used
in determining the value of these options was an expected volatility of
181.00%, an average interest rate of 4.64% per annum and an expected
holding period of two years.
(Continued)
F-13
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - Acquisitions (Continued)
Golfpromo, Inc.
On February 15, 1999, the Company acquired, in a purchase transaction,
the outstanding common stock of Golfpromo, Inc., whose principal asset
is a mailing list of golfers. The purchase price was approximately
$316,000, representing the market value of 350,000 shares of the
Company's common stock issued to the seller.
The agreements for the acquisitions of B III, Play Golf Now, Inc. and
Golfpromo, Inc. include a provision that if the price of the Company's
common stock is less than $1.00 per share, one year from the date(s) of
issuance, then additional shares will be issued to the seller(s). The
number of shares to be issued will be the value of the shares
originally issued utilizing the $1.00 per share price less the value of
the shares utilizing the current market price on the one year
anniversary of the acquisition, the difference being divided by one
dollar to determine the additional shares to be issued.
B III is the only one of the foregoing acquisitions which is considered
material in relation to those of the Company. The following presents,
on an unaudited pro forma basis, the net sales, net loss and loss per
share had the B III acquisition occurred on March 1, 1997. The
information for B III is based upon its unaudited financial data for
the period March 1, 1998 through November 16, 1998 and for the year
ended February 28, 1998. The pro forma information does not purport to
be indicative of the results of operations that would have occurred had
the transaction taken place at the beginning of the periods presented
nor is it indicative of the expected future results of operations:
Year Ended February 28,
-----------------------
1999 1998
---- ----
Net sales $ 1,130,000 $1,242,000
=========== ==========
Net loss $(5,635,000) $ (249,000)
=========== ==========
Loss per share $ (.62) $ (.06)
=========== ==========
(Continued)
F-14
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE C - Due from Factor
B III's agreement with a factor provides for the sale of all credit
approved accounts receivable at the invoice price less a factoring
commission of 1.75%. Minimum factoring commissions of $15,000 a year,
payable monthly are required. The agreement is automatically
renewable by the Company each October 31, unless the factor gives the
Company 30 - 60 days notice of cancellation prior to that date. The
Company is given credit for the sale within two weeks of collection by
the factor. If a receivable is not collected for any reason other than
the customer's financial inability to pay, the credit approval is
automatically terminated and it becomes a "client risk" receivable. A
client risk receivable is a purchase by the factor with recourse and
can be charged back to the Company at the factor's option. The factor
may advance up to 80% of the purchase price of uncollected accounts
receivable. These advances bear interest at a rate the greater of 9% or
2% above the prime rate. The factor is collateralized under this
agreement by the accounts receivable, cash in banks and intangible
assets of B III. At February 28, 1999, the Company has a receivable due
from the factor which bears interest at 2% below the prime rate.
In March 1999, the President of the Company personally guaranteed the
above agreement.
NOTE D - Inventory
Inventory at February 28, 1999 is summarized as follows:
Raw materials $30,768
Work-in-process 4,069
Finished goods 38,540
-------
Total $73,377
=======
NOTE E - Loans to/from Major Stockholder/Officer
Loans to/from a major stockholder/officer are payable on demand with
interest at 10% a year. These loans are unsecured. From February 28,
1999 to September 1, 1999, the loans receivable from the
stockholder/officer were repaid and the stockholder/officer made net
advances to the Company of approximately $150,000.
(Continued)
F-15
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F - Equipment
Equipment consists of the following at February 28, 1999:
Useful Lives
(Years)
------------
Office equipment and computers $10,515 5
Machinery and equipment 34,425 5
-------
Total 44,940
Less accumulated depreciation 1,890
-------
Total $43,050
=======
Depreciation expense for the year ended February 28, 1999 was $1,890.
NOTE G - Licensing Agreement
In December 1998, the Company entered into a ten year licensing
agreement for the services of Joe Namath to be a spokesperson to
promote the Company's products. The license fee of approximately
$1,586,500, which is being amortized over the life of the agreement,
was paid for by the issuance of 1,200,000 shares of the Company's
common stock with a market value of $1,174,500, the issuance of 600,000
shares of common stock with a market value of approximately $387,000 to
two individuals who assisted in obtaining the agreement and $25,000 in
cash. The amortization expense for the year ended February 28, 1999 was
approximately $40,000. In addition, Mr. Namath is entitled to a royalty
fee of 5% of the gross sales, as defined, generated from products
promoted in accordance with the agreement. No royalties are due for the
year ended February 28, 1999.
NOTE H - Commitments
Employment Agreements
On June 1, 1998, the Company entered into a five year employment
agreement with its President which provides for a minimum annual salary
of $260,000 with annual increases of not less than four percent.
However, in lieu of cash payments of $150,000 due under the agreement
through December 1998, the Company issued 2,000,000 shares of common
stock to its President. The $1,925,000 quoted market value of these
shares has been charged to operations as officer's salary.
(Continued)
F-16
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE H - Commitments (Continued)
Employment Agreements (Continued)
On February 18, 1999, the Company entered into a one year employment
agreement with the Vice President of Golfpromo, Inc., which provides
for a minimum annual salary of $60,000. Additionally, the agreement
provides for a bonus of five percent of sales of Golfpromo, Inc. up to
$500,000 and three percent of its sales between $500,001 to $1,000,000.
The agreement is renewable at the option of both parties. Golfpromo had
no sales for the period ended February 28, 1999. In addition, the
Company agreed to continue the employment of two employees for one year
at a combined annual salary of approximately $76,000.
In connection with the acquisition of Play Golf Now, Inc., the Company
entered into an employment agreement with the seller for a two year
period commencing on May 26, 1999 at an annual salary of $104,000.
Lease
In August 1999, the Company entered into a three year lease for office
space in Florida. The lease can be renewed for an additional two year
term. Rent is $5,000 a month with an annual cost of living increase and
is subject to further adjustments for any increases in real estate
taxes or insurance. The minimum annual base rentals under this lease
are as follows:
Year ending February 28:
------------------------
2000 $ 40,000
2001 60,000
2002 60,000
2003 20,000
--------
Total $180,000
========
The Company's other locations are leased on a month-to-month basis.
Rent expense for the year ended February 28, 1999 was $15,980.
(Continued)
F-17
<PAGE>
LCS GOLF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE I - Stockholders' Equity
During the year ended February 28, 1999, the Company sold, under
Regulation D of the Federal Securities Act, 200,000 units at $.10 a
unit. Each unit consisted of one share of the Company's common stock
and two common stock warrants. Each warrant is for the purchase of
seven shares of common stock at $.35 a share. As of February 28, 1999,
2,782,150 shares had been issued for the exercise of the warrants,
warrants to purchase 350 shares were outstanding and warrants to
purchase 17,500 shares have been surrendered by the holders. The
Company received $979,704 in proceeds from the sale of units and
exercise of the warrants, net of offering expenses of $14,048.
The Company has issued shares of common stock for the following
services rendered during the year ended February 28, 1999 (the shares
have been recorded at the quoted market value of the Company's stock):
Quoted
Number of Market
Shares Issued for Services Shares Value
-------------------------- ------ -----
Licensing agreement (Note G) 1,800,000 $1,561,576
Board of Directors fees 300,000 197,250
Consulting services 2,669,311 2,501,735
President's wages (Note H) 2,000,000 1,925,000
Consulting fees - related parties 1,325,000 820,975
--------- -----------
Total 8,094,311 $7,006,536
========= ==========
The Company utilized consulting services provided by certain family
members of the President of the Company.
The foregoing table includes 1,307,500 shares of common stock issued by
the Company after February 28, 1999 in payment of $1,830,796 due for
certain business acquisitions, related expenses, fees and consulting
services incurred prior to February 28, 1999. The attached pro forma
balance sheet gives effect to these shares as if they had been issued
at February 28, 1999. Accordingly, on a pro forma basis, liabilities
have been reduced and stockholders' equity increased by the $1,830,796
aggregate quoted market prices of these shares as of the dates the
liabilities were incurred or that the shares were issued, as
appropriate.
On June 25, 1999, the stockholders of the Company approved an increase
in the number of authorized shares from 20,000,000 shares to 50,000,000
shares.
F-18
<PAGE>
PART III
Item 1. Index to Exhibits.
- --------------------------------------------------------------------------------
Exhibit Number Description
- --------------------------------------------------------------------------------
2.1 Linkun Holding Company
- --------------------------------------------------------------------------------
2.2 LCS Golf, Inc. Merger
- --------------------------------------------------------------------------------
2.3 Golf Universe, Inc.
- --------------------------------------------------------------------------------
2.4 Mr. "B" III, Inc.
- --------------------------------------------------------------------------------
2.5 GolfPromo, Inc.
- --------------------------------------------------------------------------------
2.6 Play Golf Now, Inc.
- --------------------------------------------------------------------------------
3.1 Articles of Incorporation, as amended
- --------------------------------------------------------------------------------
3.2 By-laws
- --------------------------------------------------------------------------------
4.1 * Form of Common Stock Certificate
- --------------------------------------------------------------------------------
* To be filed by Amendment.
Page 27 of 28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: October 1, 1999 /s/ Dr. Michael Mitchell
---------------- ------------------------------------
By: Dr. Michael Mitchell, President
Page 28 of 28
UNANIMOUS CONSENT IN LIEU
OF SPECIAL MEETING OF THE
BOARD OF DIRECTORS OF
WASHTON PRODUCTS LTD.
---------------
The undersigned on this 23rd day of April 1997, hereby take the
following action by virtue of this consent in lieu of special meeting of the
Board of Directors of Washton Products Ltd. (WASHTON).
BE IT RESOLVED THAT: The action of the President in entering into and
carrying out the terms of an agreement with Interventional Services Inc. dated
April 10, 1997, is hereby ratified, approved and confirmed.
BE IT RESOLVED THAT: The foregoing agreement did not require Washton
Products Ltd. to include it's holdings of shares of various stock securities and
other valuable assets in it's agreement with Interventional Services Inc.
THEREFORE BE IT RESOLVED THAT: WASHTON issue to each shareholder of
record date April 23, 1997, an undivided Interest, equal to the number of shares
held in WASHTON, into a "Company" to be known as Linkun Holding Co.; (LHC) and
that WASHTON transfer and assign to LHC all of its rights, title and Interest in
and to the said stock and other valuable assets and that Morris Diamond shall be
the President of LHC.
Pursuant to the plan of the Board of Directors, the LHC's Interest are
allocated to the shareholders of WASHTON consistent with, and in proportion to,
distributions of Washton Products Ltd. stock. One LHC Interest was allocated
for each share of WASHTON common stock.
