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
ULTREXX CORPORATION
(Name of Small Business issuer in its charter)
UTAH 87-0405662
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6100 SOUTH CENTER BLVD. #230
SEATTLE, WA 98188 98188
(Address of Principal Executive Office) (Zip Code)
|
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 242-6480
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED:
------------------- ---------------------
COMMON SHARES NONE
$.001 PAR VALUE
|
TABLE OF CONTENTS
PART I
Item 1: Description of Business 1
Item 2: Description of Property 7
Item 3: Directors, Executive Officers and Significant Employees 7
Item 4: Remuneration of Directors and Officers 8
Item 5: Security Ownership of Management and Certain Securityholders 9
Item 6: Interest of Management and Others in Certain Transactions 10
PART II
Item 1: Market Price of and Dividends on the Registrant's Common Equity 11
and Other Shareholder Matters
Item 2: Legal Proceedings 11
Item 3: Changes in and Disagreements with Accountants 12
Item 4: Recent Sales of Unregistered Securities 12
Item 5: Indemnification of Directors and Officers 12
PART F/S
Financial Statements: 13
PART III
Item 1: Index to Exhibits 13
Item 2: Description of Exhibits 13
EXHIBITS
A. FINANCIAL STATEMENTS
3. CORPORATE GOVERNANCE
10. MATERIAL CONTRACTS
|
PART I
All statements, other than statements of historical fact, included in this Form 10-SB, including without limitation, the statements under "Description of Business," are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Such forward-looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of Ultrexx Corporation to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements contained in this Form 10-SB. Such potential risks and uncertainties include, without limitation, the Company being a development stage Company, receiving an audit opinion with a "going concern" paragraph, having limited financial resources, dealing in an industry with rapidly developing technology and intense competition, and other risk factors detailed herein. The forward-looking statements are made as of the date of this Form 10-SB and the Company assumes no obligation to update the forward-looking statements or to update the reasons actual results could differ from those projected in such forward-looking statements. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements.
The Company is filing this 10-SB in transitional disclosure format and following Alternative 2 in furnishing the information required by Items 6-12 of Model B of Form 1-A.
ITEM 1: DESCRIPTION OF BUSINESS
NARRATIVE DESCRIPTION OF BUSINESS
Ultrexx Corporation, (the "Company"), a publicly traded corporation, and its wholly-owned subsidiary Crux Inc., ("Crux") develop Java-language based software technology and applications that allow the creation of intelligent, knowledge-based solutions for the internet, intranets, wireless devices, and other networks.
Effective June 30, 1995, Ultrexx Corporation, a Minnesota corporation, merged with EconoDraft Corporation, a Utah Corporation. EconoDraft was the surviving entity. Through this transaction, Ultrexx also acquired a subsidiary, HealthGuard International Marketing Corporation ("HIMC"). On August 16, 1995, EconoDraft changed its name to Ultrexx Corporation. During 1995 the Company had no material operations.
On November 1, 1996, the Company acquired all of the outstanding common stock of Crux, a Washington Corporation (formerly NetExpert Inc.) in a reverse acquisition. NetExpert Inc. was incorporated in Washington in 1996 to develop computer software knowledge engineering tools and applications.
The Company has also signed a letter of intent with Ultrexx Solutions Pvt. Ltd., an Indian legal entity ("Ultrexx India"), to acquire Ultrexx India as a subsidiary.
PRINCIPAL PRODUCTS AND STATUS
The Company's software development expertise is a key asset which the Company is attempting to leverage by developing and bringing applications that use the software to market.
The Company's original products were a series of development tools for the creation of intelligent, interactive applications in Java and HTML. The range of products includes; 1) CruXpert 2.0-TM-, available in Pro, Standard, and Lite versions, and 2) Visual CruXpert 2.0-TM-. These products are sold through the Company's web site and also through various software distributors such as Netsales, Beyond.com, and Ingram Micro. Although they do not provide substantial revenues for the Company, they establish and
reinforce the Company's credibility in the Java development area while requiring minimal attention from management.
In 1998, under a development contract with six port facilities in the Seattle, Washington area, the Company developed the Northwest Marina Management Software Suite. This is software for the management of marinas, ship and boat movements, and related functions. The software has gone through extensive testing and changes and is currently undergoing final testing and port staff training. A key element of the development contract, granted in exchange for a reduced development fee, allows the Company the intellectual property ownership and exclusive global marketing rights for the software. Once the software is accepted, which the Company anticipates will occur during the third quarter of 2000, the Company will have the opportunity to bring the software to the broader market and plans to do so by establishing a series of distribution agreements with companies that sell products into marinas and ports. The Company is also exploring other derivatives of the software, such as a consumer accessible version.
In March 2000, the Company launched its first software application into the online advertising market. This product known as Knowledge Banner-TM-, is a Java-based, thin-client, banner technology for web pages that allows a complete transaction to take place inside the banner without leaving the host site. Online advertising was determined by the Company to be a key market growth area and the Company entered into a strategic alliance with an online advertising firm, Eyescream Interactive ("Eyescream"). The alliance provides for Eyescream to develop the graphic appearance for the banners and to sell them to Eyescream clients while the Company develops the backend, server, and database elements of the banner using its software. Through the alliance with Eyescream, sales costs to the Company are minimal and the primary time demands are on the Company's programming staff to develop the related backend features for each banner. The companies jointly represent Knowledge Banner technology to prospective advertising clients, agencies, and web site publishers.
Eyescream is one of the top interactive agencies in the world. Mark Grimes, founder and president of Eyescream, has 15 years of experience in marketing and telecommunications. A pioneer in online advertising, marketing, and sales, Mr. Grimes and Eyescream have served since 1996 as expert consultants or strategic partners to an impressive range of Web-savvy media destinations and online advertisers. Mr. Grimes was appointed to the Ultrexx Board of Advisors in January 2000.
The Company's primary marketing tool for Knowledge Banner is a web site, WWW.KNOWLEDGEBANNER.COM, which is currently operating. The Company has also discussed Knowledge Banner alliances with other companies active in the online advertising field. The Company also offers programming and development services, some of which it outsources to approved contractors. While this activity may contribute to revenues and profits, it is not considered a primary goal of the Company and is undertaken only when there will be minimum impact on Company operations.
RESEARCH AND DEVELOPMENT
The Company intends to continue to improve its Intelligent Bridge-TM- technology, which is being overseen by Mr. Muralidhara Keshavamurthy at Ultrexx India. Intelligent Bridge is a server-side software that provides an intelligent, real-time bridge between front-end interactive clients (web-pages/banners/devices) and back-end enterprise management software such as databases, enterprise systems, and supply-chain systems.
Elements of Intelligent Bridge technology are already being used in serving Knowledge Banner application, but the Company believes that they may also have business-to-business applications which could be licensed to third parties because they are compatible with most commonly used database and data-warehousing systems.
The Knowledge Banner and Intelligent Bridge technology is also compatible with many of the wireless devices currently being developed and marketed and the Company is pursuing use of its technologies for wireless applications marketed by third parties.
To date, substantially all of the Company's research and development has been performed in-house and through approved contractors. The Company does not devote significant funds to research and development other than the time of Mr. Muralidhara and Ultrexx India's staff. The Company expects that most of its products will continue to be developed internally or jointly with selected strategic partners; although, it may, on occasion, acquire ownership of, or rights to market, existing programs. During 1998 and 1999, the Company spent approximately $200,000, cumulatively, on research and development.
EMPLOYEES
As of July 1, 2000, the Company and its subsidiary, Crux, had four employees, including two employees on a full-time basis and two part-time employees. Other programming and administrative staff are retained on a hourly or per-job basis. The Company also utilizes the services of various individuals on a consulting basis. None of the Company's employees are covered by a collective bargaining agreement, the Company has never experienced a work stoppage, and the Company considers its labor relations to be excellent.
CHARACTERISTICS OF THE INTERNET INDUSTRY
The growth of the Internet has permanently changed business dynamics. In the wired world, companies want interaction with customers, colleagues, and employees that is as easy-to-use and as efficient as possible. Companies and individuals continually seek the most productive means of obtaining or providing information. The Internet may become the most efficient vehicle yet designed for organizations to sell products, disseminate information, and provide services.
The Company believes that intelligent, interactive access to well-structured, constantly evolving knowledge systems will allow companies to increase their efficiency. The Company's core technologies are designed to run behind the scenes to access and bridge information sources.
Although businesses have focused on wired access to the Internet since its inception, there is currently a transition to wireless web access. The Company technology designed for Internet use is easily adaptable to wireless formats.
The Company exists in a fast-moving, dynamic field that has many competitors. The Company believes that its technology is contemporary and is attempting to bring it to market in a timely manner.
RISK FACTORS
Potential factors which could materially affect the Company's profitability, viability, and future prospects include, but are not necessarily limited to, the following:
GENERAL BUSINESS ASSUMPTIONS
The Company has formulated its business plans and strategies based on certain assumptions regarding the size and growth of the Internet and other network and technology markets, the market for programming services and products, and the Company's anticipated share of the market and perceived competitive advantages, as well as the estimated price and acceptance of its products. The Company's assumptions are based upon speaking with present and potential technology partners and potential customers, and these assumptions represent the Company's best estimates. The Company could be wrong as to the market size and growth, its potential market share, its product pricing, its product acceptance, or a variety of other assumptions. Ultimately, the Company's success depends on its ability to
effectively execute its business plan and many outside factors, some or all of which the Company may be able to accurately predict and some or all of which it may not be able to predict. The Internet and network industries and related technologies change rapidly, making the Company's ability to change quickly and adjust product and marketing strategies at any time very important to the Company's survival, particularly in the long term. Some of the outside factors which may affect the Company's business include changes in the communications and data transmission industries, technological advances or product obsolescence, increased levels of competition including the entry of additional competitors, changes in general worldwide economic conditions, increases in operating costs including supplies, personnel and equipment, and foreign regulation changes.
LIMITED OPERATING HISTORY - NEW BUSINESS
The Company should be considered as being in the start-up and development stage. The Company's success will depend largely on the skills and abilities of its officers, management, and directors. While many of the Company's officers and principals have experience in the industries it has entered and plans to enter, the Company cannot provide assurance that this experience will result in a successful and profitable operation. The Company's operations are subject to all the risks inherent in the establishment of any new enterprise. The likelihood of the Company's success should be considered in the light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with a new business.
DEPENDENCE ON KEY PERSONNEL
The Company's formation and business development has resulted from the efforts of certain management and technical employees. The loss of services for any reason of any of these key contributors could adversely affect the progress of its business. The Company has key man insurance coverage on Ram Menon, but currently does not maintain life insurance on other key personnel. The Company's growth is dependent upon the ability to continue to attract and retain additional qualified employees. There is no assurance that the Company will continue to attract and retain personnel with the requisite capabilities. The Company is requesting that many of its employees work for less than they could receive elsewhere to help preserve cash, while providing stock options, as non-cash incentive to join and remain on its team.
MANAGEMENT OF GROWTH
The Company believes that its business may grow rapidly over the next several years. This anticipated growth will likely place a significant strain on its management and operations. To manage this growth effectively, it will need to continue to implement and to improve its operational systems and attract, hire, and retain skilled employees. The Company will also need to effectively use its financial resources for operational needs in a cost-effective and efficient manner. Should the Company be unable to effectively manage growth, its operations and financial condition could suffer.
TECHNOLOGICAL CHANGE AND OBSOLESCENCE
The Internet, network, programming, and other technology markets in which the Company intends to operate may be subject to technological changes. The Company cannot provide assurance that its technology and processes will remain at the forefront of technology even with significant additional capital investment and continued research and development. The rapidly changing nature of these technologies and their markets makes it difficult to predict if the Company will be able to obtain or maintain an adequate market share.
The Company may have to change and improve its products and/or services in response to customer requirements, changes to operating systems, application and networking software, computer and communications hardware, and the emergence of competitive services or technology. There can be no assurance that the Company will be able to complete product enhancements in a timely manner or that
it will be able to bring new services to market in a timely manner. Delays and difficulties, for technological or other reasons, in the development of the Company's products and services could have a material adverse effect on its business, operating results, and financial condition.
In addition, competitors may announce enhancements to existing products or services or new products or services embodying new technologies, industry standards or customer requirements that have the potential to supplant or provide lower cost alternatives than the Company's products and services. The introduction of such enhancements or new products and services could render the Company's products or services obsolete and not marketable. The Company cannot provide assurance that the announcement or introduction of new products or services by a competitor or any change in industry standards will not cause customers to defer or cancel the use of the Company's products or services. Furthermore, introduction of products or services with reliability or quality problems could result in reduced orders and additional development and service costs. Conversely, the failure to introduce a new product, service, or product enhancement on a timely basis could delay or hinder market acceptance. Any of these events could have a material adverse effect on the Company's overall business, operating results, and financial condition.
MARKETING
The Company's success will depend on adequate marketing and support resources, both of which are very difficult to accurately predict, among other financial factors. There can be no assurance that the Company's marketing efforts will result in sales and profits, or that the Company's products can be offered at profitable levels.
COMPETITION
Company competitors include Enliven, Thinking Media, ePod, and others presently unknown to the Company. These companies have developed rich media banner ads in the form of animation, audio, and video streaming in their banners. While providing TV commercial-like features on the banner, these applications do require a higher speed of Internet connectivity than is generally prevalent to be truly appreciated. Future competitors, as well as the Company's existing competitors, may have substantially greater financial and operating resources than the Company has. The Company cannot provide assurance that it will be able to effectively compete with present or future competitors.
Online ad spending is expected to increase from $5.25 billion in 1999 to $45.5 billion by 2005, according to a study released in March 2000 from The Myers Group. Findings estimate that the U.S. will account for $4.32 billion, or 82 percent of global online ad spending this year, with that figure rising to $32.5 billion by 2005. The study also predicts that U.S. advertisers will spend more to market their products and services on the Internet than they will on television.
RELIANCE ON SUBCONTRACTORS, SUBSIDIARIES, AND IMPACT OF FOREIGN
CONDITIONS
It is possible that unexpected changes in domestic or foreign laws or in the Company's relationship with subsidiaries and subcontractors may cause it to suffer delays or other problems that could impact its profitability, viability, and ability to compete. Such factors might also impact the Company's ability to meet its client or creditor obligations.
INDUSTRY RISKS
The industries in which the Company operates entail commercial risks that could adversely affect its ultimate profitability, including, competition for clients, miscalculation of operating costs, the failure of other parties to fulfill their contractual obligations and other contingencies. The industries may be affected by deflation or inflation, employment and wage level changes (including labor shortages), changes in local markets or economic conditions, changes in client tastes and changes in governmental regulations (including health codes and wage and price controls).
