-----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, U45byFgRCq+HbueM0sK2Pxmnti8SEcXPuv0U+CZgv0hEZm6AoCacJdj3DdFFFnzv u55MBj0TfGYqsuh0SQYiVQ== 0000931731-97-000167.txt : 19970811 0000931731-97-000167.hdr.sgml : 19970811 ACCESSION NUMBER: 0000931731-97-000167 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19970808 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNAPTX WORLDWIDE INC CENTRAL INDEX KEY: 0001043933 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 870375342 STATE OF INCORPORATION: UT FILING VALUES: FORM TYPE: 10SB12G SEC ACT: 1934 Act SEC FILE NUMBER: 000-22969 FILM NUMBER: 97654540 BUSINESS ADDRESS: STREET 1: 385 AIRPORT ROAD STREET 2: SUITE A CITY: ELGIN STATE: IL ZIP: 60123 BUSINESS PHONE: 8476220200 MAIL ADDRESS: STREET 1: 385 AIRPORT ROAD STREET 2: SUITE A CITY: ELGIN STATE: IL ZIP: 60123 10SB12G 1 As filed with the Securities and Exchange Commission on August 8, 1997 Registration No. _________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-SB GENERAL FORM FOR REGISTRANTS OF SECURITIES OF SMALL BUSINESS ISSUERS Under Section 12(b) or (g) of the Securities Exchange Act of 1934 SYNAPTX WORLDWIDE, INC. (Name of Small Business Issuer in its charter) Utah 87-0375342 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 385 Airport Road, Suite A, Elgin, Illinois 60123 (Address of principal executive officers) (Zip Code) Issuer's telephone number: (847) 622-0200 Securities to be registered under Section 12(b) of the Act: Title of each class Name of each exchange on which to be so registered each class is to be registered N/A N/A Securities to be registered under Section 12(g) of the Act: Common Stock, par value $.001 per share (Title of Class) SYNAPTX WORLDWIDE, INC. FORM 10-SB TABLE OF CONTENTS PAGE PART I ITEM 1. Description of Business. . . . . . . . . . . . . . . . . 3 ITEM 2. Management's Discussion and Analysis or Plan of Operation. . . . . . . . . . . . . . . . . . . 11 ITEM 3. Description of Property. . . . . . . . . . . . . . . . . 17 ITEM 4. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . 17 ITEM 5. Directors, Executive Officers, Promoters and Control Persons. . . . . . . . . . . . . . . . . . 19 ITEM 6. Executive Compensation . . . . . . . . . . . . . . . . . 21 ITEM 7. Certain Relationships and Related Transactions . . . . . 23 ITEM 8. Description of Securities. . . . . . . . . . . . . . . . 25 PART II ITEM 1. Market Price of and Dividends on Registrant's Common Equity and Other Shareholder Matters. . . . . . 26 ITEM 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 27 ITEM 3. Changes in and Disagreements with Accountants. . . . . . 27 ITEM 4. Recent Sales of Unregistered Securities. . . . . . . . . 28 ITEM 5. Indemnification of Directors and Officers. . . . . . . . 28 PART F/S Financial Statements . . . . . . . . . . . . . . . . . . 29 PART III ITEM 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . S-1 ITEM 2. Description of Exhibits. . . . . . . . . . . . . . . . . S-1 Signatures . . . . . . . . . . . . . . . . . . . . . . . S-2 PART I Registration Summary The following summary is qualified in its entirety by the more detailed information and the financial statements including the notes thereto, appearing elsewhere in this Registration. Except as otherwise indicated, the information in this Registration reflects the recapitalization of the Company (as more fully explained below) whereby through a reverse merger, the Company's pre-merger shareholders' common stock reflects a 1 for 1.75 stock split of the Common Stock in February, 1997 and in connection with the merger agreement with Worldwide Applied Telecom Technologies, Inc., a Delaware Corporation, ("WWATT"), the WWATT pre-merger shareholders of its Common Stock received 3,600,000 shares of the Company's common stock for the 3,271,000 shares of WWATT Common Stock issued and outstanding, representing a stock dividend of 10.058086% as of the merger date, March 12, 1997. ITEM 1. Description of Business Synaptx Worldwide, Inc. ("Synaptx" or the "Company") provides consulting service, marketing, sales and search assistance within the telecommunications industry. The Company's stated goal is to develop through acquisitions a national telecommunications sales representative organization. Synaptx also intends to make additional acquisitions of existing telecommunications companies having potential for growth as equipment manufacturers and software providers needing developed marketing channels. The Company was incorporated on June 25, 1981 under the laws of the State of Utah as Calico Gold Properties, Inc. and initially engaged in the acquisition and development of mineral resource prospects. The Company engaged in limited mining operations and subsequently ceased its operations and became inactive for several years. In 1995, the Company began to actively investigate and seek mergers with or acquisitions of operating businesses. In 1996, the Company changed its name to In-Touch Interactive Multimedia, Inc. in connection with a previously planned merger that was never consummated. On February 10, 1997, the Company entered into a merger agreement (the "Merger") with WWATT. Pursuant to the terms of the Merger, the Company effected a reverse stock split of its outstanding shares of common stock on a one (1) share for one and three-fourths (1.75) shares, and exchanged 3,600,000 shares of authorized but previously unissued shares of the Company's common stock for all the previously issued and outstanding shares of WWATT. An additional 790,000 shares of the Company's common stock were issued for services related to the Merger. As a result of the Merger, WWATT was merged with and into the Company with the Company being the surviving corporation, and the Company changed its corporate name to Synaptx Worldwide, Inc. The aforementioned actions were approved by the Company's shareholders at the Special Meeting of Shareholders held March 12, 1997. Prior to the Merger, there was no affiliation between the Company and WWATT, nor between the officers, directors or principal shareholders of the two respective entities. For accounting purposes, the transaction has been treated as a recapitalization of WWATT, or a reverse merger, with WWATT being treated as the acquirer. Business Development: WWATT was initially conceived and organized on November 3, 1995, with the intent to provide a vehicle to acquire emerging high technology companies in the telecommunications industry. As a result of its Merger with WWATT, the Company is presently committed to the acquisition and development of sales representative organizations and telecommunications equipment manufacturers and software providers. Acquisition candidates will typically be undercapitalized, existing companies that already have developed products or services that offer significant growth potential. The Company may also acquire other consulting or sales representative businesses. WWATT completed two acquisitions prior to the Merger, specifically North American Telco/Cable Representatives, Inc. ("NATCRI"), an independent network of senior executives possessing professional relationships in the telecommunications industry, and Maxwell Partners, Inc. ("Maxwell"), an integrated marketing consulting firm that works exclusively with telecommunications and information industry clients. Management believes that NATCRI and Maxwell provide the Company with the marketing and sales support necessary to provide potential future acquisitions with needed developed marketing channels for their products and/or services. As a result of the Merger, NATCRI and Maxwell became subsidiaries of the Company. Synaptx Access, Inc. (F/K/A North American Telco/Cable Representatives, Inc.) North American Telco/Cable Representatives, Inc. which has changed its name to Synaptx Access, Inc. (hereinafter referred to as "Access") is an independent network of senior executives ("Executive Associates") whose existing professional relationships in the telecommunications industry provide the Company with access to key industry decision makers. Access was incorporated in Florida on November 14, 1994 with the dual objectives of increasing sales for smaller manufacturers and software providers to the telecommunications industry and enabling larger network providers and manufacturers to utilize the products and services of smaller innovative firms in a time-efficient manner. WWATT issued 490,000 shares of its common stock for the acquisition of Access on June 3, 1996, which shares were converted into 539,285 shares of the Company's common stock as a result of the Merger. The acquisition was treated as a pooling of interests. Access has developed a unique multi-level sales strategy named the Executive/SME Squeeze to overcome the challenge of selling to larger organizations that are being downsized and in which decisions are made by only a very few senior executives. "SME" represents a Subject Matter Expert, a commonly used term in the telecommunications industry. Access Executive Associates can generate meetings with key industry decision makers relying upon their history of building personal relationships. Executive Associates are able to arrange executive introductions, trigger assignment of a SME to review proposed products, manage the relationship to obtain a recommendation to deploy its clients' products, and orchestrate executive approval of the purchase. Companies with which Access Executive Associates have existing relationships include major equipment manufacturers such as Lucent, Nortel (formerly Northern Telecom), Siemens, and L.M. Ericcson; major service providers such as the regional Bell operating com- panies (RBOCs), AT&T, MCI, Sprint, GTE and other independent telephone companies; competitive access providers and long distance resellers; and major wireless service providers such as Air Touch, Cellular One, and Skytel. Among the services the Executive Associates provide to their clients is assistance in evaluating investments in other telecommunications companies. In order to complement the efforts of its Executive Associates, Access will strive to develop an independent national sales representative organization that will target public and private network providers, utilities, and original equipment manufacturers. This development will proceed through the possible acquisition of regional sales representative firms that typically employ five to ten employees ("Representatives"). Leads will be generated, qualified, and tracked through a sophisticated central database that will provide Representatives with easy access to key decision makers. By taking advantage of senior Executive Associates and Representatives' personal contacts, management anticipates that Access will generate a base of new sales opportunities for its principal companies, "Access Principals" representing companies whose products and/or services Executive Associates and Representatives will promote and sell. Access is pursuing an aggressive growth strategy to build a nationwide sales representative organization by the end of its 1998 fiscal year. By using its existing network of Executive Associate contacts, Access intends to approach other major equipment manufacturers with proposals to represent their products to larger customers. Access held its first annual sales meeting of its Executive Associates in November, 1995, and the second was held in January, 1997. Clients and potential clients presented their companies' product lines, marketing plans, and sales strategies to the Access team. In its first year of operation, Access recruited more than twenty firms as clients and has accepted several new Executive Associates. In addition, some larger firms have contracted with Access to facilitate their sales efforts. Other firms employ Access Executive Associates as consultants and as members of their management team. In addition to its sales activities, Access Executive Associates will investigate, through their professional network contacts, a variety of executive recruiting opportunities. Access accepts search assignments on a contingency basis, charging clients a percentage of a new hire's first-year compensation. Candidates submitted for client consideration are identified in one of two ways. In the first scenario, a client may ask Access to fill a specific position. In this case, the firm contacts members of its Executive Associates' network and alerts them to the client's need. Alternatively, Access keeps on file and continually updates a database of resumes from individuals interested in exploring new professional opportunities. Candidates for a specific position may well be found from within this collection. Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.) Maxwell Partners, Inc. which has changed its name to Synaptx Impulse, Inc. (hereinafter referred to as "Impulse"), the Company's second acquisition, in October 1996, is an integrated marketing consulting firm that works with telecommunications and information industry clients. Founded in 1991, its core services include strategic and market planning, new product launch planning, distribution channel analysis and design, communications program planning and implementation, and event and trade show management. Past and present clients include AT&T, Lucent Technologies, Ameritech, BellSouth, SBC Corporation, GTE, Sprint, Motorola, Nortel, Rochester Telephone, SNET, SPSS, Reltec and Century Telephone. WWATT issued 690,000 shares of its common stock for the acquisition of Impulse on October 1, 1996, which shares were converted into 759,400 shares of the Company's common stock as a result of the Merger. The acquisition was treated as a purchase. Access and Impulse will combine to provide the Company's potential future acquisitions with marketing and sales support. Management of Access has an extended network of personal relationships it can leverage to facilitate sales of its sister companies' products, and Impulse can assist these same companies in developing marketing strategies, distribution channels, and lead-generating communications programs. ORAYCOM, Inc. On June 1, 1997, the Company made its first acquisition of a telecommunications sales representative company, ORAYCOM, Inc. located in Carrollton, Texas ("ORAYCOM"). ORAYCOM was acquired with 142,858 shares of Synaptx common stock. ORAYCOM will operate as a subsidiary of Access. ORAYCOM is a sales representative to the private network, public telephone network, cable operating companies and alternate access provider communication markets. ORAYCOM currently represents RELTEC and Thomas & Bettes in addition to other clients. Employing seven (7) people and operating out of leased office space in Carrollton, Texas, ORAYCOM's employees based in strategic territories to meet their customers' needs, serve North and Southeast Texas, Oklahoma, Arkansas, Arizona, New Mexico, Nevada and Southern California. Revenues represent the earning of commissions on its customers' sales. These commissions range from 3.5% up to 8%, depending on the sophistication of the customers' products and services represented. The Company intends to make additional acquisitions as financing and business conditions warrant, although there can be no assurance that the Company will be able to finalize any future acquisitions. The Company intends to make its acquisitions with Synaptx securities, employing tax-free exchanges for the stock of the to-be-acquired companies. Contingent earn-out payments of the Company's common stock will be based on aggressive revenue and profit hurdles. Marketing and Business Strategy The Company's primary objective is to acquire emerging high technology companies in the telecommunications industry that have limited market access. The Company will provide marketing assistance, access to key industry decision makers, an experienced sales team, management expertise, financial direction and executive recruiting services in an effort to build revenues and profits. Because such companies typically service a sharply defined niche market, they will generally function more as OEM suppliers than direct competitors to major equipment manufacturers. The Company's objective is to strengthen each acquisition's income statement and balance sheet to the point where it can operate as a self-sustaining subsidiary. Toward this end, the Company has set the following objectives: (a) Acquire high technology companies and help them to maximize their performance; (b) Achieve industry status and recognition as a growth facilitator for small and emerging high technology companies within the telecommunications industry; (c) Build the Company into a significant participant in the telecommunications industry; and (d) Optimize return on investment for shareholders. The Company's strategy is designed to enable its future subsidiaries to either sell directly to network providers or through larger manufacturers on an original equipment manufacturer (OEM) basis. In some cases, the Company will have the flexibility to distribute its products through large suppliers that are burdened with proprietary rather than open standards based products. To maintain and improve its competitive position, the Company seeks to acquire companies that develop and introduce, on a timely and cost-effective basis, new products and product features that keep pace with technological developments and emerging industry standards and address the increasingly sophisticated needs of its customers. In striving toward its business objectives, the Company intends to implement the following key strategies: (a) Acquire firms that are cash flow positive or have the potential to generate significant cash flows within the first year following acquisition. (b) Build, through acquisition, a national telecommunications sales representative organization targeting public and private network providers, utilities, and original equipment manufacturers; (c) Identify and acquire small telecommunications suppliers with unique, proven product lines that have demonstrated uneven sales success; (d) Use the Company's expertise to sell products in wider geographic areas and broader market areas to dramatically increase revenue; (e) Establish relationships leading to international import and export opportunities; (f) Establish and operate acquired companies as independent profit centers, with all intracompany transactions handled on an arm's length basis; and (g) Raise performance of subsidiaries to predetermined levels where they can become self-sustaining subsidiaries. There can be no assurance that the Company will be able to make future material acquisitions or that it will ever achieve its expressed goals. Management believes that the cost of building a distribution network is equal to or greater than the cost of developing a product. As a result, many small technology companies are unable to develop distribution channels and thus fail to realize their full potential. The Company intends to seek out suppliers that possess excellent technology but have been unable to realize their full potential because of limited sales and marketing skills and/or their inability to raise capital. The Company's management group and advisors have extensive experience in the management of suppliers to the telecommunications industry. Moreover, the Company plans to capitalize on the current trend in downsizing in larger companies by offering products that replace labor or perform functions that are likely to be outsourced. Potential New Acquisitions and Product Lines The dynamics of the telecommunications industry will dictate the types of products Synaptx will seek to acquire in the future. Primary targets will be products that facilitate management of elements within decentralized, distributed telecommunications networks and the environments in which they operate. Synaptx will seek out technology leadership that brings value to its customers in terms of quality improvements or cost reductions. Synaptx intends to focus on acquiring companies that compete in the following product-market segments: (a) Advanced intelligent network software and hardware platforms; (b) Emerging broadband transmission technologies (e.g. xDSL); (c) Wireless transmission and switching technologies, especially PCS systems; (d) Network management technologies (software and hardware); (e) Convergent billing systems that accommodate wireline and wireless, local and long distance in a single system; (f) Customer care systems (especially expert software systems); (g) Products that maintain the environment in which network elements are housed such as central office enclosures, outside plant cabinets, cement vaults, and next generation termination devices; and (h) Products whose features include testing and early warning of network component failures. Increasing market competition demands that new products address the issues of product creation, product delivery, and product assurance in both public and private networks. Synaptx will strive to address the needs of emerging companies and the needs of existing companies that continue to use embedded legacy maintenance systems. Synaptx will focus on products that have the ability to respond to a demanding and changing customer base. Application flexibility will be a critical product attribute. In addition to product-oriented acquisitions, the Company will also endeavor to build through acquisition a nationwide sales representative organization by the end of 1998. It is anticipated that acquired firms will be local or regional in scope, will generally employ five to ten reps, and will bring with them established product lines that support the Company's strategic direction. The Company intends to focus its acquisition efforts on telecommunications suppliers that have (1) a unique, proven product line that is not being sold evenly across North America, (2) a demonstrated technical ability to envision, design, develop, and service their products, (3) a demonstrated track record of market acceptance in the markets they address, (4) positive cash flow or the potential to achieve positive cash flow in the short term, and (5) availability for purchase at attractive prices. The Company's strategy is to consolidate certain sales, marketing, and administrative functions at the corporate level both to enhance the effectiveness of the function and to achieve cost savings by eliminating redundant expenses. Target companies will typically be strong technologically but weak in product distribution skills and in their ability to raise additional capital. Acquisition candidates will have been in business for a minimum of three years. Synaptx will evaluate companies that are cash flow positive but not overburdened with debt. All acquired companies will have demonstrated the potential to generate significant, positive cash flows with additional capital, sales and marketing assistance, and managerial focus. Past operating experience with Access and Impulse will be used to evaluate acquisition candidates and to simplify and expedite the due diligence process. The Company anticipates making future acquisitions by primarily using its capital stock. If necessary, the Company plans to finance or seek outside financing for potential requirements of cash. Although the Company is currently exploring additional acquisition opportunities, the Company has no agreements regarding such possible future acquisitions and has no agreement or commitments to obtain any additional financing. There can be no assurances that financing for any future acquisitions will be available on terms acceptable to the Company or at all, or that any future acquisitions will be consummated. On May 16, 1997, the Company entered into a letter of agreement ("letter agreement") to acquire a Chicago-based sales representative organization. Under the proposed terms of the letter agreement, the Company would purchase all of the outstanding capital stock and pay $2,000,000 in stock and cash. Additionally, the proposed terms call for an earn-out of additional stock over the next two years based on the acquiree achieving certain defined revenues and earnings before income taxes targets. Employment agreements would also be entered into with the three key managers of the business. At this time, no definitive agreements have been entered into. Closing is expected in September 1997. On May 13, 1997, the Company entered into a letter of intent ("letter of intent") to acquire a Minneapolis-based sales representative organization. Under the proposed terms of this letter of intent, the Company would purchase all of the outstanding capital stock. The letter of intent also calls for the development of mutually agreeable employment agreements with the principals of the business. At this time, no definitive agreements have been entered into. Closing is expected in September 1997. Competition The telecommunications industry is highly competitive and characterized by rapidly changing technologies, evolving industry standards, frequent new product introductions, and rapid changes in customer requirements. Synaptx's competitors will vary from market to market depending upon which companies are acquired and become Synaptx subsidiaries. Principal competitive factors affecting the market for subsidiary products include product reputation, quality, performance, price, professional service, and customer support. Features such as adaptability, scalability, ability to integrate with other products, functionality, and ease of use are key product differentiators. Synaptx intends to empower its subsidiary companies to compete by using the Access sales team and Impulse's integrated marketing expertise. Facilities The Company's principal place of business is located at 385 Airport Road, Suite A, Elgin, Illinois 60123, and consists of approximately 8,800 square feet of office space. This facility is subject to a lease which expires on January 31, 1998. Impulse also leases office space in Atlanta, Georgia consisting of 2,733 square feet of space, with a lease expiration date of June 30, 1998. In February, 1997, Impulse signed a letter of intent to build out and rent new office space at a new location, covering approximately 19,760 square feet of space. The proposed lease would extend for seven (7) years, commencing in December 1997. Monthly rents start at $12,597 and escalate approximately 3% per year on each anniversary date of the lease. This facility is considered adequate to support the future needs of Impulse, Access and the projected sales representative organization to be acquired to serve the upper Midwest. However, as of the date hereof, no definitive lease has been signed. ORAYCOM's office facility covers 2,000 square feet of space with the lease term extending to February 28, 2002. Litigation The Company is not a party to any material pending legal proceedings and no such action by, or to the best of its knowledge, against the Company has been threatened. Employees As of June 30, 1997 the Company employed 38 full-time individuals, consisting of 3 executive officers, 29 professional and sales representatives, and 6 office staff personnel. In addition to its full-time employees, the Company may use the services of certain consultants, writers and design professionals on a contract basis. Management presently anticipates hiring additional employees as business warrants and as funds become available. ITEM 2. Management's Discussion and Analysis or Plan of Operation The following information should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in the Form 10-SB. Overview The Company is a fully integrated service provider of consulting, marketing, sales advice and implementation strategies serving customers in the telecommunications industry. The Company operates in one business segment. The Company's fiscal year is August 31. Unless otherwise noted, references to fiscal 1995 or 1996 relate to the fiscal years ended August 31, 1995 and 1996, respectively. The Company's objective is to use its comprehensive knowledge of the telecommunications industry to acquire and improve equipment manufacturers and software developers. Targeted acquisition candidates would include companies that have demonstrated an ability to envision, design and commercialize unique products. Once such an entity is acquired, the Company will direct its sales, marketing and managerial resources toward achieving increased revenues and earnings. To date, the Company has only acquired companies that support its core services of consulting, marketing and sales. These acquisitions are not intended for subsequent spin-out. Instead, they will be the foundation to create the revenues and earnings growth for target acquirees. The Company currently provides consulting services, marketing support services and the development of collateral marketing materials, and sales channel advice. Additionally, the Company has entered the employment search business charging fees for individuals hired by client companies based on a negotiated percentage of the new employee's total first year recurring compensation. Revenues of the Company consist of fees for professional services which are estimated in advance, quoted, negotiated and then formalized via contract or purchase order. These professional fees are therefore structured as fixed price arrangements which in accordance with the Company's terms and conditions can be and are regularly billed in advance. Because these billings often precede the work being performed, revenues are only recognized as work is performed. Accordingly, any excess of professional fee billings over professional fees earned are reflected as a current liability, that is, deferred revenue. Additionally, the Company bills for collateral material production and the placement of ads which are marked-up based on industry standards. These revenues are recorded when the item is produced. Cost of sales and revenues consist primarily of the cost of labor in providing professional services representing salaries and benefits for employees and direct costs for outside independent professionals, copywriters and designers (sometimes referred to herein as "freelancers"). Production and ad placement costs represent amounts invoiced from suppliers. If the vendor has not provided an invoice at the time of revenue recognition, such costs are accrued at the estimated cost for which the production or ads were billed. Selling, general and administrative expenses consist primarily of marketing and administration expenses which include salaries, benefits and associated taxes, rent and other general office expenses. Results of Operations The following table sets forth, for fiscal periods 1995 and 1996 and for the nine months ended May 31, 1996 and 1997, certain items from the Company's Consolidated Statements of Operations expressed as a percentage of net sales. Results for the fiscal periods ended 1995 and 1996 and for the nine months ended May 31, 1996 include the consolidated operations of Synaptx and Access (utilizing pooling of interests accounting) while the results for the first nine months of 1997 include eight months of Impulse operations subsequent to its October 1, 1996 acquisition date, which is not reflected in prior periods since the acquisition is presented under the purchase method of accounting. Fiscal Periods Nine Months Ended August 31 Ended May 31 1995 1996 1996 1997 Net sales and revenues 100.0% 100.0% 100.0% 100.0% Cost of Sales 89.5% 86.9% 87.1% 69.1% Gross profit 10.5% 13.1% 12.9% 30.9% Selling, general and administrative expenses 87.8% 61.2% 18.7% 48.3% Operating loss (77.3%) (48.1%) (5.8%) (17.4%) Interest expense, net - - - 1.4% Net loss (77.3%) (48.1%) (5.8%) (18.8%) Year Ended August 31, 1996 Compared to Year Ended August 31, 1995 The Company's net sales and revenues increased by $121,715 or 508%, from $23,938 for the fiscal year ended August 31, 1995 ("1995") to $145,653 for the fiscal year ended August 31, 1996 ("1996"). The total increase related to consulting revenues generated through the Access subsidiary. Access was incorporated in November, 1994 and began operations in early 1995. Thus, it had only a few months of operations during its initial fiscal year, 1995. 1996 represented a full year of operations and 1996 consulting revenues resulted from primarily three customers. Cost of sales and revenues increased by $105,134 in 1996, or 491%, from $21,427 in 1995 to $126,561 in 1996. Both amounts related to the cost of Access Executive Associates who perform the Access subsidiary consulting assignments. Of these total amounts, the Company's President and C.E.O. represented $21,200 or 98.9% of the 1995 total consulting costs and $111,500 or 88.1% of the 1996 total consulting costs, thus representing $90,300 or 71.0% of the increase. As a percentage of net sales and revenues, cost of sales and revenues decreased from 89.5% in 1995 to 86.9% in 1996. The Company's gross profit margin, was 10.5% and 13.1% for 1995 and 1996, respectively. The increase in gross profit margin of 2.6 points in 1996 is attributable to a full year of operations of the Access subsidiary in 1996 versus start-up operations in 1995 plus a more profitable mix of business. Selling, general and administrative expenses increased by $70,609 in 1996 or 336%, from $21,024 in 1995 to $91,633 in 1996. This increase reflects a full year of operations for Access in 1996 versus only partial year operations in 1995. Furthermore, the parent company, Synaptx Worldwide, Inc., formerly known as Worldwide Applied Telecom Technologies, Inc., was formed in November of 1995 and the President and C.E.O.'s salary was accrued starting June 1, 1996, which represents the beginning of his activities implementing the Company's business plan. Of these total amounts, the Company's President and C.E.O. was reimbursed for selling, general and administrative costs representing $15,800 or 75.1% of the 1995 total and $17,200 or 18.8% of the 1996 total. As a percentage of net sales and revenues, selling, general and administrative expenses decreased from 87.8% in 1995 to 61.2% in 1996. Nine Months ended May 31, 1997 Compared to Nine Months Ended May 31, 1996 Net sales and revenues increased by $2,371,728 or 2,445%, from $97,000 in the nine month period ended May 31, 1996 ("first nine months of 1996") to $2,468,728 in the nine month period ended May 31, 1997 ("first nine months of 1997"). The Company's consulting revenues increased $19,663 or 20.3% from $97,000 to $116,663 due to sales to two new consulting customers, partially offset by reduced activity by an existing customer. The acquisition of the Impulse subsidiary in October, 1996 resulted in the addition of marketing services and production revenues of $2,281,958 for the first nine months of 1997. Marketing services and production revenues were primarily derived from telecommunications industry customers of which two represented more than 10%, each, of such revenues. Search revenues began in the third quarter of 1997, adding $70,107 from this new revenue source. Cost of sales and revenues increased by $1,620,250 or 1,917%, from $84,502 to $1,704,752. Of these total amounts, the Company's President and C.E.O. represented $79,595 or 94.2% for the nine months ended May 31,1996 and $86,436 or 5.1% for the nine months ended May 31, 1997. The acquisition of the Impulse subsidiary in October, 1996, results in the addition of cost of revenues for marketing services and production revenues of $1,698,398 or 71.3% of related revenues. As a percentage of net sales and revenues, cost of sales and revenues decreased from 87.1% in 1996 to 69.1% in 1997. The Company's gross profit margin, was 12.9% and 30.9% for the first nine months of 1996 and 1997, respectively. Gross profit margin increased for the first nine months of 1997 compared to the first nine months of 1996 because of the Impulse acquisition. Selling, general and administrative expenses increased by $1,173,626 or 6,478%, from $18,118 for the first nine months of 1996 to $1,191,744 for the first nine months of 1997. Of these total amounts, the Company's President and C.E.O. was reimbursed for operating costs representing $13,242 or 73.1% for the first nine months of 1996 and $27,900 or 2.3% for the first nine months of 1997. Selling, general and administrative expenses also increased due primarily to the creation of WWATT in November, 1995 including the addition of salary expense for the C.E.O. which began in June, 1996. The increase in selling, general and administrative expenses for the first nine months of 1997 versus the first nine months of 1996 reflects the inclusion of Impulse subsequent to its October 1, 1996 acquisition date. The acquisition of Impulse results in the addition to selling, general and administrative expenses of $826,035, or 33.5% of net sales and revenues. As a percentage of net sales and revenues, selling, general and administrative expenses increased from 18.7% for the first nine months of 1996 to 48.3% for the first nine months of 1997. The remainder of fiscal year ending August 31, 1997 will reflect an additional increase in selling, general and administrative expenses as a result of the acquisition of ORAYCOM. This higher run rate will carry over to fiscal 1998 which will have a full year of both Impulse and ORAYCOM selling, general and administrative expenses. Additionally, the Company estimates that 1998 selling, general and administrative expenses should increase as a result of increased expenses related to the increase in net sales and revenues. However, because the Company expects increased net sales and revenues in 1998, the Company believes that such expenses should remain relatively consistent as a percentage of net sales and revenues with the fiscal 1997 level. Net interest expense increased from none for the first nine months of 1996 to $35,343 or 1.4% of net sales and revenues for the first nine months of 1997. The increase in interest expense results from the acquisition of the Impulse subsidiary whose operations are included herein for the eight months since its October 1, 1996 purchase date. The bank line of credit and note supporting this interest expense bear interest at the bank's internal rate which approximated 11% during the period. Net Operating Loss The Company has accumulated approximately $467,732 of net operating loss carryforwards as of May 31, 1997, which may be offset against taxable income and income taxes in future years. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The carry-forwards expire in the year 2011. In the event of certain changes in control of the Company, there will be an annual limitation on the amount of net operating loss carryforwards which can be used. No tax benefit has been reported in the financial statements for the year ended August 31, 1996 or for the nine months ended May 31, 1997 because there is a 50% or greater chance that the carryforward will not be utilized. Accordingly, the potential tax benefit of the loss carryforward is offset by a valuation allowance of the same amount. Liquidity and Capital Resources The Company's principal cash requirements are for selling, general and administrative expenses, primarily outside consultants such as independent contractors who provide design, copywriting and professional marketing and sales consulting services, employee costs, funding of accounts receivable, capital expenditures and funding of acquisitions. The Company's primary sources of cash have been from an initial private placement of the Company's common stock which raised $747,588 of net proceeds plus cash derived from operations. The Company is investigating various sources for additional financing, including both equity infusion and debt facility arrangements. During fiscal 1995, the Company's sole operation was consulting during this initial stage period of operations. The creation of Access was funded by $30,000 invested by the two shareholders from whom Access was acquired in June, 1996 for 539,285 shares of Synaptx common stock. Access was accounted for as a pooling of interests. This initial Access funding financed the first year loss of $18,513. During fiscal 1996, the Company experienced increased revenues and selling, general and administrative costs through growth of its consulting business. The Company financed this growth in revenues and accounts receivable with increased accounts payable financing from its vendors. Additionally, the Company advanced $50,000 as a non-interest loan to Impulse before it was acquired on October 1, 1996. This loan was partially financed by increased accounts payable from its vendors and by a non-interest bearing loan from the Company's President and C.E.O. of $32,000. For the nine months ended May 31, 1996, the Company's sole source of revenue was its consulting business and it incurred a net loss of $5,620 and increased accounts receivable of $7,228. These uses of cash from operations were financed by increased accounts payable financing from the Company's vendors and a non-interest bearing short-term loan of $10,000 from its President and C.E.O. Capital expenditures of $13,100 were financed by the issuance of common stock to its President and C.E.O. During the nine months ended May 31, 1997, the Company's results included the acquired Impulse subsidiary, for eight months, starting from October 1, 1996, the Impulse acquisition date. Impulse was acquired for 759,401 shares of the Company's common stock. Because the acquisition was accounted for using the purchase method it provided $141,194 of cash and increased the liabilities by $1,033,101. The Company has experienced an operating loss of $463,111 for the nine months ended May 31, 1997. The Impulse subsidiary represented $171,283 or 37.0% of this loss including $127,698 of noncash transactions for depreciation and amortization. Access represented $85,054 or 18.4% of this loss which primarily related to cost of management payroll and related costs associated with developing and beginning implementation of the sales representative organization acquisition plan. Synaptx, the parent company, represented $206,773 or 44.6% of this loss representing the holding company costs including the salary and related taxes and benefits for the President and C.E.O. plus allocation of the estimated costs for the other corporate officers who provide services to Synaptx overall plus the cost of insurance, brochures promoting the Company's new image, public relations and legal costs. The Company's revenue growth for the nine months ended May 31, 1997 required financing for increased accounts receivable of $385,767, resulting primarily from the Impulse acquisition's revenue growth. Additionally, the Company repaid $315,308 of notes payable to banks and other current liabilities resulting from the Impulse acquisition and incurred $78,606 of capital expenditures, primarily related to the opening of an Atlanta office to support Impulse operations. In March, 1997, the Company raised $747,588 of cash from the net proceeds of its private placement offering of 1,430,800 shares of the Company's common stock of which 898,074 shares were issued. The Company's current expansion plans are primarily related to the acquisition of sales representative organizations for the creation of the first nationwide telecommunications sales representative channel of distribution. Furthermore, acquisition targets are being identified and discussions have ensued to begin the acquisition of telecommunications hardware and service providers. These acquisitions are expected to be consummated primarily for Synaptx stock. However, part of these acquisitions can be expected to require the use of cash for noncompete agreements with key employees and possibly past performance liabilities to the selling shareholders. Management anticipates that cash needed to finance possible acquisitions in the near term will be generated from operations which are expected to begin generating cash from operations beginning in the fourth quarter of fiscal 1997 and from additional private placement financing. There can be no assurance that such financing can be obtained. The Company's current expansion plans include relocating from its corporate headquarters representing 8,800 square feet office space in a business park in Elgin, Illinois around December, 1997 to office facilities currently being refurbished in downtown Elgin. This new facility will provide, as currently configured, nearly 20,000 square feet of office space. A lease has not yet been signed and therefore, an obligation to relocate does not yet exist. If this space is leased and relocation takes place, the estimated cost of relocation of $25,000 is expected to be financed from current operations. Recent Accounting Pronouncements In December, 1995, FASB issued Statement of Financial Accounting Standards Number 123, "Accounting for Stock-Based Compensation." This standard encourages a new method of recognizing stock-based compensation expense using an option pricing model measurement of the estimated fair value of employee stock options. Alternatively, companies may choose to retain the current approach set forth in Accounting Principles Board Opinion Number 25, "Accounting for Stock Issued to Employees," and provide expanded footnote disclosure as to what the effects of utilizing the option pricing model measurement would have been. Statement 123 is effective for fiscal years beginning in 1996. The Company does not plan to use the option pricing model measurement of Statement 123 and will provide the required footnote disclosure. In February, 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per Share." The new standard simplifies the methods for computing earnings per share and requires the preparation of two new amounts, basic and diluted earnings per share. When the Company adopts SFAS No. 128, it expects to report the following restated amounts for the fiscal periods: 1996 1995 Basic $ (0.04) $ (0.03) Diluted $ (0.04) $ (0.03) Inflation In the opinion of management, inflation has not had a material effect on the operations of the Company. Risk Factors and Cautionary Statements Forward-looking statements in this report are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company wishes to advise readers that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements, including, but not limited to, the following: the ability of the Company to meet its cash and working capital needs, the ability of the Company to complete material acquisitions of operating companies, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. ITEM 3. Description of Property The information required by this Item 3, Description of Property, is set forth in Item 1, Description of Business, of this Form 10-SB. ITEM 4. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information, to the best of the Company's knowledge, as of June 30, 1997, with respect to each person known by the Company to own beneficially more than 5% of the outstanding Common Stock, each director and all directors and officers as a group. Name and Address Amount and Nature of Percent of Beneficial Owner Beneficial Ownership(1) of Class(2) Ronald L. Weindruch * 1,665,550(3) 32.05% 385 Airport Road Suite A Elgin, IL 60123 D. Mike Maxwell * 554,145(4) 10.49% 385 Airport Road Suite A Elgin, IL 60123 Richard E. Hanik * 73,748(5) 1.42% 385 Airport Road Suite A Elgin, IL 60123 William N. Kashul, Sr. * 60,533(6) 1.15% 385 Airport Road Suite A Elgin, IL 60123 Peter B. Atwal * 5,503(7) 0.11% 385 Airport Road Suite A Elgin, IL 60123 Jerome Rhattigan 269,643 5.19% 1612 Bridgewater Drive Heathrow, FL 32746 Aegir International Investments, Inc. 266,692 5.13% P.O. Box HMI387 Hamilton, Bermuda HMFX All directors and 2,359,479(8) 44.06% executive officers as a group(5 persons in group) * Director and/or executive officer Note: Unless otherwise indicated in the footnotes below, the Company has been advised that each person above has sole voting power over the shares indicated above. (1) Share amounts include, where indicated, Common Stock issuable upon the exercise of certain stock options and stock warrants held by the Company's directors and executive officers at exercise prices ranging from $0.0909 to $0.9995 per share which are exercisable within sixty days. (2) Based upon 5,193,660 shares of common stock outstanding on June 30, 1997. Percentage ownership is calculated separately for each person on the basis of the actual number of outstanding shares as of June 30, 1997 and assumes the exercise of certain stock options held by such person (but not by anyone else) exercisable within sixty days. (3) Includes 44,024 shares of stock held in the names of Mr. Weindruch's children. Includes 3,669 shares which may be acquired by Mr. Weindruch pursuant to the exercise of stock purchase options exercisable within sixty days at the average exercise price of $0.9995 per share. (4) Includes 400,062 shares held by Mr. Maxwell's wife and 66,036 shares held by Mr. Maxwell's children and their spouses, as to which Mr. Maxwell disclaims any beneficial ownership. Also includes 3,669 shares which may be acquired by Mr. Maxwell pursuant to the exercise of stock purchase options exercisable within sixty days at the average exercise price of $0.9995 per share, 1,834 shares which may be purchased by Mr. Maxwell's wife pursuant to the exercise of stock purchase options exercisable within 60 days at the average exercise price of $0.90861 per share, and 82,544 shares which may be acquired by Mr. Maxwell pursuant to the exercise of stock purchase warrants exercisable within sixty days at the average exercise price of $0.90861 per share. (5) Includes 5,000 shares held in the names of Mr. Hanik's children. Includes 3,669 shares which may be acquired by Mr. Hanik pursuant to the exercise of stock purchase options exercisable within sixty days at the average exercise price of $0.90861 per share. (6) Includes 60,533 shares which may be acquired by Mr. Kashul pursuant to the exercise of stock purchase options exercisable within sixty days at the average exercise price of $0.166 per share. (7) Includes 5,503 shares which may be acquired by Mr. Atwal pursuant to the exercise of stock purchase options exercisable within sixty days at the average exercise price of $0.90861 per share. (8) Includes 162,359 shares which are issuable upon the exercise of certain stock options and stock warrants held by the Company's directors and executive officers at exercise prices ranging from $0.0909 to $0.9995 per share which are exercisable within sixty days. ITEM 5. Directors, Executive Officers, Promoters and Control Persons Executive Officers and Directors The executive officers and directors of the Company are as follows: Name Age Position Ronald L. Weindruch. . . . . . . . 50 President, C.E.O. and Director William N. Kashul, Sr. . . . . . . 63 Director D. Mike Maxwell. . . . . . . . . . 57 Executive Vice President and Director Peter B. Atwal . . . . . . . . . . 41 Director Richard E. Hanik . . . . . . . . . 50 Secretary, Treasurer and C.F.O. All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. The Company has not compensated its directors for service on the Board of Directors or any committee thereof, but directors are reimbursed for expenses incurred for attendance at meetings of the Board of Directors and any committee of the Board of Directors. Officers are appointed annually by the Board of Directors and each executive officer serves at the discretion of the Board of Directors. The Company does not have any standing committees. None of the officers and/or directors of the Company are officers or directors of any other publicly traded corporation, nor have any of the directors and/or officers, nor have any of the affiliates or promoters of the Company filed any bankruptcy petition, been convicted in or been the subject of any pending criminal proceedings, or the subject or any order, judgment, or decree involving the violation of any state or federal securities laws within the past five years. The business experience of each of the persons listed above during the past five years is as follows: Ronald L. Weindruch is the founder, Chairman and Chief Executive Officer of Synaptx as well as the founder of Access. Mr. Weindruch also serves as Chairman of the Sanford Airport Authority in Sanford, Florida. Prior to founding Access in 1994, he held a variety of senior management positions with Siemens, including senior vice-president of operations at Siemens Stromberg-Carlson. Prior to beginning with Siemens in 1984, Mr Weindruch served as director of marketing for the Nortel (formerly Northern Telecom) DMS 100 switching system and was also group director of business development for Nortel's digital switching group. Mr. Weindruch holds an M.B.A. degree from George Washington University. D. Mike Maxwell is Executive Vice President of Synaptx. He founded Impulse in 1991 which was acquired by WWATT on October 1, 1996. Additionally, he has founded Pet Care, Inc., Paw Island Limited Partnership, and the National Cellular SAFETALK Center, Inc. He has over twenty years of marketing and sales experience in the telecommunications industry, with expertise in marketing services, market plan development and execution, marketing and sales training, sales planning and management. Mr. Maxwell has been in the marketing services business since 1984 when he was named vice president of sales for Warner-Little Text, a consumer telecommunications and enhanced subscriber services subsidiary of Warner Communications. Prior to joining Warner-Little Text, he was the director of marketing for Consolidated Communications, a diversified communications company. Mr. Maxwell has served as chairman of the marketing committee of the U.S. Telephone Association and is an active member of International Engineer Consortium education planning council for the Business and Marketing institute. Mr. Maxwell holds a B.A. degree from Eastern Illinois University. William N. Kashul, Sr. is President of Kashul Consulting, Inc., a Chicago-based telecommunications consulting firm. Prior to forming his firm in 1994, Mr. Kashul was a regional vice president of Strategic Account Development, North America, for Northern Telecom, Inc. Mr. Kashul began his telecommunications career in the U.S. Army in 1953. He joined BTE Automated Electric as an engineer in 1956 and went to ITT Kellogg as a project engineer in 1959. He joined Stromberg-Carlson as a senior sales engineer in 1967 before going to Northern Telecom in 1972. Mr. Kashul is a member of the International Communications Forum Executive Advisory Council and holds an M.B.A. from the University of Chicago. Peter B. Atwal has over twenty-two years experience in the telecommunications and data communications industry and has worked in research and development, switching systems and operations support systems. Mr. Atwal is the Chief Technology Officer for ISR Global Telecom, a network management provider. In this capacity, he is responsible for development of TMN Toolkit products, turnkey projects for service platforms, interworking units and network and element management solutions based on TMN principles and standards. Mr. Atwal previously worked as a research and development manager for Siemens, and as a consultant for Logica, Inc. Mr. Atwal holds a BSC degree in computer science from London University. Richard E. Hanik is Chief Financial Officer, Secretary and Treasurer of Synaptx. In 1994 he joined Impulse which was acquired on October 1, 1996, and was appointed C.F.O. following WWATT's acquisition of Impulse. Prior to joining Impulse, Mr. Hanik had 11 years of telecommunications business development and financial experience with Ameritech, in their cellular and paging operations. While at Ameritech, Mr. Hanik was instrumental in their acquisition of numerous paging businesses and developed the initial financial system when cellular operations first began in October, 1983. Prior to that he spent four years as an Audit Manager with Deloitte & Touche. Mr. Hanik also held various financial positions at Chemetron Corporation, then a Fortune 500 company, including Division Controller and Internal Audit Director. Prior to Chemetron, he served as Controller of the Illinois Housing Development Authority and started his career as an auditor with Arthur Andersen & Co. Mr. Hanik is a member of the American Institute of Certified Public Accountants and the Illinois Society of CPAs, and holds a B.A. degree from DePaul University. ITEM 6. Executive Compensation Employee Stock Option Plan The Board of Directors and a majority of the shareholders of the Company have approved and adopted the Company's 1996 Stock Option Plan (the "Plan"). The purpose of the Plan is to encourage stock ownership by management employees of the Company, to provide an additional incentive for those employees to contribute to the success of the Company and to provide the Company with the opportunity to use stock options as a means of recruiting new managerial personnel where appropriate. The Plan authorizes the grant of options which qualify as incentive stock options under Section 422A of the Internal Revenue Code ("qualified options"), as well as stock options which do not qualify under that section of the Code ("nonqualified options"). The Plan is administered by the Board of Directors of the Company. The Board is authorized to select the individual employees to receive options under the Plan, the number of shares subject to each option, the option term and other matters specified in the Plan. The Plan provides that the exercise price of any option may not be less than 100% of the fair market value of the Company's stock at the date of grant. Options must be granted within ten years from the date the Plan was approved by the Company's shareholders. A maximum of 550,290 shares of the Company's common stock are authorized for issuance pursuant to options granted under the Plan, subject to adjustments to prevent dilution or enlargement of rights of participants in certain circumstances. As of June 30, 1997 there were 240,144 stock options issued under the Plan of which 80,061 are exercisable at an option price per share ranging from $0.09086 to $2.18 per share and with expiration dates from October, 1998 through June, 2002. In addition to the shares of the Company's common stock available under the Plan, the Company has also issued nonqualified stock options outside of the Plan. In July 1996, nonqualified options to purchase 33,018 shares of the Company's common stock at an option price of $0.9086 per share were issued to the outside members of the Board of Directors for their services. In October 1996, one of the outside directors was granted nonqualified options to purchase 55,030 shares of the Company's common stock at an option price of $0.0909 per share for his services in identifying the Impulse acquisition. As of June 30, 1997, all 88,048 of the nonqualified options are outstanding and exercisable. Profit Sharing Plan The Company's subsidiary, Synaptx Impulse, Inc., sponsors a qualified employee savings plan (commonly referred to as a "401K plan") for all eligible employees, including all the officers of the Company. Participants may make contributions from their gross pay (limited to 15% of the employee's compensation, as defined), with Synaptx Impulse, Inc. matching such contributions (subject to certain limitations) at the rate of 25% of the first 6% of each participant's contribution. No other deferred compensation plan is currently in place. The following table sets forth all compensation actually paid or accrued by the Company for services rendered to the Company for the years ended August 31, 1995 and 1996, and the ten month period ended June 30, 1997 to the Company's Chief Executive Officer and Executive Vice President. No executive officer of the Company has earned a salary greater than $100,000 annually for any of the periods depicted. Summary Compensation Table Other All Annual Other Name and Compen- Compen- Principal Position Year Salary Bonus sation sation(1) Ronald L. Weindruch, 1995 $ -0- $ -0- $ -0- $ 21,200 President, C.E.O. 1996 $18,000 $ -0- $ -0- $111,500 1997 $76,600 $ -0- $ -0- $ 90,900 D. Mike Maxwell, 1995 $ -0- $ -0- $ -0- $ -0- Executive Vice 1996 $ -0- $ -0- $ -0- $ -0- President 1997 $91,125 $ -0- $ -0- $ -0- (1) Consulting and commission income. Employment Agreement The Company has entered into an employment agreement with its President and CEO which currently provides for an annual salary of $108,000 per year with an increase in compensation to $120,000 per year effective September 1, 1997. This agreement also provides for an increase in compensation to $144,000 per year when the consolidated sales and revenues run rate defined as three consecutive months reaches $12 million annually, a bonus based on Company's performance as defined by the Board of Directors not to exceed 33% of base compensation, and other incentives upon achieving certain other performance hurdles. The term of this employment agreement expires August 31, 1998 but automatically renews on an annual basis, unless acted upon by the Board. If the employee is terminated without cause, the Company is liable for three years of regular compensation if this termination takes place during the initial term and two years of regular compensation if after the initial term. The Executive Vice President of the Company has an employment agreement with a subsidiary of the Company which expires on August 31, 1998 but has an automatic annual renewal provision. This agreement provides for an annual salary of $135,000 and a bonus based on the subsidiary's performance (as defined by the subsidiary's Board of Directors) not to exceed 33% of base compensation. If the employee is terminated without cause, the Company is liable for three years of regular compensation if this termination takes place during the initial term and two years of regular compensation if after the initial term. Following the acquisition of ORAYCOM, Inc. on June 1, 1997, its founder and president, O. Ray Strickland, had an employment agreement in place which among other things, provided for annual compensation of $120,000 per year and a commission of 5% on all commission revenues generated within the nine state territory serving the Southwest U.S. This employment agreement extends through June 1, 2000. The Company, through its subsidiaries, has four other employment agreements, including one with the remaining officer of the Company. These agreements provide for annual salaries ranging from $72,000 to $95,000 and expire on December 31, 1997 with the exception of one agreement which expires on August 31, 1998. All these employment agreements provide for automatic renewal. If the employee is terminated without cause during the initial term of their agreement, the Company is liable for nine months of regular compensation. ITEM 7. Certain Relationships and Related Transactions During the Company's last two fiscal years, there have been no transactions between the Company and any officer, director, nominee for election as director, or any shareholder owning greater than five percent (5%) of the Company's outstanding shares, nor any member of the above referenced individuals' immediate family, except as set forth below. On February 10, 1997, the Company entered into the Merger. Pursuant to the terms of the Merger, the Company effected a reverse stock split of its outstanding shares of common stock on a one (1) share for one and three-fourths (1.75) shares, and exchanged 3,600,000 shares of authorized but previously unissued shares of the Company's common stock (post-split) for all the previously issued and outstanding shares of WWATT. An additional 790,000 shares of the Company's common stock was issued for services related to the Merger. As a result of the Merger, WWATT was merged with and into the Company with the Company being the surviving corporation, and the Company changed its corporate name to Synaptx Worldwide, Inc. The aforementioned actions were approved by the Company's shareholders at the Special Meeting of Shareholders held February 10, 1997. For accounting purposes, the transaction has been treated as a recapitalization of the Company, or reverse merger. At the time of the transaction, the Company had only nominal assets and there was no substantive trading market for its securities. Therefore, the value of the transaction and the number of shares issued thereby was determined by mutual negotiation among the parties. The Synaptx Chairman of the Board of Directors, who is also its President & C.E.O., received 269,642 shares of the Company's common stock which is equal to 50% of the common stock issued in the exchange for NATCRI's stock, for his 50% ownership in Access. Also, this individual provides a significant amount of the services to Access. He was paid or an accrual was made for services provided and expenses incurred, as follows: Total incurred for: May 31, May 31, August 31, August 31, 1996 1997 1995 1996 Consulting and commission expenses $84,300 $90,900 $ -0- $ 111,500 Selling, general and administrative expenses 13,200 27,900 15,800 17,200 Accrued expenses: Consulting and commission expenses 12,200 17,400 21,200 20,200 Additionally, this majority shareholder of WWATT had, as of August 31, 1996, advanced funds to a company in the form of a noninterest-bearing loan in the amount of $32,000. The Company has repaid the loan. The Company has a revolving line-of-credit with a bank for $250,000, due to expire May 1, 1998. It is expected to be renewed. Furthermore, the Company also has a $25,000 term note with a maturity date of September 30, 1997. Borrowings under the line-of-credit and the outstanding principal and interest on the note are collateralized by substantially all of the Company's assets and bear interest at the bank's floating interest rate (currently 10.99%). The line-of-credit and the note are further secured by commercial guaranties of two of the shareholders and Synaptx. The Company through its acquisition of Impulse is also acting as guarantor of personal notes to a bank of an officer of the Company and his wife, a shareholder. These notes, as of June 30, 1997, total $443,800 which includes $257,500 under a mortgage note secured by real estate. The Company believes that the current fair market value of such real estate is sufficient to cover the principal amounts associated with these mortgage notes. The officer and the shareholder are current in their payments. ITEM 8. Description of Securities Common Stock The Company is authorized to issue 25,000,000 shares of common stock, par value $.001 per share, of which 5,193,660 shares are issued and outstanding as of June 30, 1997. All shares of common stock have equal rights and privileges with respect to voting, liquidation and dividend rights. Each share of common stock entitles the holder thereof to (i) one non-cumulative vote for each share held of record on all matters submitted to a vote of the stockholders; (ii) to participate equally and to receive any and all such dividends as may be declared by the Board of Directors out of funds legally available thereof; and (iii) to participate pro rata in any distribution of assets available for distribution upon liquidation of the Company. Stockholders of the Company have no preemptive rights to acquire additional shares of common stock or any other securities. All outstanding shares of common stock are non-assessable. Preferred Stock The Company is also authorized to issue 10,000,000 shares of preferred stock , par value One-Tenth of a Cent ($.001) per share, which shares of preferred stock may be issued in various series with terms, rights, voting privileges and preferences to be determined at the discretion of the Board of Directors at the time of issuance. All fully paid shares of preferred stock of the Company shall not be liable to call or assessment. No shares of Preferred Stock have been issued or are currently outstanding. Warrants to Purchase Common Stock The Company also authorized the issuance of 200,006 warrant certificates to purchase shares of common stock of the Company. The warrant certificates allow for the purchase of one (1) share of common stock for every one warrant certificate. The warrants were issued as follows: Number of Exercise Date Expiration Warrant Price Issued Date Certificates Range 9/1/96 8/31/2001 88,048 $ 0.45431 to $ 0.90861 2/7/97 2/6/2002 111,958 $ 0.90861 to $ 1.36292 The Warrant Agreement provides for adjustments to the number of warrant certificates to prevent dilution of warrant holders under certain circumstances. PART II ITEM 1. Market Price of And Dividends on the Registrant's Common Equity and Other Shareholder Matters No shares of the Company's Common Stock have been registered with the Securities and Exchange Commission (the "Commission") or any state securities agency of authority. The Company's Common Stock is being traded on a limited basis in the over-the-counter market and quotations are published on the OTC Bulletin Board under the symbol "SYTX", and in the National Quotation Bureau, Inc. "pink sheets" under Synaptx Worldwide, Inc. Inclusion on the OTC Bulletin Board permits price quotations for the Company's shares to be published by such service. The ability of an individual shareholder to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, the Company has no plans to register its securities in any particular state. Further, most likely the Company's shares will be subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or exempted from the definition by the Commission. If the Company's shares are deemed to be a penny stock, trading in the shares will be subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in the Company's common stock and may affect the ability of shareholders to sell their shares. As of June 30, 1997 there were 145 holders of record of the Company's common stock, which figure does not take into account those shareholders whose certificates are held in the name of broker-dealers. Because of the sparse trading of the Company's securities and the absence of a current bid and ask quotation, no trading history is presented herein. As of the date hereof, the Company has issued and outstanding 5,193,660 shares of common stock. Of this total, 657,211 shares were issued in transactions more than two years ago. The remaining 4,536,449 shares were issued on or after March 12, 1997. Thus, 657,211 shares of the Company's outstanding common stock may be sold or otherwise transferred without restriction pursuant to the terms of Rule 144 ("Rule 144") of the Securities Act of 1933, as amended (the "Act"), unless held by an affiliate or controlling shareholder of the Company. Of these shares, the Company has identified no shares as being held by affiliates of the Company. The 4,536,449 shares issued on or after March 12, 1997 and/or presently held by affiliates or controlling shareholders of the Company may be sold pursuant to Rule 144, subject to the volume and other limitations set forth under Rule 144. In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned restricted shares of the Company for at least one year, including any person who may be deemed to be an "affiliate" of the Company (as the term "affiliate" is defined under the Act), is entitled to sell, within any three-month period, an amount of shares that does not exceed the greater of (i) the average weekly trading volume in the Company's common stock during the four calendar weeks preceding such sale or (ii) 1% of the shares then outstanding. A person who is not deemed to be an "affiliate" of the Company and who has held restricted shares for at least three years would be entitled to sell such shares without regard to the resale limitations of Rule 144. Dividend Policy The Company has not declared or paid cash dividends or made distributions in the past, and the Company does not anticipate that it will pay cash dividends or make distributions in the foreseeable future. The Company currently intends to retain and invest future earnings to finance its operations. ITEM 2. Legal Proceedings There are presently no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of its property is subject and, to the best of its knowledge, no such actions against the Company are contemplated or threatened. ITEM 3. Changes in and Disagreements With Accountants There have been no changes in or disagreements with accountants. ITEM 4. Recent Sales of Unregistered Securities The Company's predecessor, WWATT, issued restricted shares of WWATT common stock starting March 1, 1996. Additionally, shares were issued to consummate the purchases of Access, Impulse and ORAYCOM, Inc. on June 3, 1996, October 1, 1996 and June 1, 1997, respectively. Beginning June 10, 1996, WWATT began offering a private placement which was consummated March 12, 1997. All the above transactions were adjusted in a stock dividend upon the recapitalization of WWATT into Synaptx for which 3,600,000 shares of Synaptx common stock were issued. Additionally, 790,000 shares of Synaptx common stock were issued to one person for providing services related to the recapitalization of WWATT into Synaptx. On January 23, 1997 pursuant to a written agreement, the Company issued an aggregate of 85,716 shares of common stock to a total of three individuals in exchange for various services rendered to the Company, including assisting the Company in its search for and investigation of potential acquisition and merger candidates. These shares were issued in reliance on the exemption from registration provided by Rule 701 promulgated under the Securities Act of 1933, as amended (the "Act"), and certificates representing the shares bear an appropriate restrictive legend. On June 3, 1997 the Board of Directors of Synaptx authorized a stock rights offering whereby every shareholder of record as of May 28, 1997 of Synaptx common stock could purchase one (1) share of common stock for every three (3) shares held at a price of $2.18 per share. As a result, an offering of 1,682,403 shares were so offered of which 3,591 were exercised as of June 30, 1997 the expiration date. With respect to the issuance and/or sale of the aforementioned shares except for those issued on January 23, 1997, the Company relied on the exemption from registration provided by Sections 4(2) and 4(6) of the Securities Act of 1933, as amended (the "Act"), and Regulation D Rule 506 promulgated thereunder. The Company has also made available to purchasers of its common stock its business plan and/or Private Placement Memorandum. All of the shares issued to the aforementioned persons bore restrictive legends preventing their transfer except in accordance with the Act and the regulations promulgated thereunder. In addition, stop transfer instructions pertaining to these shares will be lodged with the Company's transfer agent. ITEM 5. Indemnification of Directors and Officers As permitted by the provisions of the Utah Revised Business Corporation Act (the "Utah Act"), the Company has the power to indemnify an individual made a party to a proceeding because they are or were a director, against liability incurred in the proceeding, if such individual acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the Company and, in a criminal proceeding, they had no reasonable cause to believe their conduct was lawful. Indemnification under this provision is limited to reasonable expenses incurred in connection with the proceeding. The Company must indemnify a director or officer who is successful, on the merits or otherwise, in the defense of any proceeding or in defense of any claim, issue, or matter in the proceeding, to which they are a party to because they are or were a director or officer of the Company, against reasonable expenses incurred by them in connection with the proceeding or claim with respect to which they have been successful. The Company's Articles of Incorporation empower the Board of Directors to indemnify its officers, directors, agents, or employees against any loss or damage sustained when acting in good faith in the performance of their corporate duties. The Company may pay for or reimburse reasonable expenses incurred by a director, officer employee, fiduciary or agent of the Company who is a party to a proceeding in advance of final disposition of the proceeding provided the individual furnishes the Company with a written affirmation that their conduct was in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of the Company, and undertake to repay the advance if it is ultimately determined that they did not meet such standard of conduct. Also pursuant to the Utah Act, a corporation may set forth in its articles of incorporation, by-laws or by resolution, a provision eliminating or limiting in certain circumstances, liability of a director to the corporation or its shareholders for monetary damages for any action taken or any failure to take action as a director. This provision does not eliminate or limit the liability of a director (i) for the amount of a financial benefit received by a director to which they are not entitled; (ii) an intentional infliction of harm on the corporation or its shareholders; (iii) for liability for a violation of Section 16-10a-842 of the Utah Act (relating to the distributions made in violation of the Utah Act); and (iv) an intentional violation of criminal law. To date, the Company has not adopted such a provision in its Articles of Incorporation, By-Laws, or by resolution. A corporation may not eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision becomes effective. The Utah Act also permits a corporation to purchase and maintain liability insurance on behalf of its directors, officers, employees, fiduciaries or agents. Transfer Agent The Company has designated Interstate Transfer Co., 56 West 400 South, Suite 260, Salt Lake City, Utah 84101, as its transfer agent. PART F/S The financial statements for Synaptx Worldwide, Inc. for the fiscal periods ended August 31, 1996 and 1995 have been audited to the extent indicated in their report by BDO Seidman, LLP, independent certified public accountants, and have been prepared in accordance with generally accepted accounting principles and pursuant to Regulation S-B as promulgated by the Securities and Exchange Commission and are included herein in response to Item 15 of this Form 10-SB. Financial statements for the period ended May 31, 1997 and 1996 have been compiled by management of the Company and are included herewith. These statements were not audited or reviewed by BDO Seidman, LLP and, accordingly they did not express an opinion or any other form of assurance on them. The financial statements for Synaptx Impulse, Inc. for the fiscal years ended August 31, 1996 and 1995 have been audited to the extent indicated in their report by BDO Seidman, LLP, independent certified public accountants, and have been prepared in accordance with generally accepted accounting principals. Synaptx Worldwide, Inc. and Subsidiary (f/f/a/ Worldwide Applied Telecom Technology, Inc.) Independent Auditors' Report F-2 Consolidated Balance Sheets as of August 31, 1996 and 1995 F-3 Consolidated Statements of Operations for the Periods Ended August 31, 1996 and 1995 F-4 Consolidated Statements of Stockholders' (Deficit) Equity for the Years Ended August 31, 1996 and 1995 F-5 Consolidated Statements of Cash Flows for the Periods Ended August 31, 1996 and 1995 F-6 Notes to Consolidated Financial Statements F-7 Unaudited Financial Statements Consolidated Balance Sheet as of May 31, 1997 F-16 Consolidated Statements of Operations for the Nine Months Ended May 31, 1996 and 1997 F-17 Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 1996 and 1997 F-18 Notes to Consolidated Financial Statements F-19 Pro Forma Consolidated Financial Information Introduction to the Unaudited Pro Forma Consolidated Financial Information for the Nine Months Ended May 31, 1997 F-22 Pro Forma Consolidated Statement of Operations for the Nine Months Ended May 31, 1997 F-23 Note to Pro Forma Consolidated Financial Statement F-24 Introduction to Unaudited Pro Forma Consolidated Financial Information for the Year Ended August 31, 1996 F-25 Pro Forma Consolidated Statement of Operations for the Year Ended August 31, 1996 F-26 Note to Pro Forma Consolidated Financial Statement F-27 Acquisition Synaptx Impulse, Inc. (f/k/a Maxwell Partners, Inc.) Independent Auditors' Report F-28 Balance Sheets as of August 31, 1996 and 1995 F-29 - F-30 Statements of Operations for the Years Ended August 31, 1996 and 1995 F-31 Statements of Stockholders' Deficit for the Years Ended August 31, 1996 and 1995 F-32 Statements of Cash Flows for the Years Ended August 31, 1996 and 1995 F-33 Notes to Financial Statements F-34 Independent Auditors' Report Board of Directors Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Elgin, Illinois We have audited the accompanying consolidated balance sheets of Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary as of August 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' (deficit) equity and cash flows for the year ended August 31, 1996 and the ten months ended August 31, 1995. 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 Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary at August 31, 1996 and 1995, and the consolidated results of their operations and cash flows for the year and ten months then ended, respectively, in conformity with generally accepted accounting principles. BDO SEIDMAN, LLP Chicago, Illinois April 23, 1997 Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Consolidated Balance Sheets August 31, 1996 1995 Assets Current Assets Cash $ - $ 11,342 Accounts receivable (Note 5) 36,792 27,001 Total Current Assets 36,792 38,343 Restricted Cash (Note 6) 10,000 - Due From Maxwell Partners, Inc.(Note 9) 50,000 - Property and Equipment, net of accumulated depreciation (Note 3) 11,500 - Deferred Placement Cost (Note 6) 5,000 - $113,292 $ 38,343 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 56,746 $ 26,856 Accrued expenses (Note 8) 60,000 - Due to officer (Note 2) 32,000 - Total Current Liabilities 148,746 26,856 Liability to Private Placement Subscribers (Note 6) 10,000 - Commitments (Note 7) Stockholders' (Deficit) Equity Preferred stock; $.001 par value; 10,000,000 shares authorized - - Common stock; $.001 par value; 25,000,000 shares authorized, 1,937,022 and 539,285 shares issued and outstanding 1,936 539 Additional paid-in capital 43,664 29,461 Deficit (91,054) (18,513) Total Stockholders' (Deficit) Equity (45,454) 11,487 $113,292 $ 38,343 See accompanying notes to consolidated financial statements. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Consolidated Statements of Operations Ten months Year ended ended August 31, August 31, 1996 1995 Consulting Revenue (Note 5) $ 145,653 $ 23,938 Consulting and Commission Expenses 126,561 21,427 Gross profit 19,092 2,511 General and Administrative Expenses 91,633 21,024 Net Loss $ (72,541) $ (18,513) Weighted Average Shares Outstanding 1,937,022 539,285 Net Loss Per Share $ (0.04) $ (0.03) See accompanying notes to consolidated financial statements. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Consolidated Statements of Stockholders' (Deficit) Equity Additional Common Par Paid-in Stock Value Capital Deficit Total Balance, September 1, 1994 - $ - $ - - $ - Shares issued in acquisition (Note 1) 539,285 539 29,461 - 30,000 Net loss for the period - - - (18,513) (18,513) Balance, August 31, 1995 539,285 539 29,461 (18,513) 11,487 Shares issued for assets 1,397,737 1,397 11,703 - 13,100 Expenses incurred for the Company by the President - - 2,500 - 2,500 Net loss for the year - - - (72,541) (72,541) Balance, August 31, 1996 1,937,022 $1,936 $43,664 $(91,054) $(45,454) See accompanying notes to consolidated financial statements. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Consolidated Statements of Cash Flows Ten Year months ended ended August 31, August 31, Cash Flows From Operating Activities Net loss (72,541) $(18,513) Adjustments to reconcile net loss to net cash provided by (used in)operating activities Depreciation 1,600 - Noncash rent expense 2,500 - Changes in assets and liabilities Increase in accounts receivable (9,791) (27,001) Increase in accounts payable 29,890 26,856 Increase in accrued expenses 60,000 - Net cash provided by (used in) operating activities 11,658 (18,658) Cash Flows From Financing Activities Increase in restricted cash (10,000) - Increase in liability to private placement subscribers 10,000 - Increase in deferred placement coss (5,000) - Increase in due from Maxwell Partners, Inc. (50,000) - Increase in due to officer 32,000 - Issuance of common stock - 30,000 Net cash used in financing activities (23,000) 30,000 Net (Decrease) Increase in Cash (11,342) 11,342 Cash, at beginning of period 11,342 - Cash, at end of period $ - $ 11,342 Supplemental Cash Flow Information During the year 1996, the Company issued 1,397,737 shares of common stock in exchange for fixed assets with a value of $13,100. See accompanying notes to consolidated financial statements. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Summary of Accounting Policies Operations Synaptx Worldwide, Inc., formerly known as Worldwide Applied Telecom Technology, Inc. (the "Company"), is a holding company incorporated in the State of Utah. The Company has a wholly owned subsidiary, North American Telco Cable Representatives, Inc. (d/b/a Synaptx Access ("Access")), which was incorporated in the State of Florida. Access was acquired by the Company on June 3, 1996 in a transaction accounted for as a pooling of interests. See Notes 1 and 9. Access is a consulting and sales representative firm based in Florida that provides telecommunications and information industry companies with consulting, field sales and business development support. Clients are located throughout the United States. Access' revenues are primarily to telecommunications companies. Accordingly, all receivables at August 31, 1996 and 1995 are related to these customers. Basis of Reporting The consolidated financial statements of the Company (incorporated on November 3, 1995) are reporting the Company's initial results for the ten months ended August 31, 1996 and Access' results for the fiscal year ended August 31, 1996 and the ten months ended August 31, 1995. Access was incorporated November 14, 1994. See Note 2. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Access. Upon consolidation, significant intercompany accounts, transactions and profits are eliminated. At August 31, 1996, approximately 32% of net assets included in the consolidated balance sheet are attributed to Access. Recognition of Income Professional fees and commission billings represent the principal sources of revenue derived from its customers. Professional fee revenue is generally recognized when fees are earned based on work performed. Commission revenues are recorded as services are performed. Property and Equipment; Depreciation Property and equipment are stated at cost and depreciated over their estimated useful lives of three to five years using the straight-line method. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Summary of Accounting Policies Income Taxes Prior to the business combination on June 3, 1996, the Company's wholly owned subsidiary, with the consent of its shareholders, elected to be taxed as an "S" corporation in compliance with elections under the Internal Revenue Code. In lieu of corporation income taxes, the shareholders of an "S" corporation are taxed on their proportionate share of the subsidiary's taxable income. Accordingly, no liability or provision for federal income taxes is included in the accompanying financial statements for Access' taxable periods ended December 31, 1994 and 1995, and for the stub period prior to the merger for the five months ended May 31, 1996, nor are any deferred taxes provided for timing differences between income tax and financial reporting prior to May 31, 1996. Since the acquisition date, Access' results are included with the Company's results as reflected in a planned consolidated federal income tax return. See Note 4. Estimates The accompanying financial statements include estimated amounts and disclosures based on management's assumptions about future events. Actual results may differ from those estimates. Recent Accounting Pronouncements In December 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation." This standard encourages a new method of recognizing stock-based compensation expense using an option pricing model measurement of the estimated fair value of employee stock options. Alternatively, companies may choose to retain the current approach set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and provide expanded footnote disclosure as to what the effects of utilizing the option pricing model measurement would have been. SFAS No. 123 is effective for fiscal years beginning in 1996. The Company does not plan to use the option pricing model measurement of SFAS No. 123 and will provide the required footnote disclosure. In March 1997, the FASB issued SFAS No. 128, "Earnings per Share." The new standard simplifies the standards for computing earnings per share and requires presentation of two new amounts: basic and diluted earnings per share. The Company will adopt this standard when it reports its operating results for the second quarter ending February 28, 1998. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Summary of Accounting Policies Financial Instruments Financial instruments which potentially subject the Company to concentrations of risk consist principally of temporary cash investments and accounts receivable. The Company invests its temporary cash balances in financial instruments of highly rated financial institutions with maturities of less than three months. The carrying values reflected in the balance sheets reasonably approximate the fair values for cash, accounts receivable, payables and debt. Net Loss Per Share Net loss per share is based on the weighted average number of shares of common stock outstanding during each period. Stock Dividend In February 1997, the Company declared a 10.058% stock dividend. All share and per share data have been adjusted to reflect the stock dividend. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements 1. Business Combination On June 3, 1996, the Company entered into a definitive agreement with the shareholders holding all of the issued and outstanding common stock of Access. These shareholders agreed to exchange all of their outstanding common stock for 541,842 shares of common stock of the Company. The acquisition was accounted for as a pooling of interests and, accordingly, the accompanying financial information has been restated to include the accounts of Access for all periods presented. Results of the separate entities for the periods preceding the acquisition are as follows: September 1, 1995 Year through ended May 31, August 31, 1996 1995 Revenues The Company $ - Access 105,773 27,001 $ 105,773 $ 27,001 Net loss The Company $ 37,713 $ - Access 18,899 18,513 $ 56,612 $ 18,513 2. Related Party Transactions The majority shareholder of the Company who is also the Chairman of the Board of Directors and the President of the Company received 269,642 shares (50% of the Company's common stock issued in the exchange of stock) for his 50% ownership in Access. Also, this individual provides a significant amount of the services to Access. For the periods ended August 31, he was paid or an accrual was made for services provided and expenses incurred, as follows: 1996 1995 Total payments for the periods Consulting and commissions expenses $111,500 $ - General and administrative expenses 38,000 15,800 Accounts payable at August 31 Consulting and commissions expenses 20,200 21,200 General and administrative expenses 2,700 2,800 Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements In 1996, this shareholder advanced funds of $32,000 to the Company in the form of a noninterest-bearing loan. Subsequent to August 31, 1996, the Company fully paid this loan. In addition, the Company was provided office space rent free by the President. The Company has recorded an expense for the estimated market value of the rental space with a corresponding credit to paid-in capital. One of the members of the board of directors is also the founder/chief technology officer of the most significant customer in 1996. This director like all other outside directors also was granted options to purchase 5,529 shares of the Company's common stock subsequent to year end. See Note 7. 3. Property and Equipment Major classes of property and equipment consist of the following as of August 31: 1996 1995 Furniture and fixtures $ 9,400 $ - Computer equipment 3,700 - 13,100 - Less accumulated depreciation 1,600 - Net property and equipment $11,500 $ - 4.Income Taxes With the consent of its stockholders, Access elected to be taxed as an "S" corporation pursuant to the Internal Revenue Code through June 3, 1996. Under this arrangement, the stockholders will include the taxable income (loss) of the Company in their individual tax returns. As of June 3, 1996, Access became a "C" Corporation. A deferred tax asset was created as a result of the estimated future tax consequences of temporary differences between the financial statement and tax basis of assets given the provisions of the enacted tax laws. A valuation allowance has been established to fully reserve for this deferred tax asset. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements 5.Significant Customers A substantial portion of the Company's revenues are generated from relatively few customers. Two customers accounted for approximately 55% and 18% of sales in the year ended August 31, 1996 and two different customers accounted for approximately 57% and 13% of sales in the ten months ended August 31, 1995. Receivables from these customers represented approximately 14% and 37% of total receivables at August 31, 1996, respectively, and approximately 57% and 13% of total receivables at August 31, 1995, respectively. 6. Private Placement From July 1996 through March 1997, the Company sold 898,074 shares (post stock dividend, 816,000 pre dividend) of the Company's common stock at $1 per share in a private placement. The private placement required that a minimum of $500,000 be raised. At August 31, 1996, $10,000 was received towards the purchase of 10,000 shares. Accordingly, this cash was considered restricted and a liability was established for the subscribed shares. Placement costs of $5,000 were incurred as of August 31, 1996. These costs will be offset against the proceeds when the private placement becomes effective subsequent to year end. 7.Stock Incentive Plan The Company has a stock incentive plan (the "Plan") adopted by the board of directors on September 27, 1996 and approved by the stockholders on January 17, 1997. The Plan provides for the issuance of both qualified and nonqualified incentive stock options at an exercise price approximating the fair market value of the Company's stock at the date of grant (or 110% of such fair market value in the case of substantial stockholders). A total of 550,290 shares of the Company's common stock have been reserved pursuant to the Plan. As of August 31, 1996, there were no options outstanding under the Plan. Subsequent to year end, the Company has granted the following options: Outstanding as of August 31, 1996 - Granted 214,644 Exercised - Cancelled - Option range $.90 - $1.00 Options exercisable 71,565 Options available for grant 335,646 Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements In July and October 1996, the Company issued nonqualified options to purchase 33,018 and 55,030 shares of common stock, respectively. The option prices were $.91 and $.09, respectively. All these options remain outstanding and are exercisable. The Company has issued 200,006 warrants to various individuals. The exercise prices of the warrants range from $.45 to $1.36. The warrants are exercisable and expire in August 2001 and February 2002. 8.Employment Agreement In July 1996, the Company entered into an employment agreement with its president/chief executive officer which extends through December 31, 1997. The agreement shall be automatically renewed for successive one-year terms unless canceled by either party at least 30 days prior to the current term's expiration. The agreement provides for an annual salary of $108,000 and a discretionary bonus not to exceed 33% of the employee's regular compensation for each quarter. When the Company's sales for three consecutive months exceed an annual amount of $15 million, then compensation will be increased to $144,000 per year. If the employee is terminated without cause, the Company is liable for three years of regular compensation if this termination takes place during the initial term and two years of regular compensation if after the initial term. At August 31, 1996, accrued expenses includes $18,000 for his compensation. 9.Subsequent Events (a) On July 13, 1996, the Company signed a definitive agreement to exchange 759,400 shares of its common stock for all of the existing outstanding common stock of Maxwell Partners, Inc. ("Maxwell"), an Illinois corporation. The exchange of common stock was consummated on October 1, 1996. The acquisition will be accounted for using the purchase method of accounting. Maxwell is primarily engaged in marketing to the telecommunications and information industries. The results of operations of Maxwell are not included in the accompanying financial statements as of August 31, 1996. The total cost of the acquisition was approximately $1,720,000, which exceeded the fair value of the net assets of Maxwell by approximately $1,300,000. The excess will be amortized on the straight-line method over ten years. If the acquisition had occurred on September 1, 1994, management estimates that, on an unaudited proforma basis, the following would have been reported on a consolidated basis: Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements 1996 1995 (Unaudited) Revenues $3,079,000 $3,131,000 Net loss (325,000) (321,000) Loss per share (0.12) (0.25) As of August 31, 1996, the Company had advanced working capital of $50,000 to Maxwell in the form of a noninterest-bearing advance. (b) In September 1996, the Company received $40,000 from a third party in the form of a promissory note due December 3, 1996. The interest rate was 10%. This loan was fully paid in December 1996. In conjunction with this note, 40,000 warrants representing 40,000 shares of the Company's common stock were issued. These warrants are exercisable over a five- year period at $1 per share. (c) On March 12, 1997, the Company entered into a Merger Agreement (the "Agreement") and Plan of Reorganization with Synaptx Worldwide, Inc. ("Synaptx"), formerly In-Touch Interactive Multimedia, Inc., an inactive Utah publicly held shell corporation. Under the terms of the Agreement, the Company merged with and into Synaptx with Synaptx being the surviving corporation. Synaptx issued to the stockholders of the Company 3,600,000 (post stock dividend) shares of Synaptx common stock. After this merger, Synaptx had a total of 5,047,211 shares of common stock issued and outstanding. Had the merger taken place on September 1, 1994, the proforma inclusion of Synaptx's operating results would not have had a significant effect on the consolidated revenues and net loss of the Company. (d) In April 1997, Maxwell refinanced its debt with a financial institution. As part of the restructuring, Synaptx has entered into a corporate resolution to guarantee the debt of Maxwell. At August 31, 1996, the balance of this line-of-credit was $171,300. Borrowings under the line-of-credit are payable on demand or due May 1, 1998 and collateralized by substantially all of Maxwell's assets. 10.Rights Offering (Unaudited) In May 1997, the Company initiated a rights offering of up to 1,682,403 shares of its common stock at $2.18 per share. The offering terminated on June 30, 1997 with 3,591 shares subscribed. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) and Subsidiary Notes to Consolidated Financial Statements 11.Acquisitions (Unaudited) (a) In June 1997, the Company acquired a telecommunications sales representative company. The purchase price was 142,858 shares of the Company's common stock plus the contingent earnouts based on future levels of earnings as defined in the agreement. (b) In May 1997, the Company entered into letters of intent to acquire two sales representative organizations. No definitive agreements have been entered into, however closing is expected to take place in September 1997. Synaptx Worldwide, Inc. and Subsidiaries Consolidated Balance Sheet As of May 31, 1997 (Unaudited) ASSETS Current assets: Cash $ 280 Accounts receivable 733,351 Prepaid expenses and deposits 43,127 Total current assets 776,758 Property, plant and equipment 214,105 Less accumulated depreciation (47,865) Net property, plant and equipment 166,240 Other assets 17,000 Goodwill, net 1,217,209 Total assets $2,177,207 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 481,460 Accrued expenses and taxes 259,024 Unearned revenues 160,000 Capital lease obligation 11,950 Notes payable to bank 275,000 Total current liabilities 1,187,434 Shareholders' equity: Preferred stock (par value $.001, 10,000,000 shares authorized, no shares outstanding) - Common stock (par value $.001, 25,000,000 shares authorized, 5,047,211 shares issued and outstanding) 5,047 Additional paid-in capital 1,536,390 Retained earnings (551,664) Total shareholders' equity 989,773 Total liabilities and shareholders' equity $2,177,207 See notes to condensed consolidated financial statements. Synaptx Worldwide, Inc and Subsidiaries Consolidated Statements of Operation For the Nine Months Ending May 31, 1996 and 1997 (Unaudited) May 31, May 31, 1996 1997 Net sales and revenues: Marketing services & production $ 2,281,958 Commissions & consulting fees $ 97,000 116,663 Executive placement fees 70,107 Total revenues 97,000 2,468,728 Cost of sales and revenues 84,502 1,704,752 Gross Profit 12,498 763,976 Expenses: Selling, general, & admin. expenses 17,118 1,059,046 Depreciation 1,000 46,265 Amortization 86,433 Interest expense - net 35,343 Total expenses 18,118 1,227,087 Net loss $ (5,620) $ (463,111) Weighted average shares outstanding 1,937,022 3,645,607 Net loss per share $ (0.00) $ (0.13) See notes to condensed consolidated financial statements. Synaptx Worldwide, Inc and Subsidiaries Consolidated Statements of Cash Flows For the Nine Months Ending May 31, 1996 and 1997 (Unaudited) May 31, May 31, 1996 1997 Cash flows from (used in) operations Net (loss) $ (5,620) $(463,111) Depreciation expense 1,000 46,265 Amortization expense - 86,433 Changes in: (net of acquisition) Accounts receivable (7,228) (385,367) Other current assets - 33,748 Accounts payable 5,501 203,743 Accrued expenses and taxes - 12,902 Due to officers 10,000 (32,000) Unearned revenues - 10,000 Other current liabilities - (209,951) Net cash provided by (used in) operations 3,653 (697,338) Cash flows from (used in) investing activities: Additions to property plant & equipment (13,100) (73,606) Additions to long term deposits (17,000) Cash realized on acquisitions 141,194 Net cash provided by (used in) investing activities (13,100) 50,588 Cash from (used in) financing activities: Issuance of common stock - net 1,270 747,588 Additions to capital in excess of par 10,734 - Reductions in bank line of credit - (18,000) Reductions in long term debt - (82,558) Net cash provided by (used in) operations 12,004 647,030 Net increase (decrease) in cash 2,557 280 Cash at beginning of period 11,342 - Cash at end of period $ 13,899 $ 280 _________________________________________________________________ Supplemental Disclosures of Cash Flow Information Cash paid during the nine months for Interest $ - $38,438 Income taxes - - Supplemental Schedule of Noncash Investing Activities Synaptx Worldwide, Inc. acquired Synaptx Impulse, Inc. in October, 1996 for 759,400 shares of common stock with a value of $690,000. In conjunction with this acquisition, liabilities were assumed as follows: Fair value of assets acquired $ 429,459 Cost in excess of fair value of assets acquired 1,293,642 Stock Issued (690,000) Liabilities assumed $1,033,101 See notes to condensed consolidated financial statements. SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 Basis of Presentation The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. The results of operations for the nine month periods ended May 31, 1996 and 1997 are not necessarily indicative of the results to be expected for the full year. Synaptx Worldwide, Inc., formerly known as Worldwide Applied Telecom Technology, Inc. (the "Company"), is a holding company incorporated in the State of Utah. The Company has two wholly owned subsidiaries, Synaptx Access, Inc. (F/K/A North American Telco Cable Representatives, Inc.) ("Access"), which was incorporated in Florida, and Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.) ("Impulse"), which was incorporated in Illinois on October 1, 1996. See Note 3. NOTE 2 Business Reorganization - Reverse Merger On February 10, 1997, the Company entered into a merger agreement (the "Merger") with Worldwide Applied Telecom Technology, Inc., a Delaware corporation, ("WWATT"). Pursuant to the terms of the Merger, the Company effected a reverse stock split of its outstanding shares of common stock on a one (1) share for one and three-fourths (1.75) shares, and exchanged 3,600,000 shares of authorized but previously unissued shares of the Company's common stock for all the previously issued and outstanding shares of WWATT. An additional 790,000 shares of the Company's common stock was issued for services related to the Merger. As a result of the Merger, WWATT was merged with and into the Company with the Company being the surviving corporation, and the Company changed its corporate name to Synaptx Worldwide, Inc. The aforementioned actions were approved by the Company's shareholders at the Special Meeting of Shareholders held March 12, 1997. Prior to the Merger, there was no affiliation between the Company and WWATT, nor between the officers, directors or principal shareholders of the two respective entities. For accounting purposes, the transaction has been treated as a recapitalization of the Company, or reverse merger. Subsequent to the acquisition, all of the Company's activities have been restated to the prior business endeavors of WWATT. Had the merger taken place on September 1, 1994, the pro forma inclusion of Synaptx's operating results would not have had a significant effect on the consolidated revenues and net loss of the Company. NOTE 3 Business Combination On July 13, 1996, the Company signed a definitive agreement to exchange 759,400 shares of its common stock for all of the existing outstanding common stock of Impulse. The exchange of common stock was consummated on October 1, 1996. The acquisition was accounted for using the purchase method of accounting. Impulse is primarily engaged in marketing to the telecommunications and information industries. The results of operations of Impulse are not included in the accompanying financial statements as of May 31, 1996. The total cost of the acquisition was approximately $1,300,000, which included the fair value of the net liabilities assumed from Impulse. The excess will be amortized on the straight-line