FURTHERMORE: that the Board of Directors has determined that the LHC
share Interest should remain non-certificated, (Book Entry), and will be
transferable, with the consent of the President, under circumstances which
assure compliance with Federal and State securities laws. LHC keep a Book Entry
Record of all said holders of Interest until such time as the President shall
deem it prudent, and for the benefit of all such holders of Interest, to
exchange such Interest for an equal amount of shares of common stock in a
corporation to be formed.
MORRIS DIAMOND shall serve as president and Treasurer of LHC and as a
member of its Board of Directors.; (i) and Suzanne Luxenberg shall on the Board
of Directors and as Assistant Secretary.; (ii) and Shirley Diamond shall serve
as Secretary of LHC and as a member of its Board of Directors until its first
regular, annual or special meeting of shareholders.
Shareholders will not be required to pay for Shares received in the
Distribution or to surrender shares in order to receive Shares of the Company.
No certificates or scrip representing fractional Shares will be issued to share
owners as part of the
<PAGE>
Distribution. The Distribution will qualify as a tax-free spinoff under Section
355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
"Code"). For federal income tax purposes:
(1) no gain or loss will be recognized by (and no amount will be
includable in the income of) a holder of WASHTON common stock solely as a result
of the receipt of Shares in the Distribution.
(2) assuming that a holder of WASHTON common stock holds WASHTON common
stock as a capital asset, the holder's holding period for the Shares received in
the Distribution will include the holding period during which the common stock
was held.
Regulations require that each Washton Products Ltd. share owner who
receives Shares in the Distribution, attach to the holder's federal income tax
return for the year in which such stock is received, a detailed statement
setting forth such data as may be appropriate in order to show the applicability
of Section 355 of the Code to the Distribution.
The foregoing is a summary of the principal federal income tax
consequences of the distribution under current law. It does not purport to cover
all federal income tax consequences, or tax consequences that may arise under
the tax laws of other jurisdictions, that may apply to particular categories of
share owners. Each share owner should consult his or her tax advisor as to the
particular consequences of the distribution.
BE IT RESOLVED THAT: The President and Secretary are hereby authorized
and directed to take such action and execute and deliver such documents as may
be required to carry out the meaning and intent of the foregoing resolutions.
/s/ Morris Diamond
- ------------------------
Morris Diamond
/s/ Shirley Diamond
- ------------------------
Shirley Diamond
/s/ Suzanne Luxenberg
- ------------------------
Suzanne Luxenberg
<PAGE>
UNANIMOUS CONSENT IN LIEU OF FIRST
MEETING OF THE BOARD OF DIRECTORS
OF LINKUN ENTERPRISE INC.
------------------
The undersigned hereby take the following action, as of October 10,
1997, by virtue of this consent in lieu of first meeting of the Board of
Directors of Linkun Enterprise Inc. (the Company).
RESOLVED that the purpose of this consent is to take all steps
necessary to complete the organization of the Company and to enable it to
commence business.
RESOLVED that the following are elected officers of the Company to
serve until the next annual meeting of the Board of Directors or until their
successors are elected;
Morris Diamond President, Director
Shirley Diamond Secretary, Treasurer and
Director
Suzanne Luxenberg Assistant Secretary, Director
RESOLVED that the actions and business transacted by the incorporator
as set forth in the statement in lieu of an organization meeting, are hereby
ratified, approved and confirmed.
RESOLVED that the form of stock certificate annexed hereto is adopted
as the form of stock certificate of the Company.
RESOLVED that the Company may open such accounts with such banks and
financial institutions as the Directors see fit and that the usual banking
resolutions be annexed to the minutes of the Company as and when they are
executed.
RESOLVED that the President and Secretary of the Company are authorized
and empowered to pay all expenses incurred in connection with the organization
of the Company, including filing and legal fees.
RESOLVED that the appropriate officers of the Company are authorized
and directed to take all steps necessary to cause the Company to engage in the
business for which it was organized.
RESOLVED that the officers of the Company take all action necessary to
effectuate the foregoing resolutions.
/s/ Shirley Diamond
----------------------------
Shirley Diamond: Director
/s/ Morris Diamond
- ------------------------
Morris Diamond: Director
/s/ Suzanne Luxenberg
-----------------------------
Suzanne Luxenberg: Director
<PAGE>
ACTION BY
THE UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
LINKUN ENTERPRISE INC.
BE IT RESOLVED, that the proper officers of this Corporation be and are
hereby authorized to set aside a non-certificated, undivided interest equal to
10,279,216 shares of this Corporation's Common Stock to Linkun Holding Co. (a
company formed for the benefit of the shareholders of Washton Products Ltd.) in
consideration for the transfer to this Corporation of the assets described in
the attached minutes of the Board of Directors of Washton Products Ltd. dated
April 23, 1997; and be it
FURTHER RESOLVED, that this Corporation consents and agrees to the
distribution by Linkun Holding Co. of 10,279,216 shares of Linkun Enterprise
Inc. to the shareholders of Washton Products Ltd. as contemplated by the
attached resolution of the Board of Directors of Washton Products Ltd.
The foregoing resolutions were adopted by the unanimous written consent
of the directors of this Corporation to be effective October 14, 1997.
/s/ Morris Diamond
------------------
Morris Diamond
/s/ Shirley Diamond
---------------------
Shirley Diamond
/s/ Suzanne Luxenberg
----------------------
Suzanne Luxenberg
<PAGE>
UNANIMOUS CONSENT IN LIEU
OF SPECIAL MEETING OF THE
BOARD OF DIRECTORS OF
LINKUN ENTERPRISE INC.
The undersigned by virtue of this unanimous consent in lieu of special meeting
of the Board of Directors of Linkun Enterprise Inc. (the Company) takes the
following action as of the 14th day of October, 1997:
WHEREAS the President of the Linkun Enterprise Inc. (LINKUN), in his
capacity as President of Linkun Holding Co. (LHC) having deemed it
timely and prudent to exchange interests in LHC for an equal percentage of
shares in Linkun Enterprise Inc., it is
RESOLVED that the President of the Company distribute such shares to its
shareholders and file on Form D, with the Securities and Exchange
Commission a Notice of Exchange under Rule 504 of Regulation D.
BE IT FURTHER RESOLVED that a Form M-11 be filed with the State of New York
prior to filing the Form D.
/s/ Morris Diamond /s/ Shirley Diamond
- ------------------------ ---------------------
Morris Diamond Shirley Diamond
/s/ Suzanne Luxenberg
- ----------------------
Suzanne Luxenberg
<PAGE>
October 16, 1997
Interventional Services Inc. or Assigns
Mr. Robert Chiari: President
15371 Del Gado Drive.
Sherman Oaks, Calif. 91403
Re: Linkun Enterprise Inc. ("LINKUN")
Dear Mr. Chiari:
In connection with LINKUN'S purchase of 8,223,373 shares of common
stock, $.001 par value, of LINKUN (the shares), I hereby represent and warrant
to you as follows:
1. LINKUN is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
2. The following, Shirley Diamond, Morris Diamond, Rose Merzel, Martin
Osber, Southward Investments, Tramdot Development Corp., and Livingston Realty
(the sellers) each have good, absolute, and marketable title to the Shares to be
sold to you. The Shares are free and clear of all liens, security interests,
pledges, charges, limitations, claims or encumbrances of every kind. None of the
Shares are in escrow or subject to any voting trust or voting agreement, and no
proxy is in existence with respect to any of them. There are no stock options,
stock warrants, stock rights or agreements, or securities convertible or
exchangeable into stock, no offers or commitments or commitments or obligations
of any kind to issue shares of stock or securities convertible or exchangeable
into stock issued or outstanding or planned or contemplated by LINKUN. The
Sellers are not party to any agreement which offers or grants to any person the
right to purchase or acquire any of the Shares except to you. The delivery of
the Shares to you as herein contemplated will vest in you good, valid, absolute,
and marketable title to all of the Shares, free and clear of all liens, security
interests, pledges, charges, limitations, claims or encumbrances of every kind.
3. LINKUN does not and has never carried on any business. LINKUN is not
a party to any agreement or contract whatsoever.
4. The copies of each of the following documents, which are true,
complete, and correct in all material respects, have previously been delivered
to you: (i) Articles of Incorporation if LINKUN and all documents, if any to
them; (ii) Bylaws of LINKUN and all amendments, if any to them; (iii) minutes of
all meetings of the stockholders of LINKUN; (iv) minutes of all meetings of the
board of directors of LINKUN and any committee(s) thereof; (v) current list of
all officers and directors of LINKUN; (vi) copies of the latest federal and
state income tax returns of LINKUN, as filed or to be filed; (vii) stock
register and stock certificate records of LINKUN and a current, accurate
1
<PAGE>
list of LINKUN shareholders; (viii) the names of all persons holding powers of
attorney from LINKUN; and (ix) copies of all shareholder or stock restriction
agreements if any relating to the Shares.
5. The authorized capital stock of LINKUN consists of 20,000,000 shares
of $.001 par value common stock, of which 10,279,216 shares are validly issued
and now outstanding, fully paid, non assessable, free of liens encumbrances,
options, restrictions, and legal or equitable rights of others not a party to
this Agreement. No other equity or debt securities of LINKUN have been issued.
All securities issued to date by LINKUN have been issued pursuant to available
exemptions from registration under applicable state and federal securities laws,
including but not limited to Regulation D of the Securities and Exchange
Commission. There are 418 shareholders of LINKUN common stock.
6. There is no action, suit, proceeding, order, or investigation
pending or threatened against or affecting LINKUN at law or in equity or before
or by any federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality and there is no reasonable
basis for any of the foregoing, and there are no arbitration proceedings pending
to which LINKUN is a party. There is no dispute of any kind with any person
under any contract or agreement with LINKUN.
7. There is no applicable state law which would, as a result of the
purchase by you of the Shares, impair, restrict, or delay the voting rights
appurtenant to the Shares.
The LINKUN Board of Directors currently consists of three members, to
wit; Suzanne Luxemberg, Shirley Diamond, and Morris Diamond. As a condition to
the closing, the following valid actions shall be taken by the LINKUN Board of
Directors (pursuant to written consent, valid under Delaware law) simultaneously
with the closing, but in the sequence set forth below:
1. All corporate officers of LINKUN shall resign as such.
2. Suzanne Luxenberg shall resign from the Board of Directors of
LINKUN.
3. The remaining two directors of LINKUN shall, by unanimous vote,
elect Michael D. Mitchell as a director to fill the vacancy created by the
resignation of Suzanne Luxenberg.
4. Shirley Diamond shall resign from the Board of Directors of LINKUN.
5. Morris Diamond and Michael D. Mitchell shall elect Robert Scharf as
a director to fill the vacancy created by the resignation of the Shirley
Diamond.
6. Morris Diamond shall resign from the Board of Directors of LINKUN.
7. Michael D. Mitchell and Robert Scharf shall elect Sandor Engel as a
director to fill the vacancy created by the resignation of Morris Diamond.