INTELLECTUAL PROPERTY RIGHTS; DEPENDENCE UPON PROPRIETARY RIGHTS;
RISK OF INFRINGEMENT
The Company relies upon a combination of confidentiality, nondisclosure, and other contractual arrangements, and copyright and trademark laws to protect its proprietary rights. The Company has applied for patent protection on certain products and trademark protection on certain names and is working with counsel to determine other ways to protect it's intellectual property assets. The Company generally enters into confidentiality agreements with its employees, consultants, clients, potential clients, and vendors and limits access to and distribution of its proprietary information. The Company provides no assurance that its precautions to protect proprietary information will be adequate to deter misappropriation of the Company's proprietary information or that it will be able to detect unauthorized use and take appropriate steps to enforce its intellectual property rights. Although the Company believes that its services and products do not infringe on the intellectual property rights of others, the Company cannot provide assurance that such a claim will not be asserted against it in the future, or that if asserted, any such claim will be successfully defended.
INTERNATIONAL RISKS
The Company presently relies upon Ultrexx India to perform substantially all of its programming functions. These operations and the Company and its subsidiary's profitability may be affected by varying degrees of political instability and haphazard changes in government regulations such as tax laws, business laws, intellectual property, and other laws. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, environmental legislation, and labor laws.
The Company's foreign operations in India could subject it to foreign currency fluctuations and changes in government regulations governing the convertibility and use of such currency. Changing economic conditions and changes in currency controls and regulations may materially affect the Company's financial position and results. The Company does not engage in currency hedging activities.
BUSINESS STRATEGY
The Company received small revenue amounts in 1997, 1998, and 1999. Its ability to operate and develop products was hampered by lack of funds that necessitated a continual quest for funding. The Company primarily completed development of the marina management software application by utilizing our India operations. This was possible because it was able to defer payments to development engineers until additional investment capital could be raised. The Company is now financially able to continue operations in India and expects to complete the marina installation in of the third quarter of 2000 after which we can begin marketing it outside of the Seattle region.
The Company was formed for the purpose of engaging in the design, development, production, and marketing of intelligent decision-support tools and applications for the Internet and other networks, for both industrial and consumer applications. Since inception, the Company has been primarily in a development stage: developing, testing, test marketing, and improving its software.
The Company plans to bring the technology to market and grow by leveraging its proprietary technologies into applications. With the Company providing the underlying technology, it will seek established strategic partners to bring each technology to market. In the first such relationship, the Company will market its intelligent application technology as a new solution in the Internet advertising field in partnership with Eyescream.
The Company is currently developing technology to enable "intelligent" decision-support and diagnostic web-served applications that can be accessed through wireless hand-held devices. The
Company's applications are being adapted to the specific requirements of delivery systems and formats that are needed to access this market. The Company is in discussions with potential strategic partners that can harness and market the technology.
The Marina Management software described earlier is not a core focus area for the Company, but rather an application to which the Company has ownership and marketing rights. The Company plans to license the distribution rights to a Company specializing in marinas, ports, or boating and to receive royalties in perpetuity. It is also possible that the Company could profitably sell its marina software business outright. The Company will be considering this option.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases approximately 400 square feet of office space in Seattle, Washington, on a month-to-month basis, at a rate of $1,000 per month. The Company leases approximately 4000 square feet of office space in Bangalore, India, at a rate of $1,000 per month.
From November 1999 through May 2000, the Company also maintained an office in San Diego, California, in conjunction with its relationship with Venture Catalyst ("VCAT"). VCAT is a business "incubator" that invested in the Company and which leases approximately 300 feet of office space to the Company along with providing management support. Commencing March 2000, VCAT received 5,000 shares of the Company's stock per month for the office space and services provided. The relationship was ended in May 2000.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages, and positions of the Company's Directors and executive officers as of August 1, 2000 are listed below:
NAME AGE POSITION WITH THE COMPANY FIRST ELECTED David LeCompte 45 CEO, Chairman, Secretary 1999 Ram Menon 49 President 1996 Muralidhara Keshavamurthy 37 Director 1996 Manohar Prabhu 45 Director, VP of International Operations 1996 |
J. DAVID LECOMPTE, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD, SECRETARY
Mr. LeCompte became the Company's Chief Executive Officer and Chairman during 2000. Mr. LeCompte was the founder and President of Efinds, a company intending to link direct response television with an e-commerce web site from January to October 1999. Efinds was a division of Respond2, a direct response marketing agency, where LeCompte served as Vice President Interactive. As President of Efinds, he was responsible for planning, financial modeling and budgeting; hiring programmers, designers and support staff; developing creative elements and content, contracting with service providers such as database and fulfillment companies, and working with attorneys on trademarks and other legal matters. From 1996 to 1998, LeCompte worked with Williams Worldwide Television as Vice President Of International Business Development overseeing wholesale distributor relationships in approximately 60 countries, supervising the home shopping division, working with product developers to introduce new products, and coordinating marketing and trade show initiatives. Prior to working with Williams Television, LeCompte was a partner and marketing consultant to La Forza Group, based in the UK, and to Healthrider International, a joint venture between La Forza Group and Healthrider, Inc., based in the USA. He also concurrently operates FL7.com, a business-to-business web site that sells liquidation goods into international markets.
RAM MENON, PRESIDENT AND DIRECTOR
Mr. Menon has served as the President and a Director for Ultrexx since 1996 and is responsible for fund raising and developing key partnerships for promoting the growth of the Company. Prior to forming Ultrexx, from 1994 to 1996 he served as President of Intertech International, where he was responsible for creating joint venture partnerships in Asia and the U.S. in the area of energy efficient devices and sustainable infrastructure development fields. Ram Menon is an electronics engineer with over 20 years of experience in the high technology industry. He has held senior technical positions in General Electric, E.M.I , the Dutch conglomerate Philips and has worked in Europe, the United States, and Asia.
MURALIDHARA KESHAVAMURTHY, DIRECTOR, TECHNOLOGY DEVELOPMENT
Mr. Keshavamurthy has served as a Director of the Company and has been at the center of technology development since 1996. Mr. Keshavamurthy has a background in Electronics and Communication engineering, with over 15 years experience in hands-on software development, with an emphasis on the areas of artificial intelligence and expert systems. He is the developer of the first version of CruXpert 1.2 (CKRL compiler) and the CruXpert range of products developed to date besides being the chief architect of Ultrexx Intelligent Bridge technology. He has worked in various capacities on software development projects at Indian Institute of Science-Bangalore, Hewlett Packard (India) Software Operation,Bangalore and National Semiconductor, Santa Clara, California.
MANOHAR PRABHU, DIRECTOR AND VP OF INTERNATIONAL OPERATIONS
Mr. Prabhu has served as a Director of the Company since 1996 and as the interim CEO from December 1998 to December 1999. As of January 2000, he continues to be on the Board but does not serve as an officer of the Company. Mr. Prabhu has a background in mechanical engineering and is an entrepreneur with over 20 years of hands-on experience in management, finance, manufacturing, international trade, collaboration, and technology-transfer. In 1981 Mr. Prabhu founded Scarab (India) Pvt. Ltd., Bangalore, India, and has served as its director since its founding. Scarab is active in the areas of design, manufacture, marketing, and installation of solar energy devices and systems, computer aided design, passive solar architecture, and construction and specialized project consultancy.
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
Compensation paid during 1999 to the highest paid Executive Officer of the Company is as follows:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
--------------------------------------------------------------------------------------------------------
OTHER ANNUAL
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)
---------------------------------- -------- ----------- --------- ----------------
Ram Menon, President 1999 $60,000 0 0
1998 0 0 0
1997 0 0 0
|
No other officers or directors earned more than Mr. Menon during the past three years.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
BENEFICIAL OWNERSHIP
The following table sets forth, as of July 1, 2000, the number and percentage of outstanding shares of Company Common Stock owned by (i) each person known to the Company to beneficially own more than 10% of its outstanding Common Stock, (ii) each director, (iii) each named executive officer, and (iv) all officers and directors as a group.
NAME AND ADDRESS OF NUMBER OF SHARES BENEFICIAL OWNER (1) BENEFICIALLY OWNED(2) PERCENT OF TOTAL(3) -------------------- --------------------- ------------------- Muralidhara Keshavamurthy 2,932,576 14.8% Ram Menon 1,239,141 6.2% Manohar Prabhu 1,839,142 9.3% David Le Compte 1,500,000 (4) 7.9% Mark Grimes 2,000,000 (5) 9.8% Ramanathan R. Krishnan 1,599,141 8.0% All officers and Directors 7,270,359 (6) 35.2% as a group |
OPTION GRANTS IN LAST FISCAL YEAR
NAME AND PRINCIPAL POSITION NUMBER OF PERCENT OF
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR EXPIRATION
OPTIONS EMPLOYEES IN BASE PRICE DATE
GRANTED (1) FISCAL YEAR ($)
------------------------------------------------------------------------------------------------------
David LeCompte 1,500,000 43% $.18 12/31/02
Mark Grimes 2,000,000 57% $.18 12/31/02
|
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.
The company maintains an exclusive contractual relationship with Ultrexx India, which is an Indian company having its principal place of business at 270,1st Main Road, Defence Colony, Indiranagar, Bangalore -560038, India. Muralidhara Keshavamurthy is a Director of Ultrexx India and a founder, director and the single largest shareholder in the Company. Manohar Prabhu is also a Director of Ultrexx India and a founder, director and shareholder of the Company. Ultrexx India was founded for the express purpose of becoming a subsidiary of Ultrexx Corporation. Ultrexx has provided Ultrexx India with operating capital as consideration for exclusive programming and software development services. The Company has signed a letter of intent with Ultrexx India to acquire it as a subsidiary.
On January 1, 2000, the Company entered into a consulting agreement with the Chief Executive Officer ("CEO") of the Company. As payment for consulting services, the agreement calls for the issuance of options to purchase 1,500,000 shares of the Company's common stock. (See Beneficial Ownership.)
On January 1, 2000, the Company entered into a consulting agreement with a member of the Advisory Board of the Company. As payment for consulting services, the agreement calls for the issuance of options to purchase 2,000,000 shares of the Company's common stock. (See Beneficial Ownership.)
Subsequent to December 31, 1999, the Company was in default on a note payable from a related party, which is secured by 500,000 shares of common stock owned by the Company's CEO. As payment for the outstanding balance of the note payable, the CEO transferred ownership of 250,000 of the shares being held as security to the lender. The remaining 250,000 shares were returned to the CEO. The CEO resigned from his position on January 24, 2000.
The Company entered into agreements with Crux Knowledgeware, Inc. and Ultrexx Solutions Pvt. Ltd., affiliated companies located in India, to conduct research and development on its products. For the years ended December 31, 1999 and 1998 and the six months ended June 30, 2000 and 1999, research and development expense paid to these affiliated companies amounted to $96,000, $81,000, $36,400 (unaudited), and $58,500 (unaudited), respectively. Accounts payable to these affiliated companies totaled $76,000 and $25,000 (unaudited) as of December 31, 1999 and June 30, 2000, respectively.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
COMMON STOCK MARKET INFORMATION
The following table sets forth, for the period from January 1998 through December 2000, the high and low bid quotations each quarter for the Common Stock as reported by the OTC Bulletin Board through May 2000, and in the "pink sheets" thereafter. The Company's stock began trading on the OTCBB in June 1993 and traded under the stock symbol "ULTX" until April 7, 2000. The Company lost its listing on the OTCBB because of its failure to file audited financial statements with the Securities and Exchange Commission to be recognized as a fully reporting company. The prices represent quotations between dealers, without adjustment for retail markup, mark down or commission, and do not necessarily represent actual transactions.
COMMON STOCK PRICE
2000 HIGH LOW ---- ---- --- 1st Quarter 2 1/8 1/4 2nd Quarter 1 7/32 1/4 1999 HIGH LOW ---- ---- --- 1st Quarter 1 1/16 1/2 2nd Quarter 2 1/4 3/8 3rd Quarter 9/16 1/4 4th Quarter 7/8 1/8 1998 HIGH LOW ---- ---- --- 1st Quarter 1 3/16 11/16 2nd Quarter 1 7/8 5/8 3rd Quarter 1 7/8 5/8 4th Quarter 1 3/8 |
The Company has not paid any cash dividends on its common stock since its incorporation and anticipates that, for the foreseeable future, earnings, if any, will continue to be retained for use in its business. As of July 1, 2000, the approximate number of record holders of the Company's common stock was 316.
ITEM 2. LEGAL PROCEEDINGS
The Company is currently involved in litigation with Ramanathan Krishnan ("Krishnan"), a former officer and director of the Company who remains a beneficial owner of more than 5% of the Company's outstanding common stock. The action involves Fidelity Transer Company ("Fidelity"), the Company's stock transfer agent, as the plaintiff, and the Company and Krishnan as defendants ("Fidelity Action"). Krishnan has also filed a Cross-Claim against Fidelity, the Company, and Ram Menon ("Menon"), the Company's President. The Fidelity Action is pending in the Third Judicial District Court in and for Salt Lake County, State of Utah and was commenced on November 10, 1999.
The Fidelity Action involves a claim for declaratory relief concerning an attempted transfer of shares by Krishnan. The Company requested a temporary hold be placed on Krishnan's transfer request because of contractual and regulatory concerns regarding such transfers. Fidelity requested the court's
assistance in determining its rights and obligations concerning the requested transfer. Krishnan subsequently counter-sued the Company and Menon for requesting the temporary hold on the shares and demanding immediate transfer and an unspecified amount of general and punitive damages for the delay in the transfer. The Company and Menon intend to vigorously defend Krishnan's counter-claim.
The Company is currently involved in a related case in Washington State. The action is pending in Washington State Superior Court, King County, and was instigated on November 4, 1999. The case was brought by an Ultrexx stockholder, Steven Frankowitz, as the plaintiff and presumes to be brought in the name of Ultrexx as a derivative action ("Washington Action"). The complaint names the following defendants: Krishnan; NetCompliance, Inc.; and NetCompliance Products and Services, Inc. Mr. Frankowitz also named Ultrexx, not only as a Plaintiff, but also as a Defendant in this matter. The Company has not answered the complaint and has received an open extension to answer from Mr. Frankowitz.
