-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTWMYd+x/k6s5XQrL4tN4DuCxqzyL4HzAAkDMWftrsRltP2rNe5WfeI31U4pHDZJ GT64vD6xXjQW+hmzhVQ4Qg== 0001116502-03-001556.txt : 20030815 0001116502-03-001556.hdr.sgml : 20030815 20030815115344 ACCESSION NUMBER: 0001116502-03-001556 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HBOA HOLDINGS INC CENTRAL INDEX KEY: 0001042463 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 651053546 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24977 FILM NUMBER: 03849893 BUSINESS ADDRESS: STREET 1: 5200 NW 33RD AVENUE STREET 2: SUITE 215 CITY: FT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 954-938-8010 MAIL ADDRESS: STREET 1: 5200 NW 33RD AVENUE STREET 2: SUITE 215 CITY: FT LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: MIZAR ENERGY CO DATE OF NAME CHANGE: 19980923 10QSB 1 kirshner-10q.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ COMMISSION FILE NUMBER: 0-24977 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Florida 65-1053546 ------------------------- ----------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 5200 NW 33rd Avenue, Suite 215 Ft. Lauderdale, FL 33309 ------------------------------------ (Address of principal executive offices, including zip code) (954) 938-8010 ---------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X ] The number of issued and outstanding shares of the Registrant's Common Stock as of June 30, 2003 was 21,675,000. KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc.
PART I - FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements: Consolidated Balance Sheet as of June 30, 2003..................................................2 Consolidated Statements of Operations for the Six Months Ended June 30, 2003 and 2002........................................................................................4 Consolidated Statements of Changes in Stockholders' Equity......................................5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002..........................................................................6 Notes to Consolidated Financial Statements......................................................7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................................9 Item 3...Disclosure Controls and Procedures......................................................................19 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K........................................................................19 Signatures.......................................................................................................20
1 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. CONSOLIDATED BALANCE SHEET (Unaudited) June 30, 2003 Assets Current assets Cash $ 31,472 Accounts receivable 4,513 Prepaid expenses 184,931 -------- Total current assets 220,916 Property and equipment, net 36,756 Intangible assets, net 21,199 Other assets Deposits 7,960 Investment in limited partnership - related party 202,085 Due from related party 6,923 -------- 216,968 -------- $495,839 ======== See notes to financial statements. 2 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. CONSOLIDATED BALANCE SHEET (Unaudited) June 30, 2003 Liabilities and Stockholders' Deficit Current liabilities Accounts payable $ 111,668 Accrued expenses 18,958 Accrued interest 39,668 Deferred revenue 6,048 Due to related parties 570,000 Other current liabilities 237,750 ----------- Total current liabilities 984,092 Stockholders' deficit Preferred stock, no par value, 10,000,000 shares authorized; no shares issued and outstanding -- Common stock, $0.0005 par value, 25,000,000 shares authorized; 21,725,000 shares issued and 21,675,000 shares outstanding 10,862 Additional paid in capital 4,295,825 Accumulated Deficit (4,782,440) ----------- (475,753) Less: Treasury stock, 50,000 shares at cost (12,500) ----------- (488,253) ----------- $ 495,839 =========== See notes to financial statements. 3 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended June 30, Six months ended June 30, 2003 2002 2003 2002 --------- --------- --------- --------- Income Sales net of returns $ 16,972 $ 4,060 $ 34,396 $ 4,939 --------- --------- --------- --------- 16,972 4,060 34,396 4,939 Expenses Salaries 97,599 76,336 164,595 133,606 Consulting 21,732 8,400 27,507 8,400 Professional fees 70,970 21,355 81,583 25,816 Insurance 10,276 9,628 21,450 20,369 Marketing and advertising 4,630 17,368 9,662 20,849 Rent 1,655 1,379 3,310 2,758 Other general and administrative expenses 15,993 11,796 28,575 20,672 Depreciation and amortization 16,977 19,943 33,953 39,885 --------- --------- --------- --------- 239,832 166,205 370,635 272,355 Other income (expense) Other income 40,000 37,200 100,516 44,650 Interest expense (6,906) (5,563) (13,305) (9,616) --------- --------- --------- --------- Net loss $(189,766) $(130,508) $(249,028) $(232,382) ========= ========= ========= ========= Loss per share Net loss per common share $ (0.009) $ (0.006) $ (0.011) $ (0.011) ========= ========= ========= =========
See notes to financial statements. 4 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED)
Additional Common Stock Paid in Accumulated Shares Amount Capital Deficit ----------- ----------- ----------- ----------- Balance January 1, 2003 21,725,000 $ 10,862 $ 4,272,515 $(4,533,412) Additional paid in capital contributed as rent -- -- 3,310 -- Additional paid in capital contributed as salary -- -- 20,000 -- Net loss -- -- -- (249,028) ----------- ----------- ----------- ----------- Balance June 30, 2003 (unaudited) 21,725,000 $ 10,862 $ 4,295,825 $(4,782,440) =========== =========== =========== =========== [RESTUBBED] Treasury Stock Shares Amount TOTAL ----------- ----------- ----------- Balance January 1, 2003 $ (50,000) $ (12,500) $ (262,535) Additional paid in capital contributed as rent -- -- 3,310 Additional paid in capital contributed as salary -- -- 20,000 Net loss -- -- (249,028) ----------- ----------- ----------- Balance June 30, 2003 (unaudited) (50,000) $ (12,500) $ (488,253) =========== =========== ===========
See notes to financial statements 5 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended June 30, 2003 2002 --------- --------- Cash flows from operating activities: Net Loss $(249,028) $(232,382) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 33,952 39,885 Capital contributed as rent 3,310 2,758 Capital contributed as salary 20,000 -- (Increase) decrease in: Accounts receivable -- (24,812) Other receivables -- (5,457) Prepaid expenses (181,078) -- Deposits 20 -- Increase (decrease) in: Accounts payable 72,955 30,952 Accrued expenses 19,188 -- D eferred income (24,606) (825) Other Current Liabilities 237,750 -- --------- --------- Net cash used in operating activities (67,537) (189,881) --------- --------- Cash flow from financing activities: Proceeds from notes payable-related party 80,000 188,000 Web design acquisition (70) -- --------- --------- Net cash provided by financing activities 79,930 188,000 --------- --------- Net (decrease) increase in cash 12,393 (1,881) Cash, beginning of the period 19,079 5,046 --------- --------- Cash, end of the period $ 31,472 $ 3,165 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 94 $ 153 ========= ========= See notes to financial statements. 