I will deliver to you a fully executed written consent of the LINKUN
directors effectuating the above actions.
Very truly yours,
/s/ Morris Diamond
------------------------
Morris Diamond
2
<PAGE>
UNANIMOUS CONSENT IN LIEU
OF SPECIAL MEETING OF THE
BOARD OF DIRECTORS OF
LINKUN ENTERPRISE INC.
-------------------------------
The undersigned on this 17th day of October, 1997, hereby take the
following action by virtue of this consent in lieu of special meeting of the
Board of Directors of Linkun Enterprise Inc. (LINKUN).
BE IT RESOLVED THAT: The action of the President in entering into and
carrying out the terms of an agreement with Interventional Services Inc. or
Assigns, dated October 6, 1997, is hereby ratified, approved and confirmed.
BE IT RESOLVED THAT: The foregoing agreement did not require Linkun
Enterprise Inc. to include it's holdings of shares of various stock securities
and other valuable assets in it's agreement with Interventional Services Inc.
THEREFORE BE IT RESOLVED THAT: LINKUN issue to each shareholder of
record date October 17, 1997, an undivided Interest, equal to the number of the
shares held in LINKUN, into a "Company" to be known as WFM Holding Co.; (WHC)
and that LINKUN transfer and assign to WHC all of its rights, title and Interest
in and to the said stock and other valuable assets and that Morris Diamond shall
be the President of WHC.
Pursuant to the plan of the Board of Directors, the WHC's Interest are
allocated to the shareholders of LINKUN consistent with, and in proportion to,
distributions of Linkun Enterprise Inc. stock. One WHC Interest was allocated
for each share of LINKUN common stock.
FURTHERMORE: that the Board of Directors has determined that the WHC
share Interest should remain non-certificated, (Book Entry), and will be
transferable, with the consent of the President, under circumstances which
assure compliance with Federal and State securities laws. WHC keep a Book Entry
Record of all said holders of Interest until such time as the President shall
deem it prudent, and for the benefit of all such holders of Interest, to
exchange such Interest for an equal amount of shares of common stock in a
corporation to be formed.
MORRIS DIAMOND shall serve as President and treasurer of WHC and as a
member of its Board of Directors.; (i) and Suzanne Luxemberg shall serve on the
Board of Directors and as Assistant Secretary.; (ii) and Shirley Diamond shall
serve as Secretary of WHC and as a member of its Board of Directors until its
first regular, annual or special meeting of shareholders.
<PAGE>
Shareholders will not be required to pay for Shares received in the
Distribution or to surrender shares in order to receive Shares of the Company.
No certificates or scrip representing fractional Shares will be issued to share
owners as part of the Distribution. The Distribution will qualify as a tax-free
spin off under Section 355 and 368(a)(1)(D) of the Internal Revenue Code of
1986, as amended ("the Code"). For federal income tax purposes:
(1) no gain or loss will be recognized by (and no amount will be
includable in the income of) a holder of LINKUN common stock solely as a result
of the receipt of Shares in the Distribution.
(2) assuming that a holder of LINKUN common stock holds LINKUN common
stock as capital asset, the holder's holding period for the Shares received in
the Distribution will include the holding period during which the common stock
was held.
Regulations require that each Linkun Enterprise Inc. share owner who
receives Shares in the Distribution, attach to the holder's federal income tax
return for the year in which such stock is received, a detailed statement
setting forth such data as may be appropriate in order to show the applicability
of Section 355 of the Code to the Distribution.
The foregoing is a summary of the principal federal income tax
consequences of the distribution under current law. It does not purport to cover
all federal income tax consequences, or tax consequences that may arise under
the tax laws of other jurisdictions, that may apply to particular categories of
share owners. Each share owner should consult his or her tax advisor as to the
particular consequences of the distribution.
BE IT RESOLVED THAT: the President and Secretary are hereby authorized
and directed to take such action and execute and deliver such documents as may
be required to carry out the meaning and intent of the foregoing resolutions.
/s/ Morris Diamond
- ------------------------
Morris Diamond
/s/ Shirley Diamond
- ---------------------
Shirley Diamond
/s/ Suzanne Luxenberg
- ----------------------
Suzanne Luxenberg
<PAGE>
ACTION BY THE
UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
LINKUN ENTERPRISE INC.
BE IT RESOLVED, that the proper officers of this Corporation be and are
hereby authorized to transfer to WFM Holding Co. the assets obtained by this
Corporation from Washton Products Ltd. (which assets are described in the
attached minutes of the Board of Directors of Washton Products Ltd., dated April
23, 1997). for and in consideration of WFM Holding Co. funding certain legal and
other expenses of this Corporation.
The foregoing resolution was adopted by the unanimous written consent
of the directors to be effective October 17, 1997.
/s/ Morris Diamond
------------------------
Morris Diamond
/s/ Shirley Diamond
---------------------
Shirley Diamond
/s/ Suzanne Luxenberg
----------------------
Suzanne Luxenberg
AGREEMENT & PLAN OF MERGER
Dated October 28, 1997 between LCS GOLF, INC. a Delaware Corporation, (hereafter
referred to as the "surviving corporation"), and LCS GOLF, INC., a Corporation
formed and duly existing under the laws of New York, (hereinafter referred to as
the "absorbed corporation".)
STIPULATIONS
A. Surviving corporation organized and existing under the laws of the State of
Delaware, with it's principal office at 24 East 12th Street, Suite 403, New York
10003.
B. Surviving corporation has a capitalization of 20 million shares of common
stock {$0.001 par value common stock, of which 10,279,216 share are issued and
outstanding}.
C. Absorbed corporation is a corporation organized and existing under the laws
of the State of New York, with it's principal office at 24 East 12th Street,
Suite 403, New York, New York 10003.
D. Absorbed corporation has an authorization pursuant to the Business
Corporation Law of the State of New York to issue 2,000,000 common shares, $0.01
par value; of which 850,000 common shares are issued and outstanding.
E. The Board of directors of the surviving and absorbing corporations deem it
desirable and in the best business interests of the corporations and their
shareholders that LCS GOLF, INC. (New York) be merged into LCS GOLF, INC.
(Delaware) pursuant to the provisions of The General Corporation Law of Delaware
in order that the transaction qualify as a "reorganization" within the meaning
of Section 368(a)(1)(A) of the Internal Revenue Code of 1954, as amended.
<PAGE>
In consideration of the mutual covenants, and subject to the terms and
conditions hereafter set forth, and for good and valuable consideration, the
amount, receipt and sufficiency of which are hereby acknowledged, the surviving
and absorbed corporations agree as follows:
SECTION ONE. Merger. Absorbed corporation shall merge with and into LCS GOLF,
INC. (Delaware), which shall be the surviving corporation.
SECTION TWO. Terms and Conditions. On the effective date of the merger, the
separate existence of the absorbed corporation shall cease, and the surviving
corporation shall succeed to all the rights, privileges, immunities, and
franchise, and all the property, real, personal, and mixed of the absorbed
corporation, without the necessity for any separate transfer. The surviving
corporation shall thereafter be responsible and liable for all liabilities and
obligations of the absorbed corporation, and neither the rights of creditors nor
any liens on the property of the absorbed corporation shall be impaired by the
merger. Further, the capitalization of the surviving company shall not be
reduced as a result of the merger.
SECTION THREE. Conversion of Shares. The manager and basis of converting the
shares of the absorbed corporation into shares, rights, obligations and other
securities of the surviving corporation is as follows: LCS GOLF, INC. (Delaware)
shall issue 850,000 shares of their common stock to the absorbed corporation to
be distributed amongst it's stockholders, on a one-share-for-one-share basis.
(a) The conversion shall be effected as follows: After the effective date of the
merger, each holder of certificates for shares of shares of common stock in the
absorbed corporation shall surrender them to the surviving corporation or it's
duly appointed agent, in such a manner as the surviving corporation shall
legally require. On receipt of such share certificates, the surviving
corporation shall issue and exchange therefor certificates for shares of common
stock in the surviving corporation, representing the number of shares of such
stock to which such holder is entitled as provided above. The surviving
corporation shall issue to an agent for the holders otherwise entitled to
<PAGE>
(Section 3. (a) Continued): fractional shares interests, and the agent shall
sell such whole shares, and pay over the proceeds to the shareholders entitled
thereto in proportion to their fractional share interest.
(b) Holders of certificates of stock of the absorbed corporation shall not be
entitled to dividends payable on shares of stock in the surviving corporation
until certificates have been issued to such shareholders. Thereafter, each such
shareholder shall be entitled to receive any dividends on shares of stock of the
surviving corporation issuable to them hereunder which may have been declared
and paid between the effective date of the merger and issuance to such
shareholders of the certificate for his or her shares in the surviving
corporation.
SECTION FOUR. Change in Articles of Incorporation. The articles of incorporation
of the surviving corporation shall continue to be its articles of incorporation
following the effective date of the merger.
SECTION FIVE. Change in Bylaws. The bylaws of the surviving corporation shall
continue to be its bylaws following the effective date of the merger.
SECTION SIX. Directors and Officers. The directors and officers of the surviving
corporation on the effective date of the merger shall continue as the directors
and officers of the surviving corporation for the full unexpired terms. No seats
on the board of directors of the surviving corporation shall be provided to the
absorbed corporation.
SECTION SEVEN. Prohibited Transactions. Neither of the corporations shall, prior
to the effective date of the merger, engage in any activity or transaction other
than in the ordinary course of business, except that the absorbed and surviving
corporations may pay regular quarterly dividends on their outstanding common
shares and take all action necessary or appropriate under the laws of the States
of Delaware and New York at meetings to be held on or before the date of merger,
or at such other times as to which the boards of directors of the corporations
may agree.
<PAGE>
SECTION EIGHT. Effective Date of Merger. The effective date of this merger shall
be the date when the Certificate of Merger is accepted for filing by the
Secretary of State of the State of Delaware.
SECTION NINE. Abandonment of Merger. This plan of merger may be abandoned by
action of the board of directors of either the surviving or the absorbed
corporation at any time prior to the effective date on the happening of any of
the following events:
(a) If the merger is not approved by the stockholders of either the surviving or
the absorbed corporation on or before January 30, 1998.
(b) If, in the judgment of the board of directors of either the surviving or the
absorbed corporation, the merger would be impracticable because of the number of
dissenting shareholders of the absorbed corporation asserting appraisal rights
under the laws of the State of New York.
(c) If any material action or proceeding is instituted or threatended against
either of the corporations or their assets.
(d) If, between the date of this agreement and the effective date of the merger,
there has been, in the opinion of such board of directors, a material adverse
change in the business of financial condition of or affecting either of the
corporations.
