-----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, POOSu79rk7PckaZF1l32PR+fzCjNsr9DvBlrDuAEHAuNbmYBt8iJHM1UozTtbu5+ MJEntV856SG+tpP/0b1T6g== 0000950137-00-002503.txt : 20000523 0000950137-00-002503.hdr.sgml : 20000523 ACCESSION NUMBER: 0000950137-00-002503 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEXON TECHNOLOGIES INC CENTRAL INDEX KEY: 0001065189 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870502701 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24721 FILM NUMBER: 640872 BUSINESS ADDRESS: STREET 1: 1401 BROOK DRIVE CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 6309166196 FORMER COMPANY: FORMER CONFORMED NAME: REXFORD INC DATE OF NAME CHANGE: 19980630 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NUMBER 02474 LEXON TECHNOLOGIES, INC. ------------------------ (EXACT NAME OF REGISTRANT, AS SPECIFIED IN ITS CHARTER) 87-0502701 ---------- (IRS EMPLOYER IDENTIFICATION NUMBER) DELAWARE -------- (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 1401 BROOK DRIVE, DOWNERS GROVE, ILLINOIS 60515 ----------------------------------------------- (ADDRESS OF PRINCIPLE EXECUTIVE OFFICES) (630)916-6196 ------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate, by check mark, whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- On May 15, 2000, there were 13,842,561 shares of LEXON Technologies, Inc.'s common stock outstanding. 2 LEXON Technologies, Inc. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 TABLE OF CONTENTS PART I FINANCIAL INFORMATION.................................................................Page Item 1. Financial Statements Consolidated Balance Sheets March 31, 2000 (Unaudited) and December 31, 1999.........................................3 Consolidated Statements of Income (Loss) Three Months Ended March 31, 2000 and 1999 (Unaudited) ..................................5 Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)...............................................6 Consolidated Statements of Cash Flows Three Months Ended March 31, 2000 and 1999 (Unaudited) ..................................7 Notes to Consolidated Financial statements (Unaudited)...................................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. ..............................................................15 Item 3. Quantitative and Qualitative Disclosures About Market Risk ..............................16 PART II OTHER INFORMATION Item 1. Legal Proceedings .......................................................................17 Item 2. Changes in Securities ...................................................................17 Item 3. Default by the Company on its Senior Securities..........................................17 Item 4. Submission of Matters to a Vote of Securities Holdings...................................18 Item 5. Other Information .......................................................................18 Item 6. Exhibits and Reports on Form 8-K ........................................................18
2 3 FORWARD LOOKING STATEMENTS: Except for the historical information contained in this Quarterly Report on Form 10-Q, certain matters discussed herein, including (without limitation), under Part I, Management's Discussion and Analysis of Financial Condition and Results of Operations, under Part I, Quantitative and Qualitative Disclosures About Market Risk and under Part II, Legal Proceedings, contain forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995 about Lexon. Further, this Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934, as amended, about Lexon. Although Lexon believes that, in making any such statements, its expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. When used in this document, the words anticipates, believes, expects, intends, plans and similar expressions as they relate to Lexon or its management are intended to identify such forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties and speak only as of the date of this Report on Form 10-Q. Important facts that could cause actual results to differ materially from those in forward-looking statements, certain of which are beyond the control of Lexon, include: ability to raise additional capital; delays or difficulties in introducing new products; the success of Lexon's research and development; the timing of and value received in connection with asset or corporate acquisitions; obtaining required approvals, if any, of debt holders or stockholders; the impact of general economic conditions in the U.S. and in other countries in which Lexon currently does business; industry conditions, including competition, product and raw material prices; fluctuations in exchange rates and currency values; capital expenditure requirements; legislative or regulatory requirements or approvals; and interest rates. The actual results, performance or achievement by Lexon could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations and financial condition of Lexon. 3 4 LEXON TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
ASSETS (Unaudited) March 31, 2000 December 31, 1999 -------------------- ----------------- Current assets Cash $ 62,855 $ 20,892 Accounts receivable, less allowance for doubtful accounts of $2,500 28,658 18,153 Other receivable 78,258 0 Inventories 1,656 1,656 Prepaid expenses 1,820 12,570 -------- -------- Total current assets 173,247 53,271 -------- -------- Property and equipment Leasehold improvements 35,115 29,744 Furniture and equipment 178,452 178,452 Capital leases 105,458 105,458 -------- -------- 319,025 313,654 Accumulated depreciation 129,903 116,631 -------- -------- 189,122 197,023 -------- -------- Other assets Computer software costs, net of accumulated amortization of $93,732 in 2000 and $76,875 in 1999 379,256 325,279 Unamortized debt issue costs 21,967 38,442 Deferred charges 0 72,440 Deposits 17,762 17,762 -------- -------- 418,985 453,923 -------- -------- $781,354 $704,217 ======== ========
See notes to consolidated financial statements. 3 5 LEXON TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) March 31, 2000 December 31, 1999 -------------------- ----------------- Current liabilities Current maturities of long-term capital lease obligations $ 19,286 $ 19,286 Notes payable 973,000 1,123,000 Stockholder advances 75,000 0 Accounts payable 255,180 217,618 Accrued liabilities: Salaries 94,500 51,600 Interest 34,409 23,219 Other 73,844 0 Distributions 209,774 209,774 ----------- ----------- Total current liabilities 1,734,993 1,644,497 ----------- ----------- Capital lease obligations, net of current maturities 77,496 82,499 ----------- ----------- Total liabilities 1,812,489 1,726,996 ----------- ----------- Stockholders' equity (deficit) Common stock, par value $0.001 per share; authorized 100,000,000 shares; issued and outstanding 13,842,561 and 12,441,561 shares 13,843 12,442 Additional paid-in capital 417,218 68,119 Retained earnings (deficit) (1,462,196) (1,103,340) ----------- ----------- (1,031,135) (1,022,779) ----------- ----------- $ 781,354 $ 704,217 =========== ===========
See notes to consolidated financial statements. 4 6 LEXON TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (LOSS) For The Three Months Ended (Unaudited) March 31, 2000 March 31, 1999 -------------- -------------- Net sales $ 161,468 $ 186,780 Cost of sales 24,800 95,492 ------------ ------------ Gross profit 136,668 91,288 Selling, general and administrative expenses 605,119 208,631 ------------ ------------ Loss from operations (468,451) (117,343) ------------ ------------ Other income (expense) Interest income 299 0 Interest expense (40,704) 0 Other income 150,000 0 ------------ ------------ Other income, net 109,595 0 ------------ ------------ Loss before income tax benefit (358,856) (117,343) Income tax benefit 0 39,571 ------------ ------------ Net loss $ (358,856) $ (77,772) ============ ============= Weighted average common shares outstanding 13,122,005 11,500,081 ============ ============= Basic and diluted loss per common share $ (.03) $ (.01) ============ ============= See notes to consolidated financial statements. 5 7 LEXON TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited)
Total Common Stock Additional Retained Stockholders' ------------------------ Paid-In Earnings Equity Shares Amount Capital (Deficit) (Deficit) ----------- --------- ----------- ------------ --------------- Balance, December 31, 1998 11,500,081 $ 11,500 $ $ 239,725 $ 251,225 Stockholders' deficit assumed in reverse acquisition of Rexford, Inc. by Chicago Map Corporation (40,549) (40,549) Issuance of common stock 941,480 942 68,119 500 69,561 Net Loss (1,089,482) (1,089,482) Distributions to stockholders Cash (3,760) (3,760) Accrued (209,774) (209,774 ----------- --------- ----------- ----------- ------------ Balance, December 31, 1999 12,441,561 12,442 68,119 (1,103,340) (1,022,779) Issuance of common stock 1,401,000 1,401 349,099 -- 350,500 Net Loss (358,856) (358,856) ----------- --------- ----------- ----------- ------------ Balance, March 31, 2000 13,842,561 $ 13,843 $ 417,218 $(1,462,196) $ (1,031,135) ========== ========= =========== =========== ============
See notes to consolidated financial statements. 6 8 LEXON TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended (Unaudited)
March 31, 2000 March 31, 1999 ---------------- -------------- Cash flows from operating activities: Net loss $(358,856) $ (77,772) ---------- ---------- Adjustments to reconcile net loss to net cash from operating activities: Depreciation 13,272 1,504 Amortization 33,332 6,817 Write off of deferred charges 72,440 0 Change in assets (increase) decrease (78,013) (6,809) Change in liabilities increase (decrease) 157,496 43,122 ---------- ---------- Total adjustments 198,527 44,634 ---------- ---------- Net cash used in operating activities (160,329) (33,138) ---------- ---------- Cash flows from investing activities: Capital expenditures (5,371) (16,900) Payment of computer software costs (62,835) 0 Acquisition of intangible assets 0 (50,220) Payment of deposits 0 (5,000) ---------- ---------- Net cash used in investing activities (68,206) (72,120) ---------- ---------- Cash flows from financing activities: Proceeds from issuance of long-term debt 0 100,000 Proceeds from stockholder advances 75,000 0 Principal payments of notes payable (150,000) 0 Principal payments under capital lease obligations (5,002) 0 Proceeds from issuance of common stock 350,500 500 Cash distributions paid to stockholders 0 (2,675) ---------- ---------- Net cash provided by financing activities 270,498 97,825 ---------- ---------- Net increase (decrease) in cash 41,963 (7,433) Cash at beginning of period 20,892 71,526 ---------- ---------- Cash at end of period $ 62,855 $ 64,093 ========== ========== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 23,312 $ 0 Income taxes 0 0