Mr. Frankowitz, alleges against the above named defendants, except Ultrexx,
the following causes of action: (1) Breach of Fiduciary Duty against Krishnan,
due to allegations of self-dealing; (2) Breach of Contract against Krishnan,
concerning an oral employment agreement; (3) Breach of Implied Covenant of
Good Faith and Fair Dealing against Krishnan, concerning his involvement in
setting up a competing business (among other claims); (4) Conversion against
Krishnan and NetCompliance, for improperly taking assets belonging to
Plaintiffs; (5) Waste and Theft of Corporate Opportunities against Krishnan;
(6) Tortious Interference against Krishnan and NetCompliance, in that the
defendants diverted corporate opportunity to themselves; (7) Fraud against
Krishnan and NetCompliance; (8) Prima Facie Tort against Krishnan and
NetCompliance; and (9) Violation of the Uniform Trade Secrets Act.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has experienced no recent change in or disagreement with its accountant. The Company's present Auditor, Singer, Lewak, Greenbaum & Goldstein LLP, has been the Company's auditor since March 28, 1998. Management of the Company intends to keep Singer, Lewak, Greenbaum & Goldstein LLP as its auditor for the foreseeable future.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company is authorized to issue up to 50,000,000 shares of Common Stock, of which 19,881,514 shares of Common Stock are issued and outstanding.
In December 1999, Venture Catalyst purchased a total of 714,286 shares of the
Company's restricted common stock for $100,000, or $0.14 per share. The
Company issued the shares under the exemption from registration provided by
Section 4(2). The shares were sold to a single accredited investor.
In January 2000, the company concluded a private share placement or restricted common stock with Berry-Shino Securities totaling 2 million shares at a price of $.25 per share. After cash commissions to Berry-Shino Securities, the Company realized approximately $450,000 from the sale, to be used for general operating purposes. Additionally, the Company paid 200,000 shares to Berry-Shino Securities as commission valued at $50,000.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company may indemnify its directors and executive officers and may indemnify its other officers and employees and other agents to the fullest extent permitted by law. The Company believes that indemnification under its Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company's Bylaws also permit it to secure insurance
on behalf of any officer, director, employee, or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the Bylaws permit such indemnification.
At present, Ram Menon is entitled to indemnification by the Company for the acts alleged in the Cross-Claim made by Krishnan in the Fidelity Action pursuant to the vote of the Board of Directors. Other than the Fidelity Action, the Company is not aware of any pending litigation or proceeding involving any director, officer, employee, or agent of the Company where indemnification will be required or permitted.
PART F/S
FINANCIAL STATEMENTS
The financial statements listed in the accompanying Index to Financial Statements are attached hereto and filed as a part of this Report.
The selected financial data of the Company for 1998 and 1999 were derived from the financial statements of the Company which have been audited by Singer, Lewak, Greenbaum & Goldstein. Singer, Lewak, Greenbaum & Goldstein issued an unqualified opinion with a going concern paragraph regarding the financials.
The selected unaudited financial statements for the quarter and six months ended June 30, 2000 were prepared by management in accordance with generally accepted accounting standards.
PART III
ITEM 1. INDEX TO EXHIBITS
The following documents are filed as part of this report on Form 10-SB:
A. Consolidated Financial Statements for the years ended December 31, 1999 and 1998, for the six months ended June 30, 2000 and 1999 (unaudited), and for the period from July 1, 1996 (inception) to June 30, 2000 (unaudited)
3. Corporate Goverance
10. Material Contracts
ITEM 2. DESCRIPTION OF EXHIBITS
EXHIBIT SEQUENTIALLY
NUMBER NUMBERED
PAGE
A. Consolidated Financial Statements for the years ended December 31,
1999 and 1998, for the six months ended June 30, 2000 and 1999
(unaudited), and for the period from July 1, 1996 (inception) to
June 30, 2000 (unaudited)
-Consolidated Balance Sheet
-Consolidated Statements of Operations
-Consolidated Statements of Shareholders' Equity (Deficit)
-Consolidated Statements of Cash Flows
-Notes to Consolidated Financial Statements
3. Corporate Goverance
3.1(a) Articles of Incorporation of RNA Development Corporation
3.1(b) Articles of Amendment of Name Change to Ultrexx Corporation
3.2 Bylaws of Ultrexx Corporation
10. Material Contracts
10.1 Letter of Intent with Ultrexx India
10.2 Option Agreement LeCompte and Grimes
10.3 Private Placement Agreement
|
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 21, 2000.
By: /s/ Ram Menon
----------------------------
Ram Menon, President
|
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Ram Menon
----------------------------- President, Director September 21, 2000
Ram Menon
/s/ David Le Compte
----------------------------- CEO, Chairman of the Board September 21, 2000
David Le Compte
/s/ Muralidhara Keshavamurthy
----------------------------- Director September 21, 2000
Muralidhara Keshavamurthy
|
EXHIBIT INDEX
The following exhibits are being filed with this Report on Form 10-SB:
EXHIBIT SEQUENTIALLY
NUMBER NUMBERED
PAGE
A. Consolidated Financial Statements for the years ended December 31,
1999 and 1998, for the six months ended June 30, 2000 and 1999
(unaudited), and for the period from July 1, 1996 (inception) to
June 30, 2000 (unaudited)
3. Corporate Goverance
3.1(a) Articles of Incorporation of RNA Development Corporation
3.1(b) Articles of Amendment of Name Change to Ultrexx Corporation
3.2 Bylaws of Ultrexx Corporation
10. Material Contracts
10.1 Letter of Intent with Ultrexx India
10.2 Option Agreement LeCompte and Grimes
10.3 Private Placement Agreement
|
ULTREXX CORPORATION
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED),
AND FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION)
TO JUNE 30, 2000 (UNAUDITED)
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations 4
Consolidated Statements of Shareholders' Equity (Deficit) 5 - 6
Consolidated Statements of Cash Flows 7 - 9
Notes to Consolidated Financial Statements 10 - 20
|
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Ultrexx Corporation
We have audited the accompanying consolidated balance sheet of Ultrexx Corporation (a development stage company) and subsidiary as of December 31, 1999, and the related consolidated statements of operations, shareholders' equity (deficit), and cash flows for each of the two years in the period ended December 31, 1999, and the period from July 1, 1996 (inception) to December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide 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 Ultrexx Corporation and subsidiary as of December 31, 1999, and the consolidated results of their operations and their consolidated cash flows for each of the two years in the period ended December 31, 1999, and the period from July 1, 1996 (inception) to December 31, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company incurred a net loss of $2,750,212 during the period from July 1, 1996 (inception) to December 31, 1999, and it had negative cash flows from operations of $1,482,750. These factors, among others, as discussed in Note 2 to the financial statements, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
May 26, 2000
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
ASSETS
June 30, December 31,
2000 1999
-------- ------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 47,843 $ 14,983
Accounts receivable 3,810 3,810
-------- --------
Total current assets 51,653 18,793
FURNITURE AND EQUIPMENT, net of accumulated depreciation
and amortization of $77,066 (unaudited) and $71,067 25,410 27,522
CAPITALIZED SOFTWARE, net of accumulated amortization of
$307,500 (unaudited) and $262,500 142,500 187,500
DEPOSITS AND OTHER ASSETS 7,747 7,747
-------- --------
TOTAL ASSETS $227,310 $241,562
======== ========
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
LIABILITIES AND SHAREHOLDERS' DEFICIT
June 30, December 31,
2000 1999
-------- ------------
(unaudited)
CURRENT LIABILITIES
Line of credit $ -- $ 40,948
Accounts payable 121,534 228,338
Accrued payroll and payroll taxes 164,308 202,238
Notes payable to shareholders and related parties 34,350 35,634
----------- -----------
Total current liabilities 320,192 507,158
----------- -----------
COMMITMENTS
SHAREHOLDERS' DEFICIT
Common stock, $0.001 par value
50,000,000 shares authorized
19,881,514 (unaudited) and 17,391,514 shares
issued and outstanding 19,882 17,392
Common stock committed, $0.001 par value
826,907 (unaudited) and 936,786 shares committed,
but not yet issued 130,000 168,500
Additional paid-in capital 2,858,796 2,299,092
Treasury stock, at cost, 367,996 shares (368) (368)
Deficit accumulated during the development stage (3,101,192) (2,750,212)
----------- -----------
Total shareholders' deficit (92,882) (265,596)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 227,310 $ 241,562
=========== ===========
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED), AND
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
For the
Period from
For the Six Months Ended For the Year Ended July 1, 1996
June 30, December 31, (Inception) to
--------------------------- ----------------------------- June 30,
2000 1999 1999 1998 2000
---------- ---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
NET SALES $ 1,671 $ 41,338 $ 90,046 $ 27,063 $ 136,466
COST OF GOODS SOLD -- 40 -- -- 10,043
---------- ---------- ---------- ---------- ----------
GROSS PROFIT 1,671 41,298 90,046 27,063 126,423
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
General and
administrative 315,921 395,777 698,195 976,315 2,927,336
Research and
development 36,400 58,500 96,000 81,000 284,400
---------- ---------- ---------- ---------- ----------
Total operating
expenses 352,321 454,277 794,195 1,057,315 3,211,736
---------- ---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (350,650) (412,979) (704,149) (1,030,252) (3,085,313)
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Interest income 1,429 -- -- -- 1,429
Interest expense (1,759) (7,945) (10,474) (5,075) (17,308)
---------- ---------- ---------- ---------- ----------
Total other income
(expense) (330) (7,945) (10,474) (5,075) (15,879)
---------- ---------- ---------- ---------- ----------
NET LOSS $ (350,980) $ (420,924) $ (714,623) $(1,035,327) $(3,101,192)
========== ========== ========== ========== ==========
BASIC AND DILUTED LOSS
PER SHARE $ (0.02) $ (0.03) $ (0.04) $ (0.07) $ (0.24)
========== ========== ========== ========== ==========
WEIGHTED-AVERAGE
COMMON SHARES
OUTSTANDING 20,406,992 16,485,995 17,053,130 15,178,381 12,795,208
========== ========== ========== ========== ==========
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
Deficit
Accumulated
Common Stock Common Additional During the
-------------------------- Stock Paid-In Treasury Development
Shares Amount Committed Capital Stock Stage Total
----------- ----------- --------- ----------- -------- ----------- ----------
BALANCE, JULY 1, 1996 -- $ -- $ -- $ -- $ -- $ -- $ --
INITIAL CAPITALIZATION 2,414,665 2,415 36,013 (368) 38,060
COMMON STOCK ISSUED FOR
REVERSE ACQUISITION OF
CRUX, INC 10,000,000 10,000 440,000 450,000
COMMON STOCK ISSUED FOR
FEES RELATED TO REVERSE
ACQUISITION OF CRUX, INC 1,000,000 1,000 44,000 45,000
COMMON STOCK ISSUED FOR CASH 382,551 382 258,903 259,285
NET LOSS (162,988) (162,988)
----------- ----------- -------- ----------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1996 13,797,216 13,797 -- 778,916 (368) (162,988) 629,357
COMMON STOCK ISSUED FOR CASH 1,032,558 1,033 562,962 563,995
NET LOSS (837,274) (837,274)
----------- ----------- -------- ----------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1997 14,829,774 14,830 -- 1,341,878 (368) (1,000,262) 356,078
COMMON STOCK ISSUED FOR CASH 909,000 909 327,491 328,400
ISSUANCE OF COMMON STOCK
FOR SERVICES 381,000 381 190,119 190,500
NET LOSS (1,035,327) (1,035,327)
----------- ----------- -------- ----------- -------- ----------- ---------
BALANCE, DECEMBER 31, 1998 16,119,774 16,120 -- 1,859,488 (368) (2,035,589) (160,349)
COMMON STOCK ISSUED FOR CASH 565,000 565 199,435 200,000
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
Deficit
Accumulated
Common Stock Common Additional During the
-------------------------- Stock Paid-In Treasury Development
Shares Amount Committed Capital Stock Stage Total
----------- ----------- --------- ----------- -------- ----------- ----------
COMMON STOCK ISSUED
FOR SERVICES RENDERED 706,740 $ 707 $ $ 240,169 $ $ $ 240,876
COMMON STOCK COMMITTED
FOR CASH 100,000 100,000
COMMON STOCK COMMITTED
FOR SERVICES RENDERED 38,500 38,500
COMMON STOCK COMMITTED FOR
REPAYMENT OF SHORT-TERM
LOANS 30,000 30,000
NET LOSS (714,623) (714,623)
----------- ----------- --------- ----------- -------- ----------- ----------
BALANCE, DECEMBER 31, 1999 17,391,514 17,392 168,500 2,299,092 (368) (2,750,212) (265,596)
COMMON STOCK ISSUED FOR
(unaudited)
CASH 2,000,000 2,000 498,000 500,000
OFFERING COSTS 200,000 200 (50,730) (50,530)
SERVICES RENDERED 100,000 100 23,500 29,900 53,500
ISSUANCE OF COMMITTED SHARES
(unaudited) 190,000 190 (62,000) 61,810 --
CAPITAL CONTRIBUTION
(unaudited) 20,724 20,724
NET LOSS (unaudited) (350,980) (350,980)
----------- ----------- --------- ----------- -------- ----------- ----------
BALANCE, JUNE 30, 2000
(unaudited) 19,881,514 $ 19,882 $ 130,000 $ 2,858,796 $ (368) $(3,101,192) $ (92,882)
=========== =========== ========= =========== ======== =========== ==========
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED), AND
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
For the
Period from
For the Six Months Ended For the Year Ended July 1, 1996
June 30, December 31, (Inception) to
--------------------------- ----------------------------- June 30,
2000 1999 1999 1998 2000
----------- ----------- ----------- ------------- -------------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(350,980) $(420,924) $(714,623) $(1,035,327) $(3,101,192)
Adjustments to reconcile
net loss to net cash
used in operating
activities
Depreciation 5,997 11,863 22,638 23,670 77,064
Amortization of
capitalized
software 45,000 45,000 90,000 90,000 307,500
Issuance of
common stock
for services
rendered 30,000 189,000 240,876 190,500 506,376
Issuance of
committed
common stock
for services 23,500 -- 38,500 -- 62,000
(Increase) decrease in
Accounts receivable -- 11,634 21,399 (18,381) (982)
Inventory -- 40 15,309 20 --
Other receivables -- -- -- 2,338 (2,828)
Deposits and other
assets -- (10,000) 3,802 -- (7,747)
Increase (decrease) in
Accounts payable (106,804) (27,063) (78,481) 209,432 121,534
Accrued payroll
and payroll taxes (37,930) 17,205 55,501 116,331 164,308
--------- --------- --------- ----------- -----------
Net cash used in
operating activities (391,217) (183,245) (305,079) (421,417) (1,873,967)
--------- --------- --------- ----------- -----------
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED), AND
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
For the
Period from
For the Six Months Ended For the Year Ended July 1, 1996
June 30, December 31, (Inception) to
--------------------------- --------------------------- June 30,
2000 1999 1999 1998 2000
----------- ----------- ----------- ----------- -------------
(unaudited) (unaudited) (unaudited)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of furniture
and equipment $ (3,885) $ (511) $ (510) $ (2,948) $ (102,474)
--------- --------- --------- --------- -----------
Net cash used in
investing activities (3,885) (511) (510) (2,948) (102,474)
--------- --------- --------- --------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from line of
credit -- -- -- 48,635 48,635
Payments on line of
credit (40,948) (7,687) (7,687) -- (48,635)
Proceeds from short-
term loans -- -- 30,000 -- 30,000
Proceeds from notes
payable to
shareholders and
related parties -- 900 53,365 38,700 92,065
Payments on notes
payable to
shareholders and
related parties (1,284) -- (56,430) -- (57,714)
Capital contributions 20,724 -- -- -- 20,724
Stock offering costs (50,530) -- -- -- (50,530)
Proceeds from sale
of common stock 500,000 200,000 200,000 328,400 1,889,739
Proceeds from sale
of committed
common stock -- -- 100,000 -- 100,000
--------- --------- --------- --------- -----------
Net cash provided by
financing activities 427,962 193,213 319,248 415,735 2,024,284
--------- --------- --------- --------- -----------
|
The accompanying notes are an integral part of these financial statements.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED), AND
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
For the
Period from
For the Six Months Ended For the Year Ended July 1, 1996
June 30, December 31, (Inception) to
--------------------------- --------------------------- June 30,
2000 1999 1999 1998 2000
----------- ----------- ----------- ----------- -------------
(unaudited) (unaudited) (unaudited)
Net increase (decrease)
in cash and cash
equivalents $32,860 $ 9,457 $13,659 $(8,630) $47,843
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 14,983 1,324 1,324 9,954 --
------- ------- ------- ------- -------
CASH AND CASH
EQUIVALENTS,
END OF PERIOD $47,843 $10,781 $14,983 $ 1,324 $47,843
======= ======= ======= ======= =======
SUPPLEMENTAL
DISCLOSURES OF CASH
FLOW INFORMATION
INTEREST PAID $ -- $ -- $10,474 $ 5,075 $15,549
======= ======= ======= ======= =======
|
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
On October 21, 1996, Ultrexx Corporation issued 10,000,000 shares of common stock valued at $450,000 for the reverse acquisition of Crux, Inc.