6 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2003 NOTE 1 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS The accounting policies followed for interim financial reporting are the same as those disclosed in Note 1 of the Notes to Financial Statements included in the audited financial statements for Kirshner Entertainment & Technologies, Inc. f/k/a HBOA Holdings, Inc. (the "Company") for the fiscal year ended December 31, 2002, which are included in its Annual Report on Form 10- KSB and Annual Report on 10-KSB/A for fiscal 2002. In the opinion of management, the unaudited consolidated financial statements include all necessary adjustments (consisting of normal, recurring accruals) for a fair presentation of the financial position, results of operations and cash flow for the interim periods presented. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Interim results are not necessarily indicative of results for a full year. The results of operations for the six month period ended June 30, 2003 are not necessarily indicative of operating results to be expected for a full year. The accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-QSB and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with generally accepted accounting principles. It is suggested that these consolidated condensed financial statements should be read in conjunction with the Company's financial statements and notes thereto included in the Company's audited financial statements on Form 10-KSB for the fiscal year ended December 31, 2002. Effective as of July 18, 2003, the Company changed its name from HBOA Holdings, Inc. to Kirshner Entertainment & Technologies, Inc. and increased its authorized common stock from 25 million shares to 150 million shares. These changes were approved by the Company's Board of Directors and a majority of the Company's shareholders effective as of June 9, 2003. The Company filed a definitive information statement with the Securities and Exchange Commission on June 23, 2003 pursuant to Section 14C of the Exchange Act. NOTE 2 - NOTES PAYABLE RELATED PARTY Consists of several notes payable, all to a related party and with no specified rate of interest and due on demand. NOTE 3 - RELATED PARTY TRANSACTIONS On June 5, 2002 the Company entered into a consulting agreement with a related party to provide technical and network support, marketing and operating services for $5,000 per week. The total amount of services provided at June 30, 2003 amounted to $40,000. In addition, the Company has receivables at June 30, 2003 from the same related party totaling $6,923. This loan occurred during the ordinary course of business, bearing no interest, and due on demand. In the opinion of management, this loan does not bear more than normal credit risk, nor other unfavorable areas of concern. At June 30, 2003, amounts due to the same related party totaled $570,000. See Note 4. 7 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. & Subsidiaries f/k/a/ HBOA Holdings, Inc. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - SUBSEQUENT EVENTS The Company entered into agreements to purchase two businesses: LexSys Software Corp., effective as of June 5, 2003 and PARIS Health Services, LLC, effective as of June 9, 2003. Both of these acquisitions were scheduled to close on or before July 15, 2003, but the Company extended the closing date on these acquisitions until October 15, 2003. Effective as of July 24, 2003, Dundas Systems, Inc. agreed to convert its $570,000 loan into equity of the Company at a conversion price of 7.4 cents per share. The Company issued 7,702,702 shares of its common stock to Dundas Systems in this conversion and the Company's $570,000 debt to Dundas Systems was extinguished as of July 24, 2003. On July 24, 2003, the Company closed a private offering in which it sold 2,377,500 shares of its common stock to eight investors at an offering price of $.10 per share. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING INFORMATION HAS BEEN DERIVED FROM OUR FINANCIAL STATEMENTS AND SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED IN PART 1-ITEM 1 OF THIS 10-QSB. THE DISCUSSION FOLLOWING CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING THOSE SET FORTH UNDER THE SECTION ENTITLED "RISK FACTORS" UNDER MATERIAL CHANGES IN FINANCIAL CONDITION, RESULTS OF OPERATIONS AND LIQUIDITY HEREIN. OVERVIEW We currently have two divisions: (1) our Entertainment Division and (2) our Technology Division. Our Technology Division consists of two businesses - our PARIS Health Services Health, Ltd. business and our Aerisys business. ENTERTAINMENT DIVISION We formed our entertainment division in June 2003. On June 6, 2003, we entered into an employment agreement with Don Kirshner to serve as the President of our Entertainment Division. Mr. Kirshner has a long-track record of discovering new talent in the music industry. Mr. Kirshner was the head of Columbia Screen Gems Music and was further distinguished by having his name placed ahead of two major entertainment conglomerates when he was the head of Kirshner/CBS Music and Kirshner/Warner Music International. Our Entertainment Division is establishing a record label and is actively searching for talent to sign to the label. We would like to sign 3 artists before the end of December. We are currently negotiating with two musical groups that have well-established track records in the music industry and one new musical group. There can be no assurances that we will sign any of these groups prior to the end of the year. We are also launching the Don Kirshner Golden Ear Talent Search. Our first event is scheduled to take place in Cleveland, Ohio on December 6, 2003. Don Kirshner will be one of the judges and we will also have a number of number of well-recognized recording stars and writers as judges. The winner of the Don Kirshner talent search will receive a recording contract on the Kirshner record label and a $10,000 first prize. We anticipate that we will begin a large scale media campaign in Cleveland, Ohio in October 2003. TECHNOLOGY DIVISION As of June 30, 2003, we own a 20.68% interest in PARIS Health Services, Ltd. PARIS Health Services provides two healthcare process services. One service is focused on assisting hospitals in obtaining the pre-authorization approvals from insurance providers before they perform certain medical procedures. We refer to the procedure authorization routing interface system as the PARIS Outsource system. The other service is a web-based application, which assist companies in managing compliance with the HIPAA regulations as defined by the United States Department of Health and Human Services. PROPOSED ACQUISITIONS We entered into agreements to purchase two businesses: LexSys Software Corp. ("LexSys"), effective as of June 5, 2003 and PARIS Health Services, LLC ("PARIS"), effective as of June 9, 2003. LexSys is a technology and software company and PARIS is a healthcare process solution company. Both of these acquisitions were scheduled to close on or before July 15, 2003, but we extended the closing date on these acquisitions until October 15, 2003. 