(e) If, on or before the effective date of the merger, the Commissioner of the
Internal revenue Service has failed or refused to rule, in substance, that the
merger will qualify as a reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code of 1954, and that no gain or loss will be recognized to
the stockholders of the corporations on the exchange of their stock for the
common stock of the surviving corporation.
(f) If any of the corporations shall have engaged in any transaction prohibited
by this agreement.
<PAGE>
SECTION TEN. Execution of Agreement. This plan of merger may be executed in any
number of counterparts, and each such counterpart shall constitute an original
instrument. Facsimile signature shall be deemed acceptable.
Executed on behalf of the corporations by their officers, sealed with their
corporate seals, and attested by their respective secretaries pursuant to the
authorization of their respective boards of directors on the date first above
written:
/s/ Michael D. Mitchell
- -----------------------------------
LCS GOLF, INC. (New York)
by: Dr. Michael D. Mitchell, President
Attested: /s/ Sandor Engel
-------------------------
Sandor Engel, Secretary
/s/ Michael D. Mitchell
- -----------------------------------
LCS GOLF, INC. (Delaware)
by: Dr. Michael D. Mitchell, President
Attested: /s/ Sandor Engel
-------------------------
Sandor Engel, Secretary
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTFIY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER WHICH MERGES:
"LCS GOLF, INC.", A NEW YORK CORPORATION
WITH AND INTO "LCS GOLF, INC." UNDER THE NAME OF "LCS GOLF, INC.", A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS
RECEIVED AND FILED IN THIS OFFICE THE FOURTH DAY OF NOVEMBER A.D. 1997, AT 9
O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[STAMP] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
<PAGE>
[STAMP]
CERTIFICATE OF MERGER
OF LCS GOLF, INC. (NEW YORK)
INTO
LCS GOLF, INC. (DELAWARE)
The undersigned Corporation,
DOES HEREBY CERTIFY:
FIRST: That the name and jurisdiction of incorporation of each of the
constituent Corporations of the merger is as follows:
LCS GOLF, INC. Delaware
LCS GOLF, INC. New York
SECOND: That an Agreement and Plan of Merger between the two Corporations has
been approved, adopted, certified, executed, and acknowledged by each of the
constituent Corporations in accordance with the requirements of Subsection (c)
of Section 252 of the General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving Corporation is LCS GOLF, INC. a Delaware
Corporation.
FOURTH: That the Certificate of Incorporation of LCS GOLF, INC. a Delaware
Corporation, shall be the Certificate of Incorporation of the surviving
Corporation.
FIFTH: That the executed Agreement and Plan of Merger is on file at the
principal place of business of the surviving Corporation.
SIXTH: That a copy of the Agreement and Plan of Merger shall be furnished,
without cost, on request to any stockholder of either constituent Corporation.
SEVENTH: The authorized capital stock of each foreign Corporation which is a
party to the merger is as follows:
NAME: LCS GOLF, INC. (New York)
TYPE OF SHARES: Common Shares
NUMBER AUTHORIZED: (Authorized to issue 2,000,000 Common shares.)
PAR VALUE: $0.01 for Common shares.
<PAGE>
IN WITNESS WHEREOF, sold Corporation has caused this Certificate to be signed by
Dr. Michael D. Mitchell, its authorized officer this 28th day of October, 1997.
LCS GOLF, INC.
(A Delaware Corporation)
/s/ Michael D. Mitchell
- -----------------------------------
by: Dr. Michael D. Mitchell, President
STATE OF NEW YORK
COUNTY OF NEW YORK
On the 28th day of October, 1997, before me, the undersigned Notary Public in
and for the State of New York, personally appeared Dr. Michael D. Mitchell,
personally known to me to be the person and officer whose name is subscribed to
the foregoing Certificate and acknowledged to me that he executed the same.
/s/ [ILLEGIBLE]
- ----------------------------
Notary Public [STAMP]
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
This agreement is entered into this 20th day of February, 1998 by and between
Golf Universe, Inc., A Florida Corporation, (hereinafter referred to as
"Seller"), and LCS Golf, Inc., a Delaware Corporation, (hereinafter referred to
as "Buyer").
WHEREAS, Seller owns or controls 100,000 shares of the common capital stock of
Golf Universe, Inc., a Florida Corporation incorporated in 1996 sold 100,000
shares in total being 100% of the common capital shares of Golf Universe, Inc.,
and has agreed to sell said shares to Buyer, and,
Whereas, Buyer is desirous of buying the shares so owned by Seller, said sale
and purchase to be upon the terms and conditions set forth herein,
NOW, THEREFORE, for mutual consideration set out herein, and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
THE PURCHASE PRICE
1. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller
100,000 shares of the issued and outstanding common stock of Golf Universe, Inc.
(hereinafter referred to as the "Corporation") such shares constituting all of
the issued and outstanding common shares of the Corporation for a total purchase
price of (1) 200,000 shares of the common capital stock of Buyer and (2)
$100,000 in cash.
1.1 The cash portion of the purchase price shall be payable in four quarterly
installments of $25,000 each, contingent upon and commencing on the date on
which Buyer has raised $750,000.00 from a proposed stock offering by the Buyer,
which offering shall be promulgated pursuant to Regulation D. Rule 504 of the
U.S. Securities and Exchange Act.
<PAGE>
1.2 The stock portion of the purchase price shall be delivered as follows:
200,000 shares upon execution of this agreement shall be transferred to the
escrow of Don A. Paradiso, P.A., a Florida law firm, to be held in escrow for
the benefit of Mr. Rene von Richthofen pending transfer to him at such time as
the first payment in the amount of $25,000 due under this agreement has been
transferred to the Seller, and the shares in the Buyer's company due the Seller
from the Buyer have been transferred to the Seller. No refund in any portion of
the purchase price paid shall be made to the Buyer if the Buyer defaults on it's
obligations under this agreement.
1.3 The parties also agree that Rene von Richthofen will oversee Golf Universe,
Inc. operations and LCS Golf, Inc. will fund Golf Universe, Inc. operations, to
include Mr. von Richthofen's salary, secretarial expenses, office rental, and
other routine office expenses in the amount of $5,000.00 per month. Said funding
shall commence on May 1, 1998. The payments shall be increased to $8,000.00 per
month, representing an increase of $3,000.00 per month to Mr. von Richthofen's
salary after three months from the date of the first payment, therefore
commencing with the fourth monthly payment.
1.4 Buyer shall deliver into escrow upon the execution of this agreement 200,000
shares of the common capital stock of Buyer. In the event Seller cannot also
deliver into escrow all of the documents and shares of stock in Seller required
hereunder for delivery to the Buyer at the time of execution of this agreement,
then this agreement shall be deemed automatically terminated. Rene von
Richthofen shall continue in his capacity as President of and shall be elected a
Director of Golf Universe. Inc. by Buyer. Should Mr. von Richthofen voluntarily
leave the employ of Golf Universe, Inc. prior to the expiration of one year from
the effective date of this agreement, Seller agrees to forfeit back to Buyer
100,000 of the 200,000 shares of Buyer due to Seller under the express terms of
this agreement.
1.5 Seller shall deliver into escrow to be held in escrow until the entire
purchase price has been paid therefore certificates representing the shares of
the Corporation to be sold hereunder duly endorsed so as to make the Buyer or
it's designee the sole holder thereof, free and clear of all claims and
encumbrances. The shares are not registered under the Securities Act of 1933 as
amended (the "Act"). The shares will be subject to a usual and appropriate stop
transfer order on the books and records of the transfer agent pertaining to
securities not registered under the Act.
<PAGE>
1.6 Seller agrees that 100% of the cash portion of the purchase price being
$100,000 shall be used to repay corporate loan obligations owed by Golf
Universe, Inc. to Rene von Richthofen. In addition, Buyer agrees to transfer the
200,000 shares of LCS Golf, Inc. directly to Rene von Richthofen.
REPRESENTATIONS OF SELLER
2. Seller hereby represents and warrants, to the extent of the facts known to
the parties, that, effective this date, the representations listed below are
true and correct:
2.1 The common shares of the Corporation sold under this agreement will be free
from all claims, liens, or other encumbrances, including any claim of Seller in
and to the said shares, and Seller have the unqualified right to transfer and
dispose of such shares.
2.2 The Corporation's authorized capital stock is 100,000 shares, $0.001 (one
mil) par value. All of the issued and outstanding shares of the Corporation are
validity issued, fully-paid and nonassessable. The Seller shall deliver to the
Buyer the Corporation's Certificate of Incorporation, Articles of Incorporation,
and By-Laws, along with a Certificate of Good Standing valid as of the date of
this agreement.
2.3 To the best of the Seller's knowledge, there are no actions, suits,
proceedings or investigations, pending or threatened in law or in equity, or
before any governmental body whatsoever, which may result in any material
adverse change in the business operations, properties or assets, or in the
condition, financial or otherwise, of the Corporation.
2.4 The Corporation has complied to the best knowledge of the Seller in all
material respects with all laws, regulations and orders applicable to the
Corporation's business. The Corporation has no debts, liabilities or obligations
of any kind or nature whatsoever, whether contingent or fixed, liquidated or
unliquidated which have not been disclosed to the Buyer. Upon receiving payment
hereunder, the Seller shall submit to the Buyer certified minutes appointing
such Directors of the Corporation as the Buyer designates, and financial
statements of the Corporation current to December 31, 1997.
2.5 The execution and carrying out of this agreement does not violate the
corporate charter of the Corporation.
<PAGE>
REPRESENTATIONS OF BUYER
3. Buyer is purchasing the shares of the Corporation for investment purposes and
not with a view toward distribution. Buyer understands that any shares being
purchased pursuant to this agreement may be restricted shares, as that term is
defined in Rule 144 under the Securities Act of 1933 of the United States of
America and the certificates evidencing ownership of such shares shall contain
restrictive legends, if necessary to such effect.
GENERAL PROVISIONS
4. Certain documents may be delivered subsequent to the date of this agreement
upon the mutual agreement of the parties hereto. Stock certificates, duly
endorsed in blank, shall be provided to the Buyer and Seller at the execution of
this agreement.
4.1 Any failure on the part of any party hereto to comply with any of its
obligations agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
4.2 Any and all disputes and differences between and among the parties with
respect to the construction or performance of this agreement shall be resolved
by arbitration before a one-arbitrator panel of the American Arbitration
Association in Miami, Florida.
4.3 This agreement shall be governed by the laws of the State of Florida.
4.4 This is the entire agreement of the parties. This agreement supercedes all
previous contracts either oral or written before the date of this agreement
between the parties. This agreement shall be binding upon the heirs, successors
and assigns of the parties hereto. There are no oral promises, conditions or
inducements to the execution hereof.
4.5 Each party hereto shall bear all expenses, costs and fees incurred or
assumed by it in connection with the preparation and execution of this agreement
whether or not the sale and purchase herein provided for shall be in fact
effectuated.