During the years ended December 31, 1999 and 1998, the Company issued 706,740 and 381,000 shares of common stock for services rendered valued at $240,876 and $190,500, respectively.
During the year ended December 31, 1999, the Company committed to issue 100,000 shares of common stock as repayment of short-term loans totaling $30,000. These shares were issued during the six months ended June 30, 2000.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 1 - DESCRIPTION OF BUSINESS
Ultrexx Corporation ("Ultrexx"), a publicly traded corporation incorporated in the State of Utah in 1984, and its wholly owned subsidiary Crux, Inc. ("Crux"), a Washington corporation, (collectively, "the Company") is in the design and development stage of producing and marketing programming software designed for the Internet. The Company's revenue streams will be generated primarily from the sale of software packages over the Internet, as well as from contractual agreements to provide product development services.
Crux, Inc. was formed under the laws of the State of Washington on July 1, 1996. On October 21, 1996, Ultrexx entered into an Agreement and Plan of Business Combination, whereby it acquired all of the outstanding common stock of Crux in exchange for an aggregate of 10,000,000 shares of newly issued common stock effective November 1, 1996. For accounting purposes, the transaction has been treated as a recapitalization of Crux, with Crux as the accounting acquirer (reverse acquisition), and has been accounted for in a manner similar to a pooling of interests. The operations of Ultrexx have been included with those of Crux from the acquisition date.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ultrexx and its wholly owned subsidiary, Crux. All intercompany accounts and transactions have been eliminated.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. However, during the period from July 1, 1996 (inception) to December 31, 1999, the Company incurred a net loss of $2,750,212, and it had negative cash flows from operations of $1,482,750. These factors raise substantial doubt about the Company's ability to continue as a going concern.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
BASIS OF PRESENTATION (Continued)
Recovery of the Company's assets is dependent upon future events, the outcome of which is indeterminable. Successful completion of the Company's development program and its transition to the attainment of profitable operations is dependent upon the Company achieving a level of sales adequate to support the Company's cost structure. In addition, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the Company's ability to meet its financing requirements and the success of its plans to sell its products. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
Management plans to achieve a level of sales adequate to support the Company's cost structure and believes that its customer base will grow considerably once its software has become fully developed and aggressive advertising can begin.
ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For the purpose of the statements of cash flows, the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
INVENTORY
Inventory is valued at the lower of cost or market. Cost is determined using specific identification.
FURNITURE AND EQUIPMENT
Furniture and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over estimated useful lives as follows:
Furniture and fixtures 7 years Computer equipment 5 years Computer software and design equipment 3 to 7 years |
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FURNITURE AND EQUIPMENT (Continued)
Maintenance and minor replacements are charged to expense as incurred.
DEVELOPMENT STAGE ENTERPRISE
The Company is a development stage company as defined in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." The Company is devoting substantially all of its present efforts to establish a new business, and its planned principal operations have not yet commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.
TREASURY STOCK
The Company accounts for its treasury stock under the cost method, whereby purchases of treasury stock are recorded at the cost to the Company.
LOSS PER SHARE
The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Because the Company has incurred net losses, basic and diluted loss per share are the same.
COMPREHENSIVE INCOME
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income." This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. Comprehensive income is not presented in the Company's financial statements since the Company did not have any of the items of comprehensive income in any period presented.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, the carrying amounts approximate fair values due to their short maturities. The amounts shown for line of credit and notes payable to shareholders and related parties also approximate fair value because current interest rates offered to the Company for debt of similar maturities are substantially the same.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes, if applicable, represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows expected to be generated by the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. To date, no impairment has occurred.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No. 136, "Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others," which is effective for financial statements with fiscal years beginning after December 15, 1999. This statement is not applicable to the Company.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," which is effective upon issuance. This statement is not applicable to the Company.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Instruments and Certain Hedging Activities." This statement is not applicable to the Company.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement No. 53 and Amendments to Statements No. 63, 89, and 121." This statement is not applicable to the Company.
NOTE 3 - FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
June 30, December 31,
2000 1999
----------- -----------
(unaudited)
Furniture and fixtures $ 8,335 $ 8,335
Computer equipment 51,649 49,969
Computer software and design equipment 42,492 40,285
-------- -------
102,476 98,589
Less accumulated depreciation and amortization 77,066 71,067
-------- -------
TOTAL $ 25,410 $27,522
======== =======
|
NOTE 4 - CAPITALIZED SOFTWARE
As part of the Agreement and Plan of Business Combination between Ultrexx and Crux entered into on October 21, 1996, Ultrexx issued 10,000,000 shares of its common stock in exchange for the source code for the software product currently being marketed by Crux. The capitalized software costs were valued at $0.045 per share, the fair value of the common stock issued by Ultrexx on October 21, 1996.
In accordance with SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," capitalized software costs are amortized on a product-by-product basis. The annual amortization amount is the greater of the amount calculated using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the product. The capitalized software is being amortized over an estimated useful life of five years. Amortization of the capitalized software began on February 1, 1997, the date that the software product was available for general release to customers. Amortization expense for the years ended December 31, 1999 and 1998 and the six months ended June 30, 2000 and 1999 was $90,000, $90,000, $45,000 (unaudited), and $45,000 (unaudited), respectively.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 5 - LINE OF CREDIT
The Company has available a $50,000 line of credit with a bank through January 1, 2000. The line bears interest at an annual rate of 10.75% and is collateralized by the accounts receivable of the Company. As of December 31, 1999, the outstanding balance was $40,948. The Company paid off the line of credit on March 28, 2000.
NOTE 6 - NOTES PAYABLE TO SHAREHOLDERS AND RELATED PARTIES
Notes payable to shareholders and related parties at December 31, 1999 and June 30, 2000 represent advances made to the Company from various shareholders and related parties for general operating purposes. The amounts are due in varying installments.
NOTE 7 - COMMITMENTS
LEASES
During the six months ended June 30, 2000, the Company entered into a lease agreement for office facilities with a third party that had purchased 1,096,786 shares of the Company's common stock for proceeds of $211,500 during the year ended December 31, 1999. This third party is also providing management support to the Company. Under the terms of the lease agreement, this third party will receive 5,000 shares of the Company's common stock per month as payment for the office space and services provided. This agreement was ended in May 2000.
The Company has entered into a one-and-a-half-year lease agreement for the rent of its corporate offices, commencing December 17, 1999. Rent expense for this agreement for the six months ended June 30, 2000 was $8,700 (unaudited). Rent expense for the previous lease agreement of its corporate offices for the years ended December 31, 1999 and 1998 and the six months ended June 30, 1999 amounted to $58,322, $64,585, and $30,149 (unaudited), respectively.
The Company has also entered into various month-to-month lease agreements for the rental of corporate facilities and furniture. Rent expense for these leases for the years ended December 31, 1999 and 1998 and the six months ended June 30, 2000 and 1999 amounted to $8,880, $25,066, $651 (unaudited), and $4,633 (unaudited), respectively.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 7 - COMMITMENTS (Continued)
LEASES (Continued)
Future minimum lease payments under these leases are as follows:
Year Ending
December 31,
------------
2000 $17,730
2001 13,278
2002 5,391
-------
Total $36,399
=======
|
LITIGATION
The Company is currently involved in litigation with Ramanathan Krishnan ("Krishnan"), a former officer and director of the Company who remains a beneficial owner of more than 5% of the Company's outstanding common stock. The action involves Fidelity Transer Company ("Fidelity"), the Company's stock transfer agent, as the plaintiff, and the Company and Krishnan as defendants ("Fidelity Action"). Krishnan has also filed a Cross-Claim against Fidelity, the Company, and Ram Menon ("Menon"), the Company's President. The Fidelity Action is pending in the Third Judicial District Court in and for Salt Lake County, State of Utah and was commenced on November 10, 1999.
The Fidelity Action involves a claim for declaratory relief concerning an attempted transfer of shares by Krishnan. The Company requested a temporary hold be placed on Krishnan's transfer request because of contractual and regulatory concerns regarding such transfers. Fidelity requested the court's assistance in determining its rights and obligations concerning the requested transfer. Krishnan subsequently counter-sued the Company and Menon for requesting the temporary hold on the shares and demanding immediate transfer and an unspecified amount of general and punitive damages for the delay in the transfer. The Company and Menon intend to vigorously defend Krishnan's counter-claim.
The Company is also currently involved in a related case in Washington State. The action is pending in Washington State Superior Court, King County, and was instigated on November 4, 1999. The case was brought by an Ultrexx stockholder, Steven Frankowitz, as the plaintiff and presumes to be brought in the name of Ultrexx as a derivative action ("Washington Action"). The complaint names the following defendants: Krishnan; NetCompliance, Inc.; and NetCompliance Products and Services, Inc. Mr. Frankowitz also named Ultrexx, not only as a plaintiff, but also as a defendant in this matter. The Company has not answered the complaint and has received an open extension to answer from Mr. Frankowitz.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 7 - COMMITMENTS (Continued)
LITIGATION (Continued)
Mr. Frankowitz alleges against the above named defendants, except Ultrexx, the following causes of action: (1) Breach of Fiduciary Duty against Krishnan, due to allegations of self-dealing; (2) Breach of Contract against Krishnan, concerning an oral employment agreement; (3) Breach of Implied Covenant of Good Faith and Fair Dealing against Krishnan, concerning his involvement in setting up a competing business (among other claims); (4) Conversion against Krishnan and NetCompliance, Inc. for improperly taking assets belonging to the plaintiffs; (5) Waste and Theft of Corporate Opportunities against Krishnan; (6) Tortious Interference against Krishnan and NetCompliance, Inc. in that the defendants diverted corporate opportunity to themselves; (7) Fraud against Krishnan and NetCompliance, Inc.; (8) Prima Facie Tort against Krishnan and NetCompliance, Inc.; and (9) Violation of the Uniform Trade Secrets Act.
NOTE 8 - SHAREHOLDERS' DEFICIT
During the six months ended June 30, 2000, the Company entered into a consulting agreement with the Chief Executive Officer ("CEO") of the Company. As payment for consulting services, the agreement calls for the issuance of options to purchase 1,500,000 shares of the Company's common stock. 325,500 of these options are to be issued by the Company, and the remaining 1,174,500 options are to be issued by three officers of the Company from options previously issued to those officers. All options have an exercise price of $0.18 per share, vest on May 1, 2000, and expire on December 31, 2002. The expiration date of the options may be extended at the election of the Company's Board of Directors.
During the six months ended June 30, 2000, the Company entered into a consulting agreement with a member of the Advisory Board of the Company. As payment for consulting services, the agreement calls for the issuance of options to purchase 2,000,000 shares of the Company's common stock. 434,000 of these options are to be issued by the Company, and the remaining 1,566,000 options are to be issued by three officers of the Company from options previously issued to those officers. All options have an exercise price of $0.18 per share, vest on May 1, 2000, and expire on December 31, 2002. The expiration date of the options may be extended at the election of the Company's Board of Directors.
During the six months ended June 30, 2000, the Company issued 2,000,000 restricted shares of common stock for proceeds of $500,000, net of issuance costs of $100,530. The issuance costs included the issuance of 200,000 restricted shares of common stock valued at $50,000.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 8 - SHAREHOLDERS' DEFICIT (Continued)
During the six months ended June 30, 2000, the Company issued 100,000 restricted shares of common stock in exchange for services rendered valued at $30,000.
NOTE 9 - MAJOR CUSTOMERS
During the year ended December 31, 1999, the Company did business with two customers whose sales aggregated to 74% of net sales. The Company did not have any accounts receivable from these customers at December 31, 1999.
During the year ended December 31, 1998, the Company did business with one customer whose individual sales comprised 73% of net sales. Accounts receivable from this customer comprised 88% of net accounts receivable at December 31, 1998.
NOTE 10 - INCOME TAXES
The current provision for income taxes is the minimum tax due to the State of Washington. The components of the Company's net deferred taxes for the year ended December 31 were as follows:
1999 1998
--------- ---------
Deferred tax assets
Bad debt expense $ -- $ 23,316
Net operating loss carryforward 801,482 585,849
Other 272 272
Deferred tax liabilities
Capitalized software (115,668) (154,224)
Furniture and equipment (3,382) (3,382)
--------- ---------
682,704 451,831
Valuation allowance 682,704 451,831
--------- ---------
NET DEFERRED TAXES $ -- $ --
========= =========
|
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 10 - INCOME TAXES (Continued)
The Company has established a valuation allowance based on a number of factors which impact the likelihood the deferred tax assets will be recovered, including the Company's history of operating losses. Based upon a weighting of all available evidence, management believes that there is no basis to project significant United States-sourced taxable income. Therefore, it is more likely than not that the deferred tax assets will not be realized, and a full valuation allowance has been established. The net change in the valuation allowance for the year ended December 31, 1999 was an increase of $230,873. No provision for income taxes for the years ended December 31, 1999 and 1998 is required, except for minimum state taxes, since the Company incurred losses during such years.