9 RESULTS OF OPERATIONS Sales, net of returns, were $16,972 and $34,396 during the three and six months ended June 30, 2003 compared to $4,060 and $4,939 during the three and six months ended June 30, 2002. Sales consisted primarily of sales of the Aerisys Intelligent Community to schools and approximately $12,000 of these sales were generated from revenues that had been deferred. Expenses were $239,832 and $370,635 during the three and six months ended June 30, 2003 and $166,205 and $272,355 during the three and six months ended June 30, 2002. The expenses that increased the most during the three months ended June 31, 2003 compared with the prior period in fiscal 2002 were (i) salaries, which increased by $21,263, (2) consulting expenses, which increased by $13,332, and (3) professional fees, which increased by $49,615. Salaries increased because Mr. Kirshner joined our company in the second quarter. Mr. Kirshner received an initial salary payment of $150,000 in June 2003. Because Mr. Kirshner has not rendered all services required during his first year of employment, we have accrued a portion of the payments that he has received as a prepaid expense. We had additional need for consulting services during the second quarter of fiscal 2003, because we were exploring the proposed acquisitions of PARIS, LexSys and other business ventures. Professional fees increased due to the increased legal and accounting fees related to our acquisitions of PARIS and LexSys. We earned other income of $40,000 during the three months ended June 30, 2003 from services rendered our consulting agreement with Dundas Systems, a company wholly-owned by Gary Verdier, our Chairman. We generated other income of $37,200 during the three months ended June 30, 2002, of which $15,000 consisted of services rendered under the consulting agreement with Dundas and $22,200 from services that our company provided to the PARIS Partnership, an affiliated company. As a result of the forgoing, our net loss was $189,766 and $249,028 for the three and six months ended June 30, 2003 compared with a net loss of $130,508 and $232,382 for the three and six months ended June 30, 2002. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2003, we had cash on hand of $31,472. We expect that our cash on hand as of August 14, 2003, will allow us to meet our working capital requirements for the next month. We are presently exploring other options to raise additional capital for KEI, in the form of debt or equity financing. In order to decrease our liabilities, Gary Verdier agreed to convert his $570,000 on debt into equity at a price of 7.4 cents per share, effective as of July 24, 2003. We agreed to issue 7,702,702 shares of our common stock to Mr. Verdier and the $570,000 in debt was extinguished. 10 Our capital requirements have been and will continue to be significant due to, among other things, our expenses to develop our Entertainment and Technology Divisions. At the present time, we do not have any extensive capital commitments, however, we plan on making advertising expenditures in connection with our Entertainment Division. Additionally, if we complete the acquisitions of LexSys and PARIS, we will have to fund the operating requirements of those businesses. At this time, we are not able to estimate the costs of providing these services. We do not plan on making any new purchases of plant or equipment or hiring any additional employees during the next 12 month period. During the six months ended June 30, 2003, we used $67,537 in operating activities and received $80,000 in financing as a result of a loan from Gary Verdier, our founder, Chairman and President. We did not use any funds in investing activities. RISK FACTORS In evaluating our business, the following risk factors should be considered: OUR CAPITAL REQUIREMENTS ARE EXTENSIVE AND THERE ARE NO ASSURANCES THAT WE CAN FIND ADDITIONAL FINANCING Our capital requirements have been and will continue to be significant due to, among other things, our expenses to develop our Entertainment and Technology Divisions. As of June 30, 2003, we had cash on hand of $31,472. During the second quarter of 2003, our founder, Gary Verdier advanced $80,000 to our company. We are currently exploring various forms of financing, including but not limited sales of additional debt or equity securities (or a combination thereof) in future public or private offerings or obtaining loans from third parties. However, there can be no assurance that any such financing will in fact be available to us when needed or upon terms acceptable to us. OUR METHODS OF GENERATING REVENUE ARE RELATIVELY NEW AND LARGELY UNTESTED AND WE PROBABLY WILL NOT GENERATE SIGNIFICANT REVENUES IN FISCAL 2003 During 2003, we hope to generate revenues from our Entertainment and Technology Divisions. However, at this time, it is difficult to predict the amount of revenues that will be generated by each division. Entertainment Division We are new in the entertainment field and do not know if any of our projects will be profitable. There is a great deal of competition among record companies to sign new artists and we are not certain that we will be able to locate and find talent for our record label. In addition to developing a recording label, our Entertainment Division is considering other projects, including but not limited to a talent search. We are not certain if this or other projects will be profitable. Technology Division Our Technology Division intends to generate revenues by selling the Aerisys Intelligent Community(TM) to private and parochial schools. As of June 30, 2003, we had contracts with five private schools and had sales meetings with other schools. However, there can be no assurances that we will be able to obtain contracts to provide services at other schools or that we will generate revenues from our current school contracts. At the present time, we own a 20.68% limited partnership interest in PARIS Health Services and will receive income from this investment, when and if distributions are made. We intend to generate revenues from the PARIS Division by (i) securing long-term contracts with hospitals to provide outsourcing services to assist hospitals in obtaining authorizations for healthcare procedures and (ii) by identifying customers for our HIPAA Compliance Program. However, we can not assure you these businesses will be successful. 11 GROWTH AND ACQUISITIONS RISKS We intend to acquire two businesses: PARIS Ltd., a company that provides healthcare process solutions and LexSys Software Corp., a software and technology company. We expect to complete these acquisitions on or before October 15, 2003. We cannot predict the likelihood of these material acquisitions being completed in the future. We also cannot assure you that these acquisitions will be profitable or that they will achieve sales and profitability that justify the investment. Acquisitions involve a number of special risks, including adverse effects on reported operating results, diversion of management's attention, dependence on retention and hiring of key personnel, risks associated with unanticipated problems or legal liabilities, some or all of which could have a material adverse effect on our operations and financial performance. Our expansion of operations, whether through acquisitions or internal growth, may place substantial burdens on our management resources and financial controls. The increased burden on our management resources and financial controls may have an adverse effect on our operations. WE HAVE A HISTORY OF OPERATING LOSSES, A GOING CONCERN QUALIFICATION AND EXPECT TO INCUR FUTURE LOSSES We have a net loss of $189,766 and $249,028 during the three and six months ended June 30, 2003 compared to a net loss for $130,508 and $232,382 for the three and six months ended June 30, 2002. The footnotes to our financial statements for the twelve months ended December 31, 2002 include an explanatory paragraph relating to the uncertainty of our ability to continue as a going concern, which may make it more difficult for us to raise additional capital. We do not anticipate that we will earn a profit, during the 2003 fiscal year, due, in part to start up costs associated with developing our Entertainment and Technology Divisions. Furthermore, there can be no assurances that our business strategy will enable us to achieve profitable operations in the future. THE MARKETS SERVED BY OUR TECHNOLOGY DIVISION ARE HIGHLY COMPETITIVE AND MANY OF OUR COMPETITORS HAVE MUCH GREATER RESOURCES Arises Intelligent Community The market for providing private, branded intranets to schools is competitive. Our current and potential competitors include companies that are well established both in the technology marketplace and the school arena. Companies like Apple Computer with their Powerschool solution and eChalk are both excellent solutions. Additionally, a definite "competitor" of our product is an in-house solution that any school may decide to build or have built to suit their needs. We expect that it will be quite common for a company that offers or provides basic website development services to offer a school a customized solution that encompasses homework online and other similar features to the Aerisys Intelligent Community(TM) for Schools. We further expect that as the suppliers of other school products realize the market potential of school intranets, they may develop a solution to compete with ours. We expect that these current and future competitors will face increasing price and service pressures on our future family-based price. . Many of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. We cannot be sure that we will have the resources or expertise to compete successfully in the future. Our competitors may be able to (1) more quickly develop and expand their network infrastructure and service offerings; (2) better adopt to new or emerging technologies and changing customer needs; (3) negotiate more favorable licensing agreements with software application vendors; (4) devote greater resources to the marketing and sale of their products and (5) adopt more aggressive pricing polices. 12 Some of our competitors may also be able to provide customers with additional benefits at lower overall costs. We cannot be sure that we will be able to match cost reductions by our competitors. In addition, we believe that here is likely to be consolidation in our markets. Consolidation could increase price competition and other competitive forces in ways that materially adversely affect our business, results of operations and financial condition. Finally, there are not any substantial barriers to entry, and we have no patented technology that would bar competitors from our market. PARIS Division Although PARIS believes that it is offering hospitals a unique service, other companies could begin providing a similar service because there are not many barriers to entry in this market. Many large consulting companies such as IBM, EDS, Oracle and other small private software consulting companies could offer similar services. Many of these companies have significantly greater financial, technical product development and market resources and greater name recognition. We expect that competition will be based on price, speed of service and quality. Additionally, PARIS expects that the MIS departments of hospitals and managed care companies may try to develop this product on their own. However, we do not think that many of our competitors will be willing to absorb all of the costs to implement and develop the virtual area networks for the hospitals. We know that many other companies offer HIPAA compliance services. Many of these companies have greater financial, technical product development and market resources and greater name recognition. THE GROWTH IN DEMAND FOR OUR AERISYS INTELLIGENT COMMUNITIES(TM)IS HIGHLY UNCERTAIN As of June 30, 2003, we have signed contracts with five schools. We plan on pursuing an aggressive marketing and sale campaign during the upcoming months with private and parochial schools. However, it is difficult to predict if any additional schools will want to purchase our product. The market for providing private, branded intranets to K-12 schools is competitive. It is unclear if we will be able to distinguish ourselves from our competitors. 13 WE FACE RISKS RELATED TO INTELLECTUAL PROPERTY RIGHTS. Our success in our Technology Division depends on its internally developed technologies and other intellectual property. We believe our Aerisys Intelligent Community for Schools and the software for the PARIS Division is proprietary and the software. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use its intellectual property or trade secrets without authorization. In addition, it is possible that others may independently develop substantially equivalent intellectual property. If we do not effectively protect our intellectual property, our business could suffer. In the future, we may have to resort to litigation to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. This type of litigation, regardless of its outcome, could result in substantial costs and diversion of management and technical resources. We may receive in the future notices of claims of infringement of other parties' proprietary rights. Infringement or other claims could be made against us in the future. Any claims, with or without merit, could be time-consuming, result in costly litigation and diversion of technical and management personnel, cause product delays or require us to develop non-infringing technology or enter into royalty or licensing agreements. Royalty or licensing agreements, if required, may not be available on acceptable terms or at all. If a successful claim of product infringement were made against us, it could have a material adverse effect on our business. THE SUCCESS OF OUR AERISYS INTELLIGENT COMMUNITIES(TM) DEPENDS ON THE ACCEPTANCE AND INCREASED USE OF INTERNET-BASED BUSINESS SOFTWARE SOLUTIONS AND WE CANNOT BE SURE THAT THIS WILL HAPPEN The success of our Aerisys Intelligent Community(TM) depends on the adoption of Internet-based business software solutions BY schools. Our business could suffer dramatically if Internet-based solutions are not accepted or perceived to be effective. The growth of Internet-based business software solutions could also be limited by: - concerns over transaction security and user privacy; - inadequate network infrastructure for the entire Internet; and - inconsistent performance of the Internet. We cannot be certain that this market will continue to grow or to grow at the rate we anticipated. DEPENDENCE ON KEY PERSONNEL We will be dependent upon the services of its executive officers, principal employees and consultants (particularly Gary Verdier and Donald Kirshner,) for management of KEI and implementation of our business strategy. The loss of services of Mr. Verdier or Mr. Kirshner, could have a material adverse effect on our business operations, financial conditions and results of operations. If our operations expand, we will be dependent upon its ability to attract and retain additional qualified employees and consultants. There can be no assurances that the demands placed on our personnel by the growth of our business and the need for close monitoring of its operations and financial performance through appropriate and reliable administrative and accounting procedures and controls will be met, or that we will manage its growth successfully; the failure to do so could have a material adverse effect on our business, financial condition and results of operations. There is significant competition for qualified personnel, and there can be no assurances that we will be successful in recruiting, retaining or training the management personnel it requires. 14 MANAGEMENT OF GROWTH During 2003, we expect to have significant growth (principally as a result of our Entertainment Division and our Technology Division) and this growth will require us to make significant additions in personnel and increase it working capital requirements. Such growth will result in new and increased responsibilities for management personnel and has placed and continues to place a significant strain upon our management, operating and financial systems and other resources. There can not be any assurances that we will be able to attract or retain sufficient personnel to continue the planned expansion of its operations. Also crucial to our success in managing our growth will be our ability to achieve economies of scale, such as enhanced purchasing power, the ability to purchase a higher percentage of products on credit and the ability to obtain products, which we might not otherwise be able to obtain. There can be no assurance that we will be able to achieve such economies of scale and the failure to do so could have a material adverse effect on our financial condition and results of operations. Although we have experienced significant sales growth, such growth may not be indicative of future sales growth. To manage the expansion of our operations, we must continuously evaluate the adequacy of its management structure and its existing systems and procedures, including, without limitation, its data processing, financial and internal control systems. There can be no assurance that management will adequately anticipate all of the changing demands that growth could impose on our systems, procedures, and structure. In addition, we will be required to react to changes in its industry, and there can be no assurance that it will be able to do so successfully or at all. Any failure to adequately anticipate and respond to such changing demand may have a material adverse effect on our business, financial condition and results of operations. OUR LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB Because users of our web sites for our Intelligent Communities(TM) and our KEI web site may distribute our content to otherS, third parties might use us for defamation, negligence, copyright or trademark infringement, personal injury or other matters. These types of claims have been brought, sometimes successfully, against online services in the past. Others could also sue us for the content that is accessible from our web site through links to other web sites or through content and materials that may be posed by members in chat rooms or bulletin boards. We also intend to offer e-mail services on our Intelligent Community(TM) and KEI web siteS, which may subject us to potential risks, such as liabilities or claims resulting from unsolicited e-mail (spamming), lost or misdirected messages, illegal or fraudulent use of e-mail or interruptions or delays in e-mail service. Also, we have entered and may enter into other agreements with commerce partners and sponsors that entitle us to receive a share of any revenue from the purchase of goods and services through direct links from our web sites to their web sites. Such arrangements may subject us to additional claims, including potential liabilities to consumers of such products and services, because we provide access to such products or services, even if we do not provide such products or services ourselves. While our agreements with these parties often provide that we will be indemnified against such liabilities, such indemnification, if available, may not be adequate. Our insurance may not adequately protect us against these types of claims. 15 RELIABILITY OF WEB SITES AND TECHNOLOGY; RISK OF CAPACITY CONSTRAINTS The performance, reliability and availability of our web sites, systems and network infrastructure will be critical to our business and our ability to promote our business for our Intelligent Communities(TM) and other web sites associated with our businesS. Our web sites are hosted by a server owned and operated by a third party, limiting the extent to which we will have control over, or the ability to cure, technical problems, which may arise. Any systems problems that result in the unavailability of our web sites or interruption of information or access of information to members through the web sites would diminish their effectiveness as a means of promoting our business. If the volume of traffic on our web sites is greater than anticipated, we will be required to expand and upgrade our web sites and related infrastructure. Although we intend that our systems will be designed for scalability, the can be no assurance that the systems will be fully scalable. Any inability to add additional software and hardware to accommodate increased usage may cause unanticipated systems disruptions and degradation in levels of service to customers. There can be no assurance that we will be able to effectively upgrade and expand our web sites in a timely manner or to integrate smoothly any newly developed or purchased technology with its existing systems. Any inability to do so would have a material adverse effect on our business, prospects, financial condition and results of operations. SECURITY RISKS A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our Internet operations. We may be required to expend significant capital and resources to protect against the threat of such security breaches or to alleviate problems caused by such breaches. Consumer concern over Internet security has been, and could continue to be, a barrier to commercial activities requiring consumers to send their credit card information over the Internet. Computer viruses, break-ins, or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to our Aerisys Intelligent Community(TM) customers or KEI customers. Moreover, until more comprehensiVE security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet as a communication and merchandising medium. 16 GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES We are not currently subject to direct federal, state, or local regulation, and laws or regulations applicable to access to or commerce on the Internet, other than regulations applicable to businesses generally. Due to the increasing popularity and use of the Internet and other online services, however, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, "indecent" materials, freedom of expression, pricing, content and quality of products and services, taxation, advertising, intellectual property rights and information security. The adoption of any such laws or regulations might also decrease the rate of growth of Internet use, which in turn could decrease the demand for KEI's products and services or increase the cost of doing business or in some other manner have a material adverse effect on KEI's business, results of operations, and financial condition. In addition, applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity, and personal privacy is uncertain. The vast majority of such laws were adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. KEI does not believe that such regulations, which were adopted prior to the advent of the Internet, govern the operations of KEI's business nor have any claims been filed by any state implying that KEI is subject to such legislation. There can be no assurance, however, that a state will not attempt to impose these regulations upon KEI in the future or that such imposition will not have a material adverse effect on KEI's business, results of operations, and financial condition. Several states have also proposed legislation that would limit the uses of personal user information gathered online or require online services to establish privacy policies. The Federal Trade Commission has also initiated action against at least one online service regarding the manner in which personal information is collected from users and provided to third parties. Changes to existing laws or the passage of new laws intended to address these issues, including some recently proposed changes, could create uncertainty in the marketplace that could reduce demand for the services of KEI of increase the cost of doing business as a result of litigation costs or increased service delivery costs, or could in some other manner have a material adverse effect on KEI's business, results of operations, and financial condition. In addition, because KEI's services are accessible worldwide, and KEI facilitates sales of goods to users worldwide, other jurisdictions may claim that KEI is required to qualify to do business as a foreign corporation in a particular state or foreign country. KEI is qualified to do business in Florida, and failure by KEI to qualify as a foreign corporation in a jurisdiction where it is required to do so could subject KEI to taxes and penalties for the failure to quality and could result in the inability of KEI to enforce contracts in such jurisdictions. Any such new legislation or regulation, or the application of laws or regulations from jurisdictions whose laws do not currently apply to KEI's business, could have a material adverse effect on KEI's business, results of operations, and financial condition. 17 RAPID TECHNOLOGICAL CHANGE The markets in which our Aerisys and PARIS Division compete are characterized by frequent new product introductions, rapidly changing technology, and the emergence of new industry standards. The rapid development of new technologies increases the risk that current or new competitors will develop products or services that reduce the competitiveness and are superior to our products and services. The future success of our Aerisys and PARIS Divisions will depend to a substantial degree upon their ability to develop and introduce in a timely fashion new products and services and enhancements to their existing products and services that meet changing customer requirements and emerging industry standards. The development of new, technologically advanced products and services is a complex and uncertain process requiring high levels of innovation, as well as the accurate anticipation of technological and market trends. There is a potential for product development delay due to the need to comply with new or modified standards. There can be no assurance that our Aerisys and PARIS Divisions will be able to identify, develop, market, support, or manage the transition to new or enhanced products or services successfully or on a timely basis, that new products or services will be responsible to technological changes or will gain market acceptance, or that these divisions will be able to respond effectively to announcements by competitors, technological changes, or emerging industry standards. Our business, results of operations, and financial condition would be materially and adversely affected if our Aerisys and PARIS Divisions were to be unsuccessful, or to incur significant delays in developing and introducing new products, services, or enhancements. ADDITIONAL SHARES ELIGIBLE FOR FUTURE SALE As of August 1, 2003, our Articles of Incorporation authorize the issuance of up to 150 million shares of Common Stock and 10 million shares of preferred stock. As of June 30, 2003, we had 21,675 ,000 shares of our common stock issued and outstanding. The issuance of additional shares of KEI's common stock or preferred stock is solely within the discretion of KEI's Board of Directors. The issuance of a substantial number of additional shares of common stock in connection with the further development of KEI's business and such additional issuances may result in dilution to the purchasers in this Offering. NO DIVIDENDS We anticipate that earnings, if any, will be retained for the development of its business and will not be distributed to shareholders as cash dividends. The declaration and payment of cash dividends, if any, at some future time will depend upon our results of operations, financial condition, cash requirements, future prospects, limitations imposed by credit agreements or senior securities and any other factors deemed relevant by KEI's Board of Directors. The declaration and payment of cash dividends, if at all, by KEI will be at the discretion of the Board of Directors. INVESTMENT RISKS No representation can be made regarding the future operations or profitability or the amount of any future revenues, income or loss of KEI. The success of KEI will be subject to many factors beyond the control of KEI, such as general economic conditions, competition, and general conditions in the home based business market. Prospective investors should be aware that they could lose their entire investment in KEI. Even if KEI is successful in its operations, there can be no assurance that investors will receive any cash dividend or derive a profit or benefit from their investment. . 18 ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFERABILITY Our shares presently trade on the OTC Bulletin Board. Securities trading on the OTC Bulletin Board generally attract a smaller number of market makers and a less active public market and may be subject to significant volatility. Factors such as our ability to (i) generate revenues from our existing contracts and locate new customers, (ii) to raise additional capital and(iii) other risk factors listed in this Form 10-QSB and our Annual Report on Form 10-KSB could have a material effect on the price of our common stock. ITEM 3. CONTROLS AND PROCEDURES Within 90 days prior to the date of this Quarterly Report on Form 10-QSB, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. A. Exhibits 2.1 Amendment effective as of July 15, 2003 to the Purchase and Sale Agreement dated as of May 9, 2003 by and between KEI Holdings, Inc. and E-Z auth. Management Co., the general partner of PARIS Health Services, Ltd. 2.2 Amendment effective as of July 15, 2003 to the Acquisition Agreement dated as of June 5, 2003 between KEI Holdings, Inc. and LexSys Software Corp. 3.1 Articles of Amendment to Articles of Incorporation filed with the Florida Secretary of State on July 18, 2003 31.1 Certifying Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 31.2 Certifying Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1 Certifying Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act 32.2 Certifying Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act B. Reports on Form 8-K The Company filed a Report on Form 8-K on May 6, 2003 reporting information contained in Item 2 and Item 7 of Form 8-K. The Company filed a Report on Form 8-K on May 7, 2003 containing information contained in Item 5 of Form 8-K. The Company filed a Report on Form 8-K on June 11, 2003 containing information contained in Items 2 and 7 of Form 8-K. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date:August 14, 2003 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. By /s/ Harvey Judkowitz ---------------------------- Harvey Judkowitz Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) 20 EXHIBIT INDEX 2.1 Amendment effective as of July 15, 2003 to the Purchase and Sale Agreement dated as of May 9, 2003 by and between KEI Holdings, Inc. and E-Z auth. Management Co., the general partner of PARIS Health Services, Ltd. 2.2 Amendment effective as of July 15, 2003 to the Acquisition Agreement dated as of June 5, 2003 between KEI Holdings, Inc. and LexSys Software Corp. 3.1 Articles of Amendment to Articles of Incorporation filed with the Florida Secretary of State on July 18, 2003 31.1 Certifying Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 31.2 Certifying Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1 Certifying Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act 32.2 Certifying Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act EX-2.1 3 firstamendtopart.txt FIRST AMENDMENT TO PARTNERSHIP PURCHASE EXHIBIT 2.1 FIRST AMENDMENT TO PARTNERSHIP PURCHASE AND SALE AGREEMENT This Amendment, effective as of July 15, 2003 (the "Amendment"), to the Partnership Purchase and Sale Agreement (the "Agreement"), dated as of May 9, 2003, by and between HBOA Holdings, Inc. (the "Purchaser"), and E-Z Auth. Management Co., the General Partner of PARIS Health Services, Ltd. (the "Partnership"). RECITALS: --------- A. All terms not herein defined shall have the meanings set forth in the Agreement. B. The Agreement provides that the Closing shall take place on or before July 15, 2003, (the "Anticipated Closing Date"), and Section 10.1(b) provides that the General Partner or the Partnership, respectively, may terminate the Agreement if the Closing is not consummated by July 15, 2003. C. The parties wish to amend the Agreement to extend the Anticipated Closing Date until October 15, 2003. D. The parties have determined that it is in their respective best interests to modify the Agreement as set forth herein. NOW THEREFORE, for the mutual consideration set forth herein, the receipt and sufficiency of which are acknowledged, the parties hereto intending to be legally bound agree as follows: 1. Extension of Anticipated Closing Date. -------------------------------------- Section 9 of the Agreement is hereby amended to provide that the Closing shall take place on or before October 15, 2003, unless further extended by the mutual written agreement of the parties hereto. Section 10.1 (b) is amended to provide that the Partnership or the General Partner may terminate the Agreement if the Closing is not consummated by October 15, 2003. 2. Full Force and Effect. ---------------------- Except as specifically amended hereby, the provisions of the Agreement shall remain in full force and effect. 3. Entire Agreement. ----------------- The Amendment, together with the Agreement, as modified hereby, constitutes the entire agreement between the parties. 4. Amendment. ---------- This Amendment may not be amended, supplemented or modified in whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any such amendment, supplement or modification is sought. 5. Counterparts. ------------- The Amendment may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment on the date first above written. ATTEST: HBOA HOLDINGS, INC. BY: /S/GARY VERDIER - --------------------------- --------------------------- GARY VERDIER PRESIDENT ATTEST: E-Z AUTH. MANAGEMENT CO. BY: /S/ ROGER BAUMANN - --------------------------- --------------------------- ROGER BAUMANN CHIEF OPERATING OFFICER EX-2.2 4 firstamendtoagree.txt FIRST AMEND TO AGREEMENT AND PLAN OF MERGER EXHIBIT 2.2 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER This Amendment, effective as of July 15, 2003 (the "Amendment"), to the Acquisition Agreement (the "Agreement"), dated as of June 5, 2003, by and between HBOA Holdings, Inc. ("HBOA") and Lexsys Software Corp. ("LSC"). RECITALS: A. All terms not herein defined shall have the meanings set forth in the Agreement. B. The Agreement provides that the Closing shall take place on or before July 15, 2003, (the "Anticipated Closing Date"), and Section 8.1(b) provide that HBOA and LSC, respectively, may terminate the Agreement if the Closing is not consummated by July 15, 2003. C. The parties wish to amend the Agreement to extend the Anticipated Closing Date until October 15, 2003. D. The parties have determined that it is in their respective best interests to modify the Agreement as set forth herein. NOW THEREFORE, for the mutual consideration set forth herein, the receipt and sufficiency of which are acknowledged, the parties hereto intending to be legally bound agree as follows: 1. Extension of Anticipated Closing Date. -------------------------------------- Section 2.8 of the Agreement is hereby amended to provide that the Closing shall take place on or before October 15, 2003, unless further extended by the mutual written agreement of the parties hereto. Section 8.1 (b) is amended to provide that HBOA or LSC may terminate the Agreement if the Closing is not consummated by October 15, 2003. 2. Full Force and Effect. ---------------------- Except as specifically amended hereby, the provisions of the Agreement shall remain in full force and effect. 3. Entire Agreement. ----------------- The Amendment, together with the Agreement, as modified hereby, constitutes the entire agreement between the parties. 4. Amendment. ---------- This Amendment may not be amended, supplemented or modified in whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any such amendment, supplement or modification is sought. 5. Counterparts. ------------- The Amendment may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment on the date first above written. ATTEST: HBOA HOLDINGS, INC. BY: /S/ GARY VERDIER ------------------- GARY VERDIER PRESIDENT ATTEST: LEXSYS SOFTWARE CORP. BY: /S/ CHARLES TAYLOR ------------------ CHARLES TAYLOR PRESIDENT EX-3.1 5 artamendtoinc.txt ARTICLES OF AMENDMENT TO INCORPORATION EXHIBIT 3.1 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF HBOA HOLDINGS, INC. HBOA Holdings, Inc., a corporation organized and existing under the laws of the State of Florida (the "Corporation") bearing document number P00000095861, in accordance with the applicable provisions of Section 607.0821, Section 607.0704, and Section 607.1003 of the Florida Business Corporation Act (the "FBCA"): DOES HEREBY CERTIFY: FIRST: That the first paragraph of the Corporation's Articles of Incorporation is hereby deleted in its entirety and replaced with the following: "ARTICLE I NAME The name of the Corporation is Kirshner Entertainment & Technologies, Inc. and the street address of the initial principal office of the Corporation is 5200 NW 33rd Street, Ft. Lauderdale, Florida 33309." SECOND:: That the third paragraph of the Corporation's Articles