4.6 The descriptive headings contained in this agreement are inserted for
convenience only and are of no force and effect whatsoever.
<PAGE>
4.7 For the convenience of the parties, any number of counterparts of this
agreement may be executed by any one or more parties hereto and each such
executed counterpart shall be and shall be deemed to be an original instrument,
and to have the force and effect of an original but all of which shall
constitute, and shall be deemed to constitute in the aggregate but one and the
same instrument.
4.8 The Buyer and the Seller convenant and agree, each with the other, that any
such party hereto shall from time to time execute and deliver all such further
instruments or documents and shall take or cause to be taken such further action
or actions as may be reasonably deemed necessary in order to carry out the
intent and purposes of this agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
BUYER:
/s/ Michael D. Mitchell
- -----------------------------------
LCS GOLF, INC.
by: Dr. Michael D. Mitchell, President
SELLER:
/s/ Rene von Richthofen
- ----------------------------------
Golf Universe, Inc.
by: Rene von Richthofen, President
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
This agreement is entered into this 17th day of November, 1998 by and between
Milton Besen, (hereinafter referred to as "Seller"), and LCS Golf, Inc., a
Delaware Corporation, (hereinafter referred to as "Buyer").
Whereas, Seller owns or controls all (100%) of the common capital stock of Mr. B
III, Inc., a Florida Corporation, said shares in total being 100% of the common
capital shares of Mr. B III, Inc., and has agreed to sell said shares to Buyer,
and,
Whereas, Buyer is desirous of buying the shares so owned by Seller, said sale
and purchase to be upon the terms and conditions set forth herein,
NOW, THEREFORE, for mutual consideration set out herein, and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
PURCHASE PRICE
--------------
1. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all
(100%) of the common capital stock of Mr. B III, Inc. (hereinafter referred to
as the "Corporation") such shares constituting all of the issued and
outstanding, and authorized and unissued, and treasury shares of the Corporation
for a total purchase price of (1) 150,000 transfer restricted common capital
shares of the Buyer and (2) $250,000.
1.1 The cash portion of the purchase price (represented by that certain
promissory note attached hereto and made a part hereof by reference) shall be
payable as follows: (1) $175,000 upon the execution of this agreement and (2)
$75,000 on or before January 5, 1999.
1.2 The stock portion of the purchase price shall be delivered as follows;
150,000 shares upon execution of this agreement shall be transferred to the
Seller, to be held pursuant to restrictive legend by the Seller for a period of
one year from the date of issuance of the shares if the share price of the Buyer
is less than $1.00 per share one year from the date of issuance of the shares,
so many additional shares shall be paid over to the Seller by the Buyer such
that the total amount of shares transferred by the Buyer to the Seller shall be
equal to $150,000 based on the then current sales price of the Buyer's shares on
the open market. No reduction in shares will be made if the then current sales
price exceeds $1.00 per share.
<PAGE>
1.3 The parties also agree that Milton Besen and Harriet Besen will remain
employed by Mr. B III, Inc. for a period of at least one year, five days per
week for the first three months following the date of execution of this
agreement, and three days per week thereafter, in order to assist the Buyer with
the transition. During this period of employment Milton and Harriet Besen will
be compensated at the rate of $500.00 total per week gross. A significant aspect
of their work at Mr. B III, Inc. will be training employees, and supervising
daily operations.
1.4 The sales price agreed upon herein is based upon the condition of Mr. B
III, Inc. on November 5, 1998 and upon a schedule of assets and liabilities of
Mr. B III, Inc. as of that date which schedule is attached hereto and made a
part hereof as Schedule "A" All of the assets of Mr. B III, Inc. including
machinery, equipment, inventory, work in progress, goodwill, company name,
accounts receivable, notes receivable, motor vehicles, patents, trademarks,
copyrights, service marks, intangibles, and intellectual property, are included
in the sale. However, Buyer acknowledges that the "calorie blocker", a product
developed and patented by Dr. Robert Besen, is not owned by Mr. B III, Inc. and
will not be owned by Buyer's purchase of the capital stock of Mr. B III, Inc.,
Buyer further acknowledges that Dr. Robert Besen uses office space at the
principal place of business of Mr. B III, Inc. and agrees to provide Dr. Robert
Besen with 90 days written notice in the event Buyer desires him to vacate the
premises.
1.5 Upon execution of this agreement, Seller shall deliver to the attorney for
the Buyer (1) 100% of the stock of Mr. B III, Inc., (2) all of the Corporate
books and records of Mr. B III, Inc., (3) minutes of Mr. B III, Inc.,
satisfactory to the Buyer approving the sale, (4) the resignations of all of the
Officers and Directors of Mr. B III, Inc. (5) copies or originals of all of the
contracts, including all leases, entered into by Mr. B III, Inc., up to the date
of closing. The share certificates representing the shares of Mr. B III, Inc. to
be sold hereunder shall be duly endorsed so as to make the Buyer or it's
designee the sole holder thereof, free and clear of all claims and encumbrances.
REPRESENTATIONS OF SELLER
-------------------------
2. Seller hereby represents and warrants, to the extent of the facts known to
the parties, that, effective this date, the representations listed below are
true and correct.
2.1 The common shares of Mr. B III, Inc. sold this agreement will be free from
all claims, liens, or other encumbrances, including any claim of Seller in and
to the said shares, and Seller has the unqualified right to transfer and dispose
of such shares.
<PAGE>
2.2 All of the issued and outstanding shares of Mr. B III, Inc. are validly
issued, fully-paid and nonassessable. The Seller shall deliver to the Buyer the
Corporation's Certificate of Incorporation. Articles of Incorporation and
By-laws, along with a Certificate of Good Standing valid as of the date of this
agreement.
2.3 To the best of the Seller's knowledge, there are non actions, suits,
proceedings or investigations, pending or threatened, in law or in equity, or
before any governmental body whatsoever, which may result in any material
adverse change in the business, operations, properties or assets, or in the
condition, financial or otherwise of Mr. B III, Inc.
2.4 Mr. B III, has complied, to the best knowledge of the Seller, in all
material respects with all laws, regulations and orders applicable to Mr. B III,
Inc.'s business. Mr. B III, Inc. has no debt, liabilities or obligations of any
kind or nature whatsoever, whether contingent or fixed, liquidated or
unliquidated which do not appear on Schedule "A". Upon receiving payment
hereunder, the Seller shall submit to the Buyer certified minutes appointing
such Directors of Mr. B III, Inc. as the Buyer designates, and financial
statements of Mr. B III, Inc. current to September 30, 1998.
2.5 The execution and carrying out of this agreement does not violate the
corporate charter or By-laws of Mr. B III, Inc., or the laws of the State of
Florida.
REPRESENTATIONS OF BUYER
------------------------
3. Buyer is purchasing the shares of the Corporation for investment purposes and
not with a view toward distribution. Buyer understands that any shares being
purchased pursuant to this agreement are restricted shares, as that term is
defined in Rule 144 under the Securities Act of 1933 of the United States of
America and the certificates evidencing ownership of such shares shall contain
restrictive legends, if necessary, to such effect. Buyer has authorized capital
stock consisting of 20,000,000 common and no preferred shares, par value $0.01,
of which none are in treasury, and 6,250,264 were issued and outstanding as at
February 28, 1998, the date of last certified shareholder list. All of the
issued and outstanding shares of Buyer are fully paid and nonassessable, validly
authorized and issued, and were offered, issued and sold in accordance with
applicable Federal and State Law. Buyer's common stock is traded on the NASDAQ
OTC Bulletin Board and Buyer will use it's best efforts to maintain that trading
status.
<PAGE>
The certificate(s) for the shares of the Buyer delivered to the Seller hereunder
shall bear on their face the following restrictive legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then in fact applicable to such shares."
GENERAL PROVISIONS
------------------
4. Certain documents may be delivered subsequent to the date of this agreement
upon the mutual agreement of the parties hereto. Stock certificates, duly
endorsed in blank, shall be provided to the Buyer and Seller at the execution of
this agreement.
4.1 Any failure on the part of any party hereto comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
4.2 Any and all disputes and differences between and among the parties with
respect to the construction or performance of this agreement shall be resolved
by arbitration before a one-arbitrator panel of the American Arbitration
Association in Miami, Florida.
4.3 This agreement shall be governed by the laws of the State of Florida except
to the extent the laws of the State of Delaware shall apply.
4.4 Milton Besen and Harriet Besen agree not to engage in any business
Substantially similar to the business of Mr. B III, Inc. for a period of two
years from the date of execution of the agreement within the United States.
4.5 This is the entire agreement of the parties. This agreement supercedes all
previous contracts either oral or written before the date of this agreement
between the parties. This agreement shall be binding upon the heirs, successors
and assigns of the parties hereto. There are no oral promises, conditions,
representations, understandings or interpretations of any kind as conditions or
inducements to the execution hereof.
4.6 Each party hereto shall bear all expenses, costs and fees incurred or
assumed by it in connection with the preparation and execution of this agreement
whether or not the sale and purchase herein provided for shall be in fact
effectuated.
<PAGE>
4.7 The descriptive headings contained in this agreement are inserted for
convenience only and are of no force and effect whatsoever.
4.8 For the convenience of the parties, any number of counterparts of this
agreement may be executed by any one or more parties hereto and each such
executed counterpart shall be and shall be deemed to be an original instrument,
and to have the force and effect of an original but all of which shall
constitute, and shall be deemed to constitute in the aggregate but one and the
same instrument.
4.9 The Buyer and the Seller convenant and agree, each with the other, that any
such party hereto shall from time to time execute and deliver all such further
instruments or documents and shall take or cause to be taken such further action
or actions as may be reasonably deemed necessary in order to carry out the
intent and purposes of this agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
BUYER:
/s/
- -----------------------------------
LCS GOLF, INC.
by: Dr. Michael D. Mitchell, President
SELLER:
/s/
- ----------------------------------
Milton Besen
ACCEPTED AND AGREED:
- ----------------------------------
Harriet Besen
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
This agreement is entered into this 15th day of February, 1998 by and between
Leigh Ann Colguhoun, (hereinafter referred to as "Seller"), and LCS Golf, Inc.,
a Delaware Corporation, (hereinafter referred to as "Buyer").
Whereas, Seller owns or controls all (100%) of the common capital stock of
Golfpromo, Inc., a Florida Corporation, said shares in total being 100% of the
common capital shares of Golfpromo, Inc., and has agreed to sell said shares to
Buyer, and,
Whereas, Buyer is desirous of buying the shares so owned by Seller, said sale
and purchase to be upon the terms and conditions set forth herein,
NOW, THEREFORE, for mutual consideration set out herein, and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
PURCHASE PRICE
--------------
1. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all
(100%) of the common capital stock of Golfpromo, Inc., (hereinafter referred to
as the "Corporation") such shares constituting all of the issued and
outstanding, and authorized and unissued, and treasury shares of the Corporation
for a total purchase price of 200,000 transfer restricted common capital
shares of the Buyer (hereinafter referred to as "the shares").