See notes to consolidated financial statements. 7 9 LEXON TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF ACCOUNTING POLICIES Principles of Consolidation - The consolidated financial statements include the accounts of LEXON Technologies, Inc. and its wholly-owned subsidiary, Chicago Map Corporation. All material intercompany accounts and transactions have been eliminated in consolidation. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Inventories - Inventories consists of finished goods which are priced at the lower of cost, determined by the first-in, first-out method, or market. Property and Equipment - Property and equipment are recorded at cost. Expenditures for renewals and betterments which extend the life of such assets are capitalized. Maintenance and repairs are charged to expense as incurred. Differences between amounts received and net carrying value of assets retired or disposed of are charged or credited to income. Depreciation - Depreciation is charged to income using straight-line and accelerated methods based on the estimated useful lives of the assets. Computer Software Costs - Costs related to the purchase and development of computer software are capitalized from the time technological feasibility is established until the software is ready for use. Upon the general release of the software to consumers, capitalized costs are amortized on a straight-line basis over the estimated economic life of the software, generally twenty-four months. Amortization expense charged to income was $16,857 and $6,817 for the three months ended March 31, 2000 and 1999, respectively. Unamortized computer software costs determined to be in excess of the net realizable value of the software are expensed immediately. Unamortized Debt Issue Costs - Expenses related to the issuance of notes payable are being amortized on a straight-line basis over the term of the notes. Amortization expense charged to income was $16,475 for the three months ended March 31, 2000. No amortization was charged to income in 1999. Deferred Charges - Deferred charges consisted of incremental costs incurred in connection with a proposed offering of securities. The offering was rescinded during the three months ended March 31, 2000, and these costs totaling $72,440, were expensed. Revenue Recognition - The Company records sales and related profits as products are shipped. Revenue from licensing of software is based on sales of copies of software products in accordance with distribution agreements with licensed developers and recognized as licensing fees accrue. Revenue for post- contract customer support, upgrades and enhancements is recognized ratably over the term of the related agreements, which in most cases is one year. Income Taxes - Prior to July 21, 1999, Chicago Map Corporation had elected S corporation status for income tax purposes. Under this election, the Company was not liable for federal income taxes, but was liable for certain state income and replacement taxes. Federal taxable income and tax credits flowed through to the stockholders to be reported on their individual income tax returns. Upon acquisition by Rexford, Inc., Chicago Map Corporation terminated its S corporation election. Earnings (Loss) Per Share - Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is computed using the weighted average number of common shares and dilutive common share equivalents outstanding during the year. All of the common share equivalents of 6,912,452 as of March 31, 2000 have an antidilutive effect on earnings (loss) per share and, therefore, have not been used in determining the total weighted average number of common shares outstanding used in calculating diluted earnings (loss) per share. There were no common share equivalents in the three month period ended March 31, 1999. 8 10 2. NATURE OF OPERATIONS The Company creates digital map technologies which provide for the design and development of advanced geographic and mapping software applications for institutional, governmental, corporate and public consumers throughout the world. 3. NAME CHANGE Effective July 21, 1999, the name of the Company was changed from Rexford, Inc. to LEXON Technologies, Inc. 4. ORGANIZATION AND PRESENTATION On July 21, 1999, LEXON Technologies, Inc. (formerly Rexford, Inc.) (Rexford) acquired all of the issued and outstanding common stock of Chicago Map Corporation (Chicago Map) in exchange for 10,500,000 shares of common stock of Rexford. The shares issued in the acquisition resulted in the owners of Chicago Map having operating control of Rexford immediately following the acquisition. Therefore, for financial reporting purposes, Chicago Map is deemed to have acquired Rexford in a reverse acquisition accompanied by a recapitalization. The surviving entity reflects the assets and liabilities of Rexford and Chicago Map at their historical book values and the historical operations of the Company are those of Chicago Map. The issued common stock is that of Rexford and the retained earnings (deficit) is that of Chicago Map. The statements of income (loss) include operations of Chicago Map for the three months ended March 31, 2000 and 1999 and operations of Rexford for periods after July 21, 1999 (date of acquisition). 5. ACQUISITION On March 12, 1999, Chicago Map Corporation acquired certain assets of TRIUS, Inc. for $62,300 in cash and 2,198 shares of common stock of Chicago Map Corporation. The principal business of TRIUS, Inc. is the development of computer software technologies. 6. CASH The Company maintains its cash in bank accounts which at times exceed the federally insured limit of $100,000. Management believes there is no significant concentration of credit risk with respect to these accounts. 7. DEPRECIATION Depreciation was charged to income, based on the estimated useful lives of the assets, in the following amounts: Three Months Ended March 31, ------------------------------------------ Estimated 2000 1999 Life - Years ------- ------- ------------- Leasehold improvements $ 482 $ 32 5 - 39 Furniture and equipment 6,333 1,472 3 - 7 Capital leases 6,457 -- 7 -------- ------- $13,272 $ 1,504 ======== ======== 9 11 8. NOTES PAYABLE Notes payable consist of the following:
March 31, 2000 December 31, 1999 ----------------------------------- Promissory notes due on August 1, 2000 with interest payable monthly at 18%. Effective February 1, 2000, the interest rate was adjusted to 12% $600,000 $750,000 Promissory note due on June 26, 2000 with interest payable at maturity at 12% 100,000 100,000 Promissory notes with stockholders and employees due on various dates through April 29, 2000. Interest at 12% is payable at maturity 273,000 273,000 ---------------------------- Total $973,000 $1,123,000 ============================
The promissory notes due on August 1, 2000 are secured by all of the assets of the Company, the common stock of Chicago Map Corporation, and the guarantees of Chicago Map Corporation and an officer of the Company. In addition, if the Company does not receive debt or equity financing proceeds in an aggregate amount of $3,6000,000 during the period of December 30, 1999 to August 1, 2000, the promissory notes will be payable in six equal monthly installments of principal and interest commencing August 1, 2000, as stated in the loan agreements. The promissory notes due on March 26, 2000 and through April 29, 2000 are secured by the accounts receivable of Chicago Map Corporation. 9. LEASE COMMITMENTS The Company leases office facilities under an operating lease expiring on May 31, 2004. Under terms of the lease, the Company is responsible for insurance, utilities, repairs and maintenance, and a prorata share of any increase in real estate taxes. Future minimum lease commitments under all noncancelable leases in effect at March 31, 2000 are as follows: Leasing ---------------------------- Year ending December 31, Operating Capital ------------------------ ---------- -------- 2000 (nine months) $ 87,061 $ 24,854 2001 121,040 33,139 2002 122,949 33,139 2003 112,788 28,465 2004 47,587 10,830 --------- -------- Net minimum lease payments $ 491,425 130,427 ========= Less amount representing interest 33,645 -------- Present value of net minimum lease payments 96,782 Current portion 19,286 --------- Long term portion $ 77,496 ======== The present value of minimum future obligations under capital leases is based on interest rates determined to be applicable at the inception of the leases. The capital lease obligations are secured by equipment with a carrying value of $83,936 at March 31, 2000. Total lease related expenses for the capital leases for the three months ended March 31, 2000 were as follows: Depreciation $ 6,457 Interest expense 4,487 ------- $10,944 ======= 10 12 LEXON TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Rent expense for all operating leases charged to income for the three months ended March 31, 2000 and 1999 approximated $35,635 and $11,807, respectively. 10. REVERSE STOCK SPLIT On July 20, 1999, the stockholders of Rexford, Inc. approved a one-for-seventy reverse stock split whereby the issued and outstanding shares of common stock of the Company were reduced from 70,000,000 to 1,000,081. The reverse stock split did not affect the authorized shares of common stock of the Company. 