method over ten years. If the acquisition had occurred on September 1, 1995, management estimates that, on an unaudited pro forma basis, the following would have been reported on a consolidated basis for the nine months ended May 31: (Unaudited) 1996 1997 Revenues $2,455,430 $ 2,632,921 Net loss (318,951) (634,958) Loss per share $ (0.17) $ (0.17) NOTE 4 Notes Payable to Bank On April 29, 1997, the Company renewed a $250,000 revolving line of credit with the bank which is collateralized by substantially all of the Company's assets. This line-of-credit was added with the acquisition of Synaptx Impulse, Inc., consummated October 1, 1996. The total line balance is limited to 65% of Impulse accounts receivable under 90 days old. At May 31, 1997, the balance due under the line was $250,000 and bears interest at the bank's floating internal rate of 10.99%. The Company also added a term loan when it acquired Synaptx Impulse, Inc. At May 31, 1997, the balance due under the loan was $25,000. On June 26, 1997, this note was renewed with a maturity date of September 30, 1997 and bears interest at the bank's floating internal rate of 10.99%. NOTE 5 Capital Stock On March 12, 1997, the Company entered into a Merger Agreement (the "Agreement") and Plan of Reorganization with Synaptx Worldwide, Inc. ("Synaptx"), formerly In-Touch Interactive Multimedia, Inc., an inactive Utah publicly held shell corporation. Under the terms of the Agreement, the Company merged with and into Synaptx with Synaptx being the surviving corporation. Synaptx issued to the stockholders of the Company, 3,600,000 shares of Synaptx common stock. After this merger, Synaptx had a total of 5,047,211 shares of common stock issued and outstanding. NOTE 6 Subsequent Events On June 1, 1997, the Company signed a definitive agreement and consummated an exchange of 142,858 shares of its common stock for all of the existing outstanding common stock of ORAYCOM, a Texas corporation. The acquisition will be accounted for using the purchase method of accounting. ORAYCOM is primarily engaged in marketing to the telecommunications and information industries. The results of operations of ORAYCOM are not included in the accompanying financial statements as of May 31, 1997. The total cost of the acquisition was approximately $500,000, which exceeded the fair value of the net assets of ORAYCOM by approximately $403,000. Additionally, pursuant to the terms of the acquisition, the former shareholders of ORAYCOM may earn additional purchase price consideration in the form of additional common stock of the Company based on the attainment of both "commission revenues" and "earnings" above specified levels by ORAYCOM beginning June 1, 1997 through August 31, 1999. The additional consideration is specified as fixed amounts for monthly attainment of specified "commission revenues" and "earnings" through August 31, 1997 and for the attainment of specified annual "commission revenues" and "earnings" for the subsequent fiscal years ending August 31, 1998 and 1999. If ORAYCOM meets the specified "commission revenues" and "earnings" amounts for all the periods involved, the additional consideration could amount to $380,000. The excess will be amortized on the straight-line method over ten years. If the acquisition had occurred on September 1, 1995, management estimates that, on an unaudited pro forma basis, the following would have been reported on a consolidated basis: (Unaudited) 1996 1997 Revenues $ 404,954 $ 2,951,017 Net loss (6,154) (461,197) Loss per share $ (0.00) $ (0.12) On June 3, 1997 the Board of Directors of Synaptx authorized a stock rights offering whereby every shareholder of record as of May 28, 1997 of Synaptx common stock could purchase one (1) share for every three (3) shares held at a price of $2.18 per share. As a result, an offering of 1,682,403 shares were so offered of which 3,591 were exercised as of June 30, 1997, the expiration date. SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Pro Forma Consolidated Financial Statement Nine Months Ended May 31, 1997 The following unaudited pro forma consolidated statement of operations for the nine months ended May 31, 1997 gives effect to the acquisition of Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.)which was made as of October 1, 1996. The acquisition was accounted for using the purchase method of accounting. Accordingly, the results of operations of the acquired entity have been reflected since the acquisition date. The pro forma information has been prepared as if the acquisition occurred on September 1, 1996 and is based on historic financial statements of Synaptx Worldwide, Inc. and Synaptx Impulse, Inc. from September 1, 1996 to the acquisition date. The unaudited pro forma statement of operations has been prepared by management based upon the financial statements of Synaptx Worldwide, Inc. and the acquired entity. These pro forma results may not be indicative of the results that actually would have occurred if the combination had been in effect since inception or which may be obtained in the future. SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Consolidated Pro Forma Statements of Operations Nine Months Ended May 31, 1997 (Unaudited) Synaptx Synaptx Pro forma Worldwide Impulse, Adjustments Pro forma Inc. Inc. Increase Consolidation (Decrease) REVENUES $ 2,468,728 $ 164,193 $ - $ 2,632,921 COST OF REVENUES 1,704,752 201,902 1,906,654 GROSS PROFIT 763,976 (37,709) 726,267 EXPENSES Selling, general & administrative 1,059,046 103,269 1,162,315 Depreciation 46,265 18,335 64,600 Amortization 86,433 - 4,055 90,488 Interest Expense - Net 35,343 8,479 43,822 Total Expenses 1,227,087 130,083 4,055 1,361,225 NET LOSS $(463,111) $(167,792) $(4,055) $(634,958) Weighted Average Shares Outstanding 3,645,607 84,377 3,729,984 NET LOSS PER SHARE OF COMMON STOCK $ (0.13) $ (0.17) SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Note to Pro Forma Financial Statement Effective October 1, 1996, the Company acquired all of the outstanding stock of Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.,) whose principal operations consist of strategic and market planning, new product launch planning, distribution channel analysis and design, communications program planning and implementation, and event and trade show management primarily for clients in the telecommunications industry. The acquisition was consummated for 759,400 shares of Synaptx common stock, with a fair value at the acquisition date of $690,000. The transaction was recorded under the purchase method of accounting. The total cost of the acquisition was approximately $1,723,000, which exceeded the fair value of assets acquired by approximately $1,300,000. Pro forma adjustment related to the acquisition of Impulse include an adjustment for amortization of the cost in excess of fair value of assets acquired of $4,055. SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Pro Forma Consolidated Financial Statement Year Ended August 31, 1996 The following unaudited pro forma consolidated statement of operations for the year ended August 31, 1996 gives effect to the acquisition of Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.)which was made as of October 1, 1996. The acquisition was accounted for using the purchase method of accounting. Accordingly, the results of operations of the acquired entity are not reflected in the Company's year ended August 31, 1996 results of operations since the acquisition date occurred after the Company's fiscal year end. The pro forma information has been prepared as if the acquisition occurred on September 1, 1995 and is based on historic financial statements of Synaptx Worldwide, Inc. and Synaptx Impulse, Inc. from September 1, 1995 to August 31, 1996. The unaudited pro forma statement of operations has been prepared by management based upon the financial statements of operations of Synaptx Worldwide, Inc. and the acquired entity. These pro forma results may not be indicative of the results that actually would have occurred if the combination had been in effect since inception or which may be obtained in the future. SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Consolidated Pro forma Statements of Operations Year Ended August 31, 1996 (Unaudited) Synaptx Synaptx Pro forma Worldwide Impulse, Adjustments Pro forma Inc. Inc. Increase Consolidation (Decrease) REVENUES $ 145,653 $2,900,084 $ - $ 3,045,737 COST OF REVENUES 126,561 1,953,011 2,079,572 GROSS PROFIT 19,092 947,073 - 966,165 EXPENSES: Selling, general & administrative 90,033 915,064 1,005,097 Depreciation 1,600 65,000 66,600 Amortization - - 129,650 129,650 Interest Expense - Net - 35,429 35,429 Total Expenses 91,633 1,015,493 129,650 1,236,776 LOSS FROM OPERATIONS (72,541) (68,420) (129,650) (270,611) OTHER INCOME (EXPENSE) - (53,312) (53,312) NET LOSS $ (72,541) $ (121,732) $(129,650) $ (323,923) Weighted average shares outstanding 1,937,022 759,400 2,696,422 NET (LOSS) PER SHARE OF COMMON STOCK $ (0.04) $ (0.12) SYNAPTX WORLDWIDE, INC. AND SUBSIDIARIES Note to Pro Forma Financial Statement Effective October 1, 1996, the Company acquired all of the outstanding stock of Synaptx Impulse, Inc. (F/K/A Maxwell Partners, Inc.,) whose principal operations consist of strategic and market planning, new product launch planning, distribution channel analysis and design, communications program planning and implementation, and event and trade show management primarily for clients in the telecommunications industry. The acquisition was consummated for 759,400 shares of Synaptx common stock, with a fair value at the acquisition date of $690,000. The transaction was recorded under the purchase method of accounting. The total cost of the acquisition was approximately $1,723,000, which exceeded the fair value of assets acquired by approximately $1,300,000. Pro forma adjustment related to the acquisition of Impulse include an adjustment for amortization of the cost in excess of fair value of assets acquired of $129,650. Independent Auditors' Report Synaptx Impulse, Inc. (f/k/a Maxwell Partners, Inc.) Chicago, Illinois We have audited the accompanying balance sheets of Synaptx Impulse, Inc. (f/k/a Maxwell Partners, Inc.) as of August 31, 1996 and 1995, and the related statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our 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 financial position of Synaptx Impulse, Inc. (f/k/a Maxwell Partners, Inc.) at August 31, 1996 and 1995, and the results of its operations and cash flows for the years then ended, in conformity with generally accepted accounting principles. BDO SEIDMAN, LLP Chicago, Illinois April 23, 1997 Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Balance Sheets August 31, 1996 1995 Assets Current Assets Cash $ 38 $ 1,000 Investment in related party 15,000 - Accounts receivable 469,481 425,871 Due from related parties (Note 2) - 112,250 Other receivables 1,058 5,805 Prepaid expenses and other 12,023 38,106 Total Current Assets 497,600 583,032 Property and Equipment, less accumulated depreciation and amortization(Note 1) 122,516 183,963 $620,116 $766,995 Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Balance Sheets August 31, 1996 1995 Liabilities and Stockholders' Deficit Current Liabilities Accounts payable $ 436,632 $ 432,716 Accrued expenses 25,213 9,203 Due to related parties (Note 2) 33,250 - Due to Synaptx Worldwide (Note 10) 50,000 - Notes payable to bank (Note 4) 294,000 120,000 Notes payable to shareholders (Note 2) 40,675 140,000 Capital lease obligation - current portion (Note 5) 23,306 24,169 Deferred revenue 75,000 235,000 Total Current Liabilities 978,076 961,088 Capital Lease Obligation - Long-Term (Note 5) 2,173 24,243 Total Liabilities 980,249 985,331 Shareholders' Deficit Common stock, no par - 100,000 shares authorized - 15,150 shares issued and outstanding (Note 8) 35,000 35,000 Deficit (395,133) (219,336) Less subscriptions receivable (Note 2) - (34,000) (360,133) (218,336) $ 620,116 $ 766,995 See accompanying summary of accounting policies and notes to financial statements. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Statements of Operations Year ended August 31, 1996 1995 Revenues $2,900,084 $3,104,068 Expenses Operating 1,173,011 1,606,193 Direct labor 779,606 665,409 Selling, general and administrative (Notes 6 and 7) 982,270 978,631 Total expenses 2,934,887 3,250,233 Operating loss (34,803) (146,165) Other Income (Expense) Write-off of related party advances (Note 2) (53,000) (144,000) Interest income 4,707 18,476 Interest expense (40,136) (44,528) Miscellaneous 1,500 (2,009) Total other expense (86,929) (172,061) Net Loss $(121,732) $(318,226) See accompanying summary of accounting policies and notes to financial statements. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Statements of Stockholders' Deficit Retained Subscrip- Common Earnings tion Shares Stock (Deficit) Receivable Total Balance, at September 1, 1994 100 $ 1,000 $ 107,890 $ - $108,890 Shares issued 15,050 34,000 - - 34,000 Net loss - - (318,226) - (318,226) Distributions to shareholders - - (9,000) - (9,000) Advances to stockholders for purchase of common stock - - - (34,000) (34,000) Balance, at August 31, 1995 15,150 35,000 (219,336) (34,000) (218,336) Net loss - - (121,732) - (121,732) Distributions to shareholders - - (54,065) - (54,065) Payment on subscription receivable - - - 34,000 34,000 Balance, at August 31, 1996 15,150 $ 35,000 $(395,133) $ - $(360,133) See accompanying summary of accounting policies and notes to financial statements. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Statements of Cash Flows Year ended August 31, 1996 1995 Cash Flows From Operating Activities Net loss $ (121,732) $ (318,226) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 65,000 58,865 Changes in assets and liabilities Increase in accounts receivable (43,610) (50,977) Decrease (increase) in due from related parties 112,250 (75,538) Decrease in other receivables 4,747 50,048 Decrease in prepaid expenses and other 26,083 15,958 Increase in accounts payable 3,916 145,796 Increase (decrease) in accrued expenses 16,010 (98,104) Increase in due to related parties 33,250 - Increase in due to Synaptx Worldwide 50,000 - (Decrease) increase in deferred revenue (160,000) 235,000 Net cash used in operating activities (14,086) (37,178) Cash Flows From Investing Activities Capital expenditures (3,553) (37,468) Investment in related party (15,000) - Net cash used in investing activities (18,553) (37,468) Cash Flows From Financing Activities Contributions by shareholders 34,000 - Distributions to shareholders (54,065) (9,000) Payments on capital lease obligation (22,933) (15,585) Payments on shareholder loans (99,325) (22,250) Proceeds from shareholder loans - 162,250 Increase (decrease) in line-of-credit, net 174,000 (52,873) Net cash provided by financing activities 31,677 62,542 Net Decrease in Cash $ (962) $ (12,104) Cash, at beginning of year 1,000 13,104 Cash, at end of year $ 38 $ 1,000 Supplemental Disclosure of Cash Flow Information Interest paid $ 39,297 $ 41,528 Capital lease obligation incurred to lease equipment and furniture - 63,996 Stock subscription receivable - 34,000 See accompanying summary of accounting policies and notes to financial statements. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Summary of Accounting Policies Nature of Operations Synaptx Impulse, Inc. (f/k/a Maxwell Partners, Inc.) (the "Company") is a Chicago, Illinois based marketing and advertising agency serving the telecommunications and information industries throughout the continental United States. The firm employs industry professionals with expertise in market research, strategic and market planning, marketing communications, sales training and management, database marketing and graphic design. Revenue Recognition Professional fees and production billings represent the principal sources of revenue derived from customers. Professional fees revenue is generally recognized when fees are earned based on work performed. Production revenues are recorded as billed with costs accrued for vendor invoices not yet received. Salaries and other company costs are expensed as incurred. Deferred Revenue The Company often receives prepayments for professional services to be rendered. This revenue is deferred and as the services are provided, a proportionate share of the deferred revenue is recognized into income. Investments During the fiscal year 1996, the Company purchased a 12.5% interest in Paw Island, a related party of the Company. This investment is accounted for using the cost method. Subsequent to year end, this investment was distributed to the individual shareholders of the Company. Property and Equipment Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the assets using accelerated methods. Income Taxes The Company elected "S" corporation status when it was incorporated and, accordingly, it is not a tax-paying entity for federal income tax purposes. Its stockholders have consented to include the losses of the Company in their individual federal tax returns. Estimates The accompanying financial statements include estimated amounts and disclosures based on management's assumptions about future events. Actual results may differ from those estimates. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Summary of Accounting Policies Financial Instruments Financial instruments which potentially subject the Company to concentrations of risk consist principally of accounts receivable. The accounts receivable are from major corporations located throughout the United States and the associated credit risks are limited. The carrying values reflected in the balance sheet at August 31, 1996 reasonably approximate the fair values for accounts receivable and payable. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Notes to Financial Statements 1.Property and Equipment Major classes of property and equipment consist of the following: August 31, 1996 1995 Leasehold improvements $ 10,506 $ 10,089 Furniture and fixtures 228,365 227,001 Computer equipment 92,752 90,981 Vehicle 20,782 20,782 352,405 348,853 Less accumulated depreciation 229,889 164,890 Net property and equipment $ 122,516 $ 183,963 2.Related Party Transactions The Company has notes payable to shareholders totaling $40,675 and $140,000 for the years ended August 31, 1996 and 1995, respectively. These notes are payable on demand or December 28, 1999 and bear interest at 7.48%. For the last few years, the Company has performed marketing work for, and subleased rental space to, two related entities in which the majority shareholder has an equity interest. Revenues of $2,577 and $205,184 were derived from sales to related entities in the years ended August 31, 1996 and 1995, respectively. In addition, the Company advanced these two entities funds from time to time. Cash advances of $44,700 and $236,580 were made to these related entities in the years ended August 31, 1996 and 1995, respectively. It has been determined that the majority of these amounts are deemed uncollectible. As such, write-offs of $53,312 and $349,117 are reflected in the years ended August 31, 1996 and 1995, respectively. In the year ended August 31, 1995, $205,184 of these write-offs were charged directly to revenues. In the future, the Company will no longer undertake such transactions. $0 and $112,250 are due from these related entities at August 31, 1996 and 1995, respectively. Amounts due from affiliates have been stated at their net realizable value. The Company also has $33,250 due to a related party at August 31, 1996 for amounts advanced. Rent charged to these affiliates for sublet office space was $5,835 and $23,340 for the years ended August 31, 1996 and 1995, respectively. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Notes to Financial Statements During 1996, the Company paid commissions of $37,500 to the Company of one of the members of the board of directors of Synaptx Worldwide for the sale of equipment to a major customer. As of August 31, 1995, the Company advanced $34,000 to four stockholders for the purchase of the Company's common stock. These notes earned interest of 8% and were paid in full in 1996. 3.Significant Customers A substantial portion of the Company's revenues is generated from relatively few customers. Two customers accounted for approximately 28% and 27% of sales in the year ended August 31, 1996, and 31% and 27% of sales in the year ended August 31, 1995. Receivables from these customers represented approximately 14% and 15% of total receivables at August 31, 1996, respectively, and approximately 20% and 10% of total receivables at August 31, 1995, respectively. 4.Notes Payable to Bank The notes payable consist of borrowings under a revolving line-of-credit with the bank. Borrowings under the line-of-credit, which is payable on demand or due May 1, 1998, are collateralized by substantially all of the Company's assets and bear interest at the bank's internal rate (10.99% and 10.67% at August 31, 1996 and 1995, respectively). The total line balance is limited to no more than 65% of accounts receivable less than 90 days old. The line is secured by commercial guaranties of two of the shareholders and Synaptx Worldwide. As of August 31, 1996 and 1995, the balances due under this line are $171,300 and $120,000, respectively. The Company also has a term loan with a balance of $122,700 and $0 at August 31, 1996 and 1995, respectively. This loan is collateralized by substantially all of the Company's assets and bears interest at the bank's internal rate of 10.99% at August 31, 1996. The loan is due May 31, 1997. The Company has also guaranteed the personal debt of shareholders of the Company totaling $447,921 and $482,940 at August 31, 1996 and 1995, respec- tively. In addition, the Company has guaranteed the debt of a related entity totaling $74,006 and $83,129 at August 31, 1996 and 1995, respectively. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Notes to Financial Statements 5.Capital Leases In 1994, the Company entered into a capital lease for various equipment and furniture. The total principal amount of this capital lease was $63,996. The lease requires monthly installments of $2,208, which includes interest at 19.44%, until November 1997. The capital lease is secured by the related furniture and equipment. The following is a schedule by years of future minimum payments required under the lease together with its present value as of August 31, 1996: Year ending August 31, Amount 1997 $ 26,508 1998 2,208 Total minimum lease payments 28,716 Less amount representing interest 3,237 Present value of minimum lease payments $ 25,479 6.Employee Benefit Plans The Company sponsors a qualified employee savings plan for all eligible employees. Participants may make contributions from their gross pay (limited to 15% of the employee's compensation, as defined), with the Company matching such contributions (subject to certain limitations) at the rate of 25% of the first 6% of each participant's contribution. Employer matching contributions to the plan were approximately $7,000 and $9,000 for the years ended August 31, 1996 and 1995, respectively. The Company sponsored an incentive plan for the period December 1, 1995 through November 30, 1996. The incentive plan is contingent upon the profits generated by the Company that exceed $40,000 and performance objectives. Likewise, losses generated will result in no funds contributed to the incentive pool. Allocations of the fund are based upon employee eligibility and individual incen- tives. No contributions were made to the incentive plan as of August 31, 1996. 7.Lease Commitments The Company occupies their premises under a lease expiring January 31, 1998. An amendment to the lease was entered on August 30, 1994 for additional space. Rentals are subject to annual escalation charges based upon increases in operating expenses and real estate taxes. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Notes to Financial Statements As of August 31, 1996, the Company's future minimum lease payments under operating leases are as follows: Year ending August 31, Amount 1997 $ 131,220 1998 54,675 Total minimum rent commitments $ 185,895 Rental expense for the Company's facilities amounted to approximately $121,035 and $94,808 for the years ended August 31, 1996 and 1995, respectively. In September 1996, the Company entered into an agreement to lease office space in Atlanta, Georgia. The lease extends through June 1998. The aggregate minimum rental commitment for this period would be approximately $69,000. In February 1997, the Company signed a letter of intent to build out and rent new office space at a different location. The proposed lease would extend for seven years commencing in December 1997. The aggregate minimum rental commitment for this period would be approximately $1,146,000. A payment of $2,000 of the total required deposit of $25,000 has been made and serves as the second month's rent and security deposit. 8.Common Stock In January 1995, the Company's authorized shares of common stock were increased from 1,000 shares to 100,000 shares. An additional 15,050 shares of common stock were issued to selected employees of the Company. 9.Employment Agreements In July 1996, the Company entered into employment agreements with its chief financial officer and president which extend through December 31, 1997. The agreements shall be automatically renewed for successive one-year terms unless cancelled by either party at least 30 days prior to the current term's expiration. The agreements provide for an aggregate annual salary of $225,000 and a discretionary bonus not to exceed 33% of the employee's regular compensation for each quarter. If the employee is terminated without cause, the Company is liable for three years of regular compensation if this termination takes place during the initial term and two years of regular compensation if after the initial term. Synaptx Impulse, Inc. (f/k/a/ Maxwell Partners, Inc.) Notes to Financial Statements In July 1996, the Company also entered employment agreements with three of the Company's shareholders which extend through December 31, 1997. The terms are the same as the aforementioned agreements with an annual salary of $72,000 per shareholder. If the employee is terminated without cause during the initial term of their agreement, the Company is liable for nine months of regular compensation. 10.Acquisition On July 13, 1996, the Company signed a definitive agreement to exchange all the outstanding common stock of the Company for 690,000 shares of common stock of Synaptx Worldwide, Inc. The exchange of common stock was consummated on October 1, 1996. As of August 31, 1996, Synaptx Worldwide, Inc. had advanced $50,000 to the Company in the form of a noninterest-bearing advance. PART III ITEM 1. Index to Exhibits The following exhibits are filed with this Registration Statement: Exhibit No. Exhibit Name 2.1 Merger Agreement and Plan of Reorganization. 3.1(i) Articles of Incorporation and all amendments thereto ("P") 3.2(ii) By-Laws of Registrant ("P") 4.1 Specimen of Common Stock Certificate ("P") 10.1 Lease Agreement on Registrant's principal place of business ("P") 10.2 Purchase Agreement of Synaptx Access, Inc. f.k.a. North American Telco / Cable Representatives, Inc. 10.3 Purchase Agreement for Synaptx Impulse, Inc., f.k.a. Maxwell Partners, Inc. 10.4 Purchase Agreement for ORAYCOM, Inc. 10.5 Employment Agreement for Ronald L. Weindruch 10.6 Employment Agreement for D. Mike Maxwell 21.1 Subsidiaries 27. Financial Data Schedule ITEM 2. Description of Exhibits See Item I above. SIGNATURES In accordance with Section 12 of the Securities and Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly organized. SYNAPTX WORLDWIDE, INC. (Registrant) By: /S/ Ronald L. Weindruch (Signature) Date: August 8, 1997 RONALD L. WEINDRUCH President EX-2.1 2 MERGER AGREEMENT AND PLAN OF REORGANIZATION MERGER AGREEMENT AND PLAN OF REORGANIZATION THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION, (hereinafter the "Agreement") is made and entered into this 10th day of February, 1997, by and between In-Touch Interactive Multimedia, Inc., a Utah corporation (hereinafter the "Company"), and Worldwide Applied Telecom Technology, Inc., a Delaware corporation (hereinafter "WWATT"). RECITALS WHEREAS, the Company desires to merge WWATT with and into the Company whereby the Company shall be the surviving corporate entity pursuant to the terms and conditions set forth herein; WHEREAS, all current shareholders of WWATT desire to exchange all of their shares of WWATT common stock for shares of the Company's common stock; and WHEREAS, the parties hereto desire to reorganize the management and operations of the Company, to change the corporate name to Synaptix Worldwide, Inc., and to engage in the current business of WWATT. NOW, THEREFORE, in consideration of the premises and mutual representations, warranties and covenants herein contained, the parties hereby agree as follows: ARTICLE I MERGER AND EXCHANGE OF SHARES SECTION 1.1 Merger and Plan of Reorganization. (a) The parties hereby agree that the Company shall merge WWATT with and into the Company with the Company to be the surviving corporation (hereinafter the "Merger"), and whereby all the shares of WWATT common stock currently issued and outstanding at the Effective Time of the Merger, as defined in Section 1.2 below, shall, by action of the Merger and without any action on the part of the holder thereof, automatically be converted into an aggregate of three million six hundred thousand (3,600,000) shares of authorized but previously unissued common stock of the Company, par value $.001 per share and post split as set forth in Section 1.5(d) below, which shares shall be issued to the shareholders of WWATT or their assigns on a pro rata basis representing each respective shareholder's percentage ownership in WWATT. (b) In connection with the consummation of the Merger, the parties hereby agree that an additional seven hundred ninety thousand (790,000) shares of the Company's authorized but previously unissued common stock, par value $.001 per share and post-split as per Section 1.5(d) below, shall be issued to Solutions Partnership, Inc. as a fee for services related to the Merger and as set forth in Section 6.4 below. (c) The parties hereto hereby further agree that at or prior to the Effective Time of the Merger: (i) management of the Company shall be reorganized so as to seat the new Board of Directors of the Company to consist of those persons elected at the Special Meeting of Shareholders of the Company held February 10, 1997 and as set forth in Section 1.5(f) below; (ii) the Company's corporate name shall be changed to Synaptix Worldwide, Inc.; (iii) the corporate identity, existence, purposes, powers, franchises, rights, and immunities of WWATT shall be merged into the Company and the Company shall be fully vested therewith; (iv) the separate corporate existence of WWATT, except as specifically otherwise provided by law, shall cease, whereupon WWATT and the Company shall become a single corporation; and (v) the necessary steps shall be taken in order to reflect that the Company will be principally engaged in the current business of WWATT and in any other act or activity for which a corporation may be organized under the laws of the State of Utah. SECTION 1.2 Effective Time of the Merger. Subject to satisfaction of the terms and conditions of this Agreement, the parties hereto shall cause the Articles of Merger in substantially the form set forth in Exhibit 1.2 annexed hereto and by this reference made a part hereof (the "Articles of Merger"), to be signed, verified and, immediately upon its execution, delivered to the Secretary of State of the State of Utah. The Effective Time of the Merger shall be the date the Articles of Merger shall have been filed with the State of Utah and at such time the Company shall have merged WWATT with and into the Company and the separate existence of WWATT shall cease. SECTION 1.3 Issuance of Shares. (a) Upon the Effective time of the Merger, all shares of WWATT common stock issued and outstanding shall by action of the Merger and without any action on the part of the holder thereof, automatically be converted into an aggregate of 3,600,000 shares of the Company's common stock, post-split, which shares shall be issued to the shareholders of WWATT or their assigns on a pro rata basis representing each respective shareholder's percentage ownership in WWATT. (b) The shares of the Company's common stock to be issued hereunder are authorized but previously unissued shares of common stock of the Company and shall be, when issued, properly authorized, validly issued, fully paid and nonassessable. (c) All shares of the Company's common stock to be issued hereunder are deemed "restricted securities" as defined by Rule 144 of the Securities Act of 1933 (the "1933 Act") and the recipients thereof, or their designees or assigns, shall represent that they are acquiring said shares for investment purposes only and without the intent to make a further distribution of the shares. All shares of the Company's common stock to be issued under the terms of this Agreement shall be issued pursuant to an exemption from the registration requirements of the 1933 Act, under Section 4(2) of the 1933 Act and the rules and regulations promulgated thereunder. All certificates representing the Company's common stock to be issued hereunder shall bear the following legend: The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered for sale, sold or otherwise transferred except in compliance with the registration provisions of such Act or pursuant to an exemption from such registration provisions, the availability of which is to be established to the satisfaction of the Company. SECTION 1.4 Closing. The closing of this Agreement and the transactions contemplated hereby (the "Closing") shall take place on or prior to the 3rd day of March, 1997 (the "Closing Date"), unless extended by the mutual assent of the parties hereto, at a time and place to be mutually agreed upon by the parties hereto, and shall be subject to the provisions of Article X of this Agreement. At the Closing or within thirty (30) days thereafter: (a) Holders of WWATT common stock shall deliver to the Company all stock certificates representing all of the issued and outstanding shares of WWATT common stock, duly endorsed, so as to make the Company the sole holder thereof, free and clear of all claims and encumbrances, and which certificates shall be, upon the issuance of the Company's common stock as per Section 1.3 above, canceled and deemed void and of no further effect; (b) The Company shall deliver to the holders of WWATT common stock, stock certificates representing an aggregate of three million six hundred thousand (3,600,000) shares of the Company's common stock, and to Solutions Partnership, Inc. an aggregate of seven hundred ninety thousand (790,000) shares of the Company's common stock, and each certificate representing such shares shall bear a restrictive legend in a form customarily used with restricted securities and substantially as set forth in Section 1,3(c) above; (c) WWATT shall deliver to the Company all deeds, mortgages, agreements and other pertinent documents evidencing WWATT's title, interest and ownership of all of its assets and property; (d) The Company shall deliver an Officer's Certificate as described in Sections 9.1, 9.2 and 9.4 hereof, dated the Closing Date, that all representations, warranties, covenants and conditions set forth herein by the Company are true and correct as of, or have been fully performed and complied with by, the Closing Date; and (e) WWATT shall deliver an Officer's Certificate as described in Sections 8.1, 8.2 and 8.4 hereof, dated the Closing Date, that all representations, warranties, covenants and conditions set forth herein by WWATT are true and correct as of, or have been fully performed and complied with by, the Closing Date. SECTION 1.5 Special Meeting of Shareholders of the Company. In anticipation of this Agreement and the transactions contemplated hereby, the Company has taken all necessary and requisite action to call for and hold a Special Meeting of Shareholders on February 10, 1997, at which meeting the following business is to be transacted and proposals ratified by the shareholders: (a) To ratify this Agreement and all transactions contemplated hereby; (b) To ratify the rescission of the Company's proposed acquisition of Healthcare 2000 International, Inc., a Florida corporation, which transaction was previously approved by the Company's shareholders but was never finalized and closed, and to further rescind certain other proposals related to the acquisition which were also approved by the shareholders; (c) To ratify the proposed amendment to the Articles of Incorporation to change the authorized capitalization to 25,000,000 shares of common stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par value $.001 per share; (d) To effect a reverse stock split of the Company's issued and outstanding shares of common stock on a one (1) share for one and three-fourths (1.75) shares basis; (e) To ratify the amendment to the Articles of Incorporation to change the corporate name to Synaptix Worldwide, Inc., or any other name deemed suitable by the shareholders attending the meeting; and (f) To accept the resignation of the Company's current directors and to nominate and elect a new Board of Directors consisting of the following four nominees: Ronald L. Weindruch, D. Mike Maxwell, William N. Kashul, Sr. and Peter B. Atwal. SECTION 1.6 Consummation of Transaction. If at the Closing, no condition exists which would permit any of the parties to terminate this Agreement, or a condition then exists and the party entitled to terminate because of that condition elects not to do so, then the transactions herein contemplated shall be consummated upon such date, and then and thereupon, the Company will file the Articles of Merger and all other requisite documents with the State of Utah. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents, warrants and agrees that: SECTION 2.1 Organization of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah, is duly qualified and in good standing as a foreign corporation in every jurisdiction in which such qualification is necessary, and has the corporate power and authority to own its properties and assets and to transact the business in which it is engaged. There are no corporations or other entities with respect to which (i) the Company owns any of the outstanding stock or other interest, or (ii) the Company may be deemed to be in control because of factors or relationships other that the quantity of stock or other interest owned. The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally. SECTION 2.2 Capitalization of the Company. Prior to the action to be taken at the Company's Special Meeting of Shareholders and the transactions contemplated by this Agreement, the authorized capital stock of the Company consisted of 25,000,000 shares of common stock, par value $.00004 per share, of which 1,150,000 shares were issued and outstanding. Taking into consideration the effect of the proposed change of capitalization and proposed one share for 1.75 shares reverse stock split, the number of shares of common stock issued and outstanding shall be approximately 657,143 shares, par value $.001 per share, without giving effect of the rounding of fractional shares. All shares of the Company's common stock presently issued and outstanding have been duly authorized and validly issued and are fully paid and non-assessable. There are no other options, warrants, rights, calls, commitments or agreements of any character obligating the Company to issue any shares of its capital stock or any security representing the right to purchase or otherwise receive any such stock. Shares of the Company's common stock to be issued pursuant to this Agreement, when so issued, will be duly authorized, validly issued, fully paid and non-assessable. SECTION 2.3 Charter Documents. Complete and correct copies of the Articles of Incorporation and By-Laws of the Company and all amendments thereto, have been or will be delivered to WWATT prior to the Closing. SECTION 2.4 Corporate Documents. The Company's shareholders' list and corporate minute books to be delivered at the Closing are complete and accurate as of the date hereof and the corporate minute books contain the recorded minutes of all corporate meetings of shareholders and directors. SECTION 2.5 Financial Statements. The Company's financial statements for the period ended February 10, 1997 and the years ended December 31, 1996 and 1995, a copy of which is to be annexed hereto as Exhibit 2.5 and by this reference made a part hereof, are true and complete in all material respects, having been prepared in accordance with generally accepted accounting principles applied on a consistent basis for the periods covered by such statements, and fairly present, in accordance with generally accepted accounting principles, the financial condition of the Company, and results of its operations for the periods covered thereby. Except as otherwise disclosed to WWATT as set forth herein, there has been no material adverse change in the business operations, assets, properties, prospects or condition (financial or otherwise) of the Company taken as a whole from that reflected in the financial statements referred to in this Section 2.5, or which WWATT based its decision to enter into this Agreement. SECTION 2.6 Absence of Certain Changes or Events. Since the date of the Company's financial report for the period ended February 10, 1997 (see Exhibit 2.5), and except as disclosed otherwise herein, the Company has not (i) issued or sold any promissory note, stock, bond, option or other corporate security of which it was an issuer or other obligor, (ii) discharged or satisfied any lien or encumbrance or paid any obligation or liability, absolute or contingent, direct of indirect, (iii) incurred or suffered to be incurred any liability or obligation whatsoever, (iv) caused or permitted any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, (v) declared or made any dividend, payment or distribution to stock holders or purchased or redeemed or agreed to purchase or redeem any shares of its capital stock, (vi) reclassified its shares of capital stock, or (vii) entered into any agreement or transaction except in connection with the execution and performance of this Agreement. SECTION 2.7 Assets and Liabilities. The Company does not have any material assets as reflected in the financial statements included as Exhibit 2.5. As of the date hereof, the Company does not have any material debts, liabilities or obligations of any nature, whether accrued, absolute, contingent, or otherwise, whether due or to become due, that are not fully reflected in the Company's financial statements. SECTION 2.8 Tax Returns and Payments. The Company has filed with the appropriate governmental authority tax returns, whether based upon income, sales or franchise, as required by law to be filed on or before the date of this Agreement. The Company represents that immediately upon the Closing it will prepare and file those required federal tax returns that may be due. The Company has paid all taxes to be due on said returns, any assessments made against the Company and all other taxes, fees and similar charges imposed on the Company by any governmental authority. No tax liens have been filed and no claims are being assessed and no returns are under audit with respect to any such taxes, fees or other similar charges. SECTION 2.9 Contracts. The Company is not a party to or bound by any contract or commitment, whether written or oral, except as otherwise disclosed herein. SECTION 2.10 Required Authorizations. There have been or will be timely filed, given, obtained or taken, all applications, notices, consents, approvals, orders, registrations, qualifications waivers or other actions of any kind required by virtue of execution and delivery of this Agreement by the Company or the consummation by it of the transactions contemplated hereby. Prior to the Closing, the shareholders of the Company shall have approved this Agreement and the transactions contemplated hereunder and the appropriate corporate filings shall have been made with the State of Utah. SECTION 2.11 Compliance with Law and Government Regulations. The Company is in compliance with and is not in violation of, applicable federal, state, local or foreign statutes, laws and regulations (including without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting its properties or the operation of its business. SECTION 2.12 Litigation. There is no litigation, arbitration, proceeding or investigation pending or threatened to which the Company is a party or which may result in any material change in the business or condition, financial or otherwise, of the Company or in any of its properties or assets, or which might result in any liability on the part of the Company, or which questions the validity of this Agreement or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement, and to the best knowledge of the Company, there is no basis for any such litigation, arbitration, proceeding or investigation. SECTION 2.13 Trade Names and Rights. The Company does not use any trademark, service mark, trade name, or copyright in its business, nor does it own any trademark, trademark registration or application, trade name, service mark, copyright, copyright registration or application. No person owns any trademark, trademark registration or application, service mark, trade name, copyright, or copyright registration or application, the use of which is necessary or contemplated in connection with the operation of the Company's business. SECTION 2.14 Governmental Consent. With the exception of the filing specified in Section 1.2 hereof, no consent, approval, authorization or order of, or registration, qualification, designation, declaration or filing with, any governmental authority on the part of the Company is required in connection with the execution and delivery of this Agreement or the carrying out of any transactions contemplated hereby. SECTION 2.15 Previous Proposed Transactions. The Company has previously entered into two separate transactions whereby it intended to acquire MLK Industries Limited, a United Kingdom corporation, and Healthcare 2000 International, Inc., a Florida corporation. Although both proposed transactions were approved by the Company's shareholders, neither transaction resulted in a definitive agreement and neither transaction was finalized and closed. The Company has no further commitments, obligations or liabilities as a result of the two previous proposed transactions. SECTION 2.16 Authority. The Company and its shareholders have, or will prior to the Closing, approved the Merger, this Agreement and the transactions contemplated hereby and duly authorized the execution and delivery hereof. The Company has full power, authority and legal right to enter into this Agreement and to consummate the transactions contemplated hereby, and all corporate action necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly taken. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by the Company with the provisions hereof will not (i) conflict with or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company under, any of the terms, conditions or provisions of the Articles of Incorporation or By-Laws of the Company, or any note, bond, mortgage, indenture, license, lease, agreement or any instrument or obligation to which the Company is party or by which it is bound; or (ii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its properties or assets. SECTION 2.17 Investigation of Financial Condition. In addition to making available for review by WWATT all financial statements, books and records of the Company, and without in any manner reducing or otherwise mitigating the representations contained herein, WWATT shall have the opportunity to meet with the Company's accountants and attorneys to discuss the financial condition of the Company and to make whatever further independent investigation deemed necessary and prudent. SECTION 2.18 Full Disclosure. None of the representations and warranties made by the Company herein, or in any exhibit, certificate or memorandum furnished or to be furnished by the Company, on its behalf pursuant hereto, contains or will contain any untrue statement of material fact, or omits any material fact, the omission of which would be misleading. ARTICLE III COVENANTS OF THE COMPANY SECTION 3.1 Conduct Prior to the Closing. Between the date hereof and the Closing: (a) The Company will not enter into any material agreement, contract or commitment, whether written or oral, or engage in any transaction without the prior written consent of WWATT; (b) The Company will not declare any dividends or distributions with respect to its capital stock or amend its Articles of Incorporation or By-Laws without the prior written consent of WWATT; (c) The Company will not authorize, issue, sell, purchase or redeem any shares of its capital stock without the prior written consent of WWATT; (d) The Company will comply with all requirements which federal or state law may impose on it with respect to this Agreement and the transactions contemplated hereby, and will promptly cooperate with and furnish information to WWATT in connection with any such requirements imposed upon the parties hereto in connection therewith; (e) The Company will not incur any indebtedness for money borrowed, or issue or sell any debt securities, incur or suffer to be incurred any liability or obligation of any nature whatsoever, or cause or permit any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any balance sheet receivable for less than its stated amount or enter into any other transaction other than in the regular course of business, except to comply with the terms of this Agreement, without the prior written consent of WWATT; (f) The Company shall grant to WWATT and its counsel, accountants and other representatives, full access during normal business hours during the period prior to the Closing to all its respective properties, books, contracts, commitments and records and, during such period, furnish promptly to WWATT and such representatives all information relating to the Company as WWATT may reasonably request; and (g) Except for the transactions contemplated by this Agreement, the Company will conduct its business in the normal course, and shall not sell, pledge or assign any of its assets without the prior written consent of WWATT. SECTION 3.2 Affirmative Covenants. Prior to Closing, the Company will do the following: (a) Use its best efforts to accomplish all actions necessary to consummate this Agreement including satisfaction of all the conditions contained in this Agreement; (b) Promptly notify WWATT in writing of any material adverse change in the financial condition, business, operations or key personnel of the Company, any breach of its representations or warranties contained herein, and any material contract, agreement, license or other agreement which, if in effect on the date of this Agreement, should have been included in this Agreement or in an exhibit annexed hereto and made a part hereof; (c) Obtain approval of this Agreement from a majority of its shareholders; (d) Nominate at the its Special Meeting of Shareholders a new Board of Directors, nominees to be Ronald L. Weindruch, D. Mike Maxwell, William N. Kashul, Sr. and Peter B. Atwal; (e) Reserve, and promptly after the Closing, issue and deliver to the shareholders of WWATT or their designees and to Solutions Partnership, Inc. the number of shares of the Company's common stock required hereunder; (f) Take the necessary corporate action to file with the State of Utah, Articles of Amendment to its Articles of Incorporation which will change its corporate name to Synaptix Worldwide, Inc.; and (e) Take all other necessary corporate actions to accomplish all transactions contemplated herein. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WWATT WWATT hereby represents, warrants and agrees that: SECTION 4.1 Organization of WWATT. WWATT is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and in good standing in every jurisdiction in which such qualification is necessary. Unless otherwise set forth herein or in any financial statements or in Exhibit 4.1 annexed hereto and by this reference made a part hereof, and with the exception of Maxwell Partners, Inc. and North American Telco Cable Representatives, Inc., there are no corporations or other entities with respect to which (i) WWATT owns any of the outstanding stock or other interest, or (ii) WWATT may be deemed to be in control because of factors or relationships other than the percentage of outstanding stock or other interest owned in such entity. WWATT has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. SECTION 4.2 Charter Documents. Complete and correct copies of the Articles of Incorporation and By-Laws of WWATT and all amendments thereto, have been or will be delivered to the Company prior to the Closing. SECTION 4.3 Financial Statements / Assets and Liabilities. WWATT's financial statements for the period ended August 31, 1996, a copy of which is annexed hereto as Exhibit 4.3 and by this reference made a part hereof, are true and complete in all material respects, having been prepared in accordance with generally accepted accounting principles applied on a consistent basis for the periods covered by such statements, and fairly present the financial condition of WWATT and results of its operations for the periods covered thereby. WWATT has good and marketable title to all of its assets and property, free and clear of any and all liens, claims and encumbrances except as may be otherwise set forth herein or in its audited financial statements annexed hereto as Exhibit 4.3. SECTION 4.4 Tax Returns and Payments. All of WWATT's tax returns (federal, state, city, county or foreign) which are required by law to be filed on or before the date of this Agreement, have been duly filed or extended with the appropriate governmental authority. WWATT has paid or accrued all taxes to be due on said returns, any assessments made against WWATT and all other taxes, fees and similar charges imposed on WWATT by any governmental authority (other than those, the amount or validity of which is being contested in good faith by appropriate proceedings). No tax liens have been filed and no claims are being assessed with respect to any such taxes, fees or other similar charges. SECTION 4.5 Required Authorizations. There have been or will be timely filed, given, obtained or taken, all applications, notices, consents, approvals, orders, registrations, qualifications waivers or other actions of any kind required by virtue of execution and delivery of this Agreement by WWATT or the consummation by it of the transactions contemplated hereby. SECTION 4.6 Compliance with Law and Government Regulations. WWATT is in compliance with all applicable statutes, regulations, decrees, orders, restrictions, guidelines and standards, whether mandatory or voluntary, affecting its properties and operations, imposed by State of Delaware, and any state or foreign country or government to which WWATT is subject. SECTION 4.7 Litigation. There is no material litigation, arbitration, proceeding or investigation pending or threatened to which WWATT is a party or which may result in any material change in the business or condition, financial or otherwise, of WWATT or in any of its properties or assets, or which might result in any liability on the part of WWATT, or which questions the validity of this Agreement or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement, and to the best knowledge of WWATT, there is no basis for any such litigation, arbitration, proceeding or investigation. SECTION 4.8 Trade Names and Rights. If applicable, Exhibit 4.8 annexed hereto and by this reference made a part hereof, contains a complete list of all trademarks, service marks, trademark and service mark registrations, applications and licenses with respect to the foregoing owned or held by WWATT. WWATT has no knowledge of any facts and nothing has come to its attention that would lead it to believe that it has infringed or misappropriated or is infringing upon any trademark, copyright, patent or other similar right of any person. No claim relating thereto is pending or to the knowledge of WWATT is threatened. SECTION 4.9 Governmental Consent. With the exception of any filing specified herein, no consent, approval, authorization or order of, or registration, qualification, designation, declaration or filing with, any governmental authority on the part of WWATT is required in connection with the execution and delivery of this Agreement or the carrying out of any transactions contemplated hereby. SECTION 4.10 Authority. WWATT and its shareholders have approved the Merger, this Agreement and duly authorized the execution and delivery hereof. WWATT has full power, authority and legal right to enter into this Agreement and to consummate the transactions contemplated hereby, and all corporate action necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly taken. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by WWATT with the provisions hereof will not (i) conflict with or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of WWATT under, any of the terms, conditions or provisions of the Articles of Incorporation or By-Laws of WWATT, or any note, bond, mortgage, indenture, license, agreement or any instrument or obligation to which WWATT is party or by which it is bound; or (ii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to WWATT or any of its properties or assets. SECTION 4.11 Investigation of Financial Condition. In addition to making available for review by the Company certain corporate documents, books and records of WWATT, and without in any manner reducing or otherwise mitigating the representations contained herein, the Company shall have the opportunity to meet with WWATT's accountants and attorneys to discuss the financial condition of WWATT and to make whatever further independent investigation reasonably deemed necessary and prudent. SECTION 4.12 Options and Warrants. WWATT has authorized pursuant to its 1996 Stock Option Plan, up to 500,000 stock options that may be issued for the purchase of WWATT common stock pursuant to certain terms and conditions. As of the date hereof, WWATT has issued 295,000 options pursuant to such Plan entitling the holders thereof to purchase up to an aggregate of 295,000 shares of WWATT common stock at prices ranging from $.10 to $1.10 per share prior to the year 2001. WWATT also has issued and outstanding 181,725 stock purchase warrants entitling the holders thereof to purchase up to an aggregate of 106,725 shares of WWATT common stock at prices ranging from $.50 to $1.50 per share. The aforementioned options and warrants will remain issued and outstanding and will be exercisable for the purchase of the Company's common stock following the Merger pursuant to terms and conditions to be determined by the parties. SECTION 4.13 Investment Purpose. Those persons receiving shares of the Company's common stock hereunder shall execute appropriate documents to represent and warrant that they, or their designees, are acquiring the shares of the Company's common stock for investment purposes only and not with a view for further distribution or resale, and each such recipient shall individually further represent and acknowledge that the securities issued hereunder are "restricted securities" and may not be sold, traded or otherwise transferred without registration under the 1933 Act or exemption therefrom. SECTION 4.14 Full Disclosure. None of the representations and warranties made by WWATT herein, or in any exhibit, certificate or memorandum furnished or to be furnished by the Company, on its behalf pursuant hereto, contains or will contain any untrue statement of material fact, or omits any material fact, the omission of which would be misleading. ARTICLE V COVENANTS OF WWATT SECTION 5.1 Conduct Prior to the Closing. Between the date hereof and the Closing: (a) Except within the regular course of business, WWATT and its subsidiaries will not enter into any material agreement, contract or commitment, whether written or oral, or engage in any transaction without the prior written consent of the Company; (b) WWATT and its subsidiaries will not sell, assign, transfer or otherwise divest any of the assets depicted in Exhibit 4.3 hereto without the prior written consent of the Company; (c) WWATT and its subsidiaries will not declare any dividends or distributions with respect to its capital stock or amend its Articles of Incorporation or By-Laws without the prior written consent of the Company; (d) Except within the regular course of business, WWATT and its subsidiaries will not incur any indebtedness for money borrowed or issue to sell any debt securities, or incur or suffer to be incurred any liability or obligation of any nature whatsoever, or cause or permit any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets without the prior written consent of the Company; (e) WWATT will comply with all requirements which federal or state law may impose on it with respect to this Agreement and the transactions contemplated hereby, and will promptly cooperate with and furnish information to the Company in connection with any such requirements imposed upon the parties hereto in connection therewith; and (f) WWATT shall grant to the Company and its counsel, accountants and other representatives, full access during normal business hours during the period prior to the Closing to all its respective properties, books, contracts, commitments and records and, during such period, furnish promptly to the Company and such representatives all information relating to WWATT as the Company may reasonably request. SECTION 5.2 Affirmative Covenants. Prior to Closing, WWATT will do the following: (a) Obtain the approval of its Board of Directors and a majority of its shareholders to proceed with this Agreement; (b) Use its best efforts to accomplish all actions necessary to consummate this Agreement including satisfaction of all the conditions contained in this Agreement; (c) Cause to be prepared and delivered to the Company, if applicable, all deeds, contracts, agreements, mortgages, encumbrances and other documents relating to the ownership and title and/or interest in WWATT's assets and property; and (d) Promptly notify the Company in writing of any materially adverse change in the financial condition, business, operations or key personnel of WWATT, any breach of its representations or warranties contained herein, and any material contract, agreement, license or other agreement which, if in effect on the date of this Agreement, should have been included in this Agreement. ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.1 Expenses. Whether or not the transactions contemplated in this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense or as otherwise agreed to herein. SECTION 6.2 Brokers and Finders. Each of the parties hereto represents, as to itself, that no agent, broker, investment banker or other firm or person is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, except as may be otherwise set forth herein and in Section 6.4 below. SECTION 6.3 Necessary Actions. Subject to the terms and conditions herein provided, each of the parties hereto agree to use all reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In the event at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of the Company or WWATT, as the case may be, shall take all such necessary action. SECTION 6.4 Consulting Agreement. For services rendered in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated herein, the parties have entered into a separate agreement whereby at the Closing, a fee of seven hundred ninety thousand (790,000) shares of the Company's authorized but previously unissued common stock (post-split) shall be issued to Solutions Partnership, Inc. Such shares shall be deemed restricted securities as defined by Rule 144 of the 1933 Act. SECTION 6.5 Indemnification. (a) WWATT agrees to defend and hold the Company harmless against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including interest, penalties, and reasonable attorney fees, that the Company shall incur or suffer, which arise out of, result from or relate to any material breach of, or failure by WWATT to perform any of its representations, warranties, covenants and agreements in this Agreement or in any exhibit or other instrument furnished or to be furnished by WWATT under this Agreement. (b) The Company agrees to defend and hold WWATT harmless against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including interest, penalties, and reasonable attorney fees, that WWATT shall incur or suffer, which arise out of, result from or relate to any material breach of, or failure by the Company to perform any of its representations, warranties, covenants and agreements in this Agreement or in any exhibit or other instrument furnished or to be furnished by the Company under this Agreement. SECTION 6.6 Confidentiality. All parties hereto agree to keep confidential this Agreement and all information and documents relating to this Agreement until such time as the Agreement and the transactions contemplated hereunder are made public by means of an appropriate press release or by any other means reasonably assured to make such information publicly available. ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PARTIES The obligations of the parties under this Agreement are subject to the fulfillment and satisfaction of each of the following conditions: SECTION 7.1 Legal Action. No preliminary or permanent injunction or other order by any federal or state court which prevents the consummation of this Agreement or any of the transactions contemplated by this Agreement shall have been issued and remain in effect. SECTION 7.2 Absence of Termination. The obligations to consummate the transactions contemplated hereby shall not have been canceled pursuant to Article X hereof. SECTION 7.3 Required Approvals. The Company and WWATT shall have received all such approvals, consents, authorizations or modifications as may be required to permit the performance by the Company and WWATT of the respective obligations under this Agreement and the consummation of the transactions herein contemplated, whether from governmental authorities or other persons, and the Company and WWATT shall each have received any and all permits and approvals from any regulatory authority having jurisdiction required for the lawful consummation of this Agreement. SECTION 7.4 Blue Sky Compliance. There shall have been obtained any and all permits, approvals and consents of the Securities or "Blue-Sky" Commissions of any jurisdictions, and of any other governmental body or agency, which counsel for the Company may reasonably deem necessary or appropriate so that consummation of the transactions contemplated by this Agreement may be in compliance with all applicable laws. ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY All obligations of the Company under this Agreement are subject to the fulfillment and satisfaction by WWATT prior to or at the time of the Closing, of each of the following conditions, any one or more of which may be waived by the Company. SECTION 8.1 Representations and Warranties True at the Closing. All representations and warranties of WWATT contained in this Agreement will be true and correct at and as of the time of the Closing and WWATT shall have delivered to the Company a certificate, dated the date of the Closing, to such effect and in the form and substance satisfactory to the Company and signed, in the case of WWATT, by its president and secretary. SECTION 8.2 Performance. The obligations of WWATT to be performed on or before the Closing pursuant to the terms of this Agreement shall have been duly performed at such time, and WWATT shall have delivered to the Company a certificate, dated the date of the Closing, to such effect and in form and substance satisfactory to the Company. SECTION 8.3 Authority. All action required to be taken by or on the part of WWATT to authorize the execution, delivery and performance of this Agreement by WWATT and consummation of the transactions contemplated hereby, shall have been duly and validly taken. SECTION 8.4 Absence of Certain Changes or Events. There shall not have occurred since the date hereof any adverse change in the business, condition (financial or otherwise), assets or liabilities of WWATT or any event or condition of any character adversely affecting WWATT, and it shall have delivered to the Company certificates dated the date of the Closing, to such effect and in form and substance satisfactory to the Company and signed in the case of WWATT, by its president and secretary. ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF WWATT All obligations of WWATT under this Agreement are subject to the fulfillment and satisfaction by the Company prior to or at the time of Closing, of each of the following conditions any one or more of which may be waived by WWATT. SECTION 9.1 Representations and Warranties True at the Closing. All representations and warranties of the Company contained in this Agreement will be true and correct at and as of the time of the Closing, and the Company shall have delivered to WWATT a certificate, dated the date of the Closing, to such effect and in the form and substance satisfactory to WWATT and signed, in the case of the Company, by its president and secretary. SECTION 9.2 Performance. Each of the obligations of the Company to be performed on or before the Closing pursuant to the terms of this Agreement shall have been duly performed at the time of the Closing, and the Company shall have delivered to WWATT a certificate, dated the date of the Closing, to such effect and in form and substance satisfactory to WWATT and signed, in the case of the Company, by its president and secretary. SECTION 9.3 Authority. All action required to be taken by or on the part of the Company to authorize the execution, delivery and performance of this Agreement by the Company and consummation of the transactions contemplated hereby shall be duly and validly taken. SECTION 9.4 Absence of Certain Changes or Events. There shall not have occurred since the date hereof any adverse change in the business, condition (financial or otherwise), assets or liabilities of the Company or any event or condition of any character adversely affecting the Company and it shall have delivered to WWATT certificates dated the date of the Closing, to such effect and in form and substance satisfactory to WWATT and signed in the case of the Company, by its president and secretary. ARTICLE X TERMINATION SECTION 10.1 Termination. Notwithstanding anything herein or elsewhere to the contrary, this Agreement may be terminated: (a) By mutual agreement of the parties hereto at any time. (b) By the board of directors of the Company at any time prior to the Closing if: (i) a condition to performance by the Company under this Agreement or a covenant of WWATT contained herein shall not be fulfilled on or before the time of the Closing or at such other time and date specified for the fulfillment for such covenant or condition; or (ii) a material default or breach of this Agreement is made by WWATT; or (iii) if the Closing shall not have taken place on or prior to March 31, 1997. (c) By the board of directors of WWATT at any time prior to the Closing if: (i) a condition to WWATT's performance under this Agreement or a covenant of the Company contained in this Agreement shall not be fulfilled on or before the Closing or at such other time and date specified for the fulfillment of such covenant or conditions; or (ii) a material default or breach of this Agreement is made by the Company; or (iii) if the Closing shall not have taken place on or prior to March 31, 1997. SECTION 10.2 Effect of Termination. In the event this Agreement is terminated, the Agreement, except as to Sections 11.1 and 11.2 hereof, shall no longer be of any force or effect and there shall be no liability on the part of any party or its respective directors, officers or shareholders; provided however, that in the case of a Termination without cause by a party or a termination pursuant to Sections 10.1(b)(i) or 10.1(c)(i) hereof because of a prior material default under or a material breach of this Agreement by another party, the damages which the aggrieved party or parties may recover from the defaulting party or parties shall in no event exceed the amount of out-of-pocket costs and expenses incurred by such aggravated party or parties in connection with this Agreement. ARTICLE XI MISCELLANEOUS SECTION 11.1 Costs and Expenses. All costs and expenses incurred in connection with this Agreement will be paid by the party incurring such expenses. In the event of any termination of this Agreement pursuant to Section 10.1, subject to the provisions of Section 11.2, the Company and WWATT will each bear their own respective expenses. SECTION 11.2 Extension of Time: Waivers. At any time prior to the Closing date: (a) The Company may (i) extend the time for the performance of any of the obligations or other acts of WWATT, (ii) waive any inaccuracies in the representations and warranties of WWATT contained herein or in any document delivered pursuant hereto by WWATT and (iii) waive compliance with any of the agreements or conditions contained herein to be performed by WWATT. Any agreement on the part of the Company to any such extension or waiver shall be valid only if set forth in an instrument, in writing and signed on behalf of the Company. (b) WWATT may (i) extend the time for the performance of any of the obligations or other acts of the Company, (ii) waive any inaccuracies in the representations and warranties of the Company contained herein or in any document delivered pursuant hereto by the Company and (iii) waive compliance with any of the agreements or conditions contained herein to be performed by the Company. Any agreement on the part of WWATT to any such extension or waiver shall be valid only if set forth in an instrument, in writing and signed on behalf of WWATT. SECTION 11.3 Notices. Any notice to any party hereto pursuant to this Agreement shall be given by Certified or Registered Mail, addressed as follows: In-Touch Interactive Multimedia, Inc. Copy to: 4700 South 900 East Leonard E. Neilson Suite 48 B Attorney at Law Salt Lake City, Utah 84117 1121 East 3900 South, Ste. 200 Salt Lake City, Utah 84124 Worldwide Applied Telecom Technology, Inc. Copy to: 3020 Alatka Court Bruce Rich Longwood, Florida 32779 c/o Reid & Priest 40 West 57th Street New York, New York 10019 Additional notices are to be given as to each party, at such other address as should be designated in writing complying as to delivery with the terms of this Section 11.3. All such notices shall be effective when sent, addressed as aforesaid. SECTION 11.4 Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns. Nothing in this Agreement is intended to confer, expressly or by implication upon any other person, any rights or remedies under or by reason of this Agreement. SECTION 11.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and together shall constitute one document. The delivery by facsimile of an executed counterpart of this Agreement shall be deemed to be an original and shall have the full force and effect of an original executed copy. SECTION 11.6 Severability. The parties hereto agree and affirm that none of the provisions herein is dependent upon the validity of any other provision and, if any part of this Agreement is deemed to be unenforceable, the remainder of the Agreement shall remain in full force and effect. SECTION 11.7 Headings. The Article and Section headings are provided herein for convenience of reference only and do not constitute a part of this Agreement. SECTION 11.8 Governing Law. This Agreement shall be governed by the laws of the State of Utah. SECTION 11.9 Survival of Representations and Warranties. All terms, conditions, representations and warranties set forth in this Agreement or in any instrument, certificate, opinion, or other writing provided for herein, shall survive the Closing and the delivery of the shares of the Company's common stock issued hereunder at the Closing, for a period of one year from the Closing regardless of any investigation made by or on behalf of any of the parties hereto. SECTION 11.10 General Release. Each of the parties to this Agreement hereby releases and discharges the other party together with such other party's officers, directors, employees, agents, assigns, attorneys, accountants and affiliates, whether or not herein named or referred to, of and from any and all claims, causes of action, debts, duties, liabilities and obligations of any and every sort or nature, wherever and however arising, which against the other party it now has or ever had or which it or its assigns hereafter may or can have, from any time up to and including the Closing of this Agreement and the Effective Time of the Merger contemplated hereby. SECTION 11.11 Assignability. This Agreement shall not be assignable by any of the parties hereto without the prior written consent of the other parties. SECTION 11.12 Amendment. This Agreement may be amended with the approval of the boards of directors of the Company and WWATT at any time before or after approval thereof by shareholders of the Company and, if required, of WWATT; but after such approval by the Company's shareholders, no amendment shall be made which substantially and adversely changes the terms hereof. This Agreement may not be amended except by an instrument, in writing, signed on behalf of each of the parties hereto. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in a manner legally binding upon them as of the date first above written. "Company" IN-TOUCH INTERACTIVE MULTIMEDIA, INC. ATTEST: By: __________________________ ___________________________ Its: President Its: Secretary "WWATT" WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC. ATTEST: By: ________________________ __________________________ Its: President Its: Secretary EX-10.2 3 PURCHASE ATREEMENT OF SYNAPTX ACCESS, INC. AGREEMENT THIS AGREEMENT is made as of the 3rd day of June, 1996, by and among WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC., a Delaware corporation ("WWATT") and Ronald L. Weindruch and Jerome Rhattigan (collectively, the "NATCRI Shareholders"). BACKGROUND The NATCRI Shareholders own all the outstanding capital stock North American Telecom Cable Representatives, Inc., a Florida corporation ("NATCRI"). WWATT wishes to acquire NATCRI, and the NATCRI Shareholders wish to own common stock in WWATT and to continue to conduct NATCRI's business as a subsidiary of WWATT. Accordingly, in consideration of the mutual agreements set forth herein, the parties agree as follows: ARTICLE 1 STOCK FOR STOCK EXCHANGE 1.1 Exchange of NATCRI Shares for WWATT Shares. Subject to the terms and conditions of this Agreement, WWATT agrees to issue to the NATCRI Shareholders a total of 490,000 shares of WWATT's common stock (the "WWATT Common Stock"), in exchange for all the outstanding shares of capital stock of NATCRI (the "NATCRI Stock"). Each NATCRI Shareholder shall transfer to WWATT at the Closing (as hereinafter defined) the number of shares of NATCRI Stock shown opposite such person's name on Exhibit 1.1 and shall receive in exchange therefor the number of shares of WWATT Common Stock shown opposite such person's name on Exhibit 1.1. The parties hereto, including the NATCRI Shareholders, NATCRI and WWATT, intend for this exchange of stock to be treated as a tax free reorganization as defined within the U.S. Internal Revenue Code Section 368. 1.2 Closing. The exchange of WWATT Common Stock for NATCRI Stock shall take place at a closing (the "Closing") at such place as shall be mutually agreed to by the parties at 10:00 a.m. on June 3, 1996, or as soon as practicable thereafter upon the satisfaction or waiver of the conditions to Closing set forth in Article 5. The date on which the Closing takes place is referred to as the "Closing Date." At the Closing, each NATCRI Shareholder shall deliver to WWATT stock certificates representing the NATCRI Stock owned by such NATCRI Shareholder, duly endorsed for transfer or with duly executed stock powers attached, together with such other documents as WWATT may reasonably request prior to the Closing. At the Closing, WWATT shall deliver to each NATCRI Shareholder a stock certificate representing the WWATT Common Stock issued to such NATCRI Shareholder in exchange for his or her NATCRI Stock, together with such other documents as each NATCRI Shareholder may reasonably request prior to the Closing. The parties agree to execute such additional documents after the Closing as may be necessary or desirable to carry out the terms of this Agreement. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF NATCRI SHAREHOLDERS The NATCRI Shareholders, jointly (except where otherwise expressly indicated to the contrary) and severally, represent and warrant as follows: 2.1 Organization. To the best of their knowledge, NATCRI is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operation of NATCRI, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 2.2 Authorization. Each NATCRI Shareholder represents and warrants that he or she has full power, capacity and authority to execute, deliver and perform this Agreement subject to the security interest held, and rights of approval or consent which may be asserted, by Resource Bank. This Agreement has been duly executed and delivered by such NATCRI Shareholder and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of such NATCRI Shareholder enforceable against such person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. The NATCRI Shareholders shall, at the Closing, provide a fully executed resolution of the NATCRI Board of Directors indicated that there are no existing conditions that preclude the transaction as defined in Section 1.1 and authorizing such exchange as documented by a Plan of Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this NATCRI Board of Directors resolution. 2.3 No Consents, Conflicts. Each NATCRI Shareholder represents and warrants that (a) no consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by such NATCRI Shareholder; and (b) neither the execution, delivery or performance of this Agreement by such NATCRI Shareholder will (i) violate, conflict with or result in a breach of any provision of or constitute a default or an event which with notice or lapse of time or both, would constitute a default under NATCRI's articles of incorporation or bylaws or any agreement or obligation to which NATCRI or such NATCRI Shareholder is a party or by which either of such persons may be bound or affected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii)violate any order, writ, injunction, decree, statute, rule or regulation applicable to NATCRI or such NATCRI Shareholder where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 2.4 Financial Statements. The NATCRI Shareholders have previously delivered to WWATT the balance sheets and related statements of income, shareholders' equity and cash flows as of and for the calendar year period ended December 31, 1995 (the "Financial Statements"). The Financial Statements have been prepared in accordance with NATCRI's books and records, present fairly in all material respects the financial position, results of operations, shareholders' equity and cash flows for the year then ended. There has been no material adverse change in the business, financial condition, results of operations or prospects of NATCRI since December 31, 1995. Except as disclosed in the Financial Statements, NATCRI does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial condition, results of operations or prospects of Maxwell. 2.5 Compliance, No Litigation. To the best of their knowledge, NATCRI is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. To the best of their knowledge, there is no proceeding, investigation or inquiry pending or threatened against NATCRI, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither NATCRI nor, to the best of their knowledge, its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agents or instrumentality. 2.6 Authorized Capital Stock. The authorized capital stock of NATCRI consists of 7,500 shares of common stock, of which 1,000 shares are issued and outstanding, all of which are owned by the NATCRI Shareholders. All the outstanding shares of NATCRI Stock have been validly issued and are fully paid and non assessable. There are no outstanding options, warrants, rights or other commitments obligating NATCRI to issue any of its capital stock. 2.7 Title to NATCRI Stock. Each NATCRI Shareholder owns the NATCRI Stock to be transferred to WWATT at the Closing, free and clear of all liens, claims and encumbrances, and at the Closing, WWATT will acquire good and valid title to such NATCRI Stock, free and clear of all liens, claims and encumbrances. 2.8 Investment Representations. Each NATCRI Shareholder represents and warrants that he or she has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the WWATT Common Stock in exchange for the NATCRI Stock owned by such NATCRI Shareholder, and has been given the opportunity to examine all documents and ask questions of, and receive answers from representatives of WWATT concerning the terms and conditions of such exchange and the financial condition, business and prospects of WWATT, and to obtain such additional information as he or she deemed necessary in connection with the transaction contemplated by this agreement. The WWATT common stock to be acquired by such NATCRI Shareholder pursuant to this agreement is being acquired by such NATCRI Shareholder pursuant to this agreement is being acquired for such person's own account for investment and not with a view to the public distribution thereof, and such NATCRI Shareholder will not effect any transfer of such WWATT Common Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. Each NATCRI Shareholder understands that the WWATT Common Stock to be received by such person at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. 2.9 Reliance on Own Tax Advisors. The NATCRI Shareholders are relying on their own tax advisors in connection with determining the tax consequences to them of the transactions contemplated by this Agreement and are not relying on WWATT or WWATT's attorneys, accountants or advisors for any such advice. 2.10 Brokers and Finders. Neither WWATT nor any of its shareholders, officers, directors or agents is liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 2.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by any NATCRI Shareholder in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF WWATT WWATT represents and warrants as follows: 3.1 Organization. WWATT is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operations of WWATT, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 3.2 Authorization. WWATT has full power, capacity and authority to execute, deliver and perform this Agreement. This Agreement has been duly executed and delivered by WWATT and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of WWATT enforceable against WWATT in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. WWATT shall, at the Closing, provide a fully executed resolution of the WWATT Board of Directors indicating that there are no existing conditions that preclude the transaction as defined in Section 1.1 and authorizing such exchange as documented by a Plan or Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this WWATT Board of Directors resolution. 3.3 No Consents, Conflicts. No consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by WWATT and neither the execution, delivery or performance of this Agreement by WWATT will (i) violate, conflict with or result in a breach of any provision of, or constitute a default or an event which with notice or lapse of time or both, would constitute a default under WWATT's articles of incorporated or bylaws or any agreement or obligation to which WWATT is a party or by which it may be bound or effected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii) violate any order, writ, injunctions, decree, statue, rule or regulation applicable to WWATT where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 3.4 Business of WWATT. WWATT has had no business operations to date except as set forth on Exhibit 3.4. WWATT will deliver at the closing to each NATCRI Shareholder a statement of financial condition as of May 31, 1996, which has been prepared in accordance with the books and records of WWATT, and presents fairly in all material respects the financial position of WWATT as of the date thereof. There has been no material adverse change in the business, financial condition, results of operations or prospects of WWATT since the date of WWATT's balance sheet referred to above. Except as disclosed in such balance sheet and as otherwise herein specifically noted, WWATT does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial conditions, results of operations or prospects of WWATT. 3.5 Compliance, No Litigation. WWATT is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. There is no proceeding, investigation or inquiry pending or threatened against WWATT, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither WWATT nor its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agency or instrumentality. 3.6 Authorized Capital Stock. The authorized capital stock of the Company is 20,000,000 shares, consisting of 5,000,000 shares of convertible preferred Stock, $.001 par value per share, none of which are issued or outstanding and 15,000,000 shares of Common Stock, $.001 par value per share, of which 1,320,000 shares have been validly issued and are outstanding, and 1,300,000 shares are planned on being offered for sale. 3.7 Title to WWATT Stock. The WWATT Common Stock to be issued to each NATCRI Shareholder will be duly and validly issued, fully paid and non assessable, and each NATCRI Shareholder will acquire title to the WWATT Common Stock to be issued to such person hereunder free and clear of all liens, claims and encumbrances. 3.8 Investment Representations. WWATT represents and warrants that it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the NATCRI Stock in exchange for the WWATT Common Stock, and has been given the opportunity to examine all documents and ask questions of and receive answers from representatives of NATCRI concerning the terms and conditions of such exchange and the financial condition, business and prospects of NATCRI, and to obtain such additional information as it deems necessary in connection with the transactions contemplated by this Agreement the NATCRI Stock to be acquired by WWATT pursuant to this Agreement is being acquired for WWATT's own account for investment and not with a view to the public distribution thereof, and WWATT will not effect any transfer of such NATCRI Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. WWATT understands that the NATCRI Common Stock to be received by WWATT at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. WWATT agrees to comply with Blue Sky Laws in the States of Florida and Wisconsin. 3.9 Reliance on Own Tax Advisers. WWATT is relying on their own tax advisors in connection with determining the tax consequences to them of the transactions contemplated by this Agreement and are not relying on NATCRI or NATCRI's attorneys, accountants or advisors for any such advice. 3.10 Brokers and Finders. Neither NATCRI nor any of its shareholders, officers, director or agents is liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 3.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by WWATT in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. ARTICLE 4 ACTIONS PRIOR TO CLOSING 4.1 Ordinary Course. From the date hereof until the Closing, each NATCRI Shareholder agrees to use reasonable best efforts to cause NATCRI to conduct its business only in the ordinary course, consistent with past practice. 4.2 Best Efforts. Each party agrees to use reasonable best efforts to cause the fulfillment at the earliest practicable date of all the conditions to the Closing. 4.3 Access. During the period prior to Closing, WWATT shall give each NATCRI Shareholder, and the NATCRI Shareholder shall cause NATCRI to give WWATT, and their respective representatives reasonable access during normal business hours to all of its books and records, and to cause to be furnished to each other and their representatives all information with respect to their respective businesses and affairs as the other may reasonably request. 4.4 Plan of Reorganization. NATCRI and WWATT will effect a plan of Reorganization that documents the actions it is taking to accomplish transactions in accordance with tax free intent of the parties, including the NATCRI Shareholders, NATCRI, NATCRI and WWATT, as defined in Section 1.1 above. ARTICLE 5 CONDITIONS TO CLOSING 5.1 NATCRI Shareholders' Obligations to Close. Each and every obligation of each NATCRI Shareholder to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.1.1 Representations, Warranties and Covenants. The representations and warranties of WWATT set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and WWATT shall have performed all obligations required to be performed by it under this Agreement on or before the Closing Date. 5.1.2 Tax Consequences. The NATCRI Shareholders shall have determined, in consultation with their own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to them (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that the NATCRI Shareholders are unable to make such a determination, so that the foregoing condition can be satisfied). 5.2 WWATT's Obligations to Close. Each and every obligation of WWATT to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.2.1 Representations, Warranties and Covenants. The representations and warranties of each NATCRI Shareholder set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and each NATCRI Shareholder shall have performed all obligations required to be performed by such person under this Agreement on or before the Closing Date. 5.2.2 Tax Consequences. WWATT shall have determined, in consultation with their own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to them (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that WWATT is unable to make such a determination, so that the foregoing condition can be satisfied). ARTICLE 6 TERMINATION 6.1 Termination by Either Party. This Agreement may be terminated, without liability, By WWATT or by the NATCRI Shareholders if the terminating party is not itself in default hereunder by written notice of such election to the other if the closing has not occurred by November 1, 1996. If for any reason, other than a failure by WWATT to perform according to this Agreement or a failure of any condition to closing set forth in Section 5.1 hereof or the failure to close by November 1, 1996, NATCRI chooses to withdraw from the merger, NATCRI and/or the NATCRI Shareholders, jointly and severally, shall pay to WWATT, as liquidated damages in lieu of any and all claims, damages, costs and expenses incurred by WWATT, and not as a penalty, the sum of $25,000 to be paid within thirty (30) days after written notice of said election to withdraw. If for any reason, other than a failure by NATCRI or the NATCRI Shareholders to perform according to this Agreement or a failure of any condition to closing set forth in Section 5.2 hereof or the failure to close by November 1, 1996, WWATT chooses to withdraw from the merger, WWATT shall pay to NATCRI, as liquidated damages, in lieu of any and all claims, damages, costs and expenses incurred by NATCRI or the NATCRI Shareholders, and not as a penalty, the sum of $25,000 to be paid within thirty (30) days after written notice of said election to withdraw. 6.2 Breach. In the event of any breach by one or more NATCRI Shareholders and NATCRI hereunder, including a breach of representations and warranties, prior to the Closing, WWATT shall have the option to (i) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. In the event of a breach by WWATT hereunder, including a breach of representations and warranties, prior to the Closing, the NATCRI Shareholders shall have the options to (I) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. Nothing contained in this section is intended to preclude or limit the right of any party to seek a remedy in damages in lieu of or in addition to any other remedy set forth herein. ARTICLE 7 POST-CLOSING COVENANTS 7.1 Post-Closing Covenants of WWATT. WWATT covenants from and after the Closing as follows: 7.1.1 Registration of Shares. WWATT shall use reasonable best efforts to cause the registration under the Securities Act of 1933 of the WWATT Common Stock issued to the NATCRI Shareholders at the Closing no later than twelve (12) months after WWATT's Common Stock has been registered under Section 12 of the Securities Exchange Act of 1934. WWATT agrees to use reasonable best efforts to accomplish such 1934 Act registration within twelve (12) months after the Closing. 7.2 Operation of NATCRI's Business Following the Closing. The parties agree as follows with respect to the operation of NATCRI's business following the Closing: 7.2.1 Location. NATCRI shall continue to conduct its business at its present facility in Elgin, Illinois until such time as NATCRI's Board and WWATT's Board of Directors mutually agree that a change would be beneficial to the business of WWATT and its subsidiaries taken as a whole. 7.3 Budgets and Business Plans. Senior management of NATCRI shall prepare an annual operating budget and capital budget for review by WWATT's Board of Directors at least ninety (90) days prior to the beginning of each fiscal year which shall exclude the first fiscal year or such period of shorter than one year that includes the closing date. Such budgets shall be reviewed and may be revised quarterly. Implementation of all such budgets and revisions thereto must be approved both by NATCRI's senior management and WWATT's Board of Directors. Additionally, NATCRI's senior management shall prepare a five-year business plan for review and approval by WWATT's Board of Directors, in conjunction with the preparation and review and approval of NATCRI's annual operating and capital budgets. The five-year business plan shall be reviewed and may be revised annually, with the approval of WWATT's Board of Directors. ARTICLE 8 OTHER 8.1 Survival. The representations and warranties set forth in Articles 2 and 3 shall survive the Closing for a period of six (6) months. NATCRI and each NATCRI Shareholder agrees to defend, indemnify and hold harmless WWATT and WWATT agrees to defend, indemnify and hold harmless each NATCRI Shareholder for any damages, losses, liabilities or claims incurred by the other as a result of the breach by the other of such representations and warranties made by it herein. 8.2 Miscellaneous. This Agreement may be amended only in writing signed by the party against whom enforcement is sought. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties. This Agreement shall be governed and construed in accordance with the laws of the State of Florida, without regard to principles of conflicts of law. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original. The headings contained in this Agreement are only for convenience and shall not affect the meaning or interpretation of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect any other provisions of this Agreement, which shall remain in full force and effect. Each party agrees that the others would be irreparably harmed in the even of any breach of this Agreement. Accordingly, the parties agree that each shall be entitled to specific performance of this Agreement to injunctive relief to prevent any breach of this Agreement. In the event of any litigation arising out of or relating to this Agreement, the prevailing party shall be entitled to reasonable attorney's and expenses from the losing party. Worldwide Applied Telecom Technology, Inc. North American Telecom Cable Representatives, Inc. Ronald L. Weindruch, President Ronald L. Weindruch, Shareholder Jerome Rhattigan, Shareholder (Corporate Seal) (Corporate Seal) Exhibit 1.1 Exchange of NATCRI Shares for WWATT Shares NATCRI Shareholder NATCRI Shares WWATT Shares Ronald L. Weindruch 500 245,000 Jerome Rhattigan 500 245,000 Totals 1,000 490,000 EX-10.3 4 PURCHASE AGREEMENT FOR SYNAPTX IMPULSE, INC. AGREEMENT THIS AGREEMENT is made as of the 19th day of July, 1996, by and among WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC., a Delaware corporation ("WWATT"), RONALD L. WEINDRUCH ("Weindruch"), and SHARON K. MAXWELL, RICHARD E. HANIK, PAUL D. KEISER, MICHAEL B. ADAMSON, and ERIC N. FRIDMAN (collectively, the "Maxwell Shareholders"). BACKGROUND The Maxwell Shareholders own all the outstanding capital stock of Maxwell Partners, Inc., an Illinois corporation ("Maxwell"). WWATT wishes to acquire Maxwell, and the Maxwell Shareholders wish to own common stock in WWATT and to continue to conduct Maxwell's business as a subsidiary of WWATT. Accordingly, in consideration of the mutual agreements set forth herein, the parties agree as follows: ARTICLE 1 STOCK FOR STOCK EXCHANGE 1.1 Exchange of Maxwell Shares for WWATT Shares. Subject to the terms and conditions of this Agreement, WWATT agrees to issue to the Maxwell Shareholders a total of 690,000 shares of WWATT's common stock (the "WWATT Common Stock"), in exchange for all the outstanding shares of capital stock of Maxwell (the "Maxwell Stock"). Each Maxwell Shareholder shall transfer to WWATT at the Closing (as hereinafter defined) the number of shares of Maxwell Stock shown opposite such person's name on Exhibit 1.1 and shall receive in exchange therefor the number of shares of WWATT Common Stock shown opposite such person's name on Exhibit 1.1. The parties hereto, including the Maxwell Shareholders, D. Mike Maxwell, Maxwell and WWATT, intend for this exchange of stock to be treated as a tax free reorganization as defined within the U.S. Internal Revenue Code Section 368. 1.2 Closing. The exchange of WWATT Common Stock for Maxwell Stock shall take place at a closing (the "Closing") at such place as shall be mutually agreed to by the parties at 10:00 a.m. on September 1, 1996, or as soon as practicable thereafter upon the satisfaction or waiver of the conditions to Closing set forth in Article 5 and in Section 7.1.1. The date on which the Closing takes place is referred to as the "Closing Date." At the Closing, each Maxwell Shareholder shall deliver to WWATT stock certificates representing the Maxwell Stock owned by such Maxwell Shareholder, duly endorsed for transfer or with duly executed stock powers attached, together with such other documents as WWATT may reasonably request prior to the Closing. At the Closing, WWATT shall deliver to each Maxwell Shareholder a stock certificate representing the WWATT Common Stock issued to such Maxwell Shareholder in exchange for his or her Maxwell Stock, together with such other documents as each Maxwell Shareholder may reasonably request prior to the Closing. The parties agree to execute such additional documents after the Closing as may be necessary or desirable to carry out the terms of this Agreement. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF MAXWELL SHAREHOLDERS The Maxwell Shareholders, jointly (except where otherwise expressly indicated to the contrary) and severally, represent and warrant as follows: 2.1 Organization. To the best of their knowledge, Maxwell is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operation of Maxwell, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 2.2 Authorization. Each Maxwell Shareholder represents and warrants that he or she has full power, capacity and authority to execute, deliver and perform this Agreement subject to the security interest held, and rights of approval or consent which may be asserted, by Resource Bank. This Agreement has been duly executed and delivered by such Maxwell Shareholder and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of such Maxwell Shareholder enforceable against such person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. The Maxwell Shareholders shall, at the Closing, provide a fully executed resolution of the Maxwell Board of Directors indicated that there are no existing conditions that preclude the transaction as defined in Section 1.1 except the security interest held by Resource Bank and any and all rights thereunder related thereto and authorizing such exchange as documented by a Plan of Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this Maxwell Board of Directors resolution. 2.3 No Consents, Conflicts. Other than the rights held by Resource Bank arising in connection with its security interest and any consent and approval rights arising therefrom each Maxwell Shareholder represents and warrants that (a) no consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by such Maxwell Shareholder; and (b) neither the execution, delivery or performance of this Agreement by such Maxwell Shareholder will (i) violate, conflict with or result in a breach of any provision of or constitute a default or an event which with notice or lapse of time or both, would constitute a default under Maxwell's articles of incorporation or bylaws or any agreement or obligation to which Maxwell or such Maxwell Shareholder is a party or by which either of such persons may be bound or affected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii)violate any order, writ, injunction, decree, statute, rule or regulation applicable to Maxwell or such Maxwell Shareholder where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 2.4 Financial Statements. The Maxwell Shareholders have previously delivered to WWATT the balance sheets and related statements of income, shareholders' equity and cash flows as of and for the calendar year period ended December 31, 1995 and for the nine months ended September 30, 1996 (the "Financial Statements"). The Financial Statements have been prepared in accordance with Maxwell's books and records, present fairly in all material respects the financial position, results of operations, shareholders' equity and cash flows for the year then ended. There has been no material adverse change in the business, financial condition, results of operations or prospects of Maxwell since September 30, 1996. Except as disclosed in the Financial Statements, Maxwell does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial condition, results of operations or prospects of Maxwell. 2.5 Compliance, No Litigation. To the best of their knowledge, Maxwell is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. To the best of their knowledge, there is no proceeding, investigation or inquiry pending or threatened against Maxwell, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither Maxwell nor, to the best of their knowledge, its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agents or instrumentality. 