1.1 The shares shall be delivered as follows: 350,000 E.R. shares upon execution
of this agreement shall be transferred to the Seller, to be held pursuant to
restrictive legend by the Seller for a period of one year from the date of
issuance of the shares.
1.2 As regards the shares, if the price of the Buyer is less than $1.00 per
share one year from the date of issuance of the shares, so many additional
shares shall be paid over to the Seller by the Buyer such that the total amount
of shares transferred by the Buyer to the Seller shall be equal to 350,000 E.R.
based on the then current sales price of the Buyer's shares on the open market.
No Reduction in shares will be made if the then current sales price exceeds
$1.00 per share.
<PAGE>
1.3 The parties also agree that Eric Reinertsen and Daniel Reinertsen
(hereinafter "the employees") will remain employed by the Corporation for a
period of one year, renewable upon the further agreement of the parties. During
this period of employment the employment will be compensated at the rate of
$60,000 E.R. per annum, payable bi-weekly (Eric Reinertsen) and $300.00 per week
(Daniel Reinertsen). An employment agreement will be entered into with Eric
Reinertsen.
1.4 The sales price agreed upon herein is based upon the condition of the
Corporation on February 15, 1999, and upon a schedule of assets and liabilities
of the Corporation as of that date which schedule is attached hereto and made a
part hereof as Schedule "A". If the position of the Corporation materially
changes prior to the execution of this agreement, the parties may agree to
adjust the purchase price or withdraw without further obligation accordingly.
All of the assets of the Corporation including machinery, equipment, inventory,
work in progress, goodwill, company name, accounts receivable, notes receivable,
motor vehicles, patents, trademarks, copyrights, service marks, intangibles,
Websites, the golfcitymall.com Domain Name, all other Domain Names and
intellectual property, and contract with The Golf Warehouse, Pro-Curio
Golf, Inc. and Pineseeker, Inc. as well as all other current clients, are
included in the sale.
1.5 Upon execution of this agreement, Seller shall deliver to the attorney for
the Buyer (1) 100% of the stock of the Corporation, (2) all of the Corporate
books and records of the Corporation up to February 18, 1999, (3) minutes of the
Corporation satisfactory to the Buyer approving the sale, (4) the resignations
of all of the Officers and Directors of the Corporation (5) copies or originals
of all of the contracts, including all leases, entered into by the Corporation
up to the date of closing. The share certificates representing the share of the
Corporation to be sold hereunder shall be duly endorced so as to make the Buyer
or it's designee the sole holder thereof, free and clear of all claims and
encumbrances.
<PAGE>
REPRESENTATIONS OF SELLER
-------------------------
2. Seller hereby represents and warrants to the extent of the facts known to the
parties, that, effective this date, the representations listed below are true
and correct.
2.1 The common shares of the Corporation sold this agreement will be free from
all claims, liens, or other encumbrances, including any claim of Seller in and
to the said shares, and Seller has the unqualified right to transfer and dispose
of such shares.
2.2 All of the issued and outstanding shares of the Corporation are validly
issued, fully-paid and nonassessable. The Seller shall deliver to the Buyer the
Corporation's Certificate of Incorporation. Articles of Incorporation and
By-laws, along with a Certificate of Good Standing valid as of the date of this
agreement.
2.3 To the best of the Seller's knowledge, there are non actions, suits,
proceedings or investigations, pending or threatened, in law or in equity, or
before any governmental body whatsoever, which may result in any material
adverse change in the business, operations, properties or assets, or in the
condition, financial or otherwise of the Corporation.
2.4 The Corporation has complied, to the best knowledge of the Seller, in all
material respects with all laws, regulations and orders applicable to their
business. The Corporation has no debt, liabilities or obligations of any kind or
nature whatsoever, whether contingent or fixed, liquidated or unliquidated which
do not appear on Schedule "A". Upon receiving payment hereunder, the Seller
shall submit to the Buyer certified minutes appointing such Directors of the
Corporation as the Buyer designates, and financial statements current to
December 31, 1998.
2.5 The execution and carrying out of this agreement does not violate the
corporate charter or By-laws of Mr. B III, Inc., or the laws of the State of
Florida.
<PAGE>
REPRESENTATIONS OF BUYER
------------------------
3. Buyer is purchasing the shares of the Corporation for investment purposes and
not with a view toward distribution. Buyer understands that any shares being
purchased pursuant to this agreement are restricted shares, as that term is
defined in Rule 144 under the Securities Act of 1933 of the United States of
America and the certificates evidencing ownership of such shares shall contain
restrictive legends, if necessary, to such effect.
The certificate(s) for the shares of the Buyer delivered to the Seller hereunder
shall bear on their face the following restrictive legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then in fact applicable to such shares."
GENERAL PROVISIONS
------------------
4. Certain documents may be delivered subsequent to the date of this agreement
upon the mutual agreement of the parties hereto. Stock certificates, duly
endorsed in blank, shall be provided to the Buyer and Seller at the execution of
this agreement.
4.1 Any failure on the part of any party hereto comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
4.2 Any and all disputes and differences between and among the parties with
respect to the construction or performance of this agreement shall be resolved
by arbitration before a one-arbitrator panel of the American Arbitration
Association in Naples, Florida.
4.3 This agreement shall be governed by the laws of the State of Florida except
to the extent the laws of the State of Delaware shall apply.
4.4 Leigh Ann Colguhoun, Daniel Reinertsen and Eric Reinertsen agree not to
engage in any business substantially similar to the business of the Corporation
or LCS Golf, Inc., for a period of one year from the date of execution of the
agreement within the United States.
<PAGE>
4.5 This is the entire agreement of the parties. This agreement supercedes all
previous contracts either oral or written before the date of this agreement
between the parties. This agreement shall be binding upon the heirs, successors
and assigns of the parties hereto. There are no oral promises, conditions,
representations, understandings or interpretations of any kind as conditions or
inducements to the execution hereof.
4.6 Each party hereto shall bear all expenses, costs and fees incurred or
assumed by it in connection with the preparation and execution of this agreement
whether or not the sale and purchase herein provided for shall be in fact
effectuated.
4.7 The descriptive headings contained in this agreement are inserted for
convenience only and are of no force and effect whatsoever.
4.8 For the convenience of the parties, any number of counterparts of this
agreement may be executed by any one or more parties hereto and each such
executed counterpart shall be and shall be deemed to be an original instrument,
and to have the force and effect of an original but all of which shall
constitute, and shall be deemed to constitute in the aggregate but one and the
same instrument.
4.9 The Buyer and the Seller convenant and agree, each with the other, that any
such party hereto shall from time to time execute and deliver all such further
instruments or documents and shall take or cause to be taken such further action
or actions as may be reasonably deemed necessary in order to carry out the
intent and purposes of this agreement, including the execution of an appropriate
employment agreement between Buyer and the employees.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
BUYER:
/s/ Michael D. Mitchell
- -----------------------------------
LCS GOLF, INC.
By: Dr. Michael D. Mitchell, President
<PAGE>
SELLER
/s/ Leigh Ann Colguhoun
- -----------------------------------
Leigh Ann Colguhoun
ACCEPTED AND AGREED:
- -----------------------------------
Daniel Reinertsen
/s/ Eric Reinertsen
- -----------------------------------
Eric Reinertsen
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
This agreement is entered into this 26th day of January, 1999 by and between
Alex Bruni, (hereinafter referred to as "Seller"), and LCS Golf, Inc., a
Delaware Corporation, (hereinafter referred to as "Buyer").
Whereas, Seller owns or controls all (100%) of the common capital stock of Play
Golf Now, Inc., a New York Corporation, said shares in total being 100% of the
common capital shares of Play Golf Now, Inc., and has agreed to sell said shares
to Buyer, and,
Whereas, Buyer is desirous of buying the shares so owned by Seller, said sale
and purchase to be upon the terms and conditions set forth herein,
NOW, THEREFORE, for mutual consideration set out herein, and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
PURCHASE PRICE
--------------
1. Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all
(100%) of the common capital stock of Play Golf Now, Inc., (hereinafter referred
to as the "Corporation") such shares constituting all of the issued and
outstanding, and authorized and unissued, and treasury shares of the Corporation
for a total purchase price of 200,000 transfer restricted common capital shares
of the Buyer (hereinafter referred to as the "immediately issued" shares) and an
unconditional option to purchase an additional 200,000 common capital shares of
the Buyer at the purchase price of $0.60 per share if exercised in whole or in
part on or before January 25, 2001.
1.1 The stock representing the immediately issued portion of the purchase price
shall be delivered as follows 200,000 shares upon execution of this agreement
shall be transferred to the Seller, to be held pursuant to restrictive legend by
the Seller for a period of one year from the date of issuance of the shares.
1.2 As regards the immediately issued shares, if the price of the Buyer is less
than $1.00 per share one year from the date of issuance of the shares, so many
additional shares shall be paid over to the Seller by the Buyer such that the
total amount of shares transferred by the Buyer to the Seller shall be equal to
$200,000 based on the then current sales price of the Buyer's shares on the open
market. No Reduction in shares will be made if the then current sales price
exceeds $1.00 per share.
<PAGE>
1.3 The parties also agree that Alex Bruni will remain employed by LCS Golf,
Inc. as the Chief Operating Officer of Play Golf Now, Inc. and Golf Universe,
Inc. for period two years, renewable upon the further agreement of the parties.
During this period of employment Mr. Bruni will be compensated at the rate of
$104,000 per annum, payable bi-weekly. Mr. Bruni will run the companies on a
day-to-day basis while he remains in good standing with the parent company.
However, compensation under this agreement of employment shall not commence
until the earlier of (1) the date on which Buyer has raised at least $2,000,000
from a planned secondary stock offering or (2) May 28, 1999.
1.4 The sales price agreed upon herein is based upon the condition of Play Golf
Now, Inc. on January 26, 1999, and upon a schedule of assets and liabilities of
Play Golf Now, Inc. as of that date which schedule is attached hereto and made a
part hereof as Schedule "A". If the position of the company materially changes
prior to the execution of this agreement, the parties may agree to adjust the
purchase price or withdraw without further obligation accordingly. All of the
assets of Play Golf Now, Inc. including machinery, equipment, inventory, work in
progress, goodwill, company name, accounts receivable, notes receivable, motor
vehicles, patents, trademarks, copyrights, service marks, intangibles, Websites,
Domain Names, and intellectual property, are included in the sale.
1.5 Upon execution of this agreement, Seller shall deliver to the attorney for
the Buyer (1) 100% of the stock of Play Golf Now, Inc., (2) all of the Corporate
books and records of Play Golf Now, Inc. (3) minutes of Play Golf Now, Inc.
satisfactory to the Buyer approving the sale, (4) the resignations of all of the
Officers and Directors of Play Golf Now, Inc. (5) copies or originals of all of
the contracts, including all leases, entered into by Play Golf Now, Inc. up to
the date of closing. The share certificates representing the shares of Play Golf
Now, Inc. to be sold hereunder shall be duly endorced so as to make the Buyer or
it's designee the sole holder thereof, free and clear of all claims and
encumbrances.
REPRESENTATIONS OF SELLER
-------------------------
2. Seller hereby represents and warrants to the extent of the facts known to the
parties, that, effective this date, the representations listed below are true
and correct.
2.1 The common shares of Play Golf Now, Inc. sold this agreement will be free
from all claims, liens, or other encumbrances, including any claim of Seller in
and to the said shares, and Seller has the unqualified right to transfer and
dispose of such shares.
2.2 All of the issued and outstanding shares of Play Golf Now, Inc. are validly
issued, fully-paid and nonassessable. The Seller shall deliver to the Buyer the
Corporation's Certificate of Incorporation. Articles of Incorporation and
By-laws, along with a Certificate of Good Standing valid as of the date of this
agreement.
<PAGE>
2.3 To the best of the Seller's knowledge, there are non actions, suits,
proceedings or investigations, pending or threatened, in law or in equity, or
before any governmental body whatsoever, which may result in any material
adverse change in the business, operations, properties or assets, or in the
condition, financial or otherwise of Play Golf Now, Inc.
2.4 Play Golf Now, Inc. has complied, to the best knowledge of the Seller, in
all material respects with all laws, regulations and orders applicable to their
business. Play Golf Now, Inc. has no debt, liabilities or obligations of any
kind or nature whatsoever, whether contingent or fixed, liquidated or
unliquidated which do not appear on Schedule "A". Upon receiving payment
hereunder, the Seller shall submit to the Buyer certified minutes appointing
such Directors of Play Golf Now, Inc. as the Buyer designates, and financial
statements current to December 31, 1998.
2.5 The execution and carrying out of this agreement does not violate the
corporate charter or By-laws of Play Golf Now, Inc., or the laws of the State of
New York.
REPRESENTATIONS OF BUYER
------------------------
3. Buyer is purchasing the shares of the Corporation for investment purposes and
not with a view toward distribution. Buyer understands that any shares being
purchased pursuant to this agreement are restricted shares, as that term is
defined in Rule 144 under the Securities Act of 1933 of the United States of
America and the certificates evidencing ownership of such shares shall contain
restrictive legends, if necessary, to such effect.
The certificate(s) for the shares of the Buyer delivered to the Seller hereunder
shall bear on their face the following restrictive legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then in fact applicable to such shares."
GENERAL PROVISIONS
------------------
4. Certain documents may be delivered subsequent to the date of this agreement
upon the mutual agreement of the parties hereto. Stock certificates, duly
endorsed in blank, shall be provided to the Buyer and Seller at the execution of
this agreement.
<PAGE>
4.1 Any failure on the part of any party hereto comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
4.2 Any and all disputes and differences between and among the parties with
respect to the construction or performance of this agreement shall be resolved
by arbitration before a one-arbitrator panel of the American Arbitration
Association in New York City.
4.3 This agreement shall be governed by the laws of the State of New York except
to the extent the laws of the State of Delaware shall apply.
4.4 Alex Bruni agrees not to engage in any business Substantially similar to the
business of Play Golf Now, Inc., for a period of one year from the date of
execution of the agreement within the United States.
4.5 This is the entire agreement of the parties. This agreement supercedes all
previous contracts either oral or written before the date of this agreement
between the parties. This agreement shall be binding upon the heirs, successors
and assigns of the parties hereto. There are no oral promises, conditions,
representations, understandings or interpretations of any kind as conditions or
inducements to the execution hereof.
4.6 Each party hereto shall bear all expenses, costs and fees incurred or
assumed by it in connection with the preparation and execution of this agreement
whether or not the sale and purchase herein provided for shall be in fact
effectuated.
4.7 The descriptive headings contained in this agreement are inserted for
convenience only and are of no force and effect whatsoever.
4.8 For the convenience of the parties, any number of counterparts of this
agreement may be executed by any one or more parties hereto and each such
executed counterpart shall be and shall be deemed to be an original instrument,
and to have the force and effect of an original but all of which shall
constitute, and shall be deemed to constitute in the aggregate but one and the
same instrument.
4.9 The Buyer and the Seller convenant and agree, each with the other, that any
such party hereto shall from time to time execute and deliver all such further
instruments or documents and shall take or cause to be taken such further action
or actions as may be reasonably deemed necessary in order to carry out the
intent and purposes of this agreement, including the execution of an appropriate
employment agreement between Buyer and Mr. Bruni.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
BUYER:
/s/ Michael D. Mitchell
- -----------------------------------
LCS GOLF, INC.
By: Dr. Michael D. Mitchell, President
SELLER
/s/ Alex Bruni
- -----------------------------------
Alex Bruni
CERTIFICATE OF INCORPORATION
OF
LINKUN ENTERPRISE INC.
FIRST: The name of his corporation in LINKUN ENTERPRISE INC.
SECOND: Its registered office in the State of Delaware is to be located
at 1313 N. Market Street, Wilmington DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation address "same as
above".
THIRD: The nature of the business and, the objects and purpose proposed
to be transacted, promoted and carried on, not to do any or all the things
herein mentioned as fully and to the same extent as natural persons might or
could do, and in any part of the world, via:
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 20,000,000 shares of stock at .001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regine Cephas, 1313 N. Market St., Wilmington DE: 9801-1151
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount
upon the property and franchise of the Corporation.
With the consent in writing and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder: and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as confirmed by the law of the
By-Laws, or by resolutions of the stockholders.
The stockholders and directors shall have power to hold their meetings
and keep the books, documents and papers of the Corporation outside of the State
of Delaware, at such places as may be from time to time designated by the
By-Laws or by resolutions of the stockholders or directors, except as otherwise
required by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders: (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law: (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation: or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED for the purpose of forming a Corporation under the
laws of the State of Delaware do make, file and record this Certificate and do
certify that the facts are true and I have accordingly hereunto set my hand.
DATED: October 8, 1997 /s/ Regina Cephas
----------------------
Regina Cephas
[STAMP]
<PAGE>
================================================================================
THE COMPANY CORPORATION
1313 N Market Street o Wilmington, Delaware 1980-1151
o Telephone (302) 575-0440 o Fax (302) 575-0046
- --------------------------------------------------------------------------------
STATEMENT BY INCORPORATOR OF ACTION TAKEN
IN LIEU OF ORGANIZATION MEETING OF
LINKUN ENTERPRISE INC.
- --------------------------------------------------------------------------------
The undersigned being the incorporator of the corporations makes the
following statement of action taken to organize the corporation in lieu of an
organization meeting.
By-Laws regulating the conduct of the business and affairs of the
corporation will be adopted and appended to this statement.
The following person(s) were appointed director(s) of the corporation
until the first annual meeting of the stockholders or until their successors
shall be elected or appointed and shall qualify:
Morris Diamond
Shirley Diamond
Suzanne Luxenberg
The director(s) are authorized and directed to issue from time to time
the shares of capital stock of the corporation, now or hereafter authorized,
wholly or partly for cash, or labor done, or services performed, or for personal
property or leases thereof, received for the use and lawful purposes of the
corporation, or for any consideration permitted by law, as in the discretion of
the director(s) may seem for the best interests of the corporation.
/s/ Regina Cephas
<PAGE>
[STAMP]
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTFIY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "LINKUN ENTERPRISE INC.", CHANGING ITS NAME FROM "LINKUN ENTERPRISE
INC." TO "LCS GOLF, INC.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF
OCTOBER, A.D. 197, AT 11:10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[STAMP] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8729912
DATE: 10-29-97
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
LINKUN ENTERPRISE INC.
The undersigned, being the President of Linkun Enterprise Inc., a
Delaware, hereby certifies that by unanimous vote of the Board of Directors and
majority vote of the Stockholders at a meeting held upon notice in accordance
with Sections 222 and 242 of the General Corporation Law of the State of
Delaware on October 25, 1997, it was agreed that this CERTIFICATE AMENDING
ARTICLES OF INCORPORATION BE FILED.
The undersigned further certifies that the original Articles of
Incorporation of Linkun Enterprise Inc. were filed with the Secretary of State
of Delaware on the 8th day of October, 1997. The undersigned further certifies
that the original Articles of Incorporation filed on the 8th day of October,
1997, herein is amended to read as follows:
FIRST: The name of this corporation is LCS GOLF, INC.
The undersigned hereby further certifies that he has on this 25th day
of October, 1997, executed this certificate Amending the original Articles of
Incorporation heretofore filed with the Secretary of State of Delaware.
/s/ Michael D. Mitchell
----------------------------------
Dr. Michael D. Mitchell, President
STATE OF FLORIDA
COUNTY OF PALM BEACH:
On this 25th day of October, 1997, before me, the undersigned Notary Public in
and for the State of Florida, personally appeared Dr. Michael D. Mitchell,
personally known to me to be the person and officer whose name is subscribed to
the foregoing Certificate Amending Articles of Incorporation and acknowledged to
me that be executed the same.
[STAMP] /s/ Don A. Paradiso
-------------------------
Notary Public
<PAGE>
[STAMP]
STATE OF DELAWARE
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
LCS GOLF, INC. a corporation organized under the laws of Delaware, the
charter of which was voided for non-payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is LCS Golf, Inc.
--------------------------------------
----------------------------------------------------------------------
2. The registered office in the State of Delaware is located at 1013
Centre Rd. __________________ Street, City of Wilmington Zip Code
19805 County of New Castle the name and address of its registered
agent is The Company Corporation 1013 Centre Rd. Wilmington, DE 19805.
3. The date of filing of the original Certificate of Incorporation is
Delaware was October 8, 1997.
4. The date when restoration, renewal, and revival of the charter of this
company is to commence is the 28th day of February, same being prior
to the date of the expiration of the charter. This renewal and revival
of the charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1999, at
which time its charter became inoperative and void for non-payment of
taxes and this certificate for renewal and revival is filed by
authority of the duly elected directors of the corporation in
accordance with the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section
312 of the General Corporation Law of the State of Delaware, as amended,
providing for the renewal, extention and restoration of charters, Michael
Mitchell the last and acting authorized officer hereunto set his/her hand to
this certificate this 28th day of June 1999.
By: /s/ Michael Mitchell
-----------------------------
Authorized Officer
Name: Michael D. Mitchell, M.D.