of Incorporation is hereby deleted in its entirety and replaced with the following: "ARTICLE III ------------ CAPITAL STOCK ------------- The Corporation is authorized to issue One Hundred Fifty Million (150,000,000) shares of Common Stock, par value $.0005 per share, and Ten Million (10,000,000) shares of Preferred Stock, par value $.0005 per share. The designation and the preferences, limitations and relative rights of the Preferred Stock and the Common Stock of the Corporation are as follows: Provisions Relating to the Preferred Stock. ------------------------------------------- 1. The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences and rights, and qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issuance of such class or series adopted by the Board of Directors as hereinafter prescribed. Laura M. Holm, Esq. Florida Bar #0993646 Adorno & Yoss, PA 700 S. Federal Highway Suite 200 Boca Raton, Florida 33432 Phone (561) 393-5660 Fax (561) 338-8698 2. Authority is hereby expressly granted to and vested in the Board of Directors to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, to determine and take necessary proceedings fully to effect the issuance and redemption of any such Preferred Stock, and, with respect to each class or series of Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following: 1. whether or not the class or series is to have voting rights, full or limited, or is to be without voting rights; 2. the number of shares to constitute the class or series and the designations thereof; 3. the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; 4. whether or not the shares of any class or series shall be redeemable and if redeemable the redemption price or prices, and the time or times at which and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; 5. whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and if such retirement or sinking fund or funds shall be established, the annual amount thereof and the terms and provisions relative to the operation thereof; 6. the dividend rate, if any, whether any, whether any such dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when any such dividends are payable, the preference to or the relation to the payment of the dividends, payable on any other class or classes or series of stock, whether or not such dividend shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate; 7. the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation; 8. whether or not the shares of any class or series shall be convertible into, or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation and the conversion price, ratio or rate at which such conversion or exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and 9. such other special rights and protective provisions with respect to any class or series as the Board of Directors may deem advisable and in the best interests of the Company. The shares of each class or series of Preferred Stock may vary from the shares or any other series thereof in any or all of the foregoing respects. The Board of Directors may increase the number of shares of Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of Preferred Stock designated for any existing class or series by a resolution, subtracting from such series unissued shares of Preferred Stock designated for such class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of Preferred Stock. Provisions to the Common Stock. ------------------------------- 1. Except as otherwise required by law or as may be provided by the resolutions of the Board of Directors authorizing the issuance of any class or series of Preferred Stock, as hereinabove provided, all rights to vote and all voting power shall be vested exclusively in the holders of Common Stock. 2. Subject to the rights of the holders of the Preferred Stock, the holders of Common Stock shall be entitled to receive when, as and if declared by the Board of Directors, out of funds legally available therefor, dividends payable in cash, stock or otherwise. 3. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, and after the holders of the Preferred Stock shall have been paid in full the amounts to which they shall be entitled (if any) or a sum sufficient for such payment in full shall have been set aside, the remaining net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interests to the exclusion of the holders of the Preferred Stock. General Provisions. ------------------- 1. Except as may be provided by the resolutions of the Board of Directors authorizing the issuance of any class or series of Preferred Stock, as hereinabove provided, cumulative voting by any shareholder is hereby expressly denied. 2. No shareholder of this Corporation shall have, by reason of its holding shares of any class or series of stock of the Corporation, any preemptive rights to purchase or subscribe for any other shares of any class or series of this Corporation now or hereafter authorized, and any other equity securities, or any notes, debentures, warrants, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, now or hereafter authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities, would adversely affect the dividend or voting rights of such shareholder. SECOND: The foregoing Articles of Amendment to the Articles of Incorporation were adopted pursuant to FBCA Section 607.0821 by the Board of Directors of the Corporation by unanimous written consent dated June 9, 2003, and was adopted pursuant to FBCA Section 607.0704 by a holder of a majority of the Company's issued and outstanding shares of capital stock entitled to vote on the matter by written consent of such stockholder dated June 9, 2003. Therefore, the number of votes cast was sufficient for approval. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to the Articles of Incorporation to be executed by its duly authorized officer. Signed, this July 17, 2003. /s/ Harvey Judkowitz Chief Financial Officer EX-31.1 6 sect302cert-311.txt CERTIFICATION Exhibit 31.1 CERTIFICATIONS I, Gary Verdier, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Kirshner Entertainment &Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /S/ Gary Verdier --------------------------- Gary Verdier Chief Executive Officer EX-31.2 7 sect302cert-312.txt CERTIFICATION Exhibit 31.2 CERTIFICATIONS I, Harvey Judkowitz, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Kirshner Entertainment & Technologies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 14, 2003 /S/ Harvey Judkowitz ------------------------------- Harvey Judkowitz Chief Financial Officer (Principal Financial Officer) EX-32.1 8 sect906cert-321.txt CERTIFICATION Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of Kirshner Entertainment & Technologies, Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary Verdier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: August 14, 2003 /S/ Gary Verdier ---------------------------- Gary Verdier Chief Executive Officer (Principal Executive Officer) EX-32.2 9 sect906cert-322.txt CERTIFICATION Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of Kirshner Entertainment & Technologies, Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Harvey Judkowitz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: August 14, 2003 /S/ Harvey Judkowitz ----------------------------- Harvey Judkowitz Chief Financial Officer (Principal Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----