2.6 Authorized Capital Stock. The authorized capital stock of Maxwell consists of 100,000 shares of common stock, of which 15,150 shares are issued and outstanding, all of which are owned by the Maxwell Shareholders. All the outstanding shares of Maxwell Stock have been validly issued and are fully paid and non assessable. There are no outstanding options, warrants, rights or other commitments obligating Maxwell to issue any of its capital stock. The capital stocks held by Sharon K. Maxwell are pledged to the bank and to other lenders to support loans and debt provided to Maxwell Partners, Inc. and personally to Sharon K. Maxwell and to D. Mike Maxwell, held both individually, jointly and severally. 2.7 Title to Maxwell Stock. Each Maxwell Shareholder owns the Maxwell Stock to be transferred to WWATT at the Closing, free and clear of all liens, claims and encumbrances, and at the Closing, WWATT will acquire good and valid title to such Maxwell Stock, free and clear of all liens, claims and encumbrances. The only exception is that the Maxwell stock held by Sharon K. Maxwell is subject to certain liens, claims, and encumbrances as described in Section 2.6. 2.8 Investment Representations. Each Maxwell Shareholder represents and warrants that he or she has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the WWATT Common Stock in exchange for the Maxwell Stock owned by such Maxwell Shareholder, and has been given the opportunity to examine all documents and ask questions of, and receive answers from representatives of WWATT concerning the terms and conditions of such exchange and the financial condition, business and prospects of WWATT, and to obtain such additional information as he or she deemed necessary in connection with the transaction contemplated by this agreement. The WWATT common stock to be acquired by such Maxwell Shareholder pursuant to this agreement is being acquired by such Maxwell Shareholder pursuant to this agreement is being acquired for such person's own account for investment and not with a view to the public distribution thereof, and such Maxwell Shareholder will not effect any transfer of such WWATT Common Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. Each Maxwell Shareholder understands that the WWATT Common Stock to be received by such person at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. 2.9 Reliance on Own Tax Advisors. The Maxwell Shareholders are relying on their own tax advisors in connection with determining the tax consequences to them of the transactions contemplated by this Agreement and are not relying on WWATT or WWATT's attorneys, accountants or advisors for any such advice. 2.10 Brokers and Finders. Neither WWATT nor any of its shareholders, officers, directors or agents is liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 2.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by any Maxwell Shareholder in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF WWATT WWATT represents and warrants as follows: 3.1 Organization. WWATT is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operations of WWATT, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 3.2 Authorization. WWATT has full power, capacity and authority to execute, deliver and perform this Agreement. This Agreement has been duly executed and delivered by WWATT and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of WWATT enforceable against WWATT in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. WWATT shall, at the Closing, provide a fully executed resolution of the WWATT Board of Directors indicating that there are no existing conditions that preclude the transaction as defined in Section 1.1 and authorizing such exchange as documented by a Plan or Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this WWATT Board of Directors resolution. 3.3 No Consents, Conflicts. No consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by WWATT and neither the execution, delivery or performance of this Agreement by WWATT will (i) violate, conflict with or result in a breach of any provision of, or constitute a default or an event which with notice or lapse of time or both, would constitute a default under WWATT's articles of incorporated or bylaws or any agreement or obligation to which WWATT is a party or by which it may be bound or effected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii) violate any order, writ, injunctions, decree, statue, rule or regulation applicable to WWATT where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 3.4 Business of WWATT. WWATT has had no business operations to date except as set forth on Exhibit 3.4. WWATT will deliver at the closing to each Maxwell Shareholder a statement of financial condition as of September 30, 1996, which has been prepared in accordance with the books and records of WWATT, and presents fairly in all material respects the financial position of WWATT as of the date thereof. There has been no material adverse change in the business, financial condition, results of operations or prospects of WWATT since the date of WWATT's balance sheet referred to above. Except as disclosed in such balance sheet and as otherwise herein specifically noted, WWATT does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial conditions, results of operations or prospects of WWATT. 3.5 Compliance, No Litigation. WWATT is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. There is no proceeding, investigation or inquiry pending or threatened against WWATT, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither WWATT nor its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agency or instrumentality. 3.6 Authorized Capital Stock. The authorized capital stock of the Company is 20,000,000 shares, consisting of 5,000,000 shares of convertible preferred Stock, $.001 par value per share, none of which are issued or outstanding and 15,000,000 shares of Common Stock, $.001 par value per share, of which 1,810,000 shares have been validly issued and are outstanding, and 1,300,000 shares are presently being offered for sale. 3.7 Title to WWATT Stock. The WWATT Common Stock to be issued to each Maxwell Shareholder will be duly and validly issued, fully paid and non assessable, and each Maxwell Shareholder will acquire title to the WWATT Common Stock to be issued to such person hereunder free and clear of all liens, claims and encumbrances. 3.8 Investment Representations. WWATT represents and warrants that it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Maxwell Stock in exchange for the WWATT Common Stock, and has been given the opportunity to examine all documents and ask questions of and receive answers from representatives of Maxwell concerning the terms and conditions of such exchange and the financial condition, business and prospects of Maxwell, and to obtain such additional information as it deems necessary in connection with the transactions contemplated by this Agreement the Maxwell Stock to be acquired by WWATT pursuant to this Agreement is being acquired for WWATT's own account for investment and not with a view to the public distribution thereof, and WWATT will not effect any transfer of such Maxwell Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. WWATT understands that the Maxwell Common Stock to be received by WWATT at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. WWATT agrees to comply with Blue Sky Laws in the States of Illinois and Wisconsin. 3.9 Reliance on Own Tax Advisers. WWATT is relying on their own tax advisors in connection with determining the tax consequences to them of the transactions contemplated by this Agreement and are not relying on Maxwell or Maxwell's attorneys, accountants or advisors for any such advice. 3.10 Brokers and Finders. Neither Maxwell nor any of its shareholders, officers, director or agents is liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 3.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by WWATT in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. ARTICLE 4 ACTIONS PRIOR TO CLOSING 4.1 Ordinary Course. From the date hereof until the Closing, each Maxwell Shareholder agrees to use reasonable best efforts to cause Maxwell to conduct its business only in the ordinary course, consistent with past practice. 4.2 Best Efforts. Each party agrees to use reasonable best efforts to cause the fulfillment at the earliest practicable date of all the conditions to the Closing. 4.3 Access. During the period prior to Closing, WWATT shall give each Maxwell Shareholder, and the Maxwell Shareholder shall cause Maxwell to give WWATT, and their respective representatives reasonable access during normal business hours to all of its books and records, and to cause to be furnished to each other and their representatives all information with respect to their respective businesses and affairs as the other may reasonably request. 4.4 Plan of Reorganization. Maxwell and WWATT will effect a plan of Reorganization that documents the actions it is taking to accomplish transactions in accordance with tax free intent of the parties, including the Maxwell Shareholders, D. Mike Maxwell, Maxwell and WWATT, as defined in Section 1.1 above. ARTICLE 5 CONDITIONS TO CLOSING 5.1 Maxwell Shareholders' Obligations to Close. Each and every obligation of each Maxwell Shareholder to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.1.1 Representations, Warranties and Covenants. The representations and warranties of WWATT set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and WWATT shall have performed all obligations required to be performed by it under this Agreement on or before the Closing Date. 5.1.2 Tax Consequences. The Maxwell Shareholders shall have determined, in consultation with their own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to them (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that the Maxwell Shareholders are unable to make such a determination, so that the foregoing condition can be satisfied). 5.1.3 Employment Agreements. WWATT shall have caused Maxwell to enter into an employment agreement with each Maxwell key employee in substantially the form set forth for each such Maxwell Shareholder in Exhibit 5.12.3. 5.1.4 WWATT Directorship. D. Mike Maxwell shall have been elected as a director of WWATT, effective as of the Closing and D. Mike Maxwell shall be elected for a term of four (4) years, or if WWATT's By-Laws calls for a shorter term, then such shorter term shall be used along with a guarantee renewal of such term or terms to cover the intended four (4) year period. 5.1.5 Consent and Release by Bank. The Resource Bank shall have consented to the sale, transfer and exchange of the shares of Maxwell stock and to the transaction therein contemplated and shall agree in writing to release its security interest in said shares and in the personal assets of Sharon K. Maxwell and D. Mike Maxwell and to waive and release Maxwell, Sharon K. Maxwell and D. Mike Maxwell from any and all outstanding obligations or guaranties directly involving Maxwell Partners to the said bank. 5.2 WWATT's Obligations to Close. Each and every obligation of WWATT to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.2.1 Representations, Warranties and Covenants. The representations and warranties of each Maxwell Shareholder set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and each Maxwell Shareholder shall have performed all obligations required to be performed by such person under this Agreement on or before the Closing Date. 5.2.2 Tax Consequences. WWATT shall have determined, in consultation with their own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to them (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that WWATT is unable to make such a determination, so that the foregoing condition can be satisfied). 5.2.3 Employment Agreements. Each of the Maxwell key employees shall have entered into the Employment Agreements referred to in Section 5.1.3. ARTICLE 6 TERMINATION 6.1 Termination by Either Party. This Agreement may be terminated, without liability, By WWATT or by the Maxwell Shareholders if the terminating party is not itself in default hereunder by written notice of such election to the other if the closing has not occurred by September 1, 1996. If for any reason, other than a failure by WWATT to perform according to this Agreement or a failure of any condition to closing set forth in Section 5.1 hereof or the failure to close by September 1, 1996, Maxwell chooses to withdraw from the merger, Maxwell and/or the Maxwell Shareholders, jointly and severally, shall pay to WWATT, as liquidated damages in lieu of any and all claims, damages, costs and expenses incurred by WWATT, and not as a penalty, the sum of $25,000 to be paid within thirty (30) days after written notice of said election to withdraw. If for any reason, other than a failure by Maxwell or the Maxwell Shareholders to perform according to this Agreement or a failure of any condition to closing set forth in Section 5.2 hereof or the failure to close by September 1, 1996, WWATT chooses to withdraw from the merger, WWATT and/or Ronald Weindruch, jointly and severally shall pay to Maxwell, as liquidated damages, in lieu of any and all claims, damages, costs and expenses incurred by Maxwell or the Maxwell Shareholders, and not as a penalty, the sum of $25,000 to be paid within thirty (30) days after written notice of said election to withdraw. 6.2 Breach. In the event of any breach by one or more Maxwell Shareholders and D. Mike Maxwell hereunder, including a breach of representations and warranties, prior to the Closing, WWATT shall have the option to (i) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. In the event of a breach by WWATT hereunder, including a breach of representations and warranties, prior to the Closing, the Maxwell Shareholders shall have the options to (I) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. Nothing contained in this section is intended to preclude or limit the right of any party to seek a remedy in damages in lieu of or in addition to any other remedy set forth herein. ARTICLE 7 POST-CLOSING COVENANTS 7.1 Post-Closing Covenants of WWATT. WWATT covenants from and after the Closing as follows: 7.1.1 Stock Plans. WWATT agrees to use reasonable best efforts to implement within one hundred twenty (120) days after the Closing Date a stock purchase program for the executives of WWATT and its subsidiaries, including the executives of Maxwell, Additionally, WWATT agrees that each Maxwell Shareholder shall have a right of first refusal to acquire shares of Common Stock of WWATT and that WWATT expects to sell in a Regulation D private placement at $1.00 per share, with each Maxwell Shareholder having the right to acquire that amount of stock in such offering as shall equal such person's regular compensation (as defined in such person's Employment Agreement). Additionally, WWATT shall use reasonable best efforts to implement within one hundred twenty (120) days after the Closing Date a stock option plan for the Maxwell Shareholders and other key employees of Maxwell giving them an opportunity to purchase additional shares of Common Stock of WWATT, with vesting of options to be tied to the achievement of predetermined performance goals. 7.1.2 Registration of Shares. WWATT shall use reasonable best efforts to cause the registration under the Securities Act of 1933 of the WWATT Common Stock issued to the Maxwell Shareholders at the Closing no later than twelve (12) months after WWATT's Common Stock has been registered under Section 12 of the Securities Exchange Act of 1934. WWATT agrees to use reasonable best efforts to accomplish such 1934 Act registration within twelve (12) months after the Closing. 7.2 Operation of Maxwell's Business Following the Closing. The parties agree as follows with respect to the operation of Maxwell's business following the Closing: 7.2.1 Location. Maxwell shall continue to conduct its business at its present facility in Elgin, Illinois until such time as Maxwell's Board and WWATT's Board of Directors mutually agree that a change would be beneficial to the business of WWATT and its subsidiaries taken as a whole. 7.3 Budgets and Business Plans. Senior management of Maxwell shall prepare an annual operating budget and capital budget for review by WWATT's Board of Directors at least ninety (90) days prior to the beginning of each fiscal year which shall exclude the first fiscal year or such period of shorter than one year that includes the closing date. Such budgets shall be reviewed and may be revised quarterly. Implementation of all such budgets and revisions thereto must be approved both by Maxwell's senior management and WWATT's Board of Directors. Additionally, Maxwell's senior management shall prepare a five-year business plan for review and approval by WWATT's Board of Directors, in conjunction with the preparation and review and approval of Maxwell's annual operating and capital budgets. The five-year business plan shall be reviewed and may be revised annually, with the approval of WWATT's Board of Directors. Maxwell's Chairman and Chief Executive Officer shall have authority to approve capital expenditures of up to $25,000.00 each made within the guidelines established by the annual operating and capital budgets and five-year business plan approved by WWATT';s Board of Directors. Any individual capital expenditure in excess of $25,000.00 must be approved by WWATT's Board of Directors. Additionally, all individual salaries in excess of $40,000.00 per year and the total number of Maxwell employees shall be subject to approval by WWATT's Board of Directors each year. 7.4 Employee Benefits. Maxwell's existing 401(k) Plan and employee benefits shall be continued in the same form as prior to the Closing, except to the extent modified pursuant to the Employment Agreements referred to in Section 5.1.3. 7.5 Accounts Receivable. No accounts receivable of Maxwell shall be factored unless agrees to by the Chief Executive Officer and Chief Financial Officer of Maxwell and WWATT's Board of Directors. ARTICLE 8 OTHER 8.1 Survival. The representations and warranties set forth in Articles 2 and 3 shall survive the Closing for a period of six (6) months. Maxwell and each Maxwell Shareholder agrees to defend, indemnify and hold harmless WWATT and WWATT agrees to defend, indemnify and hold harmless each Maxwell Shareholder for any damages, losses, liabilities or claims incurred by the other as a result of the breach by the other of such representations and warranties made by it herein. 8.2 Miscellaneous. This Agreement may be amended only in writing signed by the party against whom enforcement is sought. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties. This Agreement shall be governed and construed in accordance with the laws of the State of Illinois, without regard to principles of conflicts of law. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original. The headings contained in this Agreement are only for convenience and shall not affect the meaning or interpretation of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect any other provisions of this Agreement, which shall remain in full force and effect. Each party agrees that the others would be irreparably harmed in the even of any breach of this Agreement. Accordingly, the parties agree that each shall be entitled to specific performance of this Agreement to injunctive relief to prevent any breach of this Agreement. In the event of any litigation arising out of or relating to this Agreement, the prevailing party shall be entitled to reasonable attorney's and expenses from the losing party. Company Signature Name and Title Worldwide Applied Telecom Technology, Inc. Ronald L.Weindruch, President (Corporate Seal) Ronald L. Weindruch, personnally Maxwell Partners, Inc. Sharon K. Maxwell, Shareholder Richard E. Hanik, Shareholder Paul D. Keiser, Shareholder Michael B. Adamson, Shareholder Eric N. Fridman, Shareholder (Corporate Seal) Exhibit 1.1 Exchange of Maxwell Shares for WWATT Shares Maxwell Shareholder Maxwell Shares WWATT Shares Sharon K.Maxwell 10,000 423,500 Richard E.Hanik 1,060 63,700 Paul D. Keiser 1,515 74,000 Michael B. Adamson 1,515 74,000 Eric N. Fridman 1,060 54,800 Totals 15,150 690,000 EX-10.4 5 PURCHASE AGREEMENT FOR ORAYCOM, INC. AGREEMENT THIS AGREEMENT is made as of the 1st day of June, 1997 ("Contract Date"), by and among SYNAPTX WORLDWIDE, INC., a Utah corporation ("SYNAPTX ") and O. RAY STRICKLAND (the "ORAYCOM Shareholder"). BACKGROUND The ORAYCOM Shareholder owns all the outstanding capital stock of ORAYCOM, Inc., a Texas corporation ("ORAYCOM"). SYNAPTX wishes to acquire ORAYCOM, and the ORAYCOM Shareholder wishes to own common stock in SYNAPTX and to continue to conduct ORAYCOM's business as a subsidiary of SYNAPTX. Accordingly, in consideration of the mutual agreements set forth herein, the parties agree as follows: ARTICLE 1 STOCK FOR STOCK EXCHANGE 1.1 Exchange of ORAYCOM Shares for SYNAPTX Shares. Subject to the terms and conditions of this Agreement, SYNAPTX agrees to issue to the ORAYCOM Shareholder a total of ______________ shares of SYNAPTX common stock representing the total number of shares of SYNAPTX common stock resulting from the formula of dividing Five Hundred Thousand Dollars ($500,000) by the average closing price of the SYNAPTX common stock for the prior twenty [20] trading days preceding the Contract Date, rounded up to next whole share of SYNAPTX common stock (the "SYNAPTX Common Stock"), in exchange for all the outstanding shares of capital stock of ORAYCOM (the "ORAYCOM Stock"). The ORAYCOM Shareholder shall transfer to SYNAPTX at the Closing (as hereinafter defined) the number of shares of ORAYCOM Stock shown opposite such person's name on Exhibit 1.1 and shall receive in exchange therefor the number of shares of SYNAPTX Common Stock shown opposite such person's name on Exhibit 1.1. The parties hereto, including the ORAYCOM Shareholder, ORAYCOM and SYNAPTX, intend for this exchange of stock to be treated as a tax free reorganization as defined within the U.S. Internal Revenue Code Section 368(a)(1)(B). 1.2 Contingent Issuance of SYNAPTX Shares. Subject to the terms and conditions of this Agreement, SYNAPTX agrees to issue to the ORAYCOM Shareholder a maximum value of $380,000 worth of SYNAPTX Common Stock ("Earn-out Bonus") as an incentive to achieve the Level One Results or Level Two Results (and as hereinafter defined) as reflected on Exhibit 1.2, to be issued over the SYNAPTX fiscal year ends, specifically August 31, 1997, 1998 and 1999 (the "Earn-out Period" for each fiscal year end or collectively the "Earn-out Periods"), to the existing ORAYCOM Shareholder who is employed by ORAYCOM as of the date ninety (90) days after each of the next three SYNAPTX fiscal year ends, specifically, August 31, 1997, 1998, and 1999 ("Payout Date" for each fiscal year end or collectively the "Payout Dates"). The Level One Results and Level Two Results represent threshold levels of amounts to be realized after the Closing covering the total of Commission Revenues and the total Earnings before Taxes, both of which must be achieved, as recorded on the books and records of ORAYCOM for each Earn-out Period in accordance with generally accepted accounting principles ("Level One Results" and "Level Two Results", respectively). The Earn-out Bonus as reflected on Exhibit 1.2 represents the dollars payable for the respective Level One Results and Level Two Results specified on Exhibit 1.2 achieved ("Earn-out Bonus Realized"). Earn-out Bonus Realized is payable in shares of Synaptx Common Stock based on the number of shares resulting from the formula of Earn-out Bonus Realized divided by the average closing price of SYNAPTX Common Stock for every trading day in the month of September as published for the stock exchange on which the SYNAPTX Common Stock is traded or as quoted on the electronic bulletin board if the SYNAPTX Common Stock is not so traded, rounded up to the next whole share of SYNAPTX Common Stock. 1.3 Closing. The exchange of SYNAPTX Common Stock for ORAYCOM Stock shall take place at a closing (the "Closing") at such place as shall be mutually agreed to by the parties at 10:00 a.m. on June 2, 1997, or as soon as practicable thereafter upon the satisfaction or waiver of the conditions to Closing set forth in Article 5 and in Section 7.1.1. The date on which the Closing takes place is referred to as the "Closing Date." At the Closing, the ORAYCOM Shareholder shall deliver to SYNAPTX stock certificates representing the ORAYCOM Stock owned by such ORAYCOM Shareholder, duly endorsed for transfer or with duly executed stock powers attached, together with such other documents as SYNAPTX may reasonably request prior to the Closing. At the Closing, SYNAPTX shall deliver to the ORAYCOM Shareholder a stock certificate representing the SYNAPTX Common Stock issued to such ORAYCOM Shareholder in exchange for his or her ORAYCOM Stock, together with such other documents as the ORAYCOM Shareholder may reasonably request prior to the Closing. The parties agree to execute such additional documents after the Closing as may be necessary or desirable to carry out the terms of this Agreement. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF ORAYCOM SHAREHOLDER The ORAYCOM Shareholder represents and warrants as follows: 2.1 Organization. To the best of his knowledge, ORAYCOM is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operation of ORAYCOM, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 2.2 Authorization. The ORAYCOM Shareholder represents and warrants that he or she has full power, capacity and authority to execute, deliver and perform this Agreement. This Agreement has been duly executed and delivered by such ORAYCOM Shareholder and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of such ORAYCOM Shareholder enforceable against such person in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. The ORAYCOM Shareholder shall, at the Closing, provide a fully executed resolution of the ORAYCOM Board of Directors indicating that there are no existing conditions that preclude the transaction as defined in Article 1 and authorizing such exchange as documented by a Plan of Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this ORAYCOM Board of Directors resolution. 2.3 No Consents, Conflicts. The ORAYCOM Shareholder represents and warrants that (a) no consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by such ORAYCOM Shareholder; and (b) neither the execution, delivery or performance of this Agreement by such ORAYCOM Shareholder will (i) violate, conflict with or result in a breach of any provision of or constitute a default or an event which with notice or lapse of time or both, would constitute a default under ORAYCOM's articles of incorporation or by-laws or any agreement or obligation to which ORAYCOM or such ORAYCOM Shareholder are a party or by which either of such persons may be bound or affected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii)violate any order, writ, injunction, decree, statute, rule or regulation applicable to ORAYCOM or such ORAYCOM Shareholder where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 2.4 Financial Statements. The ORAYCOM Shareholder has previously delivered to SYNAPTX the balance sheets and related statements of income, shareholder's equity and cash flows as of and for the calendar year period ended December 31, 1996 and for the five month period ended May 31, 1997 (the "Financial Statements"). The Financial Statements have been prepared in accordance with ORAYCOM's books and records, present fairly in all material respects the financial position, results of operations, shareholder's equity and cash flows for the periods then ended. There has been no material adverse change in the business, financial condition, results of operations or prospects of ORAYCOM since December 31, 1996. Except as disclosed in the Financial Statements, ORAYCOM does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial condition, results of operations or prospects of ORAYCOM. 2.5 Compliance, No Litigation. To the best of his knowledge, ORAYCOM is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. To the best of his knowledge, there is no proceeding, investigation or inquiry pending or threatened against ORAYCOM, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither ORAYCOM nor, to the best of his knowledge, its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agents or instrumentality. 2.6 Authorized Capital Stock. The authorized capital stock of ORAYCOM consists of ________________ shares of common stock, of which __________________ shares are issued and outstanding, all of which are owned by the ORAYCOM Shareholder. All the outstanding shares of ORAYCOM Stock have been validly issued and are fully paid and non assessable. There are no outstanding options, warrants, rights or other commitments obligating ORAYCOM to issue any of its capital stock. The capital stock held by the ORAYCOM Shareholder is not pledged to any bank or to other lenders to support loans and debt provided to ORAYCOM, Inc. and personally to any individual or multiple ORAYCOM Shareholder. 2.7 Title to ORAYCOM Stock. The ORAYCOM Shareholder owns the ORAYCOM Stock to be transferred to SYNAPTX at the Closing, free and clear of all liens, claims and encumbrances, and at the Closing, SYNAPTX will acquire good and valid title to such ORAYCOM Stock, free and clear of all liens, claims and encumbrances. 2.8 Investment Representations. The ORAYCOM Shareholder represents and warrants that he or she has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the SYNAPTX Common Stock in exchange for the ORAYCOM Stock owned by such ORAYCOM Shareholder, and has been given the opportunity to examine all documents and ask questions of, and receive answers from representatives of SYNAPTX concerning the terms and conditions of such exchange and the financial condition, business and prospects of SYNAPTX, and to obtain such additional information as he or she deemed necessary in connection with the transaction contemplated by this agreement. The SYNAPTX common stock to be acquired by such ORAYCOM Shareholder pursuant to this agreement is being acquired by such ORAYCOM Shareholder for such person's own account for investment and not with a view to the public distribution thereof, and such ORAYCOM Shareholder will not effect any transfer of such SYNAPTX Common Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. The ORAYCOM Shareholder understands that the SYNAPTX Common Stock to be received by such person at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. 2.9 Reliance on Own Tax Advisors. The ORAYCOM Shareholder is relying on his own tax advisors in connection with determining the tax consequences to him of the transactions contemplated by this Agreement and is not relying on SYNAPTX or SYNAPTX's attorneys, accountants, officers or advisors for any such advice. 2.10 Brokers and Finders. Neither ORAYCOM, including its officers, directors or agents, nor the ORAYCOM Shareholder, are liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 2.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by any ORAYCOM Shareholder in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SYNAPTX SYNAPTX represents and warrants as follows: 3.1 Organization. SYNAPTX is duly incorporated, validly existing and in good standing under the laws of the State of its incorporation, is qualified to do business as a foreign corporation in each other jurisdiction in which the failure to be so qualified would have a material adverse effect on the transactions contemplated by this Agreement or on the business, financial condition or results of operations of SYNAPTX, and has full corporate power and authority to conduct its business as presently conducted and to enter into and perform this Agreement. 3.2 Authorization. SYNAPTX has full power, capacity and authority to execute, deliver and perform this Agreement. This Agreement has been duly executed and delivered by SYNAPTX and (assuming the due execution and delivery by the other parties hereto) constitutes the legal, valid and binding agreement of SYNAPTX enforceable against SYNAPTX in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights and remedies generally and by general principles of equity. SYNAPTX shall, at the Closing, provide a fully executed resolution of the SYNAPTX Board of Directors indicating that there are no existing conditions that preclude the transaction as defined in Section 1.1 and authorizing such exchange as documented by a Plan or Reorganization that references those actions to accomplish the tax free result intended by the parties in this transaction which will be incorporated within this SYNAPTX Board of Directors resolution. 3.3 No Consents, Conflicts. No consent, approval or other action by any governmental authority or third party is required in connection with the execution, delivery and performance of this Agreement by SYNAPTX and neither the execution, delivery or performance of this Agreement by SYNAPTX will (i) violate, conflict with or result in a breach of any provision of, or constitute a default or an event which with notice or lapse of time or both, would constitute a default under SYNAPTX's articles of incorporation or bylaws or any agreement or obligation to which SYNAPTX is a party or by which it may be bound or affected where such violation, conflict, breach or default would have a material adverse effect on the transactions contemplated by this Agreement, or (ii) violate any order, writ, injunctions, decree, statute, rule or regulation applicable to SYNAPTX where such violation would have a material adverse effect on the transactions contemplated by this Agreement. 3.4 Business of SYNAPTX. SYNAPTX has previously delivered to the ORAYCOM Shareholder the balance sheets and related statements of income, shareholders' equity and cash flows as of and for the fiscal year period ended August 31, 1996 and the condensed financial statement information included in the Second Quarter 1997 Investor Quarterly Update (the "Financial Statements"). The Financial Statements have been prepared in accordance with the SYNAPTX books and records, present fairly in all material respects the financial position, results of operations, shareholders' equity and cash flows for the periods then ended. There has been no material adverse change in the business, financial condition, results of operations or prospects of SYNAPTX since the date of SYNAPTX Financial Statements referred to above. Except as disclosed in such balance sheet and as otherwise herein specifically noted, SYNAPTX does not have any liabilities, commitments or obligations (whether accrued, absolute, contingent or otherwise), other than obligations incurred since the date of the Financial Statements in the ordinary course of business and consistent with past practice and none of which has or will have a material adverse effect, on the business, financial conditions, results of operations or prospects of SYNAPTX. 3.5 Compliance, No Litigation. SYNAPTX is in material compliance with all applicable federal, state, local and foreign laws, ordinances, orders, rules and regulations and with all agreements, commitments or obligations to which it is a party or by which it or any of its assets may be bound. There is no proceeding, investigation or inquiry pending or threatened against SYNAPTX, its business or any of its assets, nor is there any basis for any such proceeding, investigation or inquiry. Neither SYNAPTX nor its business or any of its assets is subject to any judgment, order, writ or injunction of any court, arbitrator or governmental agency or instrumentality. 