As of December 31, 1999, the Company had consolidated federal and state net operating loss carryforwards of $2,148,463 and $1,073,832, respectively. These carryforwards, if unused, begin to expire in 2015.
Income tax expense differs from the amounts computed by applying the United States federal income tax rate of 34% to income taxes as a result of the following:
1999 1998
------ ------
Computed "expected" tax benefit 34.0% 34.0%
Increase in income taxes resulting from
Change in the beginning-of-the-year balance
of the valuation allowance for deferred tax
assets allocated to income tax expense (34.0) (34.0)
----- -----
Total --% --%
===== =====
|
The overall effective tax rate differs from the federal statutory tax rate of 34% due to operating losses not providing benefit for income tax purposes.
NOTE 11 - RELATED PARTY TRANSACTIONS
The Company entered into agreements with Crux Knowledgeware, Inc. and Ultrexx Solutions Pvt. Ltd., affiliated companies located in India, to conduct research and development on its products. For the years ended December 31, 1999 and 1998 and the six months ended June 30, 2000 and 1999, research and development expense paid to these affiliated companies amounted to $96,000, $81,000, $36,400 (unaudited), and $58,500 (unaudited), respectively. Accounts payable to these affiliated companies totaled $76,000 and $25,000 (unaudited) as of December 31, 1999 and June 30, 2000, respectively.
ULTREXX CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
NOTE 11 - RELATED PARTY TRANSACTIONS (Continued)
During the six months ended June 30, 2000, the Company was in default on a note payable to a related party, which is secured by 500,000 shares of common stock owned by the Company's CEO. As payment for the outstanding balance of the note payable, the CEO transferred ownership of 250,000 of the shares being held as security to the lender. The remaining 250,000 shares were returned to the CEO. The CEO resigned from his position on January 24, 2000.
During the six months ended June 30, 2000, the Company signed a letter of intent with Ultrexx Solutions Pvt. Ltd. to acquire Ultrexx India Pvt. Ltd. as a subsidiary.
NOTE 12 - YEAR 2000 ISSUE
The Company has completed a comprehensive review of its computer systems to identify the systems that could be affected by ongoing Year 2000 problems. Upgrades to systems judged critical to business operations have been successfully installed. To date, no significant costs have been incurred in the Company's systems related to the Year 2000.
Based on the review of the computer systems, management believes all action necessary to prevent significant additional problems has been taken. While the Company has taken steps to communicate with outside suppliers, it cannot guarantee that the suppliers have all taken the necessary steps to prevent any service interruption that may affect the Company.
ARTICLES OF INCORPORATION
OF
RNA DEVELOPMENT CORP.
WE, THE UNDERSIGNED natural persons of the age of twenty-one years or more, acting as incorporators of a corporation under the Utah Business Corporation Act adopt the following Articles of Incorporation for such corporation.
ARTICLE I
CORPORATE NAME
The name of this corporation is RNA Development Corp.
ARTICLE II
DURATION OF CORPORATION
The duration of this corporation is "perpetual."
ARTICLE III
CORPORATE PURPOSES
The purpose for which this corporation is organized is to purchase, lease, or sell real property for investment and to acquire other business entities or investments, and all matters related or ancillary thereto and to do all things and engage in all lawful transactions which a corporation organized under the laws of the State of Utah might do or engage in, even though not expressly stated herein.
ARTICLE IV
CAPITALIZATION
The aggregate number of shares which this corporation shall have authority to issue is FIFTY MILLION (50,000,000) shares of $0.001 par value common stock. All stock of the corporation shall be of the same class and shall have the same rights and preferences. Fully paid stock of this corporation shall not be liable to any further call or assessment.
ARTICLE V
PRE-EMPTIVE RIGHTS ABOLISHED
The authorized and treasury stock of this corporation may be issued at such time, upon such terms and conditions and for such consideration as the Board of Directors shall determine. Shareholders shall not have pre-emptive rights to acquire unissued shares of the stock of this corporation.
ARTICLE VI
COMMENCING BUSINESS
This corporation will not commence business until consideration of a value of at least $1,000 has been received for the issuance of shares.
ARTICLE VII
INTERNAL AFFAIRS
The directors shall adopt Bylaws which are not inconsistent with law or these Articles for the regulation and management of the affairs of the corporation. These Bylaws may be amended from time to time or repealed pursuant to laws.
ARTICLE VIII
REGISTERED OFFICE AND AGENT
The address of this corporation's initial registered office and name of its original registered agent at such address is:
Richard J. Lawrence Suite 777 175 South West Temple Salt Lake City, Utah 84101
ARTICLE IX
DIRECTORS
The Board of Directors shall consist of not less than three (3) nor more than nine (9) members as the Board of Directors may itself from time to time determine. The names and addresses of persons who are to serve as Directors until the first meeting of stockholders, or until their successors be elected and qualify are:
NAME ADDRESS
---- -------
Phil R. Harris 2137 Dallin Street
Salt Lake City, Utah 84109
Michael J. Jensen 2117 South 2200 East
Salt Lake City, Utah 84109
James Stewart 1601 West 400 South #56
Salt Lake City, Utah 84109
|
ARTICLE X
INCORPORATORS
NAME ADDRESS
---- -------
The name and address of each incorporator is:
Phil R. Harris 2137 Dallin Street
Salt Lake City, Utah 84109
Michael J. Jensen 2117 South 2200 East
Salt Lake City, Utah 84109
James Stewart 1601 West 400 South #56
Salt Lake City, Utah 84109
|
ARTICLE XI
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this corporation and any other corporation shall be affected by the fact that a Director or officer of this corporation is interested in or is a Director of officer of such other corporation; and any Director, individually or jointly, may be a party to or may be interested in any corporation or transaction of this corporation or in which this corporation is interested; and no contract or other transaction of this corporation with any person, firm or corporation shall be affected by the fact that any Director of this corporation is a party to or is interested in such contract, act or transaction or any way connected with such person, firm or corporation, and every person who may become a Director of this corporation is hereby relieved from liability that might otherwise exist from contracting with the corporation for the benefit of himself or any firm, association or corporation in which he may be in any way interested, provided said Director acts in good faith.
DATED this 1st day of March, 1984.
-------
/s/ PHIL R. HARRIS
---------------------------
PHIL R. HARRIS
/s/ MICHAEL J. JENSEN
---------------------------
MICHAEL J. JENSEN
/s/ JIM R. STEWART
---------------------------
JIM R. STEWART
|
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
|
I, THE UNDERSIGNED, a Notary Public, hereby certify that on the 1ST day of March, 1984, Phil R. Harris, Michael J. Jensen and Jim R. Stewart, personally appeared before me who being by me first duly sworn severally declared that they are the persons who signed the foregoing document as incorporators and that the statements therein contained are true.
DATED this 1st day of March, 1984.
-------
/s/ SHARON E. VANCE
---------------------------
Notary Public
My commission expires: Residing at:
9/20/86 SALT LAKE CITY, UTAH
----------------------------- ---------------------------
|
ECONODRAFT CORPORATION
ARTICLES OF AMENDMENT
The following Articles of Amendment to Articles of Incorporation are herewith submitted for filing.
ARTICLE 1.
The name of record of the corporation is: ECONODRAFT CORPORATION.
ARTICLE 2.
The amendment to the Articles of Incorporation as adopted is as follows:
Article 1 is changed to read as follows: The name of the corporation is ULTREXX CORPORATION.
ARTICLE 3.
The date of adoption of the amendment was July 29, 1995.
ARTICLE 4.
The amendment was adopted by the shareholders. The number of shares outstanding at the time of such adoption was 8,890,635; and the number of shares entitled to vote thereon was 8,890,635.
ARTICLE 5.
The designation and number of outstanding shares of each class entitled to vote as a class is as follows:
CLASS NUMBER OF SHARES
----- ---------------
Common Stock 8,890,635
|
ARTICLE 6.
The number of shares that voted for the amendment was 8,233,100; and the number of shares that voted against the amendment was "none."
ARTICLE 7.
The manner in which any exchange, reclassification, or cancellation of issued shares shall be effected, is as follows: No change.
ARTICLES OF AMENDMENT
We certify that we are officers of the above named corporation and are authorized to execute these articles on behalf of the corporation.
Dated: 7/29/1995 /s/ CLIFFORD M. JOHNSTON
-------------------------- ---------------------------------
President
/s/JERRY M. CORNWELL
---------------------------------
Secretary/Treasurer
|
ARTICLES OF AMENDMENT
BYLAWS
OF
ULTREXX, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICES.
The Company may locate its principal office within or without the State of Utah as the Board may determine.
SECTION 2. REGISTERED OFFICE.
The board of directors shall establish and maintain a registered office within the State of Utah. This may be, but need not be, the same as the principal or other office, if any, maintained by the Company in the State of Utah.
SECTION 3. OTHER OFFICES.
The board of directors may at any time establish offices at any place or places, either in the State of Utah, or without, where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS.
Meetings of shareholders shall be held at any place within or outside the State of Utah designated by the board of directors. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the Corporation.
SECTION 2. ANNUAL MEETING.
The annual meeting of shareholders shall be held each year on a date and at a time designated by the board of directors. At each annual meeting, directors shall be elected and any other proper business may be transacted.
SECTION 3. SPECIAL MEETING.
A special meeting of the shareholders may be called at any time by the board of directors, or by an officer, or by one or more shareholders holding shares in the aggregate entitled to cast not less than thirty percent (30%) of the votes at that meeting.
SECTION 4. NOTICE OF SHAREHOLDERS' MEETING.
All notices of meetings of shareholders shall be sent or otherwise given in accordance with Section 5 of this Article II not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and time of the meeting and, in the case of a special meeting, the general nature of the business transacted.
SECTION 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of shareholders shall be given either
personally or by first-class mail or telegraphic or other written
communication, charges prepaid, addressed to each shareholder entitled to vote
at the address of that shareholder appearing on the books of the Corporation
or given by the shareholder to the Corporation for the purpose of notice. If
no such address appears on the Corporation's books or is given, notice shall
be deemed to have been given if sent to that shareholder by first-class mail
or telegraphic or other written communication to the Corporation's principal
executive office, or if published at least once in a newspaper of general
circulation in the county where that office is located. Notice shall be deemed
to have been given at the earliest of a) the time when delivered personally or
deposited in the mail, b) it is received, c) five days after delivered to a
common carrier for transmission to the recipient, d) on the date shown on the
return receipt if sent by registered or certified mail, return receipt
requested, and the return receipt is signed by or on behalf of the addressee,
e) when actually transmitted by electronic or telegraphic means to the
recipient by the person giving the notice, or f) if by publication, on the
first date of publication.
If notice of two consecutive annual shareholders' meetings, and all notices of meetings or the taking of action by written consent without a meeting during the period between the two consecutive meetings, is addressed to a shareholder at the address of that shareholder appearing on the books of the Corporation, and is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, then all future notices or reports shall be deemed to have been duly given without further mailing if these shall be available to the shareholder on written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice; however, if such a shareholder shall at any time submit a current address, then the notice requirement shall be deemed reinstated. Likewise, if at least two payments of dividends or interest on securities are sent by first class mail in the manner explained above in this paragraph, and returned by the postal service, also as provided above, then all future notices for any purpose shall be deemed to have been duly given if they shall be available to the shareholder at the Corporation's principle executive offices, as provided in this paragraph.
An affidavit of the mailing or other means of giving any notice of any shareholders' meeting shall be executed by the secretary, assistant secretary, or any transfer agent of the Corporation giving the notice, and shall be filed and maintained in the minute book of the Corporation.
Whenever these Bylaws require written notice, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall constitute the equivalent of notice. Attendance of a person at any meeting shall constitute waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting of lack of notice or defective notice. Attendance of a meeting also waives objection to consideration of a particular matter at the meeting that is not within the purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
SECTION 6. QUORUM.
The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting of shareholders shall constitute a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.
SECTION 7. ADJOURNED MEETING; NOTICE.
Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at that meeting, except as provided in Section 6 of this Article II.
When any meeting of shareholders, either annual or special,
is adjourned to another time or place, notice need not be given of the
adjourned meeting of the time and place are announced at a meeting at which
the adjournment is taken, unless a new record date for the adjourned meeting
is fixed, or unless the adjournment is for more than thirty (30) days from the
date set for the original meeting, in which case the board of directors shall
set a new record date. Notice of any such adjourned meeting, if required,
shall be given to each shareholder of record entitled to vote at the adjourned
meeting in accordance with the provisions of Sections 4 and 5 of this Article
II. At any adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting.
SECTION 8. VOTING.
The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with the provisions of Section 11 of this Article II, subject to the provisions of Utah law. The shareholders' vote may be by voice vote or by ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than elections of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present (or if a quorum had been present earlier at the meeting but some shareholders had withdrawn), the affirmative vote of the majority of the shares represented and voting, provided such shares voting affirmatively also constitutes a majority of the number of shares required for a quorum, shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required under Utah law or by the Articles of Incorporation.
SECTION 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
The transactions of any meeting of shareholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to a holding of the meeting, or an approval of the minutes. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 4 of this Article II, the waiver of notice or consent shall state the general nature of the proposal. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
SECTION 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted. In the case of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors; provided, however, that a director may be elected at any time to fill a vacancy on the board of directors (other than a vacancy created by removal of
a director) that has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors. All such consents shall be filed with the secretary of the Corporation and shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder's proxy holders, or a transferee of the shares or a personal representative of the shareholder or their respective proxy holders, may revoke the consent by a writing received by the secretary of the Corporation before written consents of the number of shares required to authorize the proposed action have been filed with the secretary. A shareholder action taken pursuant to this section is not effective unless all written consents on which the corporation relies for the taking of the action are received by the Corporation within a sixty day period and not revoked in writing, if not irrevocable. Revocations under this section must be received by the Corporation prior to the effective date of the action.
If the consents of all shareholders entitled to vote have not been solicited in writing, and if the unanimous written consent of all such shareholders shall not have been received, the secretary shall give prompt notice of the corporate action approved by the shareholders without a meeting. This notice shall be given in the manner specified in Section 5 of this Article II and shall be given at least ten (10) days before the consummation of any action authorized by that approval.
SECTION 11. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING CONSENTS.
For purposes of determining the shareholders entitled to notice of any meeting or to vote or entitled to give consent to corporate action without a meeting, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days before any such action without a meeting, and in this event only shareholders of record at the close of business on the date so fixed are entitled to notice and to vote or to give consents as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided under Utah law.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived at the close of business, on the business day next preceding the day on which the meeting is held;
(b) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, (i) when no prior action by the board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action of the board has been taken, shall be at the close of business on the day on which the board adopts the resolution relating to that action, or the sixtieth (60th) day before the date of such other action, whichever is later.