11. STOCK-BASED COMPENSATION Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation expense for stock-based employee compensation at fair value. The Company has chosen to account for stock-based compensation using the intrinsic value method described in Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Under APB No. 25, compensation expense is measured as the excess of market price over the price the employee must pay to acquire the stock on the grant date. During July of 1999, the Company issued 3,504,096 stock options, of which 3,503,096 were outstanding and exercisable at March 31, 2000. The options were granted at market price and, as a result, no compensation expense has been recognized in 1999. The weighted average exercise price of the options was $2.40 per share in 1999. The weighted average life of the options outstanding at March 31, 2000 was 9.30 years. Pro forma information regarding net income (loss) and earnings (loss) per common share is required by SFAS No. 123 and has been determined as if the Company had accounted for its stock options under the fair value method defined in that Statement. The weighted average fair value of stock options granted during 1999 was $.61 per share. The fair value of the stock options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 6.08%, dividend yield of 0%, expected volatility factor of 10%, and an expected life of 5 years. The Company's pro forma information for the three months ended March 31, 2000 follows: Pro Forma As Reported --------- ----------- Net loss $(358,856) $(358,856) Loss per common share Basic (0.03) (0.03) Diluted (0.03) (0.03) These pro forma amounts may not be representative of the effects of such disclosures in future years. 12. STOCK PURCHASE WARRANTS In connection with the issuance of common stock and notes payable during 2000 and 1999, the Company issued stock purchase warrants that are convertible into shares of common stock. Each warrant represents the right to purchase one share of the Company's common stock. Stock purchase warrants outstanding at March 31, 2000 consist of the following: Warrants convertible at an exercise price of $2.50 per share with expiration dates ranging from September 2000 to August 2004 648,000 Warrants convertible at an exercise price of $.25 per share with expiration dates ranging from September 2000 to February 2001 3,600,000 Warrants convertible at an exercise price of $.50 per share with expiration dates ranging from February 2001 to August 2001 1,023,000 --------- 5,271,000 =========
12 13 13. EMPLOYEE BENEFIT PLAN During 1999, the Company implemented a defined contribution plan pursuant to Section 401(k) of the Internal Revenue Code. The plan covers all employees meeting eligibility and service requirements. Eligible participants may elect salary deferral contributions up to 15% of compensation, or the maximum amount allowed under the Internal Revenue Code. The plan does not provide for discretionary matching contributions by the Company. 14. INCOME TAXES The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of the Company's assets and liabilities. Measurement of deferred tax assets and liabilities is based upon the provisions of enacted tax laws and the effects of future changes in tax laws or rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets and liabilities at March 31, 2000 consist of the following: Deferred tax assets Allowance for doubtful accounts $ 968 Net operating loss carryforwards 534,061 ----------- Gross deferred tax assets 535,029 Valuation allowance (531,290) ----------- 3,739 ----------- Deferred tax liabilities Depreciation (3,739) ----------- (3,739) ----------- $ -- =========== At March 31, 2000, the Company had net operating loss carryforwards for tax purposes of $1,378,620 expiring as follows: Year Amount ---- ------ 2002 $ 7,342 2003 49,380 2004 34,314 2005 7,609 2006 6,144 2008 4,073 2009 3,497 2010 2,746 2011 42,794 2017 46,350 2018 365,433 2019 456,082 2020 352,856 ---------- $1,378,620 ========== 15. TRANSACTION WITH RELATED PARTY During 1999 Chicago Map Corporation leased office facilities on a month-to-month basis from a stockholder at a monthly rental of $3,000. Rent expense charged to income amounted to $9,000 for the three months ended March 31, 1999. 13 14 16. SUBSEQUENT EVENTS In February 2000, a new equity investor acquired voting control of the Company's issued and outstanding shares of common stock. Thereafter, a major reorganization of the Company and its board of directors was implemented. A new management team was installed and administrative staff was reduced significantly. Currently, the Company is pursuing the transfer of its lease at a reduced rent. These changes are expected to reduce employment costs significantly and result in other cost savings on an annualized basis. In addition, management is reviewing other financial alternatives available to the Company to increase liquidity, including restructuring its debt and raising additional capital. The Company incurred a net loss of $358,856 in the three months ended March 31, 2000 and used substantial amounts of working capital in its operations. At March 31, 2000, current liabilities exceeded current assets by $1,561,746 and total liabilities exceeded total assets by $1,031,135. However, management believes that the changes that have been implemented since December 31, 1999 and the initiatives that are being pursued will provide the Company with the opportunity to continue as a going concern. 14 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Some of the information in this Quarterly Report may be forward-looking statements under the federal securities laws. Such statements can be identified by the use of words such as "anticipates," "intends," "seeks," "believes," "estimates," and "expects." These statements discuss expectations for the future, contain projections concerning the results of our operations or our future financial condition or state other forward-looking information. Such statements are subject to a number of risks and uncertainties that have been identified in previous filings with the Securities and Exchange Commission. Our actual results, performance or achievements could differ substantially from the results expressed in, or implied by, those statements. We assume no responsibility for revising forward-looking statements in light of future events or circumstances. Results of Operations: Net sales decreased for the three months ended March 31, 2000 to $161,468 from $186,780 for the three months ended March 31, 1999. The primary factor in the general decrease of the year to date sales is the Company's shift from the retail market to the more profitable commercial market and its new focus on the National Atlas project. Gross profit increased during the three months ended March 31, 2000 to $136,668 or 84.6% of net sales, compared to $91,288 or 48.9% of net sales for the same period in the prior year. The variation in gross profit for the three months then ended March 31, 2000 compared to the same period in the prior year is primarily related to the decrease in development costs incurred on Chicago Map Corporation products being sold in the retail market. Selling and administrative expenses increased to $605,119 or 374.8% of net sales for the three months ended March 31, 2000 compared to $208,631 or 111.7% of sales for the same period in 1999. The increases are primarily attributable to the expenses necessary to implement the National Atlas of the United States of America project. Interest expense for the three months ended March 31, 2000 was $40,704 compared to $0 for the same period in 1999. This increase was attributable to various interim working capital loans. As a result of the factors described above, net loss increased to ($358,856) for the three months ended March 31, 2000 from ($77,772) for the same period in 1999. Basic earnings per share for the first fiscal quarter of 2000 were ($0.03) compared to ($0.01) for the same period in the prior year. Liquidity and Capital Resources: For the three months ended March 31, 2000 the primary source of liquidity was cash provided by equity investments and stockholder advances. The net cash used in operations was $160,329 for the three months ended March 31, 2000 compared to net cash used in operations of $33,138 for the same period in 1999. Net cash used in investing activities was $68,206 which was mainly due to payments of computer software costs of $62,835. For the same period in the prior year net cash used in investing activities was $72,120. Net cash provided by financing activities was $270,498 for the three months then ended March 31, 2000 compared to $97,825 provided in the prior year. In April of 1999, the Company entered into a Cooperative Research and Development Agreement with the U. S. Geological Survey agency to produce the next National Atlas of the United States of America. The Company views this product to be a high gross margin business sold on a subscription basis, with an 80% level of recurring revenue. Although the project is consistent with the Company's technological capabilities, the development and distribution of a product of this significance (initially to be sold to schools and libraries in the United States) will require significant external financing. The Company has engaged the services of a financial advisory firm to assist in addressing its capital requirements and is currently conducting discussions with several potential sources. 15 16 Five short-term notes have been executed in favor of affiliated individuals with varying terms and amounts, from March 26, 1999 through July 10, 1999, totaling $373,000 in principal. On August 10, 1999, the Company obtained additional financing through short-term loans totaling $750,000, of which $150,000 was repaid on February 9, 2000 the remaining $600,000 of principal is due August 1, 2000. In all cases, warrants to purchase the Company's common stock at $2.50 per share were granted as part of these loan agreements. It is anticipated that these loans will be either extended for a similar time period or repaid entirely when permanent financing is obtained. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS LEXON does not currently possess a significant or material investment portfolio due to limitations on its cash resources. To the extent that LEXON's cash resources are invested in interest bearing or investment-type accounts, LEXON's investment portfolio would be exposed to market risk as it relates to interest rates. Investments are comprised of certificates of deposit, commercial paper, U.S. Treasury securities, asset backed securities, and money market accounts. Only high credit quality issuers are used and exposure to any one issuer is limited by policy. Maturities and average lives are lattered up to a maximum term of three years. These investments are considered available for sale and are recorded on the balance sheet at fair value. 