3.6 Authorized Capital Stock. The authorized capital stock of the Company is 35,000,000 shares, consisting of 10,000,000 shares of preferred Stock, $.001 par value per share, none of which none are issued or outstanding and 25,000,000 shares of Common Stock, $.001 par value per share, of which 5,047,211 shares have been validly issued and are outstanding. 3.7 Title to SYNAPTX Stock. The SYNAPTX Common Stock to be issued to the ORAYCOM Shareholder will be duly and validly issued, fully paid and non assessable, and the ORAYCOM Shareholder will acquire title to the SYNAPTX Common Stock to be issued to such person hereunder free and clear of all liens, claims and encumbrances. Additionally, the SYNAPTX Board of Directors and a majority of the then Synaptx shareholders have approved a stock option plan providing for the issuance of 551,150 shares of SYNAPTX common stock of which 316,900 shares are issued with exercise prices ranging from $0.091 to $0.998 per share. Also, the SYNAPTX Board of Directors has approved the issuance of stock warrants representing 200,310 shares of SYNAPTX common stock with an exercise price from $0.454 to $0.907 per share. 3.8 Investment Representations. SYNAPTX represents and warrants that it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the ORAYCOM Stock in exchange for the SYNAPTX Common Stock, and has been given the opportunity to examine all documents and ask questions of and receive answers from representatives of ORAYCOM concerning the terms and conditions of such exchange and the financial condition, business and prospects of ORAYCOM, and to obtain such additional information as it deems necessary in connection with the transactions contemplated by this Agreement the ORAYCOM Stock to be acquired by SYNAPTX pursuant to this Agreement is being acquired for SYNAPTX's own account for investment and not with a view to the public distribution thereof, and SYNAPTX will not effect any transfer of such ORAYCOM Stock except pursuant to an effective registration statement under the Securities Act of 1933 or exemptions from registration thereunder and in compliance with all applicable state securities laws. SYNAPTX understands that the ORAYCOM Common Stock to be received by SYNAPTX at the Closing will bear appropriate restrictive legends referred to the foregoing transfer restrictions. SYNAPTX agrees to comply with Blue Sky Laws in the State of Texas. 3.9 Reliance on Own Tax Advisers. SYNAPTX is relying on its own tax advisors in connection with determining the tax consequences to it of the transactions contemplated by this Agreement and are not relying on ORAYCOM or ORAYCOM's attorneys, accountants, officers or advisors for any such advice. 3.10 Brokers and Finders. Neither SYNAPTX nor any of its shareholders, officers, director or agents is liable for any brokers' or finders' fees or expenses in connection with this Agreement or the transactions contemplated hereby. 3.11 No Misrepresentations. Neither this Agreement nor any document executed or to be executed by SYNAPTX in connection with the transactions contemplated hereby contains or will contain when executed any untrue statement of a material fact or omits or will omit when executed to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. ARTICLE 4 ACTIONS PRIOR TO CLOSING 4.1 Ordinary Course. From the date hereof until the Closing, the ORAYCOM Shareholder agrees to use reasonable best efforts to cause ORAYCOM to conduct its business only in the ordinary course, consistent with past practice. 4.2 Best Efforts. Each party agrees to use reasonable best efforts to cause the fulfillment at the earliest practicable date of all the conditions to the Closing. 4.3 Access. During the period prior to Closing, SYNAPTX shall give the ORAYCOM Shareholder, and the ORAYCOM Shareholder shall cause ORAYCOM to give SYNAPTX, and their respective representatives reasonable access during normal business hours to all of its books and records, and to cause to be furnished to each other and their representatives all information with respect to their respective businesses and affairs as the other may reasonably request. 4.4 Plan of Reorganization. ORAYCOM and SYNAPTX will effect a plan of Reorganization that documents the actions it is taking to accomplish transactions in accordance with tax free intent of the parties, including the ORAYCOM Shareholder, ORAYCOM and SYNAPTX, as defined in Section 1.1 above. ARTICLE 5 CONDITIONS TO CLOSING 5.1 ORAYCOM Shareholder's Obligations to Close. Each and every obligation of the ORAYCOM Shareholder to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.1.1 Representations, Warranties and Covenants. The representations and warranties of SYNAPTX set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and SYNAPTX shall have performed all obligations required to be performed by it under this Agreement on or before the Closing Date. 5.1.2 Tax Consequences. The ORAYCOM Shareholder shall have determined, in consultation with his own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to him (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that the ORAYCOM Shareholder is unable to make such a determination, so that the foregoing condition can be satisfied). 5.1.3 Employment Agreements. SYNAPTX shall have caused ORAYCOM to enter into an employment agreement with each ORAYCOM key employee in substantially the form set forth for the ORAYCOM Shareholder in Exhibit 5.1.3. 5.2 SYNAPTX's Obligations to Close. Each and every obligation of SYNAPTX to be performed on the Closing Date shall be subject to the satisfaction or waiver of each of the following conditions: 5.2.1 Representations, Warranties and Covenants. The representations and warranties of the ORAYCOM Shareholder set forth in this Agreement shall be true and correct in all material respects when made and as of the Closing Date as though such representations and warranties were made on and as of the Closing Date, and the ORAYCOM Shareholder shall have performed all obligations required to be performed by such person under this Agreement on or before the Closing Date. 5.2.2 Tax Consequences. SYNAPTX shall have determined, in consultation with its own tax advisors, that the transactions to be consummated at the Closing will not result in taxable income to it (the parties agree to use reasonable best efforts to restructure the transactions contemplated hereby in the event that SYNAPTX is unable to make such a determination, so that the foregoing condition can be satisfied). 5.2.3 Employment Agreements. Each of the ORAYCOM key employees shall have entered into the Employment Agreements referred to in Section 5.1.3. ARTICLE 6 TERMINATION 6.1 Termination by Either Party. This Agreement may be terminated, without liability, by SYNAPTX or by the ORAYCOM Shareholder if the terminating party is not itself in default hereunder by written notice of such election to the other if the closing has not occurred by September 1, 1997. 6.2 Breach. In the event of any breach by one or more ORAYCOM Shareholder hereunder, including a breach of representations and warranties, prior to the Closing, SYNAPTX shall have the option to (i) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. In the event of a breach by SYNAPTX hereunder, including a breach of representations and warranties, prior to the Closing, the ORAYCOM Shareholder shall have the options to (I) terminate this Agreement, (ii) close the transactions contemplated hereby notwithstanding such breach, or (iii) seek specific performance of this Agreement. ARTICLE 7 POST-CLOSING COVENANTS 7.1 Post-Closing Covenants of SYNAPTX. SYNAPTX covenants from and after the Closing as follows: 7.1.1 Stock Plans. SYNAPTX agrees to use reasonable best efforts to implement within one hundred twenty (120) days after the Closing Date a stock purchase program for the executives of ORAYCOM. 7.2 Operation of ORAYCOM's Business Following the Closing. The parties agree as follows with respect to the operation of ORAYCOM's business following the Closing: 7.2.1 Location. ORAYCOM shall continue to conduct its business at its present facility in Carrollton, Texas until such time as the ORAYCOM Board and the SYNAPTX Board of Directors mutually agree that a change would be beneficial to the business of SYNAPTX and its subsidiaries taken as a whole. ARTICLE 8 OTHER 8.1 Survival. The representations and warranties set forth in Articles 2 and 3 shall survive the Closing for a period of six (6) months. ORAYCOM and the ORAYCOM Shareholder agrees to defend, indemnify and hold harmless SYNAPTX and SYNAPTX agrees to defend, indemnify and hold harmless the ORAYCOM Shareholder for any damages, losses, liabilities or claims incurred by the other as a result of the breach by the other of such representations and warranties made by it herein. 8.2 Miscellaneous. This Agreement may be amended only in writing signed by the party against whom enforcement is sought. This Agreement may not be assigned by any party hereto without the prior written consent of the other parties. This Agreement shall be governed and construed in accordance with the laws of the State of Texas, without regard to principles of conflicts of law. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original. The headings contained in this Agreement are only for convenience and shall not affect the meaning or interpretation of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect any other provisions of this Agreement, which shall remain in full force and effect. Each party agrees that the others would be irreparably harmed in the even of any breach of this Agreement. Accordingly, the parties agree that each shall be entitled to specific performance of this Agreement to injunctive relief to prevent any breach of this Agreement. In the event of any litigation arising out of or relating to this Agreement, the prevailing party shall be entitled to reasonable attorney's fees and expenses from the losing party. Company Signature Name and Title Synaptx Worldwide, Inc. Ronald L. Weindruch, President (Corporate Seal) ORAYCOM, Inc. O. Ray Strickland, ORAYCOM Shareholder (Corporate Seal) EX-10.5 6 EMPLOYMENT AGREEMENT FOR RONALD L. WEINDRUCH WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC. EMPLOYMENT AGREEMENT BY THIS AGREEMENT, made this 1st day of July, 1996, Worldwide Applied Telecom Technology, Inc., an Delaware corporation ("Company") and Ronald L. Weindruch ("Employee"), in consideration of mutual benefits set forth herein, hereby agree as follows: 1. Employment. The Company hereby employs the Employee and the Employee hereby accepts employment upon the terms and conditions hereinafter set forth. 2. Term. Subject to the provisions for the termination as hereafter provided, the term of this Agreement shall begin on the date hereof and shall terminate on December 31, 1997. Thereafter, this Agreement shall be automatically renewed for successive one-year terms unless either party notifies the other of non-renewal at least 30 days prior to the expiration of the then current term. The compensation and other benefits provided for herein shall be subject to annual review and adjustment where appropriate by the Company's Board of Directors. 3. Compensation. For all services rendered by the Employee under this Agreement, the Company shall compensate the Employee by paying the Employee the sum of the following: (i) $108,000 per year payable in equal installments in accordance with the Company's normal payroll policies (called "Regular Compensation"); (ii) When Company's consolidated run rate sales for three (3) consecutive months exceeds an annual amount of $15,000,000, then such Regular Compensation will be increased to $144,000 per year payable in equal installments in accordance with the Company's normal payroll policies; (iii) Such bonus, if any, for each calendar quarter as is specified by the Board of Directors of Company for each quarter during which Employee's employment continues (called "Profit Bonus"), based on the Company's performance relative to budget for the quarter, together with any other factors the Board of Directors deems appropriate, such bonus normally not to exceed thirty-three percent (33%) of the Employee's Regular Compensation for the applicable quarter. (iv) In addition to the above arrangements relative to Employee's compensation, it is understood between the parties that Employee also provides services to a subsidiary of the Company, North American Telecom Cable Representatives, Inc., under a contractual arrangement as a third-party commission representative and provider of consulting services. These services are provided as an independent representative and not as an employee of Company or any of its subsidiaries or affiliates. In the event of certain early terminations of this Agreement as provided hereafter, compensation payable to the Employee shall (unless otherwise stated) be limited to amounts Fully Accrued. The term "Fully Accrued" means (a) as to Regular Compensation, the percentage of a year's Regular Compensation as shall equal the percentage of the year which has expired on the termination date, and (b) as to Profit Bonus, only that Profit Bonus which has been awarded by the Company's Board of Directors. 4. Duties. The Employee is engaged as President and Chief Executive Officer. The precise services of the Employee may be extended or curtailed, from time to time, at the direction of the Company. The Employee also shall perform such corporate development services for the Company's parent corporation and affiliates as the Company's Board of Directors may specify from time to time, without additional compensation. 5. Extent of Services. The Employee shall devote the Employee's entire time, attention and energy to the business of the Company, and shall not, during the term of this Agreement, engage in any other business activity whether or not such business activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing the Employee from investing Employee's assets in such form or manner as will not require services on the part of Employee in the operation of the affairs of the Company to which investments are made. 6. Expenses. The Employee is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for travel and similar items. The Company will reimburse the Employee for all such expenses upon presentation by the Employee, from time to time, of an itemized account of such expenditures in accordance with the Company's expense reimbursement policies. Additionally, the Company's existing practice of reimbursing the full cost of all cellular phone bills associated with the main cellular phone used for business will be continued for Employee. Also, when Company's consolidated run rate of sales for three (3) consecutive months exceeds an annualized amount of $8,000,000, Employee will be provided with, the following: (a.) membership in a country club to promote the business of the Company and its subsidiaries, (b.) a full size company car ("Company Car") for which all costs in operating such Company Car, including insurance, repairs, maintenance, gasoline, any taxes thereon, and other necessary operating costs. 7. Fringe Benefits. The Employee shall enjoy the same fringe benefits (other than stock options) as provided generally to other senior executives of Company, including health, life and disability insurance. The Company will maintain such health, life and disability insurance with benefits at a minimum consistent with the existing Company health, life and disability insurance. Furthermore, the Company or one of it's subsidiaries will offer the benefit of a deferred compensation arrangement, commonly referred to as a "401(K) Plan" whose contributions and benefits structure will at a minimum be consistent with the existing Maxwell Partners, Inc. Retirement Savings Plan. 8. Vacation. The Employee shall be entitled each year to 10 holidays, 10 vacation days and 10 personal days, during which time the Employee's compensation shall be paid in full. 9. Disability. If the Employee is unable to perform his services by reason of illness or incapacity, the Company will continue to pay Employee's compensation (until such time as Employee begins to receive payments under the disability insurance maintained by Company as to Employee), at which time compensation from the Company shall cease; provided, however, that compensation shall not be paid by the Company beyond the existing term of this Agreement. 10. Termination. (i) Without Cause. Without cause, the Company may terminate this Agreement at any time upon 30 days' written notice to the Employee. In such event, the Employee shall continue to receive Regular Compensation throughout the original or any one year renewal term as more fully explained in Section 2 of this Agreement, which shall not be less than two (2) years of such Regular Compensation, unless taking place during the original term of this agreement in which case it shall be three (3) years of such Regular Compensation, but shall be entitled to Profit Bonus only to the extent Fully Accrued on the date of termination. (ii) With Cause. The Company may terminate the employment of the Employee hereunder immediately upon written notice thereof in the event of material fraud or dishonesty by the Employee in connection with his employment or if the Employee is convicted of a felony. In such event, the Company shall pay the Employee only such compensation as shall have Fully Accrued on the date of termination. (iii) Termination by Employee. The Employee may terminate this Agreement at any time upon 30 days' prior written notice to the Company. In such event, the Employee shall be entitled to receive his or her compensation only to the extent Fully Accrued on the date of termination. 11. Death During Employment. If the Employee dies during the term of this Employment Agreement, the Company shall pay to the estate of the Employee the compensation which would be Fully Accrued as of the end of the calendar month in which his death occurs , and Employee's surviving spouse shall continue to receive such Regular Compensation throughout the original term or any one year renewal term as more fully explained in Section 2 of this Agreement, which shall not be less than two (2) years of such Regular Compensation ("Extended Compensation"), unless taking place during the original term of this agreement in which case it shall be three (3) years of such Regular Compensation, but shall be entitled to Profit Bonus only to the extent Fully Accrued on the date of death. Under no circumstances will Extended Compensation be paid beyond December 31, 2000. 12. Non-Disclosure. Employee hereby agrees with Company that Employee will keep confidential any and all confidential information of the Company, including Company's know-how, trade secrets, customer lists, and other information, data and proprietary information relating to Company's business (herein called "Proprietary Information") and will not at any time, without prior written consent of Company, disclose or make known or allow to be disclosed or made known such Proprietary Information to any person, firm, corporation, or other business entity other than Company and persons or entities designed by Company. This provision shall survive the termination of this Agreement. 13. Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and sent by certified mail or hand delivery to the Employee's residence in the Employee, or to the principal office in case of the Company. 14,. Waiver of Breach. The waiving by the Company of a breach of any provision in this Agreement by the Employee shall not operate or be construed as a waiver of any subsequent breach by the Employee. 15. Assignment. The rights and obligation of the Company under this Agreement shall inure to and be binding upon the successors and assigns of the Company. 16. Entire Agreement. This instrument contains the entire agreement of the parties. It may not be changed or altered except by an Agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. 17. Attorney's Fees. In the event of any litigation or arbitration proceeding arising out of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees and expenses from the losing party, whether incurred before suit is brought, before or at trial or the arbitration proceeding, on appeal or in insolvency proceedings. 18. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida, exclusive of conflicts of law. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Worldwide Applied Telecom Technology, Inc. ("Company") Employee Richard E. Hanik, Secretary Ronald L. Weindruch SYNAPTX WORLDWIDE, INC. (f/k/a WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC. ) AMENDMENT TO EMPLOYMENT AGREEMENT DATED: JUNE 26, 1997 BY THIS AGREEMENT, made this 26th day of June, 1997, SYNAPTX WORLDWIDE, INC. (f/k/a WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC., a Delaware corporation) a Utah corporation ("Company") and Ronald L. Weindruch ("Employee"), in consideration of mutual benefits set forth herein, hereby agree to amend the Employment Agreement, dated July 1, 1996 ("Employment Agreement"), as follows: Section 2 of the Employment Agreement is amended to read, as follows: 2. Term. Subject to the provisions for the termination as hereafter provided, the term of this Agreement shall begin on the date hereof and shall terminate on August 31, 1998. Thereafter, this Agreement shall be automatically renewed for successive one-year terms unless either party notifies the other of non-renewal at least 30 days prior to the expiration of the then current term. The compensation and other benefits provided for herein shall be subject to annual review and adjustment where appropriate by the Company's Board of Directors. Section 3 (i) of the Employment Agreement is amended to read as follows: (i) $108,000 per year payable in equal installments in accordance with the Company's normal payroll policies through the month ended August 31, 1997 and $120,000 per year payable in equal installments in accordance with the Company's normal payroll policies starting September 1, 1997 (called "Regular Compensation"); Section 3 (ii) of the Employment Agreement is amended to read as follows: (ii) When Company's consolidated run rate sales for three (3) consecutive months exceeds an annual amount of $15,000,000, then such Regular Compensation will be increased to $144,000 per year payable in equal installments in accordance with the Company's normal payroll policies; Section 3 (iv) of the Employment Agreement is amended to read as follows: (iv) In addition to the above arrangements relative to Employee's compensation, it is understood between the parties that Employee also provides services to a subsidiary of the Company, Synaptx Access Inc. (f/k/a North American Telecom Cable Representatives, Inc.), under a contractual arrangement as a third-party commission representative and provider of consulting services. These services are provided as an independent representative and not as an employee of Company or any of its subsidiaries or affiliates. Add a new Section 3 (v) to the Employment Agreement, as follows: (v) Incentive stock options to acquire thirty thousand (30,000) shares of the Synaptx Worldwide, Inc. common stock will be issued as of September 1, 1997 of which 1/3 are vested at the date of issuance, 1/3 more vest on September 1, 1998 and the final 1/3 vest September 1, 1999 with an option price based on the closing price of the Synaptx Worldwide, Inc. common stock on September 1, 1997 and a term of five (5) years to exercise the stock options from the date of issuance. Section 6 of the Employment Agreement is amended to read as follows: 6. Expenses. The Employee is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for travel and similar items. The Company will reimburse the Employee for all such expenses upon presentation by the Employee, from time to time, of an itemized account of such expenditures in accordance with the Company's expense reimbursement policies. Additionally, the Company's existing practice of reimbursing the full cost of all cellular phone bills associated with the main cellular phone used for business will be continued for Employee. Also, when Company's consolidated run rate of sales for three (3) consecutive months exceeds an annualized amount, as defined below ("Annualized Run Rate"), Employee will be provided with, the following: (a.) membership in a country club to promote the business of the Company and its subsidiaries when the Annualized Run Rate exceeds $12,000,000, and (b.) a full size company car ("Company Car") for which all costs in operating such Company Car, including insurance, repairs, maintenance, gasoline, any taxes thereon, and other necessary operating costs when the Annualized Run Rate exceeds $10,000,000. IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Employment Agreement as of the day and year first above written. Synaptx Worldwide, Inc. (f/k/a Worldwide Applied Telecom Technology, Inc.) ("Company") Employee Richard E. Hanik, Secretary Ronald L. Weindruch EX-10.6 7 EMPLOYMENT AGREEMENT FOR D. MIKE MAXWELL MAXWELL PARTNERS , INC. EMPLOYMENT AGREEMENT BY THIS AGREEMENT, made this 19th day of July, 1996, MAXWELL PARTNERS, INC., an Illinois corporation ("Company") and D. Mike Maxwell ("Employee"), in consideration of mutual benefits set forth herein, hereby agree as follows: 1. Employment. The Company hereby employs the Employee and the Employee hereby accepts employment upon the terms and conditions hereinafter set forth. 2. Term. Subject to the provisions for the termination as hereafter provided, the term of this Agreement shall begin on the date hereof and shall terminate on December 31, 1997. Thereafter, this Agreement shall be automatically renewed for successive one-year terms unless either party notifies the other of non-renewal at least 30 days prior to the expiration of the then current term. The compensation and other benefits provided for herein shall be subject to annual review and adjustment where appropriate by the Company's Board of Directors. 3. Compensation. For all services rendered by the Employee under this Agreement, the Company shall compensate the Employee by paying the Employee the sum of the following: (i) $135,000 per year payable in equal installments in accordance with the Company's normal payroll policies (called "Regular Compensation"); (ii) Such bonus, if any, for each calendar quarter as is specified by the Board of Directors of Company for each quarter during which Employee's employment continues (called "Profit Bonus"), based on the Company's performance relative to budget for the quarter, together with any other factors the Board of Directors deems appropriate, such bonus normally not to exceed thity-three percent (33%) of the Employee's Regular Compensation for the applicable quarter. In the event of certain early terminations of this Agreement as provided hereafter, compensation payable to the Employee shall (unless otherwise stated) be limited to amounts Fully Accrued. The term "Fully Accrued" means (a) as to Regular Compensation, the percentage of a year's Regular Compensation as shall equal the percentage of the year which has expired on the termination date, and (b) as to Profit Bonus, only that Profit Bonus which has been awarded by the Company's Board of Directors. 4. Duties. The Employee is engaged as President and Chief Operating Officer. The precise services of the Employee may be extended or curtailed, from time to time, at the direction of the Company. The Employee also shall perform such corporate development services for the Company's parent corporation and affiliates as the Company's Board of Directors may specify from time to time, without additional compensation. 5. Extent of Services. The Employee shall devote the Employee's entire time, attention and energy to the business of the Company, and shall not, during the term of this Agreement, engage in any other business activity whether or not such business activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing the Employee from investing Employee's assets in such form or manner as will not require services on the part of Employee in the operation of the affairs of the Company to which investments are made. 6. Expenses. The Employee is authorized to incur reasonable expenses for promoting the business of the Company, including expenses for travel and similar items. The Company will reimburse the Employee for all such expenses upon presentation by the Employee, from time to time, of an itemized account of such expenditures in accordance with the Company's expense reimbursement policies. Additionally, the Company's existing practice of reimbursing the full cost of all cellular phone bills associated with the main cellular phone used for business will be continued for Employee. Also, Employee will be provided with a full size company car ("Company Car") for which all costs in operating such Company Car, including insurance, repairs, maintenance, gasoline, any taxes thereon, and other necessary operating costs, will continue to be borne by Maxwell after closing. 7. Fringe Benefits. The Employee shall enjoy the same fringe benefits (other than stock options) as provided generally to other senior executives of Company, including health, life and disability insurance. The Company will maintain such health, life and disability insurance with benefits at a minimum consistent with the existing Company health, life and disability insurance. Furthermore, the Company will continue offering the benefit of a deferred compensation arrangement, commonly referred to as a "401(K) Plan" whose contributions and benefits structure will at a minimum be consistent with the existing Maxwell Partners, Inc. Retirement Savings Plan. 8. Vacation. The Employee shall be entitled each year to 10 holidays, 10 vacation days and 10 personal days, during which time the Employee's compensation shall be paid in full. 9. Disability. If the Employee is unable to perform his services by reason of illness or incapacity, the Company will continue to pay Employee's compensation (until such time as Employee begins to receive payments under the disability insurance maintained by Company as to Employee), at which time compensation from the Company shall cease; provided, however, that compensation shall not be paid by the Company beyond the existing term of this Agreement. 10. Termination. (i) Without Cause. Without cause, the Company may terminate this Agreement at any time upon 30 days' written notice to the Employee. In such event, the Employee shall continue to receive Regular Compensation throughout the original or any one year renewal term as more fully explained in Section 2 of this Agreement, which shall not be less than two (2) years of such Regular Compensation, unless taking place during the original term of this agreement in which case it shall be three (3) years of such Regular Compensation, but shall be entitled to Profit Bonus only to the extent Fully Accrued on the date of termination. (ii) With Cause. The Company may terminate the employment of the Employee hereunder immediately upon written notice thereof in the event of material fraud or dishonesty by the Employee in connection with his employment or if the Employee is convicted of a felony. In such event, the Company shall pay the Employee only such compensation as shall have Fully Accrued on the date of termination. (iii) Termination by Employee. The Employee may terminate this Agreement at any time upon 30 days' prior written notice to the Company. In such event, the Employee shall be entitled to receive his or her compensation only to the extent Fully Accrued on the date of termination. 11. Death During Employment. If the Employee dies during the term of this Employment Agreement, the Company shall pay to the estate of the Employee the compensation which would be Fully Accrued as of the end of the calendar month in which his death occurs , and Employee's surviving spouse shall continue to receive such Regular Compensation throughout the original term or any one year renewal term as more fully explained in Section 2 of this Agreement, which shall not be less than two (2) years of such Regular Compensation ("Extended Compensation"), unless taking place during the original term of this agreement in which case it shall be three (3) years of such Regular Compensation, but shall be entitled to Profit Bonus only to the extent Fully Accrued on the date of death. Under no circumstances will Extended Compensation be paid beyond December 31, 2000. 12. Non-Disclosure. Employee hereby agrees with Company that Employee will keep confidential any and all confidential information of the Company, including Company's know-how, trade secrets, customer lists, and other information, data and proprietary information relating to Company's business (herein called "Proprietary Information") and will not at any time, without prior written consent of Company, disclose or make known or allow to be disclosed or made known such Proprietary Information to any person, firm, corporation, or other business entity other than Company and persons or entities designed by the Company. This provision shall survive the termination of this Agreement. 13. Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and sent by certified mail or hand delivery to the Employee's residence in the Employee, or to the principal office in case of the Company. 14,. Waiver of Breach. The waiving by the Company of a breach of any provision in this Agreement by the Employee shall not operate or be construed as a waiver of any subsequent breach by the Employee. 15. Assignment. The rights and obligation of the Company under this Agreement shall inure to and be binding upon the successors and assigns of the Company. 16. Entire Agreement. This instrument contains the entire agreement of the parties. It may not be changed or altered except by an Agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. 17. Attorney's Fees. In the event of any litigation or arbitration proceeding arising out of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees and expenses from the losing party, whether incurred before suit is brought, before or at trial or the arbitration proceeding, on appeal or in insolvency proceedings. 18. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Illinois, exclusive of conflicts of law. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Maxwell Partners, Inc. ("Company") Employee Sharon K. Maxwell, Secretary and Vice President D. Mike Maxwell EX-21.1 8 SUBSIDARIES EXHIBIT 22.1 SUBSIDIARIES OF REGISTRANT The following are subsidiaries of Synaptx Worldwide, Inc.: 1. Synaptx Access, Inc., f.k.a. North American Telco/Cable Representatives, Inc., a Florida corporation, 100% owned by Synaptx Worldwide, Inc. 2. Synaptx Impulse, Inc., f.k.a. Maxwell Partners, Inc., an Illinois corporation, 100% owned by Synaptx Worldwide, Inc. 3. ORAYCOM, Inc., a Texas corporation 100% owned by Synaptx Worldwide, Inc. EX-27 9 ART. 5 FDS FOR FORM 10-SB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SYNAPTX WORLDWIDE, INC. FINANCIAL STATEMENTS FOR THE PERIODS ENDED MAY 31, 1997 AND AUGUST 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 YEAR 9-MOS AUG-31-1996 AUG-31-1997 AUG-31-1996 MAY-31-1997 0 280 0 0 36,792 733,251 0 0 0 0 36,792 776,758 13,100 214,105 1,600 47,865 113,292 2,177,207 148,746 1,187,434 0 0 0 0 0 0 1,936 5,047 43,664 1,536,390 113,292 2,177,207 145,653 2,468,728 145,653 2,468,728 126,561 1,704,752 126,561 1,704,752 91,633 1,227,087 0 0 0 35,343 (72,541) (463,111) 0 0 (72,541) (463,111) 0 0 0 0 0 0 (72,541) (463,111) (.04) (.13) (.04) (.13)
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