SECTION 12. PROXIES.
Every person entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the Corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the shareholder or the shareholder's attorney in fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless (i) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the Corporation stating that the proxy is revoked, or by a subsequent proxy executed by, or attendance at the meeting and voting in person by, the person executing the proxy; or (ii) written notice of the death or incapacity of the maker of that proxy is received by the Corporation before the vote pursuant to that proxy is counted; provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date of the proxy, unless otherwise provided in the proxy. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Utah law.
SECTION 13. INSPECTORS OF ELECTION.
Before any meeting of shareholders, the board of directors may appoint any persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If no inspectors of election are so appointed, the chairman of the meeting may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any shareholder or a shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
SECTION 1. POWERS.
Subject to the provisions of Utah law and any limitations in the Articles of Incorporation relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.
Without prejudice to these general powers, and subject to the same limitations, the directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the Corporation; prescribe any powers and duties for them that are consistent with law, with the Articles of Incorporation, and with these Bylaws; fix their compensation; and require from them security for faithful service;
(b) Change the principal executive office or the principal business office in the State of Utah from one location to another; cause the Corporation to be qualified to do business in any other state, territory, dependency, or country and conduct business within or without the State of Utah; and designate any place within or without the State of Utah for the holding of any shareholders' meeting, or meetings, including annual meetings;
(c) Adopt, make, and use a corporate seal; prescribe the forms of certificates of stock; and alter the form of the seal and certificates;
(d) Authorize the issuance of shares of stock of the Corporation on any lawful terms, in consideration of money paid, labor done, services actually rendered, debts or securities cancelled, or tangible or intangible property actually received;
(e) Borrow money and incur indebtedness on behalf of the Corporation, and cause to be executed and delivered for the Corporation's purposes, in the Corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations, and other evidences of debt and securities.
SECTION 2. NUMBER AND QUALIFICATION OF DIRECTORS.
The number of directors shall be no fewer than three (3) and no more than ten (10) until changed by a duly adopted Amendment to the Articles of Incorporation or by an Amendment to this Bylaw adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote. The number within this range shall be prescribed by the board of directors or by a vote or written consent of holders of a majority of the outstanding shares entitled to vote. Any reduction of the number of directors to a number less five (5) must be adopted by a vote or written consent of at least 83-1/3% of the outstanding shares entitled to vote.
No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires.
SECTION 3. ELECTION AND TERM OF OFFICE OF DIRECTORS.
Directors shall be elected at each annual meeting of the shareholders to hold office until the next annual meeting. Each director, including a director elected to full a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified.
SECTION 4. VACANCIES.
A vacancy or vacancies in the board of directors shall be deemed to exist in the event of the death, resignation, or removal of any director, or if the board of directors by resolution declares vacant the office of a director, or if the authorized number of directors is increased, or if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the number of directors to be voted for at that meeting.
Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary, or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director. A vacancy created by the removal of a director by the vote or written consent of the shareholders may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting of shareholders at which a quorum is present. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified.
The shareholders may elect a director or directors at any time to fill any vacancy or vacancies, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote, except that filling a vacancy created by removal of a director shall require the written consent of the holders of all outstanding shares entitled to vote.
SECTION 5. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE.
Regular or special meetings of the board of directors may be held as designated from time to time by resolution of the board. In the absence of a designation stating a place, regular or special meetings shall be held at the principal executive office of the Corporation. Any meeting, regular or special, may be held by conference telephone or similar communication
equipment, so long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at the meeting.
SECTION 6. ANNUAL MEETING.
Immediately following each annual meeting of shareholders, the board of directors shall hold a regular meeting at the place that the annual meeting of shareholders was held or at any other place that shall have been designated by the board of directors, for the purpose of organization, any desired election of officers, and the transaction of other business. Notice of this meeting shall not be required.
SECTION 7. OTHER REGULAR MEETINGS.
Other regular meetings of the board of directors shall be held without call at such time as shall from time to time be fixed by the board of directors. Such regular meetings may be held without notice.
SECTION 8. SPECIAL MEETINGS.
Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board or the president or any vice president or the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the Corporation. In case the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. In case the notice is delivered personally, or by telephone or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director whom the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting nor the place if the meeting is to be held at the principal executive office of the Corporation.
SECTION 9. QUORUM.
A majority of the prescribed number of directors, or if there is no prescribed number, the number of directors in office immediately before the meeting begins shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 11 of this Article III. Every act or decision done or made by a majority of the directors present shall be regarded as the act of the board of directors, subject to the provisions of Utah law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
SECTION 10. WAIVER OF NOTICE.
A director may waive any notice of a meeting before or after the date and time of the meeting stated in the notice. Any such waiver must be in writing, signed by the director entitled to such notice, and delivered to the corporation for filing. A director's attendance at or participation in a meeting waives the required notice to such director, unless the director at the beginning of the meeting, or promptly upon arrival, objects to holding the meeting or transacting the business of the meeting because of lack of notice or defective notice, and does not thereafter vote for or assent to action taken at the meeting. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
SECTION 11. ADJOURNMENT.
A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.
SECTION 12. NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting
need not be given, unless the meeting is adjourned for more than twenty-four
(24) hours, in which case notice of the time and place shall be given before
the time of the adjourned meeting, in the manner specified in Section 8 of
this Article III, to the directors who were not present at the time of the
adjournment.
SECTION 13. ACTION WITHOUT MEETING.
Any action required or permitted to be taken by the board of directors may be taken without a meeting, if all members of the board shall individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect of a unanimous vote of the board of directors. Such written consent or consents shall be filed with the minutes of the proceedings of the board.
SECTION 14. FEES AND COMPENSATION OF DIRECTORS.
Directors and members of committees may receive such
compensation, if any, for their services, and such reimbursement of expenses,
as may be fixed or determined by resolution of the board of directors. This
Section 14 shall not be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation for those services.
ARTICLE IV
COMMITTEES
SECTION 1. COMMITTEES OF DIRECTORS.
The board of directors may, by resolution designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the board. Such resolution must be adopted by a majority of the prescribed number of directors or a majority of the number of directors in office at when the action is taken, whichever number is greater. The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. Any committee, to the extent provided in the resolution of the board, shall have all the authority of the board, except with respect to:
(a) the approval of any action which, under Utah law, also requires shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any committee;
(c) the fixing of compensation of the directors for serving on the board or on any committee;
(e) the amendment or repeal of any resolution of the board of directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the Corporation, except at a rate or in a periodic amount or within a price range determined by the board of directors; or
(g) the appointment of any other committees of the board of directors or the members of these committees.
SECTION 2. MEETINGS AND ACTION OF COMMITTEES.
Meetings and action of committees shall be governed by, and held and taken in accordance with the provisions of Article III of these Bylaws, Section 5 (place of meetings), 7 (regular meetings), 8 (special meetings and notice), 9 (quorum), 10 (waiver and notice), 11 (adjournment), 12 (notice of adjournment), and 13 (action without meeting), with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the board of directors and its members, except that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee; special meetings of committees may also be called by resolution of the board of directors; and notice of special meetings of committees shall also be given to all alternate members who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS.
The officers of the Company shall consist of such officers as the Board may designate and elect from time to time, consistent with the Company's Articles of Incorporation and these Bylaws. The same person may hold at the same time any two or more offices.
SECTION 2. ELECTION OF OFFICERS.
The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article V, shall be chosen by the board of directors, and each shall serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment.
SECTION 3. SUBORDINATE OFFICERS.
The board of directors may appoint, and may empower the president to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the board of directors may from time to time determine.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICER.
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board of directors, at any regular or special meeting of the board, or, except in case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in the notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
SECTION 5. VACANCIES IN OFFICES.
A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to that office.
SECTION 6. CHAIRMAN OF THE BOARD.
The chairman of the board, if such an officer be elected,
shall, if present, preside at meetings of the board of directors and exercise
and perform such other powers and duties as may be from time to time assigned
to him by the board of directors or prescribed by the Bylaws. If there is no
president, the chairman of the board shall in addition be the chief executive
officer of the Corporation and shall have the powers and duties prescribed in
Section 7 of this Article V.
SECTION 7. PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the Bylaws or the board of directors to the chairman of the board, if there be such an officer, the president shall be the general manager and chief executive officer of the Corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the Corporation. He shall preside at all meetings of the shareholders and, in the absence of the chairman of the board, or if there be none, at all meetings of the board of directors. He shall have the general powers and duties of management usually vested in the office of president of a Corporation, and shall have such other powers and duties as may be prescribed by the board of directors or the Bylaws.
SECTION 8. VICE PRESIDENTS.
In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors or the Bylaws, and the president, or the chairman of the board if there is no president.
SECTION 9. SECRETARY.
The secretary shall keep or cause to be kept, at the principal executive office or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and shareholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at directors' meetings or committee meetings, the number of shares present or represented at shareholders' meetings, and the proceedings.
The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.
The secretary or assistant secretary, or if they are absent or unable to act or refuse to act, any other officer of the corporation shall give, or cause to be given, notice of all meetings of the shareholders, of the board of directors and of committees of the board of directors, required by the Bylaws or by law to be given. The secretary shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by the Bylaws.
SECTION 10. CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the Corporation as may be ordered by the board of directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the Corporation, and shall have other powers and perform such other duties as may be prescribed by the board of directors or the Bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES, AND OTHER AGENTS
SECTION 1. AGENTS, PROCEEDINGS, AND EXPENSES.
For the purposes of this Article, "agent" means any person who is or was a director, officer, employee, or other agent of this Corporation, or is or was serving at the request of this Corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of this Corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal; and "expenses" includes, without limitation, attorneys' fees and any expenses of establishing a right to indemnification under Section 4 or Section 5(c) of this Article.
SECTION 2. ACTIONS OTHER THAN BY THE CORPORATION.
This Corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any proceeding (other than an action by or in the right of this Corporation to procure a judgment in its favor) by reason of the fact that such person is or was an agent of this Corporation, against expense, judgments, finds, settlements and other amounts actually and reasonably incurred in connection with such proceeding if that person acted in good faith and in a manner that person reasonably believed to be in the best interests of this Corporation, and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of that person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interest of this Corporation or that the person had reasonable cause to believe that the person's conduct was unlawful.
SECTION 3. ACTIONS BY THE CORPORATION.
This Corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of this Corporation to procure a judgment in its favor by reason of the fact that the person is or was an agent of this Corporation, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of that action if that person acted in good faith, in a manner that person believed to be in the best interests of this Corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. No indemnification shall be made under this Section 3:
(a) In respect to any claim, issue or matter as to which that person shall have been adjudged to be liable to this Corporation in the performance of that person's duty to this Corporation, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, that person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine.
(b) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; and
(c) Of expenses incurred in defending a threatened or pending action that is settled or otherwise disposed of with or without court approval.
SECTION 4. SUCCESSFUL DEFENSE BY AGENT.
To the extent that an agent of this Corporation has been successful on the merits in defense of any proceeding referred to in Sections 2 or 3 of this Article, or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.
SECTION 5. REQUIRED APPROVAL.
Except as provided in Section 4 of this Article, any indemnification under this Article shall be made by this Corporation only if authorized in the specific case on a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in Sections 2 or 3 of this Article, by:
(a) By the board of directors by a majority vote of those present at a meeting at which a quorum is present, provided that directors, if any, who are parties to the proceeding shall not be counted for purposes of satisfying the quorum;
(b) Approval by the affirmative vote of a majority of the shares of this Corporation entitled to vote represented at a duly held meeting at which a quorum is present or by the written consent of the holders of a majority of the outstanding shares entitled to vote. For this purpose, the shares owned by the person to be indemnified shall not be considered outstanding or entitled to vote thereon;
(c) The court in which the proceeding is or was pending, on application made by this Corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney, or other person is opposed by this Corporation;
(d) By special legal counsel selected by the board of directors as in (a) above; or
(e) By any other means provided for under Utah law.
SECTION 6. ADVANCE OF EXPENSES.
Expenses incurred in defending any proceeding may be advanced by this Corporation before the final disposition of the proceeding on receipt of a) a written statement by the agent affirming his or her good faith belief that he or she has met the
applicable standard of conduct specified in the Revised Business Corporation
Act of Utah, and b) has furnished to the Corporation a written undertaking by
or on behalf of the agent to repay the amount of the advance unless it shall
be determined ultimately that the agent is entitled to be indemnified as
authorized in this Article, and c) a determination is made, as provided in
Section 5 above, that the facts then known would not preclude indemnification
under Utah law.
SECTION 7. OTHER CONTRACTUAL RIGHTS.
Nothing contained in this Article shall affect any right to indemnification to which persons other than directors and officers of this Corporation or any subsidiary hereof may be entitled by contract or otherwise.
SECTION 8. LIMITATIONS.
No indemnification or advance shall be made under this Article, except as provided in Section 4 or Section 5(c), in any circumstance where it appears:
(a) That it would be inconsistent with a provision of the articles of incorporation, a resolution of the shareholders, or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.
SECTION 9. INSURANCE.
Upon and in the event of a determination by the board of directors of this Corporation to purchase such insurance, this Corporation shall purchase and maintain insurance on behalf of any agent of the Corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such whether or not this Corporation would have the power to indemnify the agent against that liability under the provisions of this section.
SECTION 10. FIDUCIARIES OF CORPORATE EMPLOYEE BENEFIT PLAN.
This Article does not apply to any proceeding against any trustee, investment manager, or other fiduciary of an employee benefit plan in that person's capacity as such, even though that person may also be an agent of the corporation as defined in Section 1 of this Article. This Corporation shall have the power to indemnify, and to purchase and maintain insurance on behalf of, any such trustee, investment manager, or other fiduciary of any pension, profit-sharing, share bonus, share purchase, share option, savings, thrift and other retirement, incentive, and benefit plan, trust, and other provision for any or all of the directors, officers, and employees of the Corporation or any of its subsidiary or affiliated corporations, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions. Nothing contained in this Article shall limit any right to indemnification to which such a trustee, investment manager, or other fiduciary may be entitled by contract or otherwise, which shall be enforceable to the extent permitted by applicable law other than this Article.
ARTICLE VII
RECORDS AND REPORTS
SECTION 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
The Corporation shall keep at its principal executive office, or at the office of its transfer agent or registrar, if either be appointed and as determined by resolution of the board of directors, a record of its shareholders in a form that permits preparation of a list of shareholders that is (a) arranged by voting group and within each voting group by class or series of
shares, (b) that is in alphabetical order within each class or series; and (c) that shows the address of an the number of shares of each class and series held by each shareholder.