---------------------------
Print or Type
Title: President
---------------------------
<PAGE>
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTFIY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "LCS GOLF, INC.", FILED IN THIS OFFICE ON THE FIRST DAY OF JULY,
A.D. 1999, AT 9:01 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[STAMP] /s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
<PAGE>
[STAMP]
CERTIFICATE of AMENDMENT
OF
LCS Golf, Inc.
The undersigned, being the President of LCS Golf, Inc., a Delaware
Corporation incorporated on October 8, 1997 as Linkun Enterprise, Inc., hereby
certifies that by unanimous vote of the Board of Directors and majority vote of
the Stockholders at a meeting held upon notice in accordance with Sections 222
and 242 of the General Corporation Law of the State of Delaware on June 25,
1999, it was agreed that this CERTIFICATE OF AMENDMENT of LCS Golf, Inc. be
filed.
The undersigned further certifies that the original Articles of
Incorporation of LCS Golf, Inc. incorporated as Linkun Enterprise, Inc. were
filed with the Secretary of State of Delaware on the 8th day of October, 1997.
The undersigned further certifies that the original Articles of Incorporation
filed on the 8th day of October, 1997, herein is amended to read as following.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 50,000,000 (fifty million) shares of stock
at .001 par value.
The undersigned hereby further certifies that he has on this 28th day of June,
1999, executed this Certificate of Amendment amending the Articles of
Incorporation heretofore filed with the Secretary of State of Delaware.
/s/ Michael Mitchell
--------------------------------
Dr. Michael Mitchell, President
STATE OF FLORIDA
COUNTY OF PALM BEACH:
On this 28th day of June, 1999, before me, the undersigned Notary Public in and
for the State of Florida, personally appeared Dr. Michael Mitchell, personally
known to me to be the person and officer whose name is subscribed to the
foregoing Certificate of Amendment and acknowledged to me that be executed the
same.
[STAMP] /s/ Don A. Paradiso
-------------------------
Notary Public
BYLAWS OF
LINKUN ENTERPRISE INC.
ARTICLE I -- Offices
The principal office of the corporation shall be located in the State of New
York in the County of Monroe. The corporation may have such other offices,
either within or outside the state, as the Board of Directors may designate or
as the business of the corporation may require from time to time. The registered
office of the corporation may be, but need not be, identical with the principal
office, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II -- Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be held
at 4:00 o'clock p.m. on the Third Tuesday in the month of January in each year,
beginning with the year 1998. If the day fixed for the annual meeting shall be a
legal holiday, such meeting shall be held on the next succeeding business day.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose, unless otherwise prescribed by statue, may be called by the president
or by the Board of Directors, and shall be called by the president at the
request of the holders of not less than one-tenth of all the outstanding shares
of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any place as
the place for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote at
a meeting may designate any place as the place for such meeting. If no
designation is made, or if a special meeting shall be called otherwise than by
the Board, the place of meeting shall be the registered office of the
corporation.
Section 4. Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting, and, in case of a special meeting, the purposes for
which the meeting is called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally or by mail, by or
at the direction of the president, or the secretary, or the officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting, except that if the authorized capital stock is to be increased at least
thirty days notice shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid. If requested by the person or persons lawfully
calling such meeting, the secretary shall give notice thereof at corporate
expense.
1
<PAGE>
Section 5. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for any stated period not exceeding fifty days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty days, and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of the
closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
For a period of ten days prior to such meeting, this list shall be kept on file
at the principal office of the corporation and shall be subject to inspection by
any shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Section 7. Quorum. Fifty One Percent (51%) of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a quorum of the
outstanding share are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been
2
<PAGE>
transacted at the meeting as originally notified. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or the articles of incorporation.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder or his or her duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares. Each outstanding share, regardless of class, shall
be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
shareholders. Cumulative voting shall not be allowed.
Section 10. Voting of Shares by Certain Holders. Neither treasury shares, not
shares of its own stock held by the corporation in a fiduciary capacity, nor
shares held by another corporation if a majority of the shares entitled to vote
for the election of Directors of such other corporation is held by this
corporation shall be voted at any meeting or counted in determining the total
number of outstanding shares at any give time.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him or her, either in person or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority to
do so be contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
share until the shares have been transferred into the
3
<PAGE>
name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
Section 11. Informal Action by Shareholders. Any action required to be taken at
a meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting of a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders.
ARTICLE III -- Board of Directors
Section 1. General Powers. The Business and affairs of the corporation shall be
managed by its Board of Directors, except as otherwise provided by statue or the
articles of incorporation.
Section 2. Number, Tenure and Qualifications. The number of the Directors of the
corporation shall be not less than three nor more than five, unless a lesser
number is allowed by statue. Directors shall be elected at each annual meeting
of shareholders. Each director shall hold office until the next annual meeting
of shareholders and thereafter until his or her successor shall have been
elected and qualified.
Directors need not to be residents of this state or shareholders of the
corporation. Directors shall be removable in the manner provided by statue.
Section 3. Vacancies. Any director may resign at any time by giving written
notice to the president or the secretary of the corporation. Any vacancy
occurring in the Board of Directors may be filled by the affirmative vote of a
majority of the remaining Directors though not less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term of his or her
predecessor in office. Any Directorship to be filled by the affirmative vote of
a majority of the Directors then in office or by an election at an annual
meeting or at a special meeting of shareholders called for that purpose, and a
director so chosen shall hold office for the term specified in Section 2 above.
Section 4. Regular Meetings. A regular meeting of the Board of Directors shall
be held without other notice than this bylaw immediately after and at the same
place as the annual meeting of shareholders. The Board of Directors may provide
by resolution the time and place for the holding of additional regular meetings
without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the president or any two Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place as the place for holding any special meeting of the Board of Directors
called by them.
4
<PAGE>
Section 6. Notice. Notice of any special meeting shall be given at least seven
days previous thereto by written notice delivered personally or mailed to each
director at his or her business address, or by notice given at least two days
previously by telegraph. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular of special meeting of the
Board of Directors need be specified in the notice of waiver of notice of such
meeting.
Section 7. Quorum. A majority of the number of Directors fixed by Section 2
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than such majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
Section 8. Manner of Acting. The act of the majority of the Directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors.
Section 9. Compensation. By resolution of the Board of Directors, any director
may be paid any one or more of the following: expenses, if any, of attendance at
meetings; a fixed sum for attendance at each meeting; or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. Informal Action by Directors. Any action required or permitted to be
taken at a meeting of the Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Directors entitled to vote with respect to the subject matter thereof. Such
consent shall have the same force and effect as a unanimous vote of the
Directors.
ARTICLE IV -- Officers and Agents
Section 1. General. The officers of the corporation shall be a president, one or
more vice presidents, a secretary and a treasurer. The salaries of all the
officers of the corporation shall be fixed by the Board of Directors.
One person may hold any two offices, except that no person may
simultaneously hold the offices of president and secretary.
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Section 2. Election and Term of Office. The officers of the corporation shall be
elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the shareholders.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby.
Section 4. Vacancies. A vacancy in any office, however occurring, may be filled
by the Board of Directors for the unexpired portion of the term.
Section 5. President. The president shall;
(a) subject to the direction and supervision of the Board of Directors, be
the chief executive officer of the corporation;
(b) shall have general and active control of its affairs and business and
general supervision of its officers, agents and employees; and
(c) the president shall have custody of the treasurer's bond, if any.
Section 6. Vice Presidents. The vice presidents shall:
(a) assist the president; and
(b) shall perform such duties as may be assigned to them by the president
or by the Board of Directors.
Section 7. Secretary. The secretary shall;
(a) keep the minutes of the proceedings of the shareholders and the
Board of Directors;
(b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
corporation and affix the seal to all documents when authorized by the Board of
Directors;
(d) keep at its registered office or principal place of business a
record containing the names and addresses of all shareholders and the number and
class of shares held by each, unless such a record shall be kept at the office
of the corporation's transfer agent or registrar;
(e) sign with the president, or a vice president, certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the corporation,
unless the corporation has a transfer agent; and
(g) in general, perform all duties incident to the office as secretary
and such other duties as from time to time may be assigned to him or her by the
president or by the Board of Directors.
Section 8. Treasurer. The treasurer shall:
(a) be the principal financial officer of the corporation;
(b) perform all other request of the Board, shall make such reports to
it as may be required at any time;
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(c) be the principal accounting officer of the corporation; and
(d) have such other powers and perform such other duties as may be from
time to time prescribed by the Board of Directors or the president;
ARTICLE V -- Stock
Section 1. Certificates. The shares of stock shall be represented be
consecutively numbered certificates signed in the name of the corporation by its
president or a vice president and the secretary, and shall be sealed with the
sealed with the seal of the corporation, or with a facsimile thereof. No
certificate shall be issued until the shares represented thereby are fully paid.
Section 2. Consideration for Share. Share shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof, if
any) as shall be fixed from time to time by the Board of Directors. Such
consideration may consist, in whole or in part of money, other property,
tangible or intangible, or in labor or services actually performed for the
corporation, but neither promissory notes nor future services shall constitute
payment or part payment for shares.
Section 3. Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorced or
accompanied by proper evidence of succession, assignment or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the corporation which shall be kept at its
principal office, or by its registrar duly appointed.
Section 4. Transfer Agents, Registrars and Paying Agents. The Board may at its
discretion appoint one or more transfer agents, registrars and agents for making
payment upon any class of stock, bond, debenture or other security of the
corporation.
ARTICLE VI -- Indemnification of Officers and Directors
Each director and officer of this corporation shall be indemnified by the
corporation against all costs and expenses actually and necessarily incurred by
him or her in connections with the defence of any action, suit or proceeding in
which he or she may be involved or to which he or she may be made a party by
reason of his or her being or having been such director or officer, except in
relation to matters as to which he or she shall be finally adjudged in such
action, suit or proceeding to be liable for negligence or misconduct in the
performance of duty.
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ARTICLE VII -- Miscellaneous
Section 1. Waivers of Notice. Whenever notice is required by law, by the
articles of incorporation or by these bylaws, a waiver thereof in writing signed
by the director, shareholder or other person entitled to said notice, whether
before or after the time stated therein, or his or her appearance at such
meeting in person or (in the case of a shareholders' seeing) by proxy, shall be
equivalent to such notice.
Section 2. Fiscal Year. The fiscal year of corporation shall be as established
by the Board of Directors.
Section 3. Amendments. The Board of Directors shall have power to make, amend
and repeal the bylaws of the corporation at any regular meeting of the Board or
at any special meeting called for the purpose.
APPROVED:
DATED: October 10, 1997 /s/ Shirley Diamond
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Director: Shirley Diamond
/s/ Suzanne Luxenberg
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Director: Suzanne Luxenberg
/s/ Morris Diamond
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Director: Morris Diamond
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