16 17 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On December 15, 1997, Chicago Map was served with a complaint in case captioned Integrated GPS Technologies, Inc. v. Chicago Map Corporation, Defendant Civil Action No. H-97-4063 in the United States District Court for the Southern District of Texas. The complaint alleged that Chicago Map committed trademark infringement and engaged in false advertising and unfair competition, under both federal and Texas state law related to Chicago Map's Precision Mapping (TM) software and demanded declaratory and injunctive relief as well as unspecified monetary damages. At the close of the plaintiff's case, the trial judge granted Chicago Map's motion for a directed verdict and the plaintiff appealed to the Fifth Court of Appeals, which appeal is pending. Chicago Map maintains insurance policies which cover intellectual property infringement actions and Chicago Map believes that any damage awards granted to the plaintiff in Integrated GPS v. Chicago Map should be subject to payment or reimbursement by Chicago Map's insurance policies. If, as a result of determinations adverse to Chicago Map, Chicago Map is ordered to pay Integrated GPS damages from its cash reserves or assets without payment or reimbursement from Chicago Map's insurer or if Chicago Map is ordered to cease distribution of its Precision Mapping software, such determinations could have a materially adverse effect on Chicago Map's financial condition and results of operations. On July 24, 1998, Chicago Map filed a complaint against Potthast & Ring in case captioned Chicago Map Corp. v. Potthast & Ring, No. 97 L 12157, alleging certain malpractice claims related to legal services provided to Chicago Map by the defendant. On March 2, 2000, the parties agreed to a settlement, release and dismissal of all claims contained in the original complaint. The management of the Company is not aware of any other material pending or threatened litigation. ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS RECENT SALES OF UNREGISTERED SECURITIES. On February 9, 2000, Lexon issued 1,000,000 shares of its common stock to Anthony Perino in exchange for $250,000 under the terms of a Stock Purchase Agreement, dated February 9, 2000, by and among Lexon, Steven J. Peskaitis and Mr. Perino. In addition, Lexon issued to Mr. Perino a warrant to purchase up to an additional 4,100,000 shares of Lexon common stock. The warrants are exercisable at prices from $0.25 per share to $0.50 per share and expire at certain times between September 1, 2000 and August 9, 2001. In connection with this warrant, Lexon and Mr. Perino entered into a Registration Rights Agreement which provides Mr. Perino with demand and piggy-back registration rights with respect to the shares of Lexon common stock subject to the warrants. These transactions were exempt from registration in reliance on Section 4(2) of the Securities Act of 1933. On March 26, 2000, the Company issued a warrant to purchase 100,000 shares of common stock at $0.50 per share to Mark Scharmann. This warrant was issued in connection with Mr. Scharmann's extension of the term of an Interim Loan Agreement, dated as of March 26, 1999, between Mr. Scharmann and the Company. Under the Interim Loan Agreement, the Company borrowed $100,000 at an annual interest rate of 12% with a term of three months. In connection with the Interim Loan Agreement, Mr. Scharmann took a security interest in the Company's accounts receivable and 250,000 shares, held in escrow of Lexon common stock owned by an officer of Lexon. The warrant vested immediately and is exercisable for a period of 18 months and includes piggyback registration rights. This issuance was exempt from registration in reliance on Section 4(2) of the Act On March 10, 2000, the Company issued a warrant to purchase 50,000 shares of common stock at $0.50 per share to John McLean. This warrant was issued in connection with Mr. McLean's extension of the term of an Interim Loan Agreement, dated as of July 10, 1999, between the Company and Mr. McLean. Under the Interim Loan Agreement, the Company borrowed $50,000 at an annual interest rate of 12% with a term of four months. The warrant vested immediately and is exercisable for a period of 18 months and includes piggyback registration rights. This issuance was exempt from registration in reliance on Section 4(2) of the Act. ITEM 3. DEFAULT BY COMPANY ON ITS SENIOR SECURITIES. None. 17 18 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits
Incorporation Exhibit by Reference Page Number Number Description of Documents (if applicable) (if applicable) ------ ------------------------ --------------- --------------- 2.1 Agreement and Plan of Reorganization, dated as of July 21, 1999, by and between Rexford, Inc. and Chicago Map Corporation..........................+ 2.2 Securities Purchase Agreement, dated as of August 10, 1999, by and among LEXON Technologies, Inc. and Miller Capital Corporation, Stephen A. McConnell, Jock Patton and Dickerson Wright............................++ 3.1 Articles of Incorporation..........................................................+ 3.2 Bylaws..........................................................................++++ 4.1 Interim Loan Agreement, dated as of March 26, 1999, by and between Chicago Map Corporation and Mark Scharmann.......................++++ 4.2 Promissory Note, dated as of March 26, 1999, by and between Chicago Map Corporation and Mark A. Scharmann...........................++++ 4.3 Security Agreement, dated as of March 26, 1999, by and between Mark A. Scharmann and Chicago Map Corporation.......................++++ 4.4 Interim Loan Agreement, dated as of April 29, 1999, by and between Steven J. Peskaitis and Chicago Map Corporation..................++++ 4.5 Promissory Note, dated as of April 29, 1999, by and between Chicago Map Corporation and Steven J. Peskaitis.........................++++ 4.6 Promissory Note, dated as of July 10, 1999, by and between Chicago Map Corporation and Steven J. Peskaitis.............................................++++ 4.7 Promissory Note, dated as of July 10, 1999, by and between Chicago Map Corporation and Stanley J. Peskaitis............................................++++ 4.8 Promissory Note, dated as of July 10, 1999, by and between Chicago Map Corporation and John B. McLean..................................................++++ 4.9 Form of Stock Option Agreement and Schedule thereto, dated as of July 21, 1999 by and between LEXON Technologies, Inc. and Steven J. Peskaitis.............................................................++++
18 19 4.10 Promissory Note, dated as of August 10, 1999, by LEXON Technologies, Inc. and Miller Capital Corporation, Stephen A. McConnell, Jock Patton and Dickerson Wright.......................................++ 4.11 Security and Pledge Agreement, dated as of August 10, 1999 by and among LEXON Technologies, Inc. and Miller Capital Corporation, Jock Patton, Stephen A. McConnell and Dickerson Wright............................................................................++ 4.12 Continuing Guaranty, dated as of August 10, 1999, by and among Chicago Map Corporation and Steven J. Peskaitis and Miller Capital Corporation, Jack Patton, Stephen A. McConnell and Dickerson Wright..................................................................++ 4.13 Stock Pledge and Security Agreement, dated as of August 10, 1999, by and among Steven J. Peskaitis and Miller Capital Corporation, Stephen A. McConnell, Jack Patton and Dickerson Wright............................................................................++ 4.14 Warrants to Purchase Common Stock, dated as of August 10, 1999, by LEXON Technologies, Inc..................................................++ 4.15 Supplemental Agreement to Bridge Loan Transaction, dated as of December 30, 1999, by and among LEXON Technologies, Inc., Chicago Map Corporation and Steven J. Peskaitis and Miller Capital Corporation, Stephen A. McConnell, Jock Patton and Dickerson Wright................................................................++++ 10.1 Stock Purchase Agreement dated as of February 9, 2000, by and among Anthony Perino and LEXON Technologies, Inc. and Steve J. Peskaitis........................................................................+++ 10.2 Industrial Building Lease, dated as of June 1, 1999, by and between Chicago Map Corporation and United States Brass & Copper Co., for office space at 1401 Brook Drive, Downers Grove, IL 60615.................................................................++++ 10.3 Cooperative Research and Development Agreement, dated as of March 26, 1999, by and among United States Geological Survey and Chicago Map Corporation.....................................................++++ 10.4 Employment Agreement, dated as of March 12, 1999, by and between Chicago Map Corporation and Paris Karahalios............................++++ 10.5 Employment Agreement, dated as of March 12, 1999, by and between Chicago Map Corporation and David A. Schulz.............................++++ 10.6 Employment Agreement, dated as of April 19, 1999, by and between Chicago Map Corporation and Kenneth J. Eaken............................++++ 10.7 Employment Agreement, dated as of February 23, 1999, by and between Chicago Map Corporation and John B. McLean..............................++++ 10.8 Employment Agreement, dated as of May 1, 1999, by and between Chicago Map Corporation and Steven J. Peskaitis.................................++++ 10.9 Registration Rights Agreement, dated as of February 9, 2000, by and among Anthony Perino and LEXON Technologies, Inc.........................++++
19 20 10.10 Voting Trust Agreement, dated as February 9, 2000, by and among, Anthony Perino, as Voting Trustee, and Steven J. Peskaitis and Stanley Peskaitis..................................................... 11.1 Statement Re: Computation of Per Share Earnings.................................... 27 Financial Data Schedule............................................................. + Incorporated by reference to LEXON Technologies, Inc.'s Current Report on Form, dated as of July 21, 1999 and filed with the SEC on August 4, 1999. ++ Incorporated by reference to LEXON Technologies, Inc.'s Current Report on Form 8-K, dated as of August 10, 1999 and filed with the SEC on August 24, 1999. +++ Incorporated by reference to LEXON Technologies, Inc.'s Current Report on Form 8-K, dated as of February 9, 2000 and filed with the SEC on February 18, 2000 ++++ Incorporated by reference to LEXON Technologies, Inc.'s Current Report on Form 10-K, dated as of December 31, 1999 and filed with the SEC on April 14, 2000. (b) Current Reports on Form 8-K On February 18, 2000, Lexon filed a Current Report on Form 8-K announcing the acquisition of voting control of Lexon through a series of transactions related to Lexon's common stock by Anthony Perino.
20 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LEXON TECHNOLOGIES, INC. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the President of the registrant. /s/ Kenneth J. Eaken May 19, 2000 ----------------------------------------- Kenneth J. Eaken Date President and Principal Executive Officer LEXON TECHNOLOGIES, INC. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. /s/ Jerome J. Wolowicki May 19, 2000 ----------------------------------------- Jerome J. Wolowicki Date Chief Financial Officer and Principal Accounting Officer 21 22 LEXON TECHNOLOGIES, INC. EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 10.9 Registration Rights Agreement, dated as of February 9, 2000, by and among Anthony Perino and LEXON Technologies, Inc. 10.10 Voting Trust Agreement, dated as February 9, 2000, by and among, Anthony Perino, as Voting Trustee, and Steven J. Peskaitis and Stanley Peskaitis. 11.1 Statement Re: Computation of Per Share Earnings 27 Financial Data Schedule EX-10.9 2 REGISTRATION RIGHTS AGREEMENT, DATED AS OF 2/9/00 1 EXHIBIT 10.9 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement"), is made and entered into as of the 9th day of February, 2000, by and between LEXON Technologies Inc., a Delaware corporation (the "Company"), and Anthony Perino, an individual and resident of the State of Illinois (the "Stockholder"). WITNESSETH: WHEREAS, in connection with the execution and delivery of that certain Stock Purchase Agreement (the "Purchase Agreement"), dated February 7, 2000 by and between the Company and the Stockholder, the Company has agreed to issue, and as of the date hereof has issued, to the Stockholder (i) a Common Stock Purchase Warrant A ("Warrant A") to acquire up to 2,600,000 shares of the Company's common stock, .001 par value per share (the "Common Stock"), (ii) a Common Stock Purchase Warrant B ("Warrant B") to acquire up to 1,000,000 shares of the Common Stock, and (iii) a Common Stock Purchase Warrant C ("Warrant C") to acquire up to 500,000 shares of the Common Stock (with Warrant A, Warrant B and Warrant C being hereinafter collectively referred to as the "Warrants"); WHEREAS, it is a condition precedent to the obligations of the Stockholder under the Purchase Agreement that the Company execute and deliver this Agreement. NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 2 ARTICLE I CERTAIN DEFINITIONS The following terms shall have the definitions set forth below: "Commission" shall mean the United States Securities and Exchange Commission and any successor commission or agency having similar powers. "Control" (including the terms "controlling," "controlled by" and "under common control with") shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation or partnership (including, without limitation, the power to direct the voting of any securities held by such corporation or partnership), whether through the ownership of voting securities, by contract, or otherwise, unless the context indicates otherwise. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Registerable Stock" shall mean those shares of the Company's Common Stock received by the Stockholder upon exercise of any of the Warrants, provided that such shares shall no longer be Registerable Stock once such shares are (i) sold pursuant to a registration statement declared effective by the Commission under the Securities Act, or (ii) sold pursuant to Rule 144 (or any successor rule) promulgated under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Stockholder" shall mean Anthony Perino. The term "Stockholder" shall also include such Stockholder's successors and assigns, legal representatives and executors or administrators when the context so requires. 2 3 ARTICLE II REGISTRATION OF COMMON STOCK Section 2.1 Required Registration. At any time after February 7, 2001, the Holder may request that the Company register the resale by him of all or any portion of the Registerable Stock (such request a "Demand Request"). The Demand Request shall specify the number of Shares of Registerable Stock as to which such Demand Request relates and the manner in which the Stockholder proposes to sell such Registerable Stock, including, if applicable, the name of any underwriters to be employed by the Stockholder in connection with such sale. If such Demand Request is made, the Company will cause the resale of the Registerable Stock specified in the Demand Request to be registered on such form of registration statement under the Securities Act as is appropriate to allow the resale of such Registerable Stock in the manner specified in the Demand Request. Notwithstanding anything herein to the contrary, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2.1 after the Company has effected two (2) registrations (meaning that the registration statements relating thereto have been declared effective by the Commission) at the request of the Holder, provided, however, that if the Holder requests that such registration be accomplished through the filing and effectiveness of a registration statement on Form S-3 (or such other form of registration statement then available for registering the resale of the Registerable Stock under the Securities Act that permits significant incorporation by reference of the Company's subsequent periodic reports filed with the Commission pursuant to the Exchange Act), the Company shall be obligated to effect the registration so requested unless (i) the proposed offering of the Registerable Stock does not then qualify for registration on 3 4 Form S-3, or (ii) the Company has already effected the two (2) registrations (whether on Form S-3 or otherwise) at the request of the Holder during the twelve (12) month period preceding the date of such request. The Company may delay the filing of any registration statement pursuant to this Section 2.1 for up to three (3) months after the original request for registration if (i) the filing of the registration statement would cause the Company to disclose information which would not have to be disclosed at such time absent the filing of the registration statement and the Board of Directors of the Company determines in good faith that the disclosure of such information would be materially adverse to the Company, or (ii) the delay in filing the registration statement would eliminate the need for the Company to file the registration statement utilizing interim financial statements. Section 2.2 Incidental Registration. If the Company at any time proposes to register any of its Common Stock under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4 or S-8 or another form of registration statement not available for registering Common Stock for sale to the public generally), it will give written notice of such proposed registration to the Stockholder no later than thirty (30) days prior to filing a registration statement. The Stockholder shall have ten(10) days from receipt of such notice from the Company to deliver a written request to the Company (such request , a "Piggy-back Request") that the resale by the Stockholder of all or a portion of the Registerable Stock be registered pursuant to the registration statement proposed to be filed by the Company. The Piggy-back Request shall state the number of shares of Registerable Stock as to which such Piggy-back Request relates and the manner in which the Stockholder proposes to sell such Registerable Stock. If such Piggy-back Request is made, the Company will 4 5 use its best efforts to cause the resale of the Registerable Stock specified in the Piggy-back Request to be registered for resale in the manner specified in the Piggy-back Request. In the event that any registration pursuant to this Section 2.2 shall be, in whole or in part, an underwritten public offering (a) the number of shares of Registerable Stock to be included in such an underwriting may be reduced if and to the extent that the managing underwriter shall be of the written opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Company in the proposed registration, and (b) in addition to the foregoing, the Company's obligation to register the Registerable Stock specified in the Piggy-back Request shall be contingent upon (i) the Stockholder's agreement to include such Registerable Stock in the underwriting on the same terms and conditions as the shares of Common Stock otherwise being sold through underwriters under such registration, and (ii) upon the Stockholder's execution of any agreements customarily requested by underwriters in such offerings. Notwithstanding anything to the contrary contained herein, in the event that there is a firm commitment underwritten public offering of Common Stock and the Stockholder does not elect to sell its Registerable Stock to the underwriters in connection with such offering, the Stockholder shall refrain from selling any shares of Registerable Stock during the period of distribution of the Company's securities by such underwriters and the period in which the underwriting syndicate participates in the after market; provided, however, that the Stockholder shall, in any event, be entitled to sell its Registerable Stock commencing on the 90th day after the effective date of such registration statement. 5 6 Section 2.3 Registration Procedures. (a) If and whenever the Company is required by the provisions of Sections 2.1 or 2.2 hereof to effect the registration of any of the Registerable Stock under the Securities Act, the Company will, as expeditiously as possible: (i) prepare and file with the Commission a registration statement with respect to the Registerable Stock and use its best efforts to cause such registration statement to (A) become effective, and (B) remain effective for so long as all of the shares of Registerable Stock covered by such registration statement remain Registerable Stock. (ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified in paragraph (i) above and to comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registerable Stock covered by such registration statement for such period; (iii) furnish to the Stockholder such number of copies of the prospectus forming a part of such registration statement (including each preliminary prospectus) as the Stockholder may reasonably request in order to facilitate the public sale or other disposition of the Registerable Stock covered by such registration statement; (iv) use its best efforts to register or qualify the Registerable Stock covered by such registration statement under the securities or blue sky laws of such states as any underwriter or the Stockholder may reasonably request; (v) notify the Stockholder and its counsel of any stop order threatened or issued by the Commission or any state securities regulatory authority, or a trading halt threatened 6 7 or issued by the exchange or over-the-counter market in which the Common Stock is publicly traded, and take all actions required to prevent the entry of such stop order or the imposition of such trading halt or to remove such stop order or trading halt if entered or imposed; (vi) notify the Stockholder at any time when a prospectus relating to the Registerable Stock is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus, or any document incorporated by reference in the registration statement of which such prospectus forms a part, contains an untrue statement of material fact or omits to state any fact necessary to make the statements therein in the circumstances under which they were made not materially misleading, and prepare a supplement or amendment to such prospectus or any such document incorporated by reference in such registration statement so that, as thereafter delivered to the purchasers of such Registerable Stock, such prospectus or document will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein in the circumstances under which they were made not materially misleading; and (vii) cause all such Registerable Stock to be listed on the exchange or market in which the Common Stock is then listed. (b) In connection with each registration hereunder, the Stockholder will furnish to the Company in writing such information with respect to itself and the proposed distribution by it as shall be reasonably necessary in order to assure compliance with Federal and applicable state securities laws. 7 8 Section 2.4 Expenses. The Company shall pay all of the expenses in connection with any registration hereunder, regardless of whether such registration becomes effective, including in each case, without limitation, all registration and filing fees, legal, accounting, disbursements, printing, messenger and delivery expenses, and fees and expenses of any other person retained by the Company. The Stockholder's attorney and other professional fees, if any, and brokers' or other selling commissions with respect to the Registerable Stock will be borne by the Stockholder. Section 2.5 Indemnification. (a) In the event of a registration of any of the Registerable Stock under the Securities Act, the Company will indemnify and hold harmless the Stockholder and any underwriter(s) retained by the Stockholder with respect to the disposition of the Registerable Stock, and each other person, if any, who controls the Stockholder or underwriter, against any losses, claims, damages or liabilities, joint or several, to which the Stockholder or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registerable Stock was registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and shall reimburse the Stockholder, the underwriter(s) and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case if and to the extent that any such loss, claim, 8 9 damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in any document made in reliance upon and in conformity with information furnished by the Stockholder or such underwriter or such controlling person in writing specifically for use in the preparation of such documents. (b) In the event of a registration of any of the Registerable Stock under the Securities Act, the Stockholder will indemnify and hold harmless the Company and each officer of the Company, each director of the Company and each person who controls the Company against all losses, claims, damages or liabilities to which the Company or any such officer, director or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or omissions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Registerable Stock was registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and shall reimburse the Company and each such officer, director and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Stockholder shall be liable hereunder in any such case if and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission in any document was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Stockholder in writing specifically for use in the preparation of such documents; and provided, 9 10 further, however, that the liability of the Stockholder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of shares sold by the Stockholder under such registration statement bears to the total public offering price of all securities sold thereunder, but not to exceed the proceeds actually received by the Stockholder from the sale of Registerable Stock covered by such registration statement. (c) Promptly, but in no event more than five (5) business days, after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof. The failure to so notify the indemnifying party shall not relieve the indemnifying party from its obligations hereunder, except to the extent that the indemnifying party is actually prejudiced thereby. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, except in the case of a conflict of interest, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying 10 11 party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or proceeding. (d) If the indemnification provided for in subparagraphs (a) or (b) of this Section 2.5 shall for any reason be held by a court to be unavailable to an indemnified party under such subparagraphs in respect of any losses, claims, damages or liabilities or actions in respect thereof referred to therein, then each indemnifying party shall in lieu of indemnifying such indemnified party contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or actions in such proportion as appropriate to reflect the relative fault of the Company, on the one hand, and the Stockholder, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or actions, as well as any other relevant equitable considerations, or if the allocation provided by the immediately preceding clause is not permitted by applicable law, in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Stockholder from the offering of the securities hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepre sentation. In addition, no individual or entity shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or proceeding effected without such individual's or entity's consent. 11 12 (e) The indemnification and contribution required by this Section 2.5 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. Section 2.6 Assignment. The Registration Rights contained in this Agreement shall be transferable by the Stockholder to any person or entity to whom the Stockholder transfers any share of Registerable Stock in a transaction which does not remove the shares so transferred from the definition of Registerable Stock hereunder. Section 2.7 Underwriters. The Company shall have no obligation to obtain an underwriter on behalf of the Stockholders but shall be obligated to cooperate with any underwriter who has agreed to underwrite the public sale of any Registerable Stock, including, but not limited to, furnishing such underwriter with such information as it may reasonably request and the execution of any agreements customarily requested by underwriters in such offerings. ARTICLE III MISCELLANEOUS Section 3.1 Survival of Agreement; Term. This Agreement shall not be terminated or amended, nor any provision hereof waived, unless the Stockholder and the Company agree in writing to such termination, amendment or waiver. Section 3.2 Notices. All notices to be given by any party hereunder shall be in writing and shall be deemed to have been duly given if mailed, by certified or registered mail, return receipt requested, five (5) business days after deposit in the United States Mail, or if telexed or telecopied, 12 13 sent by telegram, or delivered, when confirmation is received, to the relevant party at its address set forth below: If to the Company: Lexon Technologies Inc. 1401 Brook Drive Downers Grove, Illinois 60515 Attn: Chief Executive Officer If to the Stockholder: Anthony Perino 720 Plainfield Road Suite 200 Willowbrook, Illinois 60521 The parties may change their respective addresses for purposes of notice hereunder by giving notice of such change to all other parties in the manner provided in this Section. Section 3.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the parties hereto. Section 3.4 Complete Agreement. This Agreement represents the entire agreement among the Stockholder and the Company with respect to the matters set forth herein. Section 3.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which taken together are deemed to be one agreement. Section 3.6 Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. Section 3.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflicts of law doctrine. 13 14 IN WITNESS WHEREOF, the parties hereto have executed, or caused their duly authorized representatives to execute, this Agreement as of the day and year first above written. THE COMPANY LEXON TECHNOLOGIES INC. By: /s/ Steven J. Peskaitis ------------------------------------------ Its: /s/ President ------------------------------------------ THE STOCKHOLDER /s/ Anthony Perino --------------------------------------------- ANTHONY PERINO 14 EX-10.10 3 VOTING TRUST AGREEMENT, DATED AS OF 2/9/00 1 EXHIBIT 10.10 VOTING TRUST AGREEMENT THIS VOTING TRUST AGREEMENT made in Chicago, Illinois, as of February 9, 2000 by and among, Anthony Perino as Voting Trustee ("Voting Trustee"), Steven J. Peskaitis ("SJP") and Stanley Peskaitis ("SP"). WITNESSETH: WHEREAS, SJP is the owner of 2,774,600 shares (the "SJP Contributed Stock") of the common stock (the "Common Stock"), $.001 par value per share, of LEXON Technologies Inc., a Delaware corporation (the "Company"); ; WHEREAS, SP is the owner of 1,227,100 shares (the "SP Contributed Stock," with the SJP Contributed Stock and the SP Contributed Stock being hereinafter sometimes collectively referred to as the "Contributed Stock") of Common Stock; WHEREAS, it is a condition precedent to the obligations of Anthony Perino (the "Buyer') to purchase shares of Common Stock pursuant to the terms of that certain Stock Purchase Agreement, dated as of February 9, 2000 by and among SJP, the Company and the Buyer (the "Purchase Agreement"); WHEREAS, each of SJP and SP acknowledge and agree that due to their substantial ownership of the Common Stock of the Company they will each directly benefit from the transactions contemplated by the Stock Purchase Agreement and that such benefits constitute consideration for their respective agreements contained herein; WHEREAS, SJP and SP hereto have agreed upon the identity of the Voting Trustee, and upon the form of this Agreement; and 1 2 WHEREAS, the Voting Trustee has consented to act under this Agreement for the purposes herein provided. NOW, THEREFORE, in consideration of the foregoing, the agreement by Anthony Perino to serve as Voting Trustee, the agreement of SJP and SP to transfer the Stock to the Voting Trustee, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Copies of this Agreement, and of every agreement supplemental hereto or amendatory hereof, shall be filed in the principal office of the Company in Chicago, Illinois, and shall be open to the inspection of any stockholder of the Company, or any beneficiary of the trust under this Agreement, daily during business hours. All voting trust certificates ("VT Certificates") issued as hereinafter provided shall be issued, received and held subject to all the terms of this Agreement. Every person, firm or corporation entitled to receive VT Certificates, and their transferees and assigns, upon accepting the VT Certificates issued hereunder, shall become parties to and be bound by the provisions of this Agreement with the same effect as if they had executed the Agreement. 2. Transfer of Stock to Trustee. Concurrent with the execution of this Agreement, each of SJP and SP have deposited with the Voting Trustee certificates representing the SJP Contributed Stock (such certificate or certificates, the "SJP Certificate(s)") and the SP Contributed Stock (such certificate or certificates, the "SP Certificate(s)"), respectively, together with any and all documentation necessary to transfer the Stock into the name of the Voting Trustee. 2 3 All certificates representing shares of Common Stock so delivered to the Voting Trustee pursuant to this Agreement shall be surrendered by the Voting Trustee to the Company or its transfer agent with instructions to cancel such certificates and to issue new certificates for the full number of shares of Common Stock represented thereby as follows: (a) with respect to the SJP Certificate(s): (i) one certificate representing the SJP Contributed Stock issued to "Antony Perino, as Voting Trustee under Voting Trust Agreement dated February 9, 2000;" and (ii) one certificate representing such number of shares of Common Stock as is determined by subtracting the SJP Contributed Stock from the total number of shares of Common Stock represented by the SJP Certificate(s). (b) with respect to the SP Certificate(s): (i) one certificate representing the SP Contributed Stock issued to "Anthony Perino, as Voting Trustee under Voting Trust Agreement dated February 9, 2000;" and (ii) one certificate representing such number of shares of Common Stock as is determined by subtracting the SP Contributed Stock from the total number of Common Stock represented by the SP Certificate(s). 3 4 It is understood by and agreed among the parties that all certificates issued upon cancellation of the SJP Certificate(s) and the SP Certificate(s) shall continue to bear any restrictive or other legends which appeared on the SJP Certificate(s) or the SP Certificates, as the case may be. 3. The VT Certificates. The VT Certificates to be issued and delivered by the Voting Trustee in respect of the Stock as hereinbefore provided shall be in substantially the form of Exhibit A hereto. The Trustee may, from time to time, make such changes in the form of the VT Certificate as he deems necessary or advisable, provided that such changes shall not be inconsistent with this Agreement. 4. Transfer of Certificates. The VT Certificates shall be transferable on the books of the Voting Trustee by the registered holder thereof, either in person or by attorney thereto duly authorized, upon surrender thereof according to the rules established for that purpose by the Voting Trustee; and the Voting Trustee may treat the registered holder of a VT Certificate as owner thereof for all purposes whatsoever, but the Voting Trustee shall not be required to deliver certificates representing the Stock without the surrender of the VT Certificates issued in respect of such Stock. Every transferee of a VT Certificate or VT Certificates issued hereunder, or of all or any part of the rights under such VT Certificates, or of all or any part of the rights related to the shares of Stock represented by such VT Certificates shall, by the acceptance thereof, become a party to this Agreement and shall be bound by the terms and provisions of this Agreement to the same full extent as if such person were an original party hereto. 4 5 The VT Certificates to be issued hereunder have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state, including Illinois, in reliance on exemptions contained therein. The Stockholders represent that they are acquiring the VT Certificates to be issued to them hereunder for their own account and for investment purposes only, and not with a view to resale or further distribution thereof in whole or in part. The holders of any VT Certificates issued hereunder agree that they will not sell or otherwise transfer any of such VT Certificates or any rights thereunder except in accordance with the provisions of any applicable law, including the Securities Act, any applicable state securities laws, and any rules or regulations thereunder. In order to ensure compliance with such laws, as a condition of making or permitting any transfer or delivery of the VT Certificates hereunder or of any rights thereunder, the Voting Trustee may require the transferee to deliver written representations of the transferee similar to the representations of the Stockholders contained herein and may further require the delivery of a written opinion, addressed to the Voting Trustee, of counsel satisfactory to the Voting Trustee to the effect either that the VT Certificates, or rights thereunder, proposed to be transferred have been duly registered under the Securities Act and any applicable state securities law or that no such registration is required. 5. Dividends, Distributions and Recapitalizations. The Voting Trustee shall collect and receive all dividends or other distributions that may accrue or be paid upon the Stock or other securities subject to this Agreement and shall, as of the date of distribution of such dividend or other distribution, divide and pay the same among the holders of VT Certificates. Payments of dividends 5 6 or other distributions to the holders of VT Certificates shall be in proportion to the number of shares of Stock respectively represented by their VT Certificates. If any dividend or other distribution in respect of the Stock deposited hereunder is paid in securities of the Company having any voting powers, then the Voting Trustee shall hold, subject to the terms of this Agreement, the certificates representing such securities and shall, as of the date of distribution of such dividend or other distribution, issue additional VT Certificates representing in the aggregate the number of shares and class or series of stock or other securities so received. Issuance of additional VT Certificates to the holders of existing VT Certificates shall be in proportion to the number of Shares of Stock respectively represented by their existing VT Certificates among the holders of VT Certificates registered as such on the transfer books of the Voting Trustee at the close of business on the record date fixed by the Company for the distribution of such dividend or other distribution. Notwithstanding anything herein to the contrary, if and to the extent that the Company shall at any time during the term of this Agreement have issued and outstanding more than one class or series of Stock and shall declare and pay any dividend or other distribution (i) with respect to less than all series or classes of Stock, or (ii) disproportionately among different series or classes of Stock; the Voting Trustee shall make such adjustments to the payments or VT Certificates distributed hereunder as are necessary to appropriately reflect the relative rights of the shares of capital stock or other securities represented by existing VT Certificates. 6 7 6. Subscription Rights. If any capital stock or other securities of the Company are offered for subscription to the holders of Stock deposited hereunder, the Voting Trustee, upon receipt of a request from any registered holder of VT Certificates to subscribe on such holder's behalf, accompanied with the sum of money required to pay the subscription price for such capital stock or other securities, shall make such subscription and payment and: (a) if such capital stock or other securities have no voting rights associated therewith, instruct the Company to issue a certificate representing the appropriate amount of such capital stock or other securities in the name of each holder upon whose behalf a subscription was made; or (b) if such capital stock or other securities have any voting rights associated therewith, retain such capital stock or other securities pursuant to the terms of this Agreement and, upon receipt of the certificates representing the same, issue a VT Certificate representing the appropriate amount of such capital stock or other securities to each holder upon whose behalf a subscription was made. 7. Rights of Voting Trustee. For so long as any Stock shall remain subject to the terms of this Agreement, the Voting Trustee shall have the right to exercise, in person or by proxy, all voting rights and powers in respect of such Stock. The right to vote shall include the right to vote for the election of directors and in favor of or against any resolution or proposed action of any character whatsoever which may be presented at any meeting of, or require the consent of, stock- 7 8 holders of the Company. Without limiting such general right, such action or proceeding may include the sale or mortgaging and pledging of all or any part of the property of the Company, for cash, securities or other property, and the dissolution of the Company, or the consolidation, merger, reorganization or recapitalization of the Company. The Voting Trustee may act as, and receive compensation as, a director or officer of the Company or of any controlled or subsidiary or affiliated corporation, or be otherwise associated therewith; and he, or any firm of which he may be a member, or any corporation or association of which he may be a stockholder, director or officer, or any such firm, corporation or association in which he may be otherwise directly or indirectly interested, may to the extent permitted by law, and without liability in any way or under any circumstances by reason thereof, contract with the Company or with any controlled or subsidiary or affiliated corporation, or be or become pecuniarily interested in any matter or transaction to which the Company or any controlled or subsidiary or affiliated corporation may be a party or in which the Company or any controlled or subsidiary or affiliated corporation may in any way be concerned, as fully as though he were not Voting Trustee hereunder. The Voting Trustee shall not be personally responsible with respect to any action taken pursuant to his vote cast in any matter or act committed, or omitted to be done, under this Agreement, provided such commission or omission does not amount to willful misconduct on his part, and provided also that the Voting Trustee at all times exercises good faith in such matters. The 8 9 Voting Trustee shall not be required to give any bond or security for the discharge of his duties as Voting Trustee hereunder. 8. Term and Termination. This Agreement shall be effective as of the date hereof and shall continue in full force and effect until February 9, 2001, unless earlier terminated as provided below (the effective date of any such termination being hereinafter the "Termination Date"). Notwithstanding the foregoing, this Agreement may be terminated (a) at the joint election of SJP and SP (such election to be evidenced by a written instrument delivered to the Voting Trustee stating the effective date of such termination and signed by both of SJP and SP) at any time after September 1, 2000 if and only if that certain Common Stock Purchase Warrant (the "Warrant), dated February 9, 2000, entitling the holder thereof to purchase up to 2,600,000 share of Common Stock shall not have been fully exercised prior to the Termination Date (as defined in the Warrant), or (b) at any time at the election of the Voting Trustee by delivery of a notice of termination (specifying the effective date of such termination) to the registered holders of VT Certificates at their respective addresses as appearing on the transfer books of the Voting Trustee. 9. Termination Procedure. From and after the Termination Date, the VT Certificates shall cease to have any effect, and the holders of the VT Certificates shall have no further rights under this Agreement other than to receive certificates representing shares of stock or other property distributable under the terms hereof and upon the surrender of such Certificates. At any time after the Termination Date, the registered holders of VT Certificates may deliver the same to the Voting Trustee together with instructions from the registered holder to cancel such 9 10 VT Certificates and to deliver or cause to be delivered to such registered holder a certificate representing the shares of Stock, or if other property is then being held pursuant to the terms of this Agreement, such other property, distributable in respect of such VT Certificate under the terms hereof. Within fifteen (15) days of receipt of a VT Certificate together with the instructions specified above, the Voting Trustee shall distribute, or take such action as is necessary to cease the distribution of, the Stock or other property represented by such VT Certificate. At any time subsequent to thirty (30) days after the Termination Date, the Voting Trustee may deposit with the Company certificates representing the number of shares of Stock together with any other property represented by the VT Certificates not then surrendered to the Voting Trustee; and upon such deposit, all further liability of the Voting Trustee under this Agreement, including, but not limited to, for the delivery of certificates representing shares of Stock or other property and for the delivery or payment of dividends or the exercise of subscription rights, shall cease, and the Voting Trustee shall not be required to take any further action hereunder. 10. Trustee. If for any reason at any time Anthony Perino shall be unable or unwilling to serve as Voting Trustee and he shall not have appointed a Successor Voting Trustee, then this Agreement shall terminate in accordance with the provisions of Paragraph 9 hereof. 11. Notice. Unless otherwise specifically provided in this Agreement, any notice or communication required hereunder shall be deemed to be given or made sufficiently if enclosed in 10 11 postpaid envelopes, first class mail, addressed to the person or company entitled to receive such notice as follows: (a) to holders of VT Certificates at the addresses shown on the transfer books of the Voting Trustee; (b) to the Company at its principal place of business, or to such other address as the Company may designate by notice to the Voting Trustee; and (c) to the Voting Trustee at such address as may from time to time be furnished to the Company by him, and if no such address has been furnished by the Voting Trustee, then to him in care of the Company. Every notice so given shall be effective, whether or not received, and the date five (5) days after the date of mailing. All distributions of cash, securities or other property hereunder by the Voting Trustee to the holders of VT Certificates may be made in the same manner as hereinabove provided for the giving of notice to the holders of VT Certificates. 12. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. No amendment or modification of, or supplement to, nor the waiver of any provision hereof, shall be valid unless the same shall be in writing and signed by the party against whom such amendment, modification, supplement or waiver is sought to be enforced. No failure or delay on the part of any party hereto to exercise any power, right or privilege hereunder shall be deemed a waiver of such power, right or privilege nor shall any effective waiver 11 12 of any power, right or privilege at any given time be deemed to constitute a waiver of such power, right or privilege at any future time. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement shall be governed by, and construed in accordance with, the provisions of the Delaware General Corporation Law applicable to voting trust agreements and domestic corporations. If any provision of this Agreement shall be determined to be invalid for any reason, the remaining provisions shall be severable and enforceable in accordance with their terms. IN WITNESS WHEREOF, the parties hereto have executed this Voting Trust Agreement on the day and year first above written. /s/ Anthony Perino --------------------------------- ANTHONY PERINO, AS VOTING TRUSTEE /s/ Steven J. Peskaitis ---------------------------------- STEVEN J. PESKAITIS /s/ Stanley Peskaitis ---------------------------------- STANLEY PESKAITIS, STOCKHOLDER 12 13 EXHIBIT A --------- No. ___________ __________ Shares LEXON TECHNOLOGIES INC. a Delaware Corporation VOTING TRUST CERTIFICATE FOR CAPITAL STOCK ANTHONY PERINO, Voting Trustee of certain shares of the common stock, $.001 par value per share (the "Common Stock"), of LEXON TECHNOLOGIES INC., a Delaware corporation (the "Company"), under a Voting Trust Agreement dated February 9, 2000 (the "Agreement"), having received certain shares of Common Stock (the "Stock") pursuant to the Agreement, which Agreement the holder hereof by accepting this voting trust certificate (the "VT Certificate") ratifies and adopts, hereby certifies that will be entitled to receive a certificate representing fully paid and non- assessable shares of Common Stock on the expiration (or earlier termination) of the Agreement, and in the meantime shall be entitled to receive all dividends or other distributions that may accrue or be paid upon the Stock, except that any such dividends or other distributions that are evidenced by instruments carrying the right to vote shall be retained in the Voting Trust by the Voting Trustee and VT Certificates therefor issued by them. Until the Voting Trustee shall have delivered the Stock held under the Agreement to the holder of this VT Certificate, or to the Company, as specified in the Agreement, the Trustee shall possess and shall be entitled to exercise, in his full and complete discretion as he deems appropriate, all voting rights and powers of an absolute owner of such Stock, including the right to vote thereon for every purpose, and to execute consents in respect thereof for every purpose, it being expressly stipulated that no voting right passes to the holder hereof or his assigns under this VT Certificate or any agreement, expressed or implied. No certificate representing the Stock shall be due or deliverable hereunder until the expiration or earlier termination of the Agreement This VT Certificate has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state, including 13 14 Illinois, in reliance on exemptions contained therein. The holder hereof represents that he is acquiring this VT Certificate for his own account and for investment purposes only, and not with a view to resale or further distribution hereof in whole or in part. The holder hereof agrees that he will not sell or otherwise transfer this VT Certificate or any rights hereunder except in accordance with the terms of the Agreement, and in accordance with the provisions of any applicable law, including the Securities Act, any applicable state securities laws, and any rules or regulations thereunder. In order to ensure compliance with such laws, as a condition of making or permitting any transfer or delivery of this VT Certificate or of any rights here under, the Voting Trustee may require the transferee to deliver written representations of the transferee, similar to the representations of the holder contained herein, and may further require the delivery of a written opinion, addressed to the Voting Trustee, of counsel satisfactory to the Voting Trustee to the effect either that this VT Certificate or rights hereunder proposed to be transferred have been duly registered under the Securities Act and any applicable state securities law or that no such registration is required. This VT Certificate is transferable only on the books of the undersigned Voting Trustee by the registered holder in person or by his duly authorized attorney, and the holder hereof, by accepting this VT Certificate, manifests his consent that the undersigned Voting Trustee may treat the registered holder hereof as the true owner of this VT Certificate for all purposes, except for the delivery of certificates representing the Stock, which delivery shall not be made without the surrender hereof. This VT Certificate is not valid unless duly signed by the Voting Trustee. IN WITNESS WHEREOF, the Voting Trustee has executed this VT Certificate this __ day of ________________ 2000. ------------------------------------ ANTHONY PERINO, Voting Trustee 14 EX-11.1 4 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Three Months Ended ------------------------------ March 31, March 31, 2000 1999 ----------- ---------- Net income (in thousands) (359) (78) ========== ========== Weighted average common shares outstanding 13,122,005 11,500,081 ========== ========== Basic income per share (.03) (.01) ========== ========== Dilutive effective of options and warrants outstanding under treasury-stock method -- -- ========== =========== Diluted income per share (.03) (.01) ========== ===========
EX-27 5 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 62,855 0 31,158 2,500 1,656 173,247 319,025 129,903 781,354 1,734,993 0 0 0 13,843 (1,044,978) 781,354 161,468 161,468 24,800 605,119 (150,299) 0 40,704 (358,856) 0 (358,856) 0 0 0 (358,856) (.03) (.03)
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