Any shareholder of the Corporation may (i) inspect and copy the records of shareholders' names and addresses and shareholdings during usual business hours on five (5) business days' prior written demand on the Corporation. Any shareholder may obtain from the transfer agent of the Corporation, on written demand and on the tender of such transfer agent's usual charges for such list, a list of the shareholders' names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which that list has been compiled or as of a date specified by the shareholder after the date of demand. This list shall be made available to any such shareholder or shareholders by the transfer agent on or before the later of five (5) days after the demand is received or the date specified in the demand as the date as of which the list is to be compiled. The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. Any inspection and copying under this Section 1 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand.
SECTION 2. MAINTENANCE AND INSPECTION OF BYLAWS.
The Corporation shall keep at its principal executive office, or if its principal executive office is not in the State of Utah, at its principal business office in Utah, the original or a copy of the Bylaws as amended to date, which shall be open to inspection by the shareholders or directors at all reasonable times during office hours. If the principal executive office of the Corporation is outside the State of Utah and the Corporation has no principal business office in this State, the secretary shall, upon the written request of any shareholder, furnish to that shareholder a copy of the Bylaws as amended to date.
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.
The Corporation shall keep a copy of the following records at its principle office. These include (a) its Articles of Incorporation currently in effect, (b) its Bylaws currently in effect, (c) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years, (d) all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group, (e) a list of the names and business addresses of its current officers and directors, (f) its most recent annual report, and (g) all quarterly, transitional, or annual financial reports for the last three years.
In addition to the above records, any shareholder shall also have the right to inspect and copy, during regular business hours at a reasonable location specified by the Corporotion, upon providing the required notice, any of the following records. These include (a) excerpts from minutes of any meeting or records of any action taken by the board of directors or by a committee of the board, (b) excerpts from the minutes of any meeting of the shareholders, and (c) records of any action taken by shareholder without a meeting.
The records specified above in this Section 3 shall be open to inspection upon the written demand five (5) business days in advance by any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours when the demand is made in good faith, for a proper purpose, and the records are reasonably related to such proper purpose. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary corporation of the Corporation.
SECTION 4. INSPECTION BY DIRECTORS.
Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the Corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts of documents.
SECTION 5. ANNUAL REPORT TO SHAREHOLDERS.
Unless required by law, the Corporation need not send an annual report to its shareholders, but nothing herein shall be interpreted as prohibiting the board of directors from issuing annual or other periodic reports to the shareholders of the Corporation as they consider appropriate.
SECTION 6. FINANCIAL STATEMENTS.
A copy of any annual financial statement and any income statement of the Corporation for each quarterly period of each fiscal year, and any accompanying balance sheet of the Corporation as of the end of each such period, that has been prepared by the Corporation shall be kept on file in the principal executive office of the Corporation for twelve (12) months and each such statement shall be exhibited at all reasonable times to any shareholder demanding an examination of any such statement or a copy shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five percent (5%) of the outstanding shares of any class of stock of the Corporation makes a written request to the Corporation for an income statement of the Corporation for the three-month, six-month or nine-month period of the then current fiscal year ended more than thirty (30) days before the date of the request, and a balance sheet of the Corporation as of the end of that period, the chief financial officer shall cause that statement to be prepared, if not already prepared, and shall deliver personally or mail that statement or statements to the person making the request within thirty (30) days after the receipt of the request. If the Corporation has not sent to the shareholders its annual report for the last fiscal year, this report, if any, shall likewise be delivered or mailed to the shareholder or shareholders within thirty (30) days after the request.
The Corporation shall also, on the written request of any shareholder, mail to the shareholder a copy of the last annual, semi-annual, or quarterly income statement which it has prepared, and a balance sheet as of the end of that period.
The quarterly income statements and balance sheets referred to in this section shall be accompanied by the report, if any, of any independent accountants engaged by the Corporation or the certificate of an authorized officer of the Corporation that the financial statements were prepared without audit from the books and records of the Corporation.
SECTION 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
The Corporation shall submit an annual report to the Utah Division of Corporations and Commercial Code on the prescribed form each year no later than the end of the second calendar month following the calendar month in which the report form is mailed by the division.
ARTICLE VIII
GENERAL CORPORATE MATTERS
SECTION 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING.
For purposes of determining the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action (other than action by shareholders by written consent without a meeting), the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before any such action, and in that case only shareholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution, or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date so fixed, except as otherwise provided in Utah law.
If the board of directors does not so fix a record date, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the board adopts the applicable resolution or the sixtieth.
SECTION 2. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS.
All checks, drafts, or other orders for payment of money, notes, or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the board of directors.
SECTION 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
The board of directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or re-execute any instrument in the name of and on behalf of the Corporation, and this authority may be general or confined to specific instances; and, unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
SECTION 4. CERTIFICATE FOR SHARES.
The board of directors shall have the authority to determine which, if any, shares in the Corporation shall be represented by certificates. The board of directors may authorize the issuance of certificates for shares that are fully or partly paid, provided that in the latter case, these certificates shall state the amount of the consideration to be paid for them and the amount paid. If the shares are subject to restrictions upon transfer, the restriction or restrictions shall also appear on the certificate. If the Corporation is authorized to issue different classes of shares or different series within a class, the designations, preferences, limitations, and relative rights applicable to each class or series and the authority of the board of directors to determine variations for any existing or future class or series must be summarized on the front or back of each certificate. Alternatively, each certificate may state that the Corporation will furnish this information free of charge upon request in writing. All certificates shall be signed in the name of the Corporation by the chairman of the board or vice chairman of the board or the president or vice president and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholder. All shares shall bear the seal of the Corporation. The seal and any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that officer, transfer agent, or registrar before that certificate is issued, it may be issued by the Corporation with the same effect as if that person were an officer, transfer agent, or registrar at the date of issue.
SECTION 5. LOST CERTIFICATES.
Except as provided in this Section 5, no new certificates for shares shall be issued to replace an old certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen, or destroyed, authorize the issuance of a replacement certificate on such terms and conditions as the board may require, including provision for indemnification of the Corporation secured by a bond or other adequate security sufficient to protect the Corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft, or destruction of the certificate or the issuance of the replacement certificate.
SECTION 6. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, or any vice president, or any other person authorized by resolution of the board of directors or by any of the foregoing designated officers, is authorized to vote on behalf of the Corporation any and all
shares of any other corporation or corporations, foreign or domestic, standing in the name of the Corporation. The authority granted to these officers to vote or represent on behalf of the Corporation any and all shares held by the Corporation in any other corporation or corporations may be exercised by any of these officers in person or by any person authorized to do so by a proxy duly executed by these officers.
SECTION 7. EMPLOYEE STOCK PURCHASE PLANS.
The Corporation may, upon terms and conditions herein authorized, provide and carry out an employee stock purchase plan or plans providing for the issue and sale, or for the granting of options for the purchase, of its unissued shares, or of issued shares purchased or to be purchased or acquired, to shareholders or employees of the Corporation or of any subsidiary or to a trustee on their behalf. Such plan may provide for such consideration as may be fixed therein, for the payment of such shares in installments or at one time and for aiding any such employees in paying for such shares by compensation for services or otherwise. Any such plan before becoming effective must be approved or authorized by the board of directors of the Corporation.
Such plan may include, among other things, provisions determining or providing for the determination by the board of directors, or any committee thereof designated by the board of directors, of:
(a) eligibility of employees (including officers and directors) and shareholders to participate therein,
(b) the number and class of shares which may be subscribed for or for which options may be granted under the plan,
(c) the time and method of payment therefor, shall be issued or sold,
(d) the price or prices at which such shares shall be issued or sold,
(e) whether or not title to the shares shall be reserved to the Corporation until full payment thereof,
(f) the effect of the death of a shareholder or an employee participating in the plan or termination of his employment, including whether there shall be any option or obligation on the part of the Corporation to repurchase the shares thereupon,
(g) restrictions, if any, upon the transfer of the shares, and the time limits, and termination of the plan,
(h) termination, continuation or adjustments of the rights of participating employees and shareholders upon the happening of specified contingencies, including increase or decrease in the number or issued shares of the class covered by the plan without receipt of consideration by the Corporation or any exchange of shares of such class for stock or securities of another corporation pursuant to a reorganization or merger, consolidation or dissolution of the Corporation,
(i) amendment, termination, interpretation and administration of such plan by the board or any committee thereof designated by the board of directors, and
(j) any other matters, not repugnant to law, as may be included in the plan as approved or authorized by the board of directors or any such committee.
SECTION 8. CONSTRUCTION AND DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in Utah law shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and natural person.
ARTICLE IX
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, the Shareholders or the Board may amend or repeal these Bylaws at any meeting.
LETTER OF INTENT REGARDING ULTREXX CORPORATION AND ULTREXX INDIA (AMENDED)
This letter sets forth an agreement-in principle under which Ultrexx Corporation and Ultrexx Solutions Pvt.Ldt ("Ultrexx India") will continue working together on a contractual basis with the intent to merge into a single company or a subsidiary company during the year 2000.
Ultrexx Corporation is a Utah corporation (Ultrexx) with its principle place of business at 6100 South Center Blvd., #230, Seattle, WA 98188.
Ultrexx India is an Indian company with its principal place of business in Banglore, India. Muralidhara Keshavamurthy is the president of Ultrexx India and a founder, director and the single largest shareholder in Ultrexx.
The parties acknowledge that from inception to date, Ultrexx and Ultrexx India have worked exclusively together on a contractual basis.
The parties acknowledge that Ultrexx has provided Ultrexx India with operating capital and as consideration received exclusive programming and software development services.
The parties acknowledge that it is their intent to merge during the year 2000 and that they are working jointly to determine the best way to accomplish this under Indian and US corporate and securities laws.
The parties acknowledge that until such merger occurs, it is their intent to continue working together on an exclusive contractual basis and that Ultrexx may represent that Ultrexx India is, for all practical purposes, an exclusive extension of Ultrexx.
It is so agreed.
/s/ Muralidhara Keshavamurthy ----------------------------- Muralidhara Keshavamurthy Ultrexx India Date: 04/12/00 /s/ Dave LeCompte ----------------------------- Dave LeCompte Ultrexx, Inc. Date: 04/12/00 |
JANUARY 21, 2000
ULTREXX CORPORATION
ATTN: RAM MENON, PRESIDENT
RE: AGREEMENT IN PRINCIPLE WITH LECOMPTE AND GRIMES
This letter sets forth an agreement-in principle under which David LeCompte ("LeCompte") and Mark Grimes ("Grimes") will provide consulting and business advisory services to Ultrexx Corporation ("Ultrexx"). The parties acknowledge that fulfillment of their respective obligations below will be subject to more definitive documentation prepared by Ultrexx and in form satisfactory to LeCompte and Grimes and their counsel and that this letter does not constitute a binding contract among them. They nevertheless execute this letter to confirm their obligations to proceed in good faith and with commercially reasonable best efforts to negotiate and execute such definitive documentation to be effective January 1, 2000, subject to the following terms:
1. LECOMPTE.
1.1 LeCompte will devote not less than 50% of his time to Ultrexx on a consultant basis. He will join the Board of Directors as Chairman and will be confirmed by the Board as the Chief Executive Officer of the corporation. His principal responsibilities will be fundraising, development of marketing partnerships, new accounts, oversight of both finance and operations, and acting as liaison to Venture-Catalyst and other service providers.
1.2 In consideration for the above services, Ultrexx will pay to LeCompte $5,000 per month, payable in arrears at the on or before the final day of each month, with the first payment to become due at the earlier of (a) April 30, 2000, or (b) the last day of the calendar month in which Ultrexx successfully completes not less than $300,000 in additional equity funding.
1.3 As additional consideration for the above services, LeCompte will be issued three year options with respect to 1,500,000 shares of Common Stock reserved for issuance under an Ultrexx stock incentive plan, shares of which have been registered under the Securities Act of 1933, as amended, and applicable state blue sky laws. The options will have an exercise price of $0.18, which is the approximate average price during the 90 days preceding this agreement, and will become exercisable according to the following schedule: (a) 750,000 shares exercisable immediately; and (b) 12.5% per calendar month thereafter, i.e., February, March, April and May, 2000.
2. GRIMES.
2.1 Grimes will serve on the Ultrexx Advisory Board and, in that capacity, play an active role in reviewing and recommending strategic initiatives for the
corporation. Through eyecream interactive, a Grimes affiliate, Grimes will provide Ultrexx with access to banner programmers and other eyescream resources and use commercially reasonable efforts to place and sell Ultrexx-developed banner technology, subject to an overall monthly commitment of approximately 100 hours of service.
At his option, Grimes shall have the opportunity to join the Ultrexx Board of Directors after one year on the Board of Advisors.
2.2 Grimes will provide services without cash compensation except as set forth below. In consideration for such services, Ultrexx will issue to Grimes three year options with respect to 2,000,000 shares of Common Stock reserved for issuance under an Ultrexx stock incentive plan, shares of which have been registered under the Securities Act of 1933 and applicable state blue sky laws. The options will have an exercise price of $0.18, which is the approximate average price during the 90 days preceding this agreement, and will become exercisable according to the following schedule: (a) 1,000,000 shares exercisable immediately; and (b) 12.5% per calendar month thereafter, i.e., February, March, April and May, 2000.
3. TRAVEL AND OTHER EXPENSES. Ultrexx will reimburse LeCompte and Grimes for all reasonable travel and other expenses incurred in connection with the performance of services for Ultrexx, including attendance at Board meetings. LeCompte will have the authority to retain on behalf of Ultrexx, such financial consultants and advisors as LeCompte may reasonably determine, subject to a maximum retainer of $1,000 per month.
4. SAN DIEGO OFFICE. During such time as either LeCompte or Grimes or both are providing consulting services to Ultrexx, the corporation will maintain a dedicated office in San Diego, California and not less than three meetings of the Board of Directors per year, and not less than two meetings of the Board of Advisors per year, will take place at that office. Office may be at an incubator facility, but the intent of the company shall be to occupy a separate office.
5. DISCLOSURE. Neither party will make any public disclosure concerning the subject matter or contents of this letter or the definitive documentation without the prior approval in writing of the other parties, except to the extent that a party concludes, upon reasonable written advice of counsel, the disclosure is necessary to comply with applicable law.
If this letter correctly sets forth our agreement in principle, please so indicate below and return an executed copy to the undersigned via fax at 858-270-0879.
David LeCompte
Mark Grimes
Acknowledged and Agreed this 21 day of January, 2000.
Ultrexx Corporation
By: Ram Menon
Title: Director Strategic Development/President
VENTURE CATALYST.COM
A DIVISION OF
INLAND ENTERTAINMENT CORPORATION
3420 OCEAN PARK BOULEVARD, SUITE 3020
SANTA MONICA, CALIFORNIA 90405
NOVEMBER 23, 1999
MANOHAR PRABHU
CHIEF EXECUTIVE OFFICER
ULTREXX CORPORATION
2125 WESTERN AVENUE, SUITE 302
SEATTLE, WA 98121
Dear Mickey:
This letter agreement (the "Agreement") confirms the terms and conditions of the engagement of Venture Catalyst.com, a Division of Inland Entertainment Corporation ("Venture Catalyst"), by Ultrexx Corporation (the "Company") to render general consulting, certain investor relations and financial communication services to the Company which are referred to herein.
1. SERVICES.
Commencing December 1, 1999 (the "Commencement Date"), Venture
Catalyst agrees to perform general marketing, investor relations, and
financial communication services for the Company which are ordinarily and
customarily performed by an investor relations firm on behalf of a corporate
client. These services include, but are not limited to (a) review of the
non-financial portions of quarterly and annual reports sent to securityholders
by the Company, exclusive of any current, quarterly or annual reports filed
with U.S. Securities and Exchange Commission and/or other regulatory agencies;
(b) drafting and distribution of financial and general press releases; (c)
drafting of a corporate profile for distribution to the Company's shareholders
and the public; (d) introduction of the Company to the financial brokerage
community.
2. NON-EXCLUSIVE RELATIONSHIP; NO GUARANTEE. Venture Catalyst will act as a non-exclusive agent of the Company and shall use its best efforts in the performance of its services described above. Nothing in this Agreement shall be construed as limiting Venture Catalyst's right to represent other clients.
3. FEES.
On or before the last business day of each month, the Company
shall pay to Venture Catalyst a fee of $6,500 per month in shares of the
Company's common stock at a fixed price of $0.20 per share, totaling 32,500
shares of the Company's common stock. The first payment is due December 31,
1999. Said $6,500 fee includes $2,000 per month allocated toward a lease
payment, due and payable under a separate Sublease Agreement between the
Company and Inland Entertainment Corporation. The Company represents and
warrants to Venture Catalyst that the Company's shares of common stock to be
issued by the Company to Venture Catalyst as compensation pursuant to this
Section 3 of this Agreement and pursuant to Section 6 of this Agreement have
been duly authorized and, upon delivery to Venture Catalyst in accordance with
the terms hereof (in the case of the shares delivered pursuant to this Section
3) and in accordance with the terms of the Capital Investment, hereinafter
defined (in the case of the shares referred to in Section 6), will have been
validly issued, fully paid, nonassessable and free of preemptive rights,
contractual rights to purchase and
Mr. Manohar Prabhu
Ultrexx Corporation
November 23, 1999
similar rights. The Company also represents and warrants to Venture Catalyst that it will comply with all applicable requirements necessary to allow Venture Catalyst to utilize Rule 144 under the Securities Act of 1933, as amended (or any successor or similar rule.
4. EXPENSES. In addition to any fees that may be payable hereunder, the Company agrees, from time to time upon request, to reimburse Venture Catalyst for all reasonable out of pocket expenses incurred by it in the performance of services on behalf of the Company. Such out of pocket expenses shall include, but are not limited to, costs of long-distance telephone charges, facsimile services, mileage/travel, messenger services, printing, copying, postage, investor advertising, broadcast e-mail, broadcast fax, fax on demand, press release filings and other such ancillary services. It is understood by Venture Catalyst, however, that any single expense in excess of $200.00 must be approved, in advance by the Company in writing. Any disputed expense must be made known to Venture Catalyst in writing within 5 days of receipt. Out of pocket expenses will be billed on or about the fifteenth of each month and will be due and payable with 10 days of receipt.
5. CAPITAL INVESTMENT. Venture Catalyst shall invest the sum of $100,000 through the purchase of 714,286 shares of the Company's common stock at a price of $0.14 per share, said stock to be registered as Rule 144 stock. These shares will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933 and must be held for a minimum of one year before becoming eligible for sale under Rule 144. Venture Catalyst shall tender the funds on or before 12/1/99. Ultrexx undertakes that use of proceeds of these funds shall include the balance of legal and accounting fees required for completing the process of filing to be a fully reporting company.
6. TERM AND TERMINATION OF THE ENGAGEMENT.
Venture Catalyst's engagement hereunder shall be for a period of
one year from the Commencement Date. This Agreement may be terminated by
either the Company or Venture Catalyst at any time, with or without cause,
upon provision of one month's written notice to that effect to the other
party; provided, however, that Venture Catalyst will be entitled to (a) its
full fee for the first month under Section 3 hereof regardless of when this
Agreement is terminated if terminated by the Company; (b) its pro-rated fee
for months after the first month if terminated by either party. It is also
agreed by both the Company and Venture Catalyst that the provisions of this
Section 6 and Sections 5,7 and 8 hereof shall survive such termination.
7. INDEMNITY.
(a) INDEMNIFICATION BY THE COMPANY. In connection with
Venture Catalyst's engagement hereunder, including modifications or future
additions to this engagement and the related activities prior to this date,
the Company agrees that it will indemnify, hold harmless and defend Venture
Catalyst and its affiliates, any director, officer, agent or employee of
Venture Catalyst or any of its affiliates and each other person, if any,
controlling Venture Catalyst or any of its affiliates and each of their
successors and assigns (collectively, the "VC Group") against and in respect
of any and all losses, damages, claims, obligations, demands, actions, suits,
proceedings, assessments, liabilities, judgments, recoveries and deficiencies,
costs and expenses (including, without limitation, reasonable attorneys' fees
and costs and expenses incurred in investigating, preparing, defending against
or prosecuting any litigation, claim, proceeding or demand), all on an after
tax basis, less any amounts actually paid as insurance reimbursement, of any
kind or character (collectively, a "Loss"), (i) related to, arising out of or
resulting from (A) oral or
Mr. Manohar Prabhu
Ultrexx Corporation
November 23, 1999
written information provided by the Company, the Company's employees or the
Company's other agents, for use by Venture Catalyst in connection with Venture
Catalyst's performance of services under this Agreement; (B) other action or
failure to act by the Company, the Company's employees or the Company's other
agents or by Venture Catalyst at the Company's request or with the Company's
consent or (C) any breach of, or failure by the Company to fully perform, or
any inaccuracy in, any of the representations, warranties, covenants or
agreements of the Company in this Agreement or (ii) otherwise related to or
arising out of the engagement of Venture Catalyst pursuant to this Agreement
or any transaction or conduct in connection therewith except that this clause
(ii) and clause (i)(B) relating to actions by Venture Catalyst, shall not
apply with respect to any losses that are finally judicially determined to
have resulted from Venture Catalyst's willful misconduct, bad faith or gross
negligence.
(b) NOTICE OF CLAIM. Whenever Venture Catalyst learns
of or discovers any matter which may give rise to a claim for indemnification
(the "Claim") against the Company (the "Indemnity Obligator") under this
Section 10, Venture Catalyst, as the indemnified party (the "Indemnified
Party"), shall give notice to the Indemnity Obligor of the Claim. With respect
to Claims which are the subject of actions, suits, or proceedings threatened
or asserted in writing by any third party (a "Third Party Claim"), the
Indemnified Party shall, within 15 days following receipt of such Third Party
Claim, promptly notify the Indemnity Obligor in writing of any Claim for
recovery, specifying in reasonable detail the nature of the Loss and the
amount of the liability estimated to arise therefrom. If the Indemnified Party
does not so notify the Indemnity Obligor within 15 days of its discovery of a
Third Party Claim, such Claim shall be barred only to the extent that the
Indemnity Obligor is prejudiced by such failure to notify. The Indemnified
Party shall provide to the Indemnity Obligor as promptly as practicable
thereafter all information and documentation reasonably requested by the
Indemnity Obligor to verify the Claim asserted.
(c) DEFENSE. If the facts relating to a Loss arise out a Third Party Claim, or if there is any claim against a third party available by virtue of the circumstances of the Loss, the Indemnity Obligor shall, by giving written notice to the Indemnified Party within 15 days following its receipt of the notice of such claim, assume the defense or the prosecution thereof, including the employment of counsel or accountants, reasonably satisfactory to the Indemnified Party, at its cost and expense; PROVIDED, HOWEVER, that during the interim the Indemnified Party shall use its best efforts to take all action (not including settlement) reasonably necessary to protect against further damage or loss with respect to the Loss. The Indemnified Party shall have the right to employ counsel separate from counsel employed by the Indemnity Obligor in any such action and to participate therein, but the fees and expenses of such counsel shall be at the Indemnified Party's own expense, unless (a) the employment thereof has been specifically authorized by the Indemnity Obligor, (b) such Indemnified Party has been advised by counsel reasonably satisfactory to the Indemnity Obligor that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnity Obligor and in the reasonable judgment of such counsel it is advisable for such Indemnified Party to employ separate counsel, or (c) the Indemnity Obligor has failed to assume the defense of such action and employ counsel reasonably satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor defends or prosecutes such claim, all the parties hereto shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony and shall attend such conferences, discovery proceedings and trial as may be reasonably requested in connection therewith. The Indemnity Obligor shall not be liable for any settlement of any such claim effected without its prior written consent. In the event of payment by the Indemnity Obligor to the Indemnified Party in connection with any Loss arising out of a Third Party Claim, the Indemnity Obligor shall be subrogated to and shall stand in the place of the Indemnified Party as to any events or circumstances in respect of which the Indemnified Party may have any right or claim against such third party relating to such indemnified matter. The Indemnified Party shall cooperate with the Indemnity Obligor in prosecuting
Mr. Manohar Prabhu
Ultrexx Corporation
November 23, 1999
any subrogated claim. The Indemnity Obligor will take no action in connection with any claim that would adversely affect the Indemnified Party without the consent of the Indemnified Party.
(d) DURATION OF THE COMPANY'S OBLIGATIONS. The Indemnity Obligor's indemnification obligations under this Agreement shall survive the termination of this Agreement.
8. ACKNOWLEDGMENTS AND REPRESENTATIONS.
(a) The Company recognizes and confirms that in performing its duties pursuant to this Agreement, Venture Catalyst will be using and relying upon data, material and other information furnished by the Company, its employees and representatives (the "Information"). The Company hereby agrees and represents that all Information furnished to Venture Catalyst in connection with, and relating to Venture Catalyst's performance of services under, this Agreement shall be accurate and complete in all material respects at the time furnished, and that if such Information, in whole or part, becomes materially inaccurate, misleading or incomplete during the term of Venture Catalyst's engagement hereunder, the Company shall so advise Venture Catalyst in writing and correct any such inaccuracy or omission. Venture Catalyst assumes no responsibility for the accuracy and completeness of such Information. In rendering its services hereunder, Venture Catalyst shall be entitled to use and rely upon the Information without independent verification thereof. To the extent consistent with legal requirements, all Information, unless publicly available or otherwise available to Venture Catalyst without restriction or breach of any confidentiality agreement, will be held by Venture Catalyst in confidence and will not be disclosed to anyone other than Venture Catalyst's agents and advisors without the Company's prior written approval or used for any purpose other than those referred to in this Agreement.
(b) The Company understands and agrees that in furnishing the Company with advice and other services as provided in this Agreement, neither Venture Catalyst nor any officer, director, employee or agent thereof shall be liable to the Company, its affiliates or its creditors for errors of judgment or for anything except willful misconduct, bad faith or gross negligence in the performance of its duties under the terms of this Agreement.
(c) The Company acknowledges that Venture Catalyst has been retained solely as an advisor to the Company, and not as an advisor to or agent of any other person, and that the Company's engagement of Venture Catalyst is not intended to confer rights upon any persons not a party hereto (including shareholders, employees or creditors of the Company) against Venture Catalyst, Venture Catalyst's affiliates or their respective directors, officers, employees and agents.
(d) The Company represents and warrants to Venture Catalyst that it will not cause, or knowingly permit (a) any action to be taken which violates or (b) a failure to act, the effect of which violates, any federal or state securities law.
9. NOTICES. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be delivered by (a) personal delivery, (b) telecopy, facsimile or other electronic means, or (c) mail by overnight courier or first class certified or registered mail, return receipt requested, postage prepaid, and properly addressed as follows:
If to Venture Catalyst, at Venture Catalyst.com, a Division of Inland Entertainment Corporation, 3420 Ocean Park Boulevard, Suite 3020, Santa Monica, California 90405, Attention:
Mr. Manohar Prabhu
Ultrexx Corporation
November 23, 1999
President; Fax: (310) 399-3431, e-mail: sanjay369@aol.com. If to the Company, at Ultrexx Corporation,2125 Western Avenue, Suite 302, Seattle, WA 98121. Attention: Chief Executive Officer; Fax: ( 206 ) 448-9273, e-mail mickey@ultrexx.com.
Any party may change its address for purposes of this provision by giving the other party written notice of the new address in the manner set forth above. Notice will be conclusively deemed to have been given when personally delivered, or if given by Federal Express or other similar overnight service, on the date of delivery, or on the third day after being sent by first class registered or certified mail, or if given by telecopy, fax or other electronic media, when confirmation of transmission is indicated by the sender's machine.
10. ARBITRATION. All controversies, disputes or claims arising out of or relating to this Agreement shall be resolved by binding arbitration. The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association. All arbitrators shall possess such experience in, and knowledge of, the subject area of the controversy or claim so as to qualify as an "expert" with respect to such subject matter. The governing law for the purposes of any arbitration arising hereunder shall be as set forth in Section 12 hereof. The prevailing party shall be entitled to receive its reasonable attorneys' fees and all costs relating to the arbitration. Any award rendered by arbitration shall be final and binding on the parties, and judgment thereon may be entered in any court of competent jurisdiction.
11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the state of California, without regard to the conflicts of laws provisions thereof, and may not be amended or modified except in writing signed by both parties.
12. SUCCESSORS. This Agreement and all rights and obligations thereunder shall be binding upon and inure to the benefit of each party's successors, but may not be assigned without the prior written consent of the other party, which shall not be unreasonably withheld or delayed.
13. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed severable.
14. AUTHORIZATION. The Company represents and warrants that it has all requisite power and authority, and has received all necessary authorizations, to enter into and carry out the terms and provisions of this Agreement.
Mr. Manohar Prabhu
Ultrexx Corporation
November 23, 1999
Please confirm that the foregoing correctly sets forth our Agreement by signing the enclosed letter in the space provided and returning them to us for execution, whereupon we will send you a fully executed original letter which shall constitute a binding Agreement as of the date that you executed this Agreement. We look forward to working with you on this assignment.
Very truly yours,
VENTURE CATALYST.COM,
a Division of Inland Entertainment Corporation
Agreed to and Accepted.
Ultrexx Corporation
Date: