-----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, EE4U/XgPXe74sY50zjF7PJfBoyj2YX4pn5r/uBUX7zDz1LXBTV/hV+EutT94YPBG jHfu5sShN3vzAAIDrRSZBg== 0001072588-99-000079.txt : 19990820 0001072588-99-000079.hdr.sgml : 19990820 ACCESSION NUMBER: 0001072588-99-000079 CONFORMED SUBMISSION TYPE: 10-12G/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990819 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD WIDE VIDEO CENTRAL INDEX KEY: 0001086519 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 541921580 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-12G/A SEC ACT: SEC FILE NUMBER: 000-26235 FILM NUMBER: 99695794 BUSINESS ADDRESS: STREET 1: 102A N. MAIN STREET CITY: CULPEPPER STATE: VA ZIP: 22701 BUSINESS PHONE: 5407277551 MAIL ADDRESS: STREET 1: 102A N. MAIN STREET CITY: CULPEPPER STATE: VA ZIP: 22701 10-12G/A 1 FORM 10-SB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-SB/A GENERAL FORM FOR REGISTRATION OF SECURITIES ----------------- Pursuant to Section 12(g) of The Securities Exchange Act of 1934 WORLD WIDE VIDEO, INC. (Exact name of registrant as specified in its charter) Colorado 54-1921580 - -------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization Identification No.) 102A North Main Street, Culpeper, VA 22701 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (540) 727-7551 -------------------------- Registrant's telephone number, including area code: Securities to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which to be so registered each class is to be registered None None Securities to be registered pursuant to Section 12(g) of the Act: Title of class Common 100,000,000 Shares of Common Stock TABLE OF CONTENTS PART I Page Item 1. Description of Business..........................................1 Item 2. Management Discussion & Analysis of Operations..................12 Item 3. Properties......................................................18 Item 4. Security Ownership of Certain Beneficial Owners and Management...............................19 Item 5. Directors and Executive Officers................................20 Item 6. Executive Compensation..........................................23 Item 7. Certain Relationships and Related Transactions....................................................25 Item 8. Description of Securities.......................................25 PART II Item 1. Market Price of and Dividends on Registrants Common Equity and Related Stockholder matters....................................26 Item 2 Legal Proceedings......................................................27 Item 3. Disagreements with accountants on accounting and financial disclosure............................................27 Item 4. Recent Sales of Unregistered Securities.........................28 Item 5. Indemnification of Directors and Officers.......................35 Financial Statements and Exhibits...............................36 Index to Financial Statements...................................41 Exhibit Index............................................42 Signatures...............................................43 ITEM 1. DESCRIPTION OF BUSINESS World Wide Video, Inc. (the "Issuer" or "Company" or "WWV") was organized under the corporate laws of the State of Colorado on April 9, 1998. The Company designs and manufactures technology and products for the Video Telephony market. WWV has been a development stage company during the final design and delivery of custom ultra high speed hardware H.324 Codec (audio/video compression/decompression) technology. During the period to date, the founders have developed prototype products, written proprietary enabling software/firmware, presented the products to large potential customers, and established strategic partners/distribution channels throughout the United States in anticipation of market introduction of its products. The Company acquired 100% of World Wide Video, Inc. of Virginia in a share exchange in 1998. World Wide Video, Inc. of Virginia was the predecessor company which commenced the product design. Research and product design was conducted by the two key principals, John Perry and Frank Maas, over the last four years. World Wide Video, Inc. of Virginia was established in July of 1997, and ongoing work by Messrs Perry and Maas in the area of video over the plain old telephone system (POTS) was contributed to the Virginia Corporation. (a) The Company owns one subsidiary: World Wide Video Inc. of Virginia. The Company currently maintains its offices 102A North Main Street, Culpeper, VA 22701. Its telephone number is (540) 727-7551. (b) Parents and Subsidiaries Parent WORLD WIDE VIDEO, INC., a Colorado corporation. 1 Subsidiary - ---------- World Wide Video, Inc., a Virginia corporation 100% wholly owned. Financing of Product Development Activities. - ------------------------------------------- The Company offered and sold 200,000 shares at $.50 per share pursuant to Regulation D in early 1998. In the spring of 1998, the Company sold 75,000 shares at $2.00 per share to capitalize its initial product development. In mid-1998 into 1999, the Company sold 233,987 shares at $2.75 per share to capitalize its product development to date. (d) Narrative Description of Business. THE COMPANY BUSINESS The Company has had very limited operations within the last two years, and such operations have been restricted to design of products and small consulting and development contracts. Most of the last two years, WWV has been developing new video telephony products. Production for the first in a series of products is scheduled for mid-1999. The Company products deliver high speed television signals over the plain old telephone system lines (POTS). The market potential for video communications included every desktop computer, home computer and every business that needs to communicate, especially as video systems become more and more affordable. Multimedia Research Group forecasts that the video phones market and video conferencing markets will total over $15 billion within the next five years as the video technology becomes more common place. The Company's technology is designed to provide video telephony for the individual user (home), small to large businesses, the security, and tele-medicine markets. WWV expects the market growth of these systems to be similar to that of the modem. At first modems were only used by highly paid business people who traveled extensively 2 and needed to connect to their office computer while they were away. Now most computer users use modems to hook to the "Internet," to access electronic bulletin boards and to conduct research. Modems have become standard equipment for most computers, and video may become standard equipment. The International Telecommunication Union H.324 standard permits video, voice and data to be shared simultaneously over a simple telephone modem connection. It is the first standard to specify interoperability over a single analog phone line. Because of the H.324 standard, the next generation of video phones products will be able to talk to one another and provide a foundation for gross market expansion. The Company's products operate over traditional, business and residential copper wire telephone systems commonly referred to as Plain Old Telephone Systems (POTS). POTS represent over 87% of the world's present telephone networks. The Company's technology compresses video and data at a higher rate than anyone else in the industry at this time. This gives the Company a tremendous advantage in frame rate and quality, which has been one of the limiting factors on widespread acceptance of the technology. The Company's products will provide video service at a new plateau in availability, video quality and at a lower cost than is available now. The primary initial focus of business operations will be to complete product development of the products described under "Business" and market such products to target industry prospects. 3 COMPANY'S PRODUCT LINES Product Name: Centurion(TM) Target Markets: Security and Surveillance This is a major market segment for The Company's technology. Surveillance and security information consisting of data, control, audio and high quality video images can be transmitted over POTS between cities, states, and countries or across the world. The Centurion(TM) product family provides the first complete integrated system allowing data, audio and video surveillance from remotely located sites. Centurion is a small self contained hardware module that does not require a PC. At 4" x 6" x 1.5" inches and 5 watts of power, it is the smallest compression/decompression (codec) available to OEM designers and end-users. The Centurion(TM) product family supports the International Telecommunication Union (ITU) H.324 standard for low bandwidth video over normal (analog) telephone lines. Spectator(TM) is a co-companion to Centurion(TM) that provides one-way video transmission for low cost surveillance applications. Both Centurion(TM) and Spectator(TM) are designed to be compatible with future hardware and software releases from WWV. Other Centurion(TM) family products, in the development stage, will support the ITU standards such as H.320 (for ISDN, ATM, T.1) and H.323 (for Internet and Ethernet) will be supported. A high performance PCI computer card will support all three ITU standards. "Wavelet" runtime and still video compression will be added to provide superior performance using either analog or digital telephone lines. Using standard telephone lines, the Centurion(TM) puts any site, no matter how distant, within customer access. The unique 2-way video motion provides complete communication for virtually any surveillance or conferencing application. For security monitoring there will be fewer unknown false alarms. For monitoring cash related activities Centurion(TM) can provide an interface for POS (Point of Sale) scanners. Centurion(TM) can control remotely situated pan-tilt-zoom (PTZ) 4 cameras and can be interfaced to security alarm equipment and other devices to verify a triggered alarm. Product Name: RAV(TM) Medical Target Markets: Remote Audio/Video/Data Tele-Medicine, Home Care Medical Monitoring, Doctor and Nursing Facilities, Private Care The RAV(TM) Medical allows health care professionals to keep abreast of new procedures, consult on X-rays or other visual documents, obtain health information by monitor home-bound patients and participate in conferences with specialists using normal analog POTS telephone lines. RAV(TM) Medical transportable convenience can inexpensively improve the quality of medical care that provided to patients in remote areas and link patients to experts at distant medical centers. The trend of HMOs and insurance companies to insist on home recovery instead of in-hospital recovery has opened a new market for the home monitoring of patient vital signs. A number of US and Japanese medical firms are providing vital sign monitors connected to the phone network for checking patient condition at random times. RAV(TM) Medical now provides the missing link: a two-way video connection between the patient and the care provider. Product Name: RAV(TM) Notebook Target Markets: Portable Video Conferencing The RAV(TM) Notebook (RAV(TM)) is a complete multimedia computer system in a notebook. The RAV(TM) is designed as a tool for the business person. The system is designed to provide the full range of typical multimedia computing (windows, modems, color display, fax, microphone, speakers) plus full portable video conferencing (shared files, shared applications, shared white boards and camera) using POTS or an option for cellular video communication. The RAV(TM) is the first Remote Audio-Video notebook that includes a custom removable ITU H.324 compatible hardware video compression/decompression (codec) module that frees up the CPU and provides the highest quality video conferencing. For video conferencing simply, plug a phone line into the RAV(TM) and use all the features of a "top of the line" notebook: 5 Pentium II MMX/366 MHZ with 64 - 128MB RAM, 512KB L2 Cache Brilliant 15.1" active 1024x768x16M color display with 4MB controller Data Storage includes 6.4 GB HDD, DVD, 3.5" FDD Keyboard &Trackpad & 2 PCMCIA slots Sound support includes built-in microphone and speakers Communication includes: 56 Kbps fax/modem, IR Transceiver and Inputs/Output ports includes Audio In, Audio Out, Headphone Out, Video In, and S-Video Out Software includes: Windows 98 including Net Meeting Dragon Speech Recognition Software ITU T.120 Whiteboard, File Transfer, and Shared Application 1 Year Depot Warranty Battery & Leather Carrying Case In addition, the RAV(TM) includes an integrated high resolution color camera and a removable video codec module that contains multiple high speed digital signal processors to provide unparalleled frame rate and quality using the International Telecommunication Union H.324 standard for low bit rate video conferencing. Using the H.324 protocol, the RAV(TM) Notebook video conferencing is Microsoft Net Meeting and International Telecommunication Union's T.120 software that provides for file transfers, shared applications, and shared white boards. Product Name: RAV(TM) STB Target Markets: Video Communication (non-computer based) over POTS The RAV(TM) STB (Set-Top-Box) does not require a computer for video, audio, and data communication simultaneously over POTS. The RAV(TM) STB uses the industry 6 H.324 standards and operates using a standard television and telephone, and operates with an internal video camera or an external standard NTSC video camera. The telephone set is capable of making normal voice only calls when it is not being utilized as a RAV(TM) STB. RAV(TM) STB near real-time, very high quality, video imagery at a speed of approximately 10 to 20 frames per second is displayed in a user sizable window on the TV screen. Web Browser capabilities will be added in the near future as an option. Product Name: RAV(TM) PCI Target Markets: Video Communication (computer based) over POTS The RAV(TM) PCI board is a low cost; high quality alternative to dedicated video conferencing systems. It can be used for commercial applications as diverse as desktop video conferencing and Tele-medicine to consumer personal use. The RAV(TM) PCI is a standard half sized board that plugs into a PCI bus slot in a personal computer (PC). It can be utilized for both consumer and business video communications. It comes with software that is loaded into the PC and has a simple user interface. The RAV(TM) PCI installed in a workstation can make industry standard H.324 video phone calls to any computer already using Intel's ProShare software. The RAV(TM) PCI will also support white boarding, file transfers and application sharing using the T.120 standard. See also (c) "Business." Products, Services, Markets, Methods of Distribution and Revenues. Digital electronic products are presently the principal products sought to be produced by the company. The Company has commenced limited production for orders in hand with first shipments in June 1999. Curently, marketing is by trade shows and word of mouth and by Internet web page. 7 Working Capital Needs. The working capital needs of the company consist primarily of: operating capital, product development capital and marketing capital (see "Operating Budget"). These requirements may be met by private placement of stock or loans or sale of working interests. The Company will need to develop additional working capital for future operations. At present time it has no source or commitment for any additional funds. Budget for Next Twelve Months Personnel $285,000 Rent 9,000 Office & Administration 7,000 Communications 21,000 Travel 17,000 Professional Services 11,000 Stock Transfer & Filing 8,000 Product Development 355,000 Marketing 115,000 TOTAL $828,000 (3) Dependence on a Single Customer or a Few Customers a) Revenues - $0 for fiscal year ended September 30, and the quarter ended March 31, 1998 Current Customers 1. MetroBook Computer Corporation, Inc. 2. Help Innovations, Inc. (largest single) 3. DataPower USA, Inc. 4. Boeing Information Services 5. Andries Tek, Inc. 8 6. ABM IT 7. DataPoint, Inc. 8. MTS, Inc. b) Client Services Revenues - None During the five (5) years ending September 30, 1998 and through nine months ended June 30, 1999, no revenues were generated from client services. (4) Backlog of Orders. 1. MetroBook Computer Corporation, Inc. $100,000 2. Help Innovations, Inc. $1 million order (conditional upon sales) 3. DataPower USA, Inc. $100,000 4. Boeing Information Services $2,000 5. Andries Tek, Inc. $2,000 6. ABM IT $4,000 7. DataPoint, Inc. $2,000 8. MTS, Inc. $5,000 (5) Government Contracts. None. (6) Competitive Conditions. The video electronics industry is highly competitive. The Company faces competition from large numbers of large and small companies, both public and private. Many of the competitive companies so engaged possess greater financial and personnel resources than the Company and therefore have greater leverage to use in acquiring prospects, hiring personnel development and marketing. Accordingly, a high degree of competition in these areas is expected to continue. The markets for video 9 electronic products have increased substantially in recent years, and competitors in such markets have increased substantially. There is no assurance that the Company's revenues, if any ever develop, will not be adversely affected by these factors. WORLD WIDE VIDEO, INC. COMPETITION WWV recognizes that the competition in this industry is intense. There are only two H.324 hardware based codec manufacturers. Both have focused on the consumer video conferencing market. The POTS industry players are 8x8, Inc. (see below for more details) and to a lessor degree C-Phone, Inc. They have directed their marketing toward the home video phone environment. The home based conferencing market competes mainly on price. WWV has identified that video communication is most valuable to businesses, not home users. The WWV marketing approach will be directed toward industries that need remote monitoring, as in security and surveillance, and quality video conferencing. Industry applications such as the security market are more dependent upon acceptable video quality and video performance. World Wide Video hardware provides superior video quality using newer digital technology. In addition to the quality of the video, WWV initial products will be priced equal to or less than the competition. 8x8, Inc. (formerly IIT) is the main competitor to WWV. 8x8 has been in the business of selling video compression chips for about ten years. About four years ago, they starting producing a consumer POTS Set-Top-Box, which is a H.324 codec with a built-in camera to be used with a standard TV for video display and audio. The 8x8 quality is poor, the frame rate is slow (theoretical maximum is 15 SQCIF frames per second) and the minimum bandwidth is 19.2 Kbps. WWV's Centurion(TM) product is about 1/4 the physical size and requires about 1/4 the power. The Centurion(TM) frame rate is better (theoretical maximum is 20 SQCIF 10 frames per second) and the minimum bandwidth required is 9.6 Kbps. About a year ago 8x8 starting developing POTS based security products using the same chip designs. They have not made much progress again for the same reasons. Recent 8x8 announcements indicate that they may be leaving the consumer POTS area and that now 8x8 is concentrating on industrial/commercial markets. (7) Registrant Sponsored Research and Development. The Company has continuing product development for which some research is required. The initial product production is planned for mid-1999. (8) Compliance with Environmental Laws and Regulations. The operations of the Company are subject to local, state, and national laws and regulations in the USA. To date, compliance with these regulations by the Company has had no material effect on the Company's operations, capital, earnings, or competitive position, and the cost of such compliance has not been material. The Company is unable to assess or predict at this time what effect such regulations or legislation could have on its activities in the future. (a) State and Local Regulation - None. The Company cannot determine to what extent future operations and earnings of the Company may be affected by new legislation, new regulations or changes in existing regulations at state or local level. (b) National Regulation - None. The Company cannot determine to what extent future operations and earnings of the Company may be affected by new legislation, new regulations or changes in existing regulations at a national (U.S.) level. (c) Environmental Matters - None at the date of this registration statement. 11 (d) Other Industry Factors - None at the date of this registration statement. (9) Number of Persons Employed. As of June 30, 1999, the Company had two full time employees: John G. Perry Frank A. Maas 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's only primary income source at this time is its limited product sales. Capital from private placements or borrowing against assets are required to fund future operations. The Company completed a private offering of Stock in May of 1999. The Company revenues for the twelve month period ending September 30, 1998, were none. The Company commenced limited business operations in 1998 and showed a significant net loss from operations for year ended September 30, 1998 resulting from costs of developing its products. The Company may continue to show losses resulting from the start up of operations for an indeterminate time. RESULTS OF OPERATIONS During its operations ended September 30, 1998, the Company incurred expenses in irregular amounts through year ended September 30, 1998. By "irregular," the Company is referring to the fact that due to operations, fixed expenses such as rent, general and administrative, accounting, telephone, etc. have been variable, and sporadic. The Company has generated no business revenue from operations up to September 30, 1998, but had sales revenues of $876 in the quarter ended March 31, 1999. The Company has commenced limited production for orders in hand with shipments in Summer 1999. The Company incurred the following expenses in the past fiscal year end and six months ended March 31, 1999. 13 Fiscal Year Ended Quarter Ended September 30, 1998 March 31, 1999 ------------------ -------------- Operating expenses Product Development $373,928 $ 68,875 General and Administrative 97,148 47,134 -------- --------- Total operating costs $468,326 $116,009 Cost of sales 0 6,497 It is expected that expenses will continue at a significantly increased rate due to costs of developing and marketing products. Cash Flows for Year Ended September 30, 1998: The Company achieved no revenues from operations during the fiscal year, ending September 30, 1998. The income from operations for prior years compares as follows: Fiscal year ended September 30, 1997 (none) and to fiscal year ended September 30, 1998 (none). The Company has never had any profits. At this time, the Company is dependent upon private placements or loans for future operations and funding. Therefore it will have to either borrow money, if possible, or raise funds through subsequent public or private offerings to continue operations until when, or if, it ever develops sufficient revenue from its assets to maintain operations. If such revenues are not generated, or participants not found the Company will be forced to develop another line of business, or to finance its operations through borrowed funds, the sale of assets it has, or enter into the sale of stock for additional capital none of which may be feasible when needed. The Company has no management ability, and no 14 financial resources or plans to enter any other business as of this date although the Company will be open to suggestion and opportunity. CHANGES IN FINANCIAL CONDITION At fiscal year ended September 30, 1998 the Company's assets increased to $343,056 compared to $0 at September 30, 1997. The increase was a result of shareholder contributions and private placement of common shares. The liabilities, all of which are current liabilities, increased significantly as a result of product development costs to $175,780, at year end September 30, 1998, an increase over the year ended September 30, 1997 liabilities of $0. Stockholders' equity at year ended September 30, 1998 was $167,276, an increase in the 1997 stockholder's equity of $0. This was caused by the Company's failure to generate any revenues from any source, in spite of continued expenses and product investment and development costs which were funded from the proceeds of private placements. From the aspect of whether the Company can continue toward its business goal of commencing production and sales of its products, the Company is deficient in needed capital. Without continued capital infusions or loans or a combination of capital and loans, the Company may not be able to carry out its business goals to market products for future fiscal years. Comparison of Results of Operation for the Fiscal Years Ended September 30, 1998 and 1997 The Corporation had no operating revenues in 1998 or 1997. The Company incurred product development costs of $373,928 and operating expenses, all of which are general and administrative in nature, totaling $97,148 in fiscal year ended September 30, 1998 as compared to $0 in 1997. As a result of having no operating 15 income, the Company incurred operating losses of $(468,326) in year ended September 30, 1998 and $0 in year ended September 30, 1997. The Company anticipates that the trend of net losses will continue in 1999 as it continues to incur major expenses in attempting to develop and market its products. General and Administrative costs increased in the year ended September 30, 1998 to $97,148 from a total of $0 in 1997. Expenses of a General and Administrative nature will increase substantially as a result of registering its common stock under the Securities and Exchange Act of 1934, increased audit costs and expenses related to private placements to fund product development and marketing costs and miscellaneous operations costs. Office expenses, including telephone, were $12,388 in fiscal year ended September 30, 1998 and $0 in 1997. These expenses were paid from shareholder contributions. This will increase in 1999 due to expanded operations. 1998 expense for accounting totaled $2,670, while in 1997 accounting and other professional expenses were $0. Likewise, accounting and other professional expenses in 1999 will be materially larger due to efforts required to keep the Company's SEC filings current. It should be expected that legal and accounting expenses will increase substantially for 1999. The per-share loss amounted to ($.06) in fiscal year ended September 30, 1998 as compared to $.00 in 1997. 16 RESULTS OF OPERATIONS FOR QUARTER ENDED MARCH 31, 1999 COMPARED TO SAME PERIOD IN 1998 The Company generated revenues totaling $2,189 in the second quarter of the fiscal year compared to $4,500 in revenues in the period in 1998. The cost of goods sold was ($750) for net sales of $2,315 in the quarter in 1999 compared to a cost of goods sold of 43,931 and net sales of $569 in 1998. The Company had product development costs of $9,806 in the second quarter in 1999 compared to $20,000 in the same quarter in 1998. The general and administrative expenses in the quarter in 1999 were $91,344 compared to $23 in the same quarter in 1998. The Company had net operating losses of ($98,515) in the second quarter in 1999 compared to ($19,454) in the same quarter in 1998. The Company, at quarter end, needed additional capital infusion, and only had cash of $4,032 and total current assets of $259,832 which were mostly illiquid. Its current liabilities at quarter end were $236,882. RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1999 The Company generated $10,562 in sales and income revenue in the six months period ended March 31, 1999 as compared to $4,500 in sales revenue in the same period ended March 31, 1998. The Company incurred cost of goods of $1,750 in the period ended March 31, 1999 as compared to 43,931 in cost of goods sold in the same period ended March 31, 1998. The Company incurred 4138,671 in general and administrative expenses in the period ended as compared to $23 in general and administrative expenses in the same period in 1998. The Company had product develeopment expenses of $77,961 in the six month period ended March 31, 1999 as compared to $20,000 in the same period in 1998. The Company incurred a loss on operations in the six month period ended March 31, 1999 of ($207,820) as compared to a loss on operations in the six month period ended March 31, 1998 of ($19,454). 17 LIQUIDITY - --------- The Company expects that its need for liquidity will increase for the coming year due to its anticipation of expending funds for product marketing and development. Short Term ---------- On a short term basis, the Company does not generate enough revenue to cover operations. Based on prior experience, the Company believes it will continue to have insufficient revenue to satisfy current and recurring liabilities as it seeks to increase sales and produce product. For short term needs the Company will be dependent on receipt, if any, of private placement proceeds or loans. The Company's current assets were $259,832 at March 31, 1999 and its current liabilities are $236,882. Of the current liabilities, $60,000 was owed to officer shareholders. The Company had cash of $4,039 at March 31, 1999 and inventory of $131,570 and accounts receivable of $37,323. It has recently completed a private placement of its securities for additional capital. Long Term --------- On a long-term basis, the Company had non-current assets consisting of property, equipment, and other assets of $74,299 at March 31, 1999. The Company has a start-up business at this time from which it generates small income. Its operations have negative cash flow at this time. It is reliant upon success of product marketing, at this time, for possibility of future income. 18 CAPITAL RESOURCES - ----------------- The primary capital resources of the Company are its stock only. Stock may be illiquid because it is restricted in an unproved company with limited assets and a start-up business. The Company completed a private placement of 200,000 shares consisting of common shares @ $.50 per unit for operating capital. The Offering ceased as of May 1, 1998. The Company completed a private placement of 75,000 shares consisting of common shares @ $2.00 per unit for operating capital. The Offering ceased as of July 1, 1998. The Company completed a private placement of 233,987 shares consisting of common shares @ $2.75 per unit for operating capital in late 1998 and early 1999. As of the date of the registration statement, the Company has plans for capital expenditures within the next year to manufacture product, which amounts exceed its available capital by over $200,000. Need for Additional Financing The Company does not have capital sufficient to meet the Company's cash needs for continuing operations. The Company will have to seek loans or equity placements to cover such cash needs. In the event the Company is able to complete a business combination during this period, lack of its existing capital will be a sufficient impediment to allow it to accomplish the goal of completeing a business combination. There is no assurance, however, that the available funds will ultimately prove to be adequate to allow it to complete a business combination, and once a business combination is compeleted, the Company's needs for additional financing are likely to increase substantially. 19 No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses. The Company discloses hereby that it is in a dispute with an entity, Albemarle Investments, Ltd. regarding a purported consulting arrangement under which claim has been made for $45,000 and issuance of common shares totaling 500,000. There has been no further assertion of claim since September 14, 1998. The Company disputes that any monies or shares are due and is prepared to assert legal defenses in the event any legal action were to be taken. ITEM 3. PROPERTIES (a) Real Estate. The Company rents office space of 1,000 sq. ft. from a non- affiliate. (b) Title to properties. None. (c) Oil and Gas Drilling Activities. None. (d) Oil and Gas Production. None. (e) Oil and Gas Reserves. None (f) Present value of Estimated future Net Reserves From Proved Developed Oil and Gas Reserves. None. (g) Reserves Reported to Other Agencies. None. (h) Natural Gas Gathering/Processing Facilities. None. 20 (i) Present Activities and Subsequent Events: ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF MAY 20, 1999 Security Ownership of Certain Beneficial Owners and Management As of June 30, 1999, the Company had issued and outstanding 10,911,368 shares of its common stock, $.0001 par value. The following tabulates holdings of common stock of the Company by each person who holds of record or is known by management of the Company to own beneficially more than five percent (5%) of the common stock outstanding, and, in addition, by all directors and officers of the Company individually, and as a group. The shareholders listed below have sole voting and investment power, except as otherwise noted. (a) Beneficial owners of five percent (5) or greater, of the Registrant's Common Stock. The following sets forth information with respect to ownership by holders of more than five percent (5%) of the Company's Common Stock known by the Company based upon 10,911,368 shares outstanding at June 30, 1999.
Title Name and Amount and Percent of Address of Nature of of Class Beneficial Owner Beneficial Interest Class - ----- ---------------- ------------------- ------- Common John G. Perry 5,000,000 45.82% 14327 Smith Road Culpeper, VA 22701 Common Frank A. Maas 5,000,000 45.82% 808 Culpeper Street Fredericksburg, VA 22405
21 b) The following sets forth information with respect to the Company's Common Stock beneficially owned by each Officer and Director, and by all Directors and Officers as a group. Title Name of Amount and Percent of Beneficial Nature of of Class Owner Beneficial Ownership Class - ----- ---------- -------------------- ------- Common John G. Perry 5,000,000 45.82% Common Ronald Cropper 0 0% Common Frank A. Maas 5,000,000 45.82% ------ Officers and Directors as a goup 91.64% ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS (a) The following table furnishes the information concerning the directors of the Company as of June 30, 1999. The directors of the Company are elected every year and serve until their successors are elected and qualify. Name Age Title Term - ---- --- ----- ---- John G. Perry 53 President and Director Annual Frank A. Maas 54 Secretary, Director, Annual and Chairman Ronald Cropper 52 Director Annual 22 The term of office for each director is one (1) year, or until his/her successor is elected at the Company's annual meeting and qualified. The term of office for each officer of the Company is at the pleasure of the board of directors. The board of directors has no nominating, auditing committee but has set up a compensation committee. Therefore, the selection of person or election to the board of directors was neither independently made nor negotiated at arm's length. The term of office for each director is one (1) year, or until his/her successor is elected at the Company's annual meeting and qualified. The term of office for each officer of the Company is at the pleasure of the board of directors. (c) Identification of Certain Significant Employees. There are no employees other than the executive officers disclosed above who make, or are expected to make, significant contributions to the business of the Company, the disclosure of which would be material. (d) Family Relationships. None. (e) Business Experience. None. The following is a brief account of the business experience during the past five years of each director and executive officer of the Company, including principal occupations and employment during that period and the name and principal business of any corporation or other organization in which such occupation and employment were carried on. 23 MANAGEMENT EXPERIENCE JOHN G. PERRY, age 53, President and Director of the Company and its predecesor since 1997, has over 34 years of experience in the management, analysis, design, research, development, and implementation of complex, networked computer systems. Possesses a thorough knowledge of computer science and systems engineering, and a broad spectrum of computer technologies. Experience covers a wide variety of projects including research and development of highly sophisticated weapons and ballistics systems for DoD and Intelligence agencies, design and development of wide area and local area networks, development and application of standards, technology and project management, and marketing of secure products. He possesses in depth knowledge of federal computer acquisition, Life Cycle Management (LCM), Information Resource Management (IRM), Government Open System Interconnect Profile (GOSIP) and computer and communications security. Work experience has required detailed working knowledge of LANs, WANs, FIPS, EDI, CALS, Video, and DoD Security. Mr. Perry has been the President of IMProCOM (a publicly reporting company), Inc., 1994-1996. Mr. Perry has a B. S. Mathematics, Randolph-Macon College, 1967, M. S. Computer Science, University of Maryland, 1976. FRANK A. MAAS, age 54, for more than 28 years, Mr. Maas has participated in a large number of research and development programs for the U.S. Navy and industry. He has extensive experience in the design, development, fabrication, test, evaluation, and operational installation and maintenance of electronic, mechanical, and electro-optical (E-O) components, equipment, and systems in support of pointing and tracking, surveillance, missile and gun system, chemical and biological defense, intelligence gathering, and electronic and infrared countermeasures programs for the U.S. Navy. He was recently involved in the successful design and implementation of a desktop Video-teleconferencing (VIC) system that featured links to distant CFTC systems over POTS and ISDN and has developed a portable video-teleconferencing system. Mr. Maas has been Vice President of Engineering for Mesa, Inc. (1983-94) and Pixels, Inc. (1994-95), two companies in the communication industry. Mr. Maas has a B. S. Electrical 24 Engineering, Case Institute of Technology, 1968. Mr. Maas has been Chariman, Director, and Secretary of the Company and its predecessor since 1997. RONALD CROPPER, age 51, has been the President of RPC International, Inc., since June of 1998 when he started the Company. RPC International is an international business and consulting company with experience in merger and acquisition of technical companies. RPC has provided it's services to companies with over one hundred countries during the past ten years. from November of 1976 through June of 1988 he was President of United Technical Institute and was responsible for establishing this international training company he took the Company from startup to over fourteen million dollars of annual sales during his Presidency. United Technical Institute specialized in training in the disciplines of business computers, medical, electronics and distance learning. Mr. Cropper is a graduate of Georgetown University with a Bachelors, International Business and he participated in the Harvard University Accelerated MBA Program. Mr. Cropper has received numerous Awards and has published articles relating to education and distance learning. Mr. Cropper has been Director of the Company since early 1998. Directors Compensation Members of the Board of Directors of the Company receive no compensation at this. Each Director is reimbursed reasonable outside travel expenses for each Board meeting he attends and for each Committee meeting he attends during the fiscal year. Directors who are also officers of the Company receive no compensation for services as a director. ITEM 6. EXECUTIVE COMPENSATION (a) Cash Compensation. Compensation paid by the Company for all services provided during the fiscal year ended September 30, 1998, (1) to each of the Company's five most highly 25 compensated executive officers whose cash compensation exceeded $60,000 and (2) to all officers as a group: None. directors.
SUMMARY COMPENSATION TABLE OF EXECUTIVES Annual Compensation Awards Name and Year Salary Bonus Other Restricted Securities Principal ($) ($) Stock Underlying Position Annual Award(s) ($) Compen- Options sation ($) SARs (#) - --------------------------------------------------------------------------------------------------------------------------------- John G. Perry, 1997* 0 0 0 0 0 President and Director --------------------------------------------------------------------------------------------------------- 1998 90,000 0 0 0 0 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Frank A. Maas, 1997* 0 0 0 0 0 Secretary and Director --------------------------------------------------------------------------------------------------------- 1998 90,000 0 0 0 0 - ---------------------------------------------------------------------------------------------------------------------------------
* Frank A. Maas and John G. Perry purchased founder shares in WWV of Virginia (1997), and those shares were exchanged for 5,000,000 shares each in WWV of Colorado (1998). (b) Compensation Pursuant to Plans. None. (c) Other Compensation. None. No stock appreciation rights or warrants exist to management. (d) Compensation of Directors. Compensation paid by the Company for all services provided during the fiscal year ended September 30, 1998, (1) to each of the Company's directors whose cash compensation exceeded $60,000 and (2) to all directors as a group is set forth below: None. 26 (e) Termination of Employment and Change of Control Arrangements. None (f) KEY EMPLOYEES INCENTIVE STOCK OPTION PLAN: None at this time. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Certain Transactions - -------------------- A Director, Ronald Cropper, of the Company was engaged to assist in the raising of capital. He is compensated on the basis of a percentage (from two to five percent) of the completed transaction. During the same period ended September 30, 1998, he was paid $23,435 under this contract. The contact was terminated as of August 1998. In addition, the same Director has been prepaid $16,000 under a product marketing agreement. John Perry and Frank Maas were sole owners of World Wide Video, Inc. a Virginia corporation (WWVa). Mssrs. Perry and Maas entered into a Share Exchange Agreement with Registrant May 12, 1998 in which they exchanged 100% of WWVa to Registrant in exchange for 10,000,000 shares of common stock of Registrant. John Perry and Frank Maas were each employed by the Company at a consulting fee of $10,000 per month for 9 months ended September 30, 1998. They were paid $115,000 total to September 30, 1998 and deferred $65,000. Both Mr. Perry and Mr. Maas are now employees of the Company at a salary of $10,000 per month. ITEM 8. DESCRIPTION OF SECURITIES The Company is presently authorized to issue hundred million (100,000,000) shares of its $.0001 par value common shares in such classes as the Board may determine. As of June 30, 1999 ten million nine hundred eleven thousand three hundred sixty-eight (10,911,368) Common Shares are presently issued and outstanding. 27 Preferred Stock - --------------- 10,000,000 shares of preferred stock are authorized. The Board of Directors has total discretion as to the extablishment of the series or classes of preferred stock and the rights and privileges of such classes. This type of discretion for Preferred Stock is often referred to as "Blank Check." The Company has not, as of the date hereof, determined any class or series of shares nor any rights or privileges. No preferred shares are outstanding as of June 30, 1999. Common Shares - ------------- All shares, when issued, will be fully paid and non-assessable. All shares are equal to each other with respect to voting, liquidation, and dividend rights. Special shareholders' meetings may be called by the officers or director, or upon the request of holders of at least one-tenth (1/10th) of the outstanding shares. Holders of shares are entitled to one vote at any shareholders' meeting for each share they own as of the record date fixed by the board of directors. There is no quorum requirement for shareholders' meetings. Therefore, a vote of the majority of the shares represented at a meeting will govern even if this is substantially less than a majority of the shares outstanding. Holders of shares are entitled to receive such dividends as may be declared by the board of directors out of funds legally available therefor, and upon liquidation are entitled to participate pro rata in a distribution of assets available for such a distribution to shareholders. There are no conversion, pre-emptive or other subscription rights or privileges with respect to any shares. Reference is made to the Company's Articles of Incorporation and its By-Laws as well as to the applicable statutes of the State of Colorado for a more complete description of the rights and liabilities of holders of shares. It should be noted that the By-Laws may be amended by the board of directors without notice to the shareholders. The shares of the Company do not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of the shares voting for election of directors may elect all the directors if they choose to do so. In such event, the holders of the remaining shares aggregating less than fifty percent (50%) of the shares voting for election of directors may not elect all the directors if they choose to do so. In each event, the holders of the remaining shares aggregating less than fifty percent (50%) will not be able to elect directors. 28 Warrants - -------- The Company had 70,274 common share purchase warrants outstanding. Such warrants allow the holder to purchase common shares @ $2.75 per share for a period of two years from date of issue. The warrants are non-transferable. PART II ITEM 1. (a) MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is not now traded on the "Over-the-Counter" market, but when traded may be quoted on the NASD Electronic Bulletin Board. The following table sets forth high and low bid prices of the Company's common stock for the two (2) years ended June 30, 1999 and 1998 (note: Company did not exist in 1996) as follows: 1999 High Low First Quarter 0 0 Second Quarter 0 0 High Low 1998 First Quarter 0 0 Second Quarter 0 0 Third Quarter 0 0 Fourth Quarter 0 0 29 High Low 1997 First Quarter 0 0 Second Quarter 0 0 Third Quarter 0 0 Fourth Quarter 0 0 (b) As of June 30, 1999, the Company had 61 shareholders of record of the common stock. (c) No dividends on outstanding common stock have been paid within the last two fiscal years, and interim periods. The Company does not anticipate or intend upon paying dividends for the foreseeable future. ITEM 2. LEGAL PROCEEDINGS No legal proceedings were pending at date of Registration Statement. ITEM 3. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE a) None b) In connection with audits of two most recent fiscal years and any interim period preceding resignation, no disagreements exist with any former accountant on any matter of accounting principles or procedure, which disagreements if not resolved to the satisfaction of the former accountant would have caused him to make reference in connection with his report to the subject matter of the disagreement(s). 30 c) The principal accountant's report on the financial statements for any of the past two years contained no adverse opinion or a disclaimer of opinion nor was qualified as to uncertainty, audit scope, or accounting principles except for the "going concern" qualification. ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES UNREGISTERED STOCK SALES IN THE THREE YEAR PERIOD PRIOR TO THIS REGISTRATION STATEMENT. Founders Purchase Amount of Shareholder Price Shares Consideration - ----------- -------- --------- ------------- John G. Perry 0.0 5,000,000 Exchange of shares of World Wide Video dated May 12, 1998 Frank A. Maas 0.0 5,000,000 Exchange of shares of World Wide Video dated May 12, 1998 All of the following sales were made in Reliance upon the exemption provided under Regulation D, Rule 504. 31
Private Placements in April 1, 1998 - April 20, 1999 Shareholder Purchase Amount of Consideration Price Shares --------------------------------------------------------------------------------------------------------------- 4/3/98 Nublan Zaky Yusoff $0.50 200,000 $100,000.00 PJS 19/1, Jalan Lagoon T Kumper Lumpor Malaysia 4/17/98 Vidid Resources, Inc. $2.00 25,000 $50,000.00 4370 LaJolla San Diego, CA92122 4/18/98 George and Janet Camberis $2.00 75,000 $15,000.00 40 Trish Court Danville, CA 94506 5/8/98 Patrick D. Lee $2.00 12,500 $25,000.00 319 Oak Drive South Green Grove Springs, FL 32043 5/8/98 Frederick E. Roughton $2.00 30,000 $60,000.00 POB 454 Middleburg, VA 20118 7/16/98 Dante Berry $2.75 728 $2,000.00 3FA Lerkenlard St. Thomas, USVI 00801 7/11/98 Marcia Leonard $2.75 364 $1,001.00 c/o Carribean Cowgirl St. Thomas, USVI 00802 32 7/14/98 Anne Borne $2.75 2,000 $5,500.00 3700 Vills OLGIA St. Thomas, USVI 00802 7/13/98 Molly Mills Fuch $2.75 11,000 $30,250.00 P.O. Box 9965 St. Thomas, USVI 00801 7/14/98 Dennis M. Vollmer $2.75 2,000 $5,500.00 P.O. Box 306417 St. Thomas, USVI 00803 7/15/98 Charles Berry $2.75 1,819 $5,000.00 P.O. Box 11583 St. Thomas USVI 00801 7/15/98 Stephen Bajor $2.75 725 $1,993.75 6263 EST Nazareth St. Thomas, USVI 00802 7/15/98 Sandra R. Tate $2.75 364 $1,001.00 6501 Red Hook Plaza #23 St. Thomas, USVI 00802-1306 7/15/98 Antionette B. Day $2.75 364 $1,000.00 C5-28 Sorgenfri Estate St. Thomas, USVI 00803 7/16/98 Matthew J. McCormack $2.75 364 $1,000.00 501-4009 Raphine Hill St. Thomas, USVI 00802 33 7/17/98 Gigi Anne Zaccagnino $2.75 127,273 $350,000.00 2850 Pleasant Hill Rd. Kissimmee, FL 34746 7/17/98 Bruce M. Berry, Jr. $2.75 365 $1,003.75 372 Wintbert St. Thomas, USVI 00805 7/17/98 Mary C. Deering $2.75 728 $2,000.00 1823 Mahogany Run St. Thomas, USVI 00801/00803 7/16/98 Joe Stull $2.75 728 $2,000.00 P.O. Box 305021 St. Thomas, USVI 00803 7/15/98 Donald B. Callaway $2.75 1,455 $4,000.00 308 Crown Bay Marina St. Thomas, USVI 00802 7/17/98 Linda Carlisi-Lugo $2.75 364 $1,000.00 P.O. Box 3751 St. Thomas, USVI 00802 7/16/98 Diane M. Aamodt $2.75 400 $1,100.00 6501 Red Hook Plaza #201 St. Thomas, USVI 00802 7/16/98 Geoffrey Deering $2.75 364 $1,000.00 19031 NW 89th Court Miami, FL 33108 34 7/16/98 Sandra DeSimone $2.75 546 $1,500.00 P.O. Box 306631 St. Thomas, USVI 00803 7/15/98 Matt D. Pierson $2.75 364 $1,000.00 601 Red Hook Plaza #201 St. Thomas, USVI 00802 7/16/98 Franklin Danziger $2.75 7,500 $20,625.00 2020 E. Colter Street Phoenix, AZ 85016 7/16/98 Cathy Lyn Wilde $2.75 4,000 $11,000.00 4737 E. Sheena Drive Phoenix, AZ 85032 7/23/98 Stephen Speranza $2.75 400 $1,100.00 36 Sunset Bridge Drive East Hardford, CT 6118 7/23/98 Kenneth Young $2.75 728 $2,002.00 228 Columbia Street Ithace, NY 14850 7/20/98 Gary Holland $2.75 2,000 $5,500.00 5859 Dovetail Drive Aurora Hills, CA 91301 8/31/98 Jerry A. Stangohr $2.75 1,800 $4,950.00 9801 Rosewood Hill Drive Vienna, VA 22182 35 10/2/98 Charles Bonanno $0.00 125,000 services P.O. Box 11180 St. Thomas, USVI 00801 12/13/98 DataPower USA, Inc. $0.00 250,000 exchange 101-1425 West Pender St. Vancouver, BC Canada V6G2S3 11/5/98 Alfred W. McClelland $2.75 725 $1,993.75 10 Cobblestone Road Greenville, SC 29615 12/16/98 Lawrence F. Kahn $2.75 2,000 $5,500.00 105 Woodfall Way Lilburn, GA 30047 1/11/99 Betty W. Jones $2.75 200 $5,500.00 3819 N. Wakefield Street Arlington VA 22207 1/17/99 Jeannine Atalay Harvey $2.75 200 $5,500.00 7216 Poplar Street Annandale, VA 22003 1/17/99 Roy & Laura Weinstock $2.75 2,000 $5,500.00 10405 Amberst Court Fredricksburg, VA 22408 1/17/99 Michael Atalay $2.75 200 $550.00 31 Stablemere Court Baltimore, MD 21209 36 1/17/99 Bulent Atalay $2.75 1,100 $3,025.00 10202 N. Hampton Lane Fredericksburg, VA 22408 1/17/99 Joseph Ratnam $2.75 1,000 $2,750.00 BLK 816 Yishun ST 81 #11-712 Singapore 760816 1/17/99 Lowis Chelliah $2.75 1,000 $2,750.00 BLK 141, #08-275 Lorong AH, S00 Singapore 530141 1/17/99 Bulent & Carol Jean Atalay $2.75 1,500 $4,125.00 10202 N. Hampton Lane Fredericksburg, VA 22408 1/19/99 Thomas N. Slutsker $2.75 500 $1,375.00 6 Emerson Court Morristown, NJ 07960 1/29/99 Rochele Hirsch $2.75 15,682 $43,123.90 510 Seminole Avenue Atlanta, GA 30307 1/29/99 Thomas & Dennie Stansell $2.75 1,000 $2,750.00 30110 Via Rivera Rancho Palos Verdes, CA 90275 37 1/29/99 McKenzie A. Perry, Jr. $2.75 1,000 $2,750.00 510 Seminole Avenue Atlanta, GA 30307 1/29/99 Rochele Hirsch $0.00 27,381 services 510 Seminole Avenue Atlanta, GA 30307 2/16/99 Duane & Cheryl Clayton $2.75 2,000 $5,500.00 6733 Estate Lane Fredericksburg, VA 22407 3/15/99 C.J. Zielinski $2.75 3,637 $10,000 7,274 warrants 4/2/99 Summit Limited Partnership $2.75 5,000* $13,750 19045 Clair Manor Drive 10,000 Culpeper, VA 22701 warrants 4/5/99 Jerrold W. Hoehn $2.75 3,500* $9,625 HC72 Box 543A 7,000 warrants Locust Grove, VA 22508 4/6/99 Leonard C. Feldman $2.75 2,000* $5,500 2155 Laurel Lane 4,000 warrants N. Miami, VA 22701 4/6/99 Auby D. Curtis $2.75 6,000* $16,500 16068 Rocky Road 12,000 warrants Culpeper, VA 22701 38 4/6/99 John D. Zaleski II $2.75 3,000* $8,250 11249 Pimilico Circle 6,000 warrants Culpeper, VA 22701 4/6/99 Stephanie Mendlow, M.D. & $2.75 4,000* $11,000 Leighton B. Brown 8,000 H.C.R. 2, Box 540 warrants Madison, VA 22727 4/6/99 H. Lee Kirk, Jr. & Kim M. $2.75 2,000* $5,500 Kirk 19301 Bleumont Court 4,000 Culpeper, VA 22701 warrants 4/6/99 E. Francis Updike $2.75 4,000* $11,000 12305 Hidden Lakes 8,000 warrants Culpeper, VA 22701 4/6/99 Jonathan M. & June M. Brick $2.75 2,000* $5,500 11211 Pimilco Circle 4,000 Culpeper, VA 22701 warrants
No other sales have occurred in the three years preceding filing of this registration statement. With respect to all sales of securities to persons other than the founders, Data Power, Inc., Charles Bonanno, and Rochele Hirsch the Registrant relied on the provisions of Rule 504 of Regulation D promulgated under the Securities Act of 1933, as amended (the "Act"). The offering was not made by means of any general solicitation, shares were acquired without a view toward distribution thereof and all purchasers represented that they were able to bear the economic risk of their investment, and a representation letter to that effect was obtained from each purchaser. The shares were issued with an investment legend thereon, and stop transfer instructions were noted on the Registrant's stock transfer records. Aggregate sales were less than $1,000,000. No offerings of unregistered securities are currently being offered. Data Power, Inc. obtained shares through 39 a share exchange exempt under Section 4(2), and Charles Bonanno and Rochele Hirsch received shares for services rendered as an exempt transaction under Section 4(2), but Rochele Hirsch separately purchased 15,682 shares pursuant to Reg. D., Rule 504. * In addition to shares, an aggregate total of 70,274 warrants to purchase common shares at $2.75 per share were issued to those persons marked with an *. ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Colorado Corporation Act and Company by-laws offer protection by way of indemnification to any officer, director or employee of the Company. The indemnification extends to expenses, including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with an action, suit or proceeding if the party acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company and with respect to any criminal proceeding if the party had no reasonable cause to believe the conduct was unlawful. The general effect of the above indemnification provisions allow the employees, directors, and officers of the Company to function and engage in the day to day business activities of the Company knowing the Company will offer protection against the threat or event of litigation subject to the limitations that said individual must exercise good faith and reasonableness. Insofar as indemnification for liabilities arising under the Securities Act of 1933 or Securities Exchange Act of 1934 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. 40 FINANCIAL STATEMENTS AND EXHIBITS The following documents are filed as a part of this report: 1) Financial Statements: (See Financial Exhibits Index below and Financial Exhibits furnished as Pages F-1 through F-20). 2) Financial Statement Schedules: None 3) SK Exhibits: (See SK Exhibits Index SK, page 23, and SK Exhibits, SK-3.0 through SK- 24.2.) 4) Supplemental Oil and Gas Information - None. 41 FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA INDEX TO FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES Page Reports of Independent Public Accountants F-2 I. Financial Statements (audited): Consolidated Balance Sheets, Sept. 30, F-3 1998 and since inception Consolidated Statements of Operations, F-4 Sept. 30, 1998 and since inception Statement of Equity F-5 - F-6 Statement of Cash Flows F-7 - F-8 Notes to Consolidated Financial Statements F-9 - F-11 Interim Financial Statements (unaudited) Period ended March 31, 1999 Balance Sheet F-12 Statement of Operations F-13 Statement of Cash Flows F-14 Notes to Financial Statements F-15-20 42 INDEX SK EXHIBITS 3.1 Articles of Incorporation of World Wide Video, Inc. (Colorado) 3.2 Bylaws of World Wide Video, Inc. (Colorado) 3.3 Articles of Incorporation of World Wide Video, Inc. (Virginia) 3.4 Bylaws of World Wide Video, Inc. (Virginia) 10.1 Agreement with Data Power, Inc. 10.2 Share Exchange Agreement 24.1 Consent of Accountant SUPPLEMENTAL OIL AND GAS INFORMATION None. 43 SIGNATURES: Pursuant to the requirements of Section 12 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. DATED: August 17, 1999 World Wide Video, Inc. /s/ John G. Perry by:---------------------------------- John G. Perry, President Directors: /s/ Frank A. Maas ------------------------------------- Frank A. Maas, Secretary and Director /s/ John G. Perry ------------------------------------ John G. Perry, Director /s/ Ronald Cropper ------------------------------------ Ronald Cropper, Director 44 WORLD WIDE VIDEO, INC. A Colorado Corporation A Development Stage Enterprise Financial Statements PERIOD ENDED SEPTEMBER 30, 1998 AND FROM INCEPTION (Audited) F-1 THOMPSON, GREENSPON & Co., P.C. Certified Public Accountants Management Consultants INDEPENDENT AUDITOR'S REPORT To the Shareholders World Wide Video, Inc. A Colorado Corporation Culpeper, Virginia We have audited the accompanying balance sheet of World Wide Video, Inc. (a Colorado Corporation), a development stage enterprise, as of September 30, 1998, and the related statement of operations and retained earnings and cash flows from July 16, 1997, inception through September 30, 1998, These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of World Wide Video, Inc. (a Colorado Corporation), as of September 30, 1998, and the results of its operations and its cash flows from July 16, 1997, inception, through September 30, 1998, in conformity with generally accepted accounting principles. Fairfax, Virginia January 21, 1999 F-2
WORLD WIDE VIDEO, INC. (A Colorado corporation) (A Development Stage Enterprise) BALANCE SHEET SEPTEMBER 30, 1998 1998 1997 ---- ---- --------------------------------------------------- ASSETS Current Assets $ $ Cash and cash equivalents 28,324 200 Inventories 122,448 - Prepaid assets and fees 107,134 - --------------------------------------------------- Total Current Assets 257,906 200 --------------------------------------------------- Property and Equipment Computer and equipment 7,746 - Software 13,668 - --------------------------------------------------- Total Cost 21,414 - Less accumulated depreciation (2,364) - --------------------------------------------------- Net Property and Equipment 19,050 - --------------------------------------------------- Other Assets Technology license, net of 43,750 - amortization 15,850 - Deferred offering costs 650 - Deposits 5,850 - Prepaid rent, non-current --------------------------------------------------- Total Other Assets 66,100 - --------------------------------------------------- TOTAL ASSETS $ 343,056 $ 200 ===================================================
The Notes to Financial Statements are an integral part of this statement. Prepared by THOMPSON, GREENSPON & CO., P.C. F-3
WORLD WIDE VIDEO, INC. (A Colorado corporation) (A Development Stage Enterprise) LIABILITIES AND STOCKHOLDERS' EQUITY FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 1998 197 ----------------------------------------------- Current Liabilities Accounts payable $ 75,780 $ - Deferred revenue 50,000 - Convertible loan 50,000 - ----------------------------------------------- Total Current Liabilities 175,780 - ----------------------------------------------- Stockholders' Equity Common stock, par value $0.0001; 100,000,000 shares 1,044 200 authorized; 10,443,737 issued and outstanding Preferred stock, par value $0.01; 10,000,000 shares authorized; no shares issued or outstanding Additional paid-in capital Accumulated deficit during - - development stage 634,558 - (468,326) - ----------------------------------------------- Total Stockholders' Equity 167,276 200 ----------------------------------------------- Total Liabilities and Stockholders' $343,056 $200 Equity ===============================================
F-4
WORLD WIDE VIDEO, INC. (A Colorado corporation) (A Development Stage Enterprise) STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998 AND FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 AND 1997 July 16, 1997, July 16, 1997, Year Ended Inception to Inception, to September September 30, September 30, 30, 1997 1998 1998 Sales $- $- $- ----------------------------------------------------------------------------------- Product Development Costs Subcontractors 196,867 - 196,867 Other development costs 177,061 - 177,061 ----------------------------------------------------------------------------------- Total Product Development Costs 373,928 - 373,928 ----------------------------------------------------------------------------------- General and Administrative Expenses Marketing and sales 54,615 - 54,615 Office 12,388 - 12,388 Depreciation and amortization 8,614 - 8,614 Printing 4,366 - 4,366 Occupancy 5,903 - 5,903 Utilities and telephone 2,991 - 2,991 Other 8,271 - 8,271 ----------------------------------------------------------------------------------- Total General & Administrative Expenses 97,148 - 97,148 ----------------------------------------------------------------------------------- Total Costs and Expenses (471,076) - (471,076) Other Income 2,750 - 2,750 ----------------------------------------------------------------------------------- Loss before Income Taxes (468,326) Income Taxes - ----------------------------------------------------------------------------------- Net Loss ($468,326) $- ($468,326) =================================================================================== Net Loss Per Share ($0.06) $- ($0.06) =================================================================================== Average Common and Common Equivalent Shares Outstanding 7,556,726 - 7,556,726 ===================================================================================
The Notes to Financial Statements are an Integral Part of This Statement. F-5
WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1998 AND FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 AND 1997 July 16, 1997, July 16, 1997, Year Ended Inception, to Inception, to September 30, September 30, September 30, 1997 1997 1998 --------------------------------------------------------------------------------------- Sales $- $- $- --------------------------------------------------------------------------------------- Product Development Costs Subcontractors 196,867 - 196,867 Other development costs 177,061 - 177,061 --------------------------------------------------------------------------------------- Total Product Devel. Costs 373,928 - 373,928 --------------------------------------------------------------------------------------- General & Admin. Expenses Marketing & sales 54,615 - 54,615 Office 12,388 - 12,388 Depreciation & amortization 8,614 - 8,614 Printing 4,366 - 4,366 Ocupancy 5,903 - 5,903 Utilitites & telephone 2,991 - 2,991 Other 8,271 - 8,271 --------------------------------------------------------------------------------------- Total General & Admin. Expenses 97,148 - 97,148 --------------------------------------------------------------------------------------- Total Costs & Expenses (471,076) - (471,076) Other Income 2,750 - 2,750 --------------------------------------------------------------------------------------- Loss before Income Taxes (468,326) - (468,326) Income Taxes - - - --------------------------------------------------------------------------------------- Net Loss ($468,326) $- ($468,326) ======================================================================================= Net Loss Per Share ($0.06) $- ($0.06) ======================================================================================= Average Common & Common Equivalent Shares Outstanding 7,556,726 - 7,556,726 =======================================================================================
The Notes to Financial Statements are an integral part of this statement. F-6
WORLD WIDE VIDEO, INC. (A Colordo Corporation) (A Development Stage Enterprise) STATMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 1998 AND FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 AND 1997 July 16, 1997, July 16, 1997, Year Ended Inception, to Inception, to September 30, September 30, September 30, 1998 1997 1998 --------------------------------------------------------------------------- Cash Flows from Operating Activities Net loss ($468,326) $- ($468,326) Noncash items included in net loss Depreciation 2,364 - 2,364 Amortization 6,250 - 6,250 Changes in assets & liabilities (Increase) in Inventory (107,134) - (122,448) Prepaid expenses (122,448) - (107,134) Increase in Accounts payable 75,780 - 75,780 Deferred revenue 50,000 - 50,000 --------------------------------------------------------------------------- Net Cash Used During Development Stage (563,514) - (563,514) --------------------------------------------------------------------------- Cash Flows from Investing Activities Purchase of equipment & software (21,414) - (21,414) Purchase of technology license (50,000) - (50,000) F-7 WORLD WIDE VIDEO, INC. (A Colordo Corporation) (A Development Stage Enterprise) STATMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 1998 AND FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 AND 1997 Continued Purchase of other assets (22,350) - (22,350) --------------------------------------------------------------------------- Net Cash Used by Investing Activities (93,764) - (93,764) --------------------------------------------------------------------------- Cash Flows from Financing Activities Proceeds from Common Stock 635,402 200 635,602 Convertible Loan 50,000 - 50,000 --------------------------------------------------------------------------- Net Cash Provided by Financing Activities 685,402 200 685,602 --------------------------------------------------------------------------- Net Increase in Cash & Cash Equivalents 28,124 200 28,324 Cash & Cash Equivalents, beginning of period 200 - --------------------------------------------------------------------------- Cash & Cash Equivalents, end of period $28,324 $200 $28,324 ===========================================================================
The Notes to Financial Statements are an Integral Part of these Statements. F-8
WORLD WIDE VIDEO, INC. (A Colordo Corporation) (A Development Stage Enterprise) STATMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 1998 AND FROM JULY 16, 1997, INCEPTION, THROUGH SEPTEMBER 30, 1998 AND 1997 Accumulated Deficit During Development Stage Additional Paid in Capital Shares Common Stock Totals -------------------------------------------------------------------------------------------- Issuance of share capital to Founders, July 16, 1997 200 $- $200 $- $200 Net loss, period ended September 30, 1997 - - - - - -------------------------------------------------------------------------------------------- Balance Sheet September 30, 1997 200 - 200 - 200 Exchange of shares, issuance of new hsares, May 12, 1998 9,999,800 1,000 (200) - 800 Sale of common Stock, April 3 through September 8, 1998 443,737 44 634,558 - 634,602 Net loss, year ended September 30, 1998 - - - (468,326) (468,326) -------------------------------------------------------------------------------------------- Balance, September 30, 1998 10,443,737 $1,044 $634,558 ($468,326) $167,276 ============================================================================================
The Notes to Financial Statements are an integral part of these statements. F-9 WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Company and Purpose World Wide Video, Inc. was organized under the laws of the Commonwealth of Virginia on July 16, 1997. World Wide Video, Inc. was organized under the laws of the State of Colorado on April 9, 1998. On May 12, 1998, the Companies adopted a plan of reorganization in which the Virginia corporation was merged into the Colorado corporation. The surviving Company, World Wide Video, Inc. (a Colorado Corporation), intends to design and manufacture technology and products for the video telephony market. The principal activities of the Company since inception have been raising capital, conducting research and product development. The Company conducts its operations from offices in Culpeper, Virginia. The accounting and reporting policies of World Wide Video, Inc. (the Company) conform with generally accepted accounting principles and reflect practices appropriate to a development stage enterprise. These policies are summarized below. Development Stage Enterprise Substantially all of the Company's operations have been in connection with the establishment of a new business. The Company has elected early adoption of Statement of Position 98-5 which permits expensing of costs of start-up activities, including organization costs, as incurred. Method of Accounting The financial statements are presented on the accrual basis of accounting. Financial Statement Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Due to their prospective nature, actual results could differ from those estimates. Cash and Cash Equivalents The statements of cash flows classify changes in cash or cash equivalents (short-term, highly liquid investments readily convertible into cash with a maturity of three months or less) according to operating, investing or financing activities. There were no income taxes or interest paid during the period ended September 30, 1998. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Inventory Inventory, which consists primarily of raw materials, is stated at the lower of cost or market, with cost being determined on a first-in, first-out basis. Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives. Leases which meet certain specified criteria are accounted for as capital assets and liabilities, and those not meeting the criteria are accounted for as operating leases. Expenditures for maintenance, repairs, and improvements which do not materially extend the useful lives of property and equipment are charged to earnings. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation or amortization is removed from the accounts, and the resulting gain or loss is reflected in earnings. Depreciation expense for the period ended September 30, 1998 was $2,364. Technology Licenses The Company capitalizes technology licenses. Technology licenses are carried at cost less accumulated amortization. Amortization is taken on the straight line basis over five years. Amortization expense for the period ended September 30, 1998 was $6,250. Deferred Offering Costs Deferred offering costs represent costs incurred in connection with raising capital. Upon completion of an offering, the amount of the proceeds credited to additional paid in capital is reduced by the deferred offering costs. Should an offering be unsuccessful, these costs are charged to expense. Deferred Revenue The Company has deferred recognition of revenue from licenses sold until marketable products are available for sale. Income Taxes The Corporation utilizes the liability method for accounting for income taxes. The liability method accounts for deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to differences between financial statement amounts and tax bases of assets and liabilities. The resulting deferred income tax liabilities are adjusted to reflect changes in tax laws and rates. Temporary differences consist of the difference in financial statement and income tax bases for accounting for start up and organizational costs. Deferred income taxes related to an asset or liability are classified as current or noncurrent based on the classification of the related asset or liability. Prior to April 1, 1998, the Corporation, with the consent of its stockholders, had elected S corporation status under Section 1372 of the Internal Revenue Code and similar sections of the state income tax laws. On April 1, 1998, the Company terminated its S election and is now subject to corporate income tax rates. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 2. NEED FOR ADDITIONAL CAPITAL The Company's continued existence is dependent upon its ability to raise additional funds to complete products in development. The Company is concluding a private securities offering in which it has raised $635,602, net of offerings costs of $78,624 to date. Additional funds will be raised through similar private offerings, which in Management's opinion, will provide sufficient capital resources to complete current product development and initial product marketing. 3. PREPAID ASSETS AND FEES Included in Prepaid Expenses is $50,000, which is on deposit with Analog Devices, Inc., the Company's principal supplier of raw materials, for custom engineering support in connection with product development. The Company also has $15,000 on deposit with the same vendor for raw materials to be delivered in the next year. Prepaid product marketing costs of $16,000 are expected to be expensed in the next year. The Company also has $8,900 in deposits on equipment and inventory and $7,800 in prepaid rent. 4. INVENTORY Inventory consists principally of raw materials, chipsets, which are purchased from Analog Devices, Inc. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 5. OTHER ASSETS The Company has acquired a technology license at a cost of $50,000, from Analog Devices, Inc., that is being amortized over a period of five years. The license agreement permits the Company to use certain proprietary reference designs and software in the development of video telephony products. The net carrying value of the license at September 30, 1998 was $43,750. In connection with a private securities offering, the Company has deferred costs of $15,850 associated with certain filing requirements that are expected to be completed in the near future. These charges will be netted against proceeds of the offering when filings are completed. 6. CONTRIBUTED CAPITAL In connection with the reorganization of the Company, the original stockholders received 10,000,000 shares of common stock in exchange for their shares of a predecessor corporation. After the reorganization, the Company sold 200,000 shares of common stock at $0.50 per share, 75,000 shares at $2.00 per share, and 168,737 shares at $2.75 per share, in a private offering of securities. After deducting costs of $78,624, the Company has realized proceeds of $635,602. Additional costs of $15,850 have been deferred until completion of certain filings. 7. CONVERTIBLE DEBT A Canadian company has advanced the Company $50,000 (non interest bearing) under an agreement to develop products. The agreement granted the Canadian corporation an exclusive option to market these products for a specified term. In addition, the debt is convertible to 250,000 shares of common stock upon achievement of certain milestones. At that time, the Company would contribute 250,000 shares of its stock and the Canadian Corporation would forgive the debt. 8. OPERATING LEASE The Company leases office space in Culpeper, Virginia, under a two-year lease agreement commencing July 7, 1998 and expiring July 6, 2000. Monthly rent is $650. The rent for the leased premises is $15,600 for the term of the lease, which the Company prepaid. The Company has made a security deposit of $650. Rent expense was $1,950, for the period ended September 30, 1998. 9. RELATED PARTIES A Director of the Company has been engaged to assist in the raising of capital. He is compensated on the basis of a percentage (from 2 to 5 per cent) of the completed transaction. During the period ended September 30, 1998, he was paid $23, 435 under this contract. In addition, the same Director has been prepaid $ 16,000 under a product marketing agreement. The two majority stockholders have agreements to provide services. During the period ended September 30, 1998, they earned $180,000 under these agreements, of which $65,000 remains unpaid at September 30, 1998. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 10. COMMITMENTS AND CONTINGENCIES The Company has entered into several agreements and contracts in connection with the raising of capital and product development. Raising Capital The Company has engaged several consultants to assist in the effort to raise additional capital. Certain of these contracts require payment of fees calculated as a percentage of completed transactions (see Notes 6 and 9). Other contracts require compensation in the form of stock. No stock compensation has been earned as of September 30, 1998. Product Development Under an agreement to develop certain products, the Company has deferred revenue of $50,000 pending achievement of contract milestones. Successful completion of contract milestones will result in additional payments of up to $50,000. Several other product development arrangements are in negotiation. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) Interim Financial Statements for Period Ended March 31, 1999 (Unaudited)
WORLD WIDE VIDEO, INC. Balance Sheet (unaudited) For Quarter Ended March 31, 1999 ASSETS March 31, September 30, 1999 1998 CURRENT ASSETS Cash $ 4,039 - Inventory 131,570 28,324 Accounts Receivable 37,323 122,448 Prepaid 86,900 107,134 -------------------------- ------------------------- Total Current Assets $259,832 257,906 PROPERTY AND EQUIPMENT Computer Software $ 13,668 7,746 Computer and Equipment 7,746 13,668 Less Accumulated Depreciation (2,364) (2,364) -------------------------- ------------------------- NET PROPERTY & EQUIPMENT 19,049 19,050 OTHER ASSETS Technology Licenses $ 43,750 43,750 Deferred Charges 5,000 15,850 Deposits 650 650 Prepaid Rent-Non-Current 5,850 5,850 TOTAL OTHER ASSETS $ 55,250 66,100 -------------------------- ------------------------- TOTAL ASSETS $ 334,131 $ 343,056 ====================== ========================= LIABILITIES Accounts Payable $ 99,882 $ 75,780 Deferred Revenue 77,000 50,000 Salary Payable 60,000 50,000 -------------------------- ------------------------- TOTAL LIABILITIES $236,882 175,780 WORLD WIDE VIDEO, INC. Balance Sheet (unaudited) For Quarter Ended March 31, 1999 Continued Stockholders Equity Common stock, par value $0.0001; 100,000,000 shares authorized; 10,443,737 issued or outstanding @ Sept. 30, 1998 1,044 and 10,911,365 issued and outstanding @ March 31, 1999 authorized; Preferred stock, par value 1,091 $0.01; 10,000,000 shares; no shares issued or outstanding Additional Paid-In Capital $ 777,325 634,558 Accumulated deficit during developement stage (676,145) (468,326) -------------------------- ------------------------- Total Stockholders' Equity $97,271 $167,276 -------------------------- ------------------------- Total Liabilities & Shareholders' $ 334,131 $ 343,056 ========================== ========================= Equity
World Wide Video, Inc. (A Development Stage Company) Statement of Operations (unaudited) Quarter Ended 03-31-99 Three Months Three Months Ended Ending March 31, March 31, 1999 1998 ---------------------------------------------------------- SALES Income $ 2,189 0 Sales 876 4,500 Cost of Goods Sold (750) 3,931 -------------------------- ------------------------- TOTAL SALES 2,315 569 COSTS PRODUCT DEVELOPMENT COSTS Subcontractors 686 20,00 Contract Expense 8,400 - TOTAL PRODUCT DEVELOPMENT COSTS 9,086 20,000 GENERAL & ADMIN. EXPENSES Slaries 60,000 - Marketing 9,156 - Office 40,700 20 TOTAL GENERAL & ADMIN. EXPENSES 91,344 23 TOTAL COSTS & EXPENSES 100,830 20,023 NET INCOME (98,515) (19,454) Net income (lossI) (.01) .00 Per share Weighted Average Shares Outstanding 10,443,737 7,392,000
The accompanying notes are an integral part of the financial statements.
World Wide Video, Inc. (A Development Stage Company) Statement of Operations (unaudited) Quarter Ended 03-31-99 Six Months Six Months Ended March Ended March 31, 31, 1999 1998 REVENUE Income $2,189 $0 Sales 8,373 4,500 Costs of Goods Sold (1,750) (3,931) ------------------------------------------------------------------ NET SALES 8,812 569 Product Development Costs Subcontractors 61,286 20,000 Contract Expense 16,675 0 ------------------------------------------------------------------ TOTAL PRODUCT DEVELOPMENT COSTS 77,961 20,000 GENERAL & ADMIN EXPENSES Salaries 60,000 0 Trade Show 0 0 Marketing Sales 6,989 0 Office 71,682 23 ------------------------------------------------------------------ TOTAL GENERAL & ADMIN EXPENSES 138,671 23 TOTAL COSTS & EXPENSES 216,632 20,023 ------------------------------------------------------------------ NET INCOME ($207,820) ($19,454) Net income (loss) per share (.02) .00 Weighted average number of common shares 10,668,737 7,556,726
The accompanying notes are an integral part of the financial statements.
World Wide Video, Inc. (A Development Stage Company) Statement of Cash Flows (unaudited) Six Months Ending Six Months Ending Mar. 31, 1999 Mar. 31, 1998 ---------------------------------------------------------------------------- Cash flows from operating activities: Net (loss) ($207,820) ($19,454) Noncash items included in net loss 0 0 Depreciation 0 0 Amortization Changes in assets and liabilities (Increase) Decrease in 0 0 Inventory (103,246) 0 Accounts receivable 85,125 0 Prepaid expenses Increase (Decrease) in Accounts payable 31,086 (46,800) Net cash used during 61,102 41,995 ----------------------------------- ----------------------------------- development stage (133,758) (4,802) Cash Flows from Financing Activites 0 0 Proceeds from Sales of Common Stock 137,792 2 Loan 0 0 Net Cash Provided by Financing Activities 137,792 2 Net Decrease in Cash & 4,039 (24,254) Cash Equivalents Cash at Beginning of 0 0 Period ============================================================================ Cash at End of Period 4,039 (24,254) ============================================================================
The Notes to Financial Statements are an Integral part of this Statement.
World Wide Video, Inc. (A Development Stage Company) Statement of Cash Flows (unaudited) Three Months Ending Three Months Ending Mar. 31, 1999 Mar. 31, 1998 ---------------------------------------------------------------- Cash flows from operating activities: Net (loss) ($98,515) ($19,454) Noncash items included in net loss 0 0 Depreciation 0 0 Amortization 0 0 Changes in assets and liabilities 0 0 (Increase) Decrease in Inventory 7,582 0 Inventory 0 0 Accounts receivable (29,492) 0 Prepaid expenses and other assets 1,950 (46,800) Increase (Decrease) in Accounts Payable 38,453 41,998 ---------------------------------------------------------------- Net cash used during development stage (78,021) (4,802) Cash flows from Financing Activities 0 0 Proceeds from sales of Common Stock 75,298 2 Loan 0 0 ---------------------------------------------------------------- Net Cash provided by financing activities 75,298 2 Net Decrease in Cash & Cash Equivalents (2,723) (24,254) Cash at Beginning of Period 6,782 0 ================================================================ Cash at End of Period 4,039 (24,254) ================================================================
The Notes to Financial Statements are an Integral part of this Statement. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Company and Purpose World Wide Video, Inc. was organized under the laws of the Commonwealth of Virginia on July 16, 1997. World Wide Video, Inc. was organized under the laws of the State of Colorado on April 9, 1998. On May 12, 1998, the Companies adopted a plan of reorganization in which the Virginia corporation was merged into the Colorado corporation. The surviving Company, World Wide Video, Inc. (a Colorado Corporation), intends to design and manufacture technology and products for the video telephony market. The principal activities of the Company since inception have been raising capital, conducting research and product development. The Company conducts its operations from offices in Culpeper, Virginia. The accounting and reporting policies of World Wide Video, Inc. (the Company) conform with generally accepted accounting principles and reflect practices appropriate to a development stage enterprise. These policies are summarized below. Development Stage Enterprise Substantially all of the Company's operations have been in connection with the establishment of a new business. The Company has elected early adoption of Statement of Position 98-5 which permits expensing of costs of start-up activities, including organization costs, as incurred. Method of Accounting The financial statements are presented on the accrual basis of accounting. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Financial Statement Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Due to their prospective nature, actual results could differ from those estimates. Cash and Cash Equivalents The statements of cash flows classify changes in cash or cash equivalents (short-term, highly liquid investments readily convertible into cash with a maturity of three months or less) according to operating, investing or financing activities. There were no income taxes or interest paid during the period ended March 31, 1999. Inventory Inventory, which consists primarily of raw materials, is stated at the lower of cost or market, with cost being determined on a first-in, first-out basis. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives. Leases which meet certain specified criteria are accounted for as capital assets and liabilities, and those not meeting the criteria are accounted for as operating leases. Expenditures for maintenance, repairs, and improvements which do not materially extend the useful lives of property and equipment are charged to earnings. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation or amortization is removed from the accounts, and the resulting gain or loss is reflected in earnings. Technology Licenses The Company capitalizes technology licenses. Technology licenses are carried at cost less accumulated amortization. Amortization is taken on the straight line basis over five years. Deferred Offering Costs Deferred offering costs represent costs incurred in connection with raising capital. Upon completion of an offering, the amount of the proceeds credited to additional paid in capital is reduced by the deferred offering costs. Should an offering be unsuccessful, these costs are charged to expense. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Deferred Revenue The Company has deferred recognition of revenue from licenses sold until marketable products are available for sale. Income Taxes The Corporation utilizes the liability method for accounting for income taxes. The liability method accounts for deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to differences between financial statement amounts and tax bases of assets and liabilities. The resulting deferred income tax liabilities are adjusted to reflect changes in tax laws and rates. Temporary differences consist of the difference in financial statement and income tax bases for accounting for start up and organizational costs. Deferred income taxes related to an asset or liability are classified as current or noncurrent based on the classification of the related asset or liability. Prior to April 1, 1998, the Corporation, with the consent of its stockholders, had elected S corporation status under Section 1372 of the Internal Revenue Code and similar sections of the state income tax laws. On April 1, 1998, the Company terminated its S election and is now subject to corporate income tax rates. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 2. NEED FOR ADDITIONAL CAPITAL The Company's continued existence is dependent upon its ability to raise additional funds to complete products in development. The Company is concluding a private securities offering in which it has raised $635,602, net of offerings costs of $78,624 to date. Additional funds will be raised through similar private offerings, which in Management's opinion, will provide sufficient capital resources to complete current product development and initial product marketing. 3. PREPAID ASSETS AND FEES Included in Prepaid Expenses is $50,000, which is on deposit with Analog Devices, Inc., the Company's principal supplier of raw materials, for custom engineering support in connection with product development. The Company also has $15,000 on deposit with the same vendor for raw materials to be delivered in the next year. Prepaid product marketing costs of $16,000 are expected to be expensed in the next year. The Company also has $8,900 in deposits on equipment and inventory and $7,800 in prepaid rent. 4. INVENTORY Inventory consists principally of raw materials, chipsets, which are purchased from Analog Devices, Inc. 5. OTHER ASSETS The Company has acquired a technology license at a cost of $50,000, from Analog Devices, Inc., that is being amortized over a period of five years. The license agreement permits the Company to use certain proprietary reference designs and software in the development of video telephony products. The net carrying value of the license at March 31, 1999 was $43,750. WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 5. OTHER ASSETS (cont'd) In connection with a private securities offering, the Company has deferred costs of $15,850 associated with certain filing requirements that are expected to be completed in the near future. These charges will be netted against proceeds of the offering when filings are completed. 6. CONTRIBUTED CAPITAL In connection with the reorganization of the Company, the original stockholders received 10,000,000 shares of common stock in exchange for their shares of a predecessor corporation. After the reorganization, the Company sold 200,000 shares of common stock at $0.50 per share, 75,000 shares at $2.00 per share, and 168,737 shares at $2.75 per share, in a private offering of securities. After deducting costs of $78,624, the Company has realized proceeds of $635,602. Additional costs of $15,850 have been deferred until completion of certain filings. 7. CONVERTIBLE DEBT A Canadian company has advanced the Company $50,000 (non interest bearing) under an agreement to develop products. The agreement granted the Canadian corporation an exclusive option to market these products for a specified term. In addition, the debt is convertible to 250,000 shares of common stock upon achievement of certain milestones. At that time, the Company would contribute 250,000 shares of its stock and the Canadian Corporation would forgive the debt. 8. OPERATING LEASE The Company leases office space in Culpeper, Virginia, under a two-year lease agreement commencing July 7, 1998 and expiring July 6, 2000. Monthly rent is $650. The rent for the leased premises is $15,600 for the term of the lease, WORLD WIDE VIDEO, INC. (A Colorado Corporation) (A Development Stage Enterprise) NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 8. OPERATING LEASE (Cont'd) which the Company prepaid. The Company has made a security deposit of $650. Rent expense was $1,950, for the period ended March 31, 1999. 9. COMMITMENTS AND CONTINGENCIES The Company has entered into several agreements and contracts in connection with the raising of capital and product development. Raising Capital The Company has engaged several consultants to assist in the effort to raise additional capital. Certain of these contracts require payment of fees calculated as a percentage of completed transactions (see Notes 6 and 8). Other contacts require compensation in the form of stock. No stock compensation has been earned as of March 31, 1999. Product Development Under an agreement to develop certain products, the Company has deferred revenue of $50,000 pending achievement of contract milestones. Successful completion of contract milestones will result in additional payments of up to $50,000. Several other product development arrangements are in negotiation. EX-3.(II) 2 BYLAWS EXHIBIT 3.2 BYLAWS OF WORLD WIDE VIDEO, INC. (COLORADO) BY-LAWS of WORLD WIDE VIDEO, INC. a Colorado Corporation ARTICLE I The initial principal office of the Corporation shall be in Wheat Ridge, Colorado. The Corporation may have offices at such other places within or without the State of Colorado as the Board of Directors may from time to time establish. ARTICLE II CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with corporate action, by any provisions of the statutes of the Certificate of Incorporation, the meeting and vote of stockholders may be dispensed with, if all the stockholders who should have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III Board of Directors Section 1. GENERAL POWERS. The business of the Corporation shall be managed by the Board of Directors, except as otherwise provided by statute or by the Certificate of Incorporation. Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors shall consist of up to three (3) members. Except as provided in the Certificate of Incorporation, this number can be increased only by the vote or written consent of the holders of ninety (90) percent of the stock of the Corporation outstanding and entitled to vote. The current number of Directors shall be determined by the Board of Directors at its annual meeting. No Director need be a stockholder. Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected annually by the stockholders, and shall hold office until their successors are respectively elected and qualified. Election of Directors need not be by ballot. Section 4. COMPENSATION. The members of the Board of Directors shall be paid a fee of $10.00 for attendance at all annual, regular, special and adjourned meetings of the Board. No such fee shall be paid any director if absent. Any director of the Corporation may also serve the Corporation in any other capacity, and receive compensation therefor in any form. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 5. REMOVAL AND RESIGNATIONS. The stockholders may, at any meeting called for the purpose, by vote of two-thirds of the capital stock issued and outstanding, remove any directors from office, with or without cause; provided however, that no director shall be removed in case the vote of a sufficient number of shares are cast against his removal, which if cumulatively voted at any election of directors would be sufficient to elect him, if cumulative voting is allowed by the Articles of Incorporation. The stockholders may, at any meeting, by vote of a majority of such stock represented at such meeting accept the resignation of any director. Section 6. VACANCIES. Any vacancy occurring in the office of director may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced. When one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have powers to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations become effective. ARTICLE IV Meetings of Board of Directors Section 1. REGULAR MEETINGS. A regular meeting of the Board of Directors may be held without call or formal notice immediately after and at the same place as the annual meeting of the stockholders or any special meeting of the stockholders at such places within or without the State of Colorado and at such times as the Board may by vote from time to time determine. Section 2. SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any place whether within or without the State of Colorado at any time when called by the President, Treasurer, Secretary or two or more directors. Notice of the time and place thereof shall be given to each director at least three (3) days before the meeting if by mail or at least twenty-four hours if in person or by telephone or telegraph. A waiver of such notice in writing, signed by the person or persons entitled to said notice, either before or after the time stated therein, shall be deemed equivalent to such notice. Notice of any adjourned meeting of the Board of Directors need not be given. Section 3. QUORUM. The presence, at any meeting, of one-third of the total number of directors, but in no case less than two (2) directors, shall be necessary and sufficient to constitute a quorum for the transaction of business except as otherwise required by statute or by the Certificate of Incorporation, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present at the time and place of any meeting may adjourn such meeting from time to time until a quorum be present. Section 4.a. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or committee, and such written consent is filed within the minutes of the Corporation. b. The Board of Directors may hold regular or special meetings by telephone conference call, provided that any resolutions adopted shall be recorded in writing within 3 days of such telephone conference, and written ratification of such resolutions by the directors shall be provided within 10 days thereafter. ARTICLE V Committees of Board of Directors The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation, which, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The committees of the Board of Directors shall keep regular minutes of their proceedings and report the same to the Board of Directors when required. ARTICLE VI Officers Section 1. NUMBER. The Corporation shall have a President, one or more Vice Presidents, a Secretary and a Treasurer, and such other officers, agents and factors as may be deemed necessary. One person may hold any two offices except the offices of President and Vice President and the offices of President and Secretary. Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The officers specifically designated in Section 1 of this Article VI shall be chosen annually by the Board of Directors and shall hold office until their successors are chosen and qualified. No officer need be a director. Section 3. SUBORDINATE OFFICERS. The Board of Directors from time to time may appoint other officers and agents, including one or more Assistant Secretaries and one or more Assistant Treasurers, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these By-Laws or as the Board of Directors from time to time may determine. The Board of Directors may delegate to any office the power to appoint any such subordinate officers, agents and factors and to prescribe their respective authorities and duties. Section 4. REMOVALS AND RESIGNATIONS. The Board of Directors may at any meeting called for the purpose, by vote of a majority of their entire number, remove from office any officer or agent of the Corporation, or any member of any committee appointed by the Board of Directors. The Board of Directors may at any meeting, by vote of a majority of the directors present at such meeting, accept the resignation of any officer of the Corporation. Section 5. VACANCIES. Any vacancy occurring in the office of President, Vice President, Secretary, Treasurer or any other office by death, resignation, removal or otherwise shall be filled for the expired portion of the term in the manner prescribed by these By-Laws for the regular election or appointment to such office. Section 6. THE PRESIDENT. The President shall be the chief executive officer of the Corporation and, subject to the direction and under the supervision of the Board of Directors, shall have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees. The President shall preside at all meetings of the stockholders and of the Board of Directors at which he is present. The President shall do and perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors. Section 7. THE VICE PRESIDENT. At the request of the President or in the event of his absence or disability, the Vice President, or in case there shall be more than one Vice President, the Vice President designated by the President, or in the absence of such designation, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. Any Vice President shall perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors, or the President. Section 8. THE SECRETARY. The Secretary shall: a. Record all the proceedings of the meetings of the Corporation and directors in a book to be kept for that purpose; b. Have charge of the stock ledger (which may, however, be kept by any transfer agent or agents of the Corporation under the direction of the Secretary), an original or duplicate of which shall be kept at the principal office or place of business of the Corporation in the State of Colorado; C. Prepare and make, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order; d. See that all notices are duly given in accordance with the provisions of these By-Laws or as required by statute; e. Be custodian of the records of the Corporation and the Board of Directors, and of the seal of the Corporation, and see that the seal is affixed to all stock certificates prior to their issuance and to all documents, the execution of which on behalf of the Corporation under its seal have been duly authorized; f. See that all books, reports, statements, certificates and the other documents and records required by law to be kept or filed are properly kept or filed; and g. In general, perform all duties and have all powers incident to the office of Secretary and perform such other duties and have such powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors or the President. Section 9. THE TREASURER. The Treasurer shall: a. Have supervision over the funds, securities, receipts, and disbursements of the Corporation; b. Cause all monies and other valuable effects of the Corporation to be deposited in its name and to its credit, in such depositories as shall be selected by the Board of Directors or pursuant to authority conferred by the Board of Directors. c. Cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositories of the Corporation, when such disbursements shall have been duly authorized; d. Cause to be taken and preserved proper vouchers for all monies disbursed; e. Cause to be kept at the principal office of the Corporation correct books of account of all its business and transactions; f. Render to the President or the Board of Directors, whenever requested, an account of the financial condition of the Corporation and of his transactions as Treasurer; g. Be empowered to require from the officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation; and h. In general, perform all duties and have all powers incident to the office of Treasurer and perform such other duties and have such power as from time to time may be assigned to him by these By-Laws or by the Board of Directors or President. Section 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretaries and Assistant Treasurers shall have such duties as from time to time may be assigned to them by the Board of Directors or the President. Section 11. SALARIES. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person the power to fix the salaries or other compensation of any officers or agents appointed in accordance with the provisions of Section 3 of this Article VI. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. Section 12. SURETY BOND. The Board of Directors may secure the fidelity of any or all of the officers of the Corporation by bond or otherwise. ARTICLE VII Execution of Instruments Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents or writings of any nature shall be signed, executed, verified, acknowledged and delivered by such officer or officers or such agent of the Corporation and in such manner as the Board of Directors from time to time may determine. Section 2. CHECKS, DRAFTS, ETC. All notes, drafts, acceptances, checks, endorsements, and all evidence of indebtedness of the corporation whatsoever, shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be made in such manner as the Board of Directors from time to time may determine. Section 3. PROXIES. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the President or Vice President and the Secretary or Assistant Secretary of the Corporation or by any other person or persons duly authorized by the Board of Directors. ARTICLE VIII Section 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate, signed in the name of the Corporation by the Chairman or Vice President of the Board of Directors, the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation; provided, however, that where such certificate is signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of any such Chairman of the Board of Directors, President, Vice President, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary may be facsimile. In case any officer or officers who shall have signed, or whole facsimile signature or signatures shall have been used thereon, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the Corporation, and any such delivery shall be regarded as an adoption by the Corporation of such certificate or certificates. Certificates of stock shall be in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors. Section 2. TRANSFER OF STOCK. Shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by his attorney duly authorized in writing, upon surrender to the Corporation of the certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer tax stamps. In that event, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction on its books. Section 3. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS. Prior to the surrender to the Corporation of the certificates for shares of stock with a request to record the transfer of such shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. Section 4. CLOSING STOCK TRANSFER BOOK. The Board of Directors may close the Stock Transfer Book of the Corporation for a period not exceeding fifty (50) days preceding the date of any meeting of the stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding (50) days in connection with obtaining the consent of stockholders for any purpose. However, in lieu of closing the Stock Transfer Book, the Board of Directors may fix in advance a date, not exceeding fifty (50) days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 5. LOST, DESTROYED AND STOLEN CERTIFICATES. Where the owner of a Certificate for shares claims that such certificate has been lost, destroyed or wrongfully taken, the Corporation shall issue a new certificate in place of the original certificate if the owner (a) so requests before the Corporation has notice that the shares have been acquired by a bona fide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies such other reasonable requirements, including evidence of such loss, destruction, or wrongful taking, as may be imposed by the Corporation. ARTICLE IX Dividends Section 1. SOURCES OF DIVIDENDS. The directors of the Corporation, subject to any restrictions contained in the statutes and Certificate of Incorporation, may declare and pay dividends upon the shares of the capital stock of the Corporation either (a) out of its new assets in excess of its capital, or (b) in case there shall be no such excess, out of its net profits for the fiscal year then current or the current and preceding fiscal year. Section 2. RESERVES. Before the payment of any dividend, the directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose, and the directors may abolish any such reserve in the manner in which it was created. Section 3. RELIANCE ON CORPORATE RECORDS. A director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officials as to the value and amount of the assets, liabilities and net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid. Section 4. MANNER OF PAYMENT. Dividends may be paid in cash, in property, or in shares of the capital stock of the Corporation at par. ARTICLE X Seal The Corporate seal, subject to alteration by the Board of Directors, shall be in the form of a circle and shall bear the name of the Corporation and shall indicate its formation under the laws of the State of Colorado. Such seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XI Fiscal Year Except as from time to time otherwise provided by the Board of Directors, the fiscal year of the Corporation shall be the calendar year. ARTICLE XII Amendments Section 1. BY THE STOCKHOLDERS. Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, these By-Laws may be amended or repealed, or new By-Laws may be made and adopted by a majority vote of all the stock of the Corporation issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided that notice of intention to amend shall have been contained in the notice of meeting. Section 2. BY THE DIRECTORS. Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, these By-Laws, including amendments adopted by the stockholders, may be amended or repealed by a majority vote of the whole Board of Directors at any regular or special meeting of the Board, provided that the stockholders may from time to time specify particular provisions of the By-Laws which shall not be amended by the Board of Directors. ARTICLE XIII Indemnification The Board of Directors hereby adopt the provision of C.R.S. 7-3-101 S (as it may be amended from time to time) relating to Indemnification and in corporate such provisions by this reference as fully as if set forth herein. EX-3.(I) 3 ARTICLES OF INCORPORATION EXHIBIT 3.3 ARTICLES OF INCORPORATION OF WORLD WIDE VIDEO, INC. (VIRGINIA) ARTICLES OF INCORPORATION OF WORLD WIDE VIDEO, INC. The undersigned incorporator desires to form a stock corporation under the provisions of Chapter 9 of Title 13.1 of the 1950 Code of Virginia, as amended, and to that end sets forth the following: 1. The name of the corporation is World Wide Video, Inc. 2. The corporation is authorized to issue one class of common stock of 5,000 shares. 3. The address of the initial registered office of the corporation is 14327 Smith Road, Culpeper, Virginia 22701. The name of the County in which the initial registered office is located is Culpeper County. The name of its initial registered agent is John G. Perry, who is a resident of Virginia, whose business office is the same as the registered office of the corporation, and who is a director of the corporation. 4. The Board of Directors of the corporation shall consist of two members until the number is changed by amendment to the bylaws of the corporation. 5. The initial members of the Board of Directors are John G. Perry and Frank A. Maas. In witness whereof, the undersigned executes these Articles of Incorporation as incorporator this 14th day of July, 1997. /s/ W. M. Scaife, Jr. -------------------------------- W. M. SCAIFE, JR., Incorporator COMMONWEATH OF VIRGINIA STATE CORPORATION COMMISSION Richmond July 16, 1997 This is to Certify that the certificate of incorporation of WORLD WIDE VIDEO, INC. Was this day issued and admitted to record in this office and that the said corporation is authorized to transact its business subject to all Virginia laws applicable to the corporation and its business. Effective date: July 16, 1997 State Corporation Commission ----------------------------------- Clerk of the Commission EX-3.(II) 4 BYLAWS EXHIBIT 3.4 BYLAWS OF WORLD WIDE VIDEO, INC. (VIRGINIA) BY-LAWS OF WORLD WIDE VIDEO, INC. ARTICLE I - STOCKHOLDERS' MEETINGS Section 1. Annual Meeting: The annual meeting of the stockholders shall be held each year, on such business day and at such place and hour as may be provided in the notice of meeting, for the purpose of election of Directors and for the transaction of such other business as may properly come before the meeting. Notice of the time and place of the annual meeting of stockholders shall be given by mailing a notice thereof to each stockholder of record at least ten days and not more than sixty days prior to said meeting, postage prepaid, addressed to his last known post office address. Section 2. Other Meetings: Special meetings of stockholders may be called by the Chairman of the Board of Directors, the President or by the Board of Directors. Notice of such special meetings shall be given in the same manner as is provided in the case of annual meetings and such meetings shall be at such place as may be provided in the notice of the meeting. Notwithstanding the foregoing, notice of a meeting of the stockholders to act on an amendment to the Articles of Incorporation, a plan of merger or share exchange, a proposed sale, lease, exchange or disposition of all or substantially all of the corporation's property or the dissolution of the corporation shall be given not less than twenty-five calendar days before the date of such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the corporation at the close of business on the record date established by resolution of the Board of Directors for such meeting pursuant to Section 3 of this Article. Section 3. Fixing the Record Date: The stockholders entitled to notice of or to vote at any meeting of the stockholders, or the stockholders entitled to receive payment of a dividend are the stockholders of record at the close of business on the date before the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be. Section 4. Quorum and Voting: Unless otherwise provided by law, a majority of the outstanding shares entitled to vote represented in person or by proxy shall constitute a quorum at a meeting of stockholders and if a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall, unless otherwise provided by law, be the act of the stockholders. Each stockholder shall be entitled to one vote in person, or by proxy, for each share entitled to vote standing in his name on the books of the Corporation. Cumulative voting by stockholders at meetings or for any other purpose is prohibited. Section 5. Conduct of Meetings: The President shall preside over all meetings of the stockholders. The Secretary of the Corporation shall act as Secretary of all the meetings if he is present and if not present, the Chairman of the meeting shall appoint a Secretary of the meeting. The stockholders may take actions without meetings pursuant to ss.13.1-657 of the Code of Virginia. ARTICLE II - BOARD OF DIRECTORS Section 1. Number, Election and Terms: The management and control of the business of the Corporation shall be vested in a Board of Directors, consisting of one person. The number of Directors may be increased or decreased from time to time by amendment of these By-Laws adopted by the stockholders. The Board of Directors shall be elected at the annual meeting of the stockholders and any special meeting held in lieu thereof. Directors shall hold office until removed, or until the next annual meeting of the stockholders, or until their successors are elected. Section 2. Removal and Vacancies: The stockholders at any meeting, by a vote of the holders of a majority of all the shares of Common Stock at the time outstanding and having voting power, may remove any Director and fill the vacancy. Any vacancy in the Board of Directors caused by resignation, death or otherwise, may be filled by the remaining Directors at a special meeting called for that purpose, or by the stockholders at any regular or special meeting held prior to the filling of such vacancy by the Board as above provided. The person so chosen as Director shall hold office until removed, or until the next annual meeting of stockholders, or until his successor is elected. Section 3. Quorum: A majority of the number of Directors shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 4. Meetings and Notices: Meetings of the Board of Directors shall be held at times fixed by resolution of the Board, or upon the call of the President, or upon the call of a majority of the members of the Board. Notice of any meeting not held at a time fixed by a resolution of the Board shall be given to each Director at least 24 hours before the meeting by delivering such notice to his residence or business address. Any such notice shall contain the time and place of the meeting, but need not contain either the business to be transacted or the purpose of any meeting. Meetings of the Board of Directors may be held within or without the Commonwealth of Virginia, and meetings may be held without notice if all the Directors are present or those not present waive notice before or after the meeting. The Board of Directors may take actions without meetings pursuant to ss.13.1-685 of the Code of Virginia. ARTICLE III - OFFICERS Section 1. Election, Removal and Duties: The Board of Directors, promptly after its election each year, shall elect a President (who shall be a Director) and shall also elect a Secretary, who nay be the same person as the President, and may elect or appoint a Treasurer and one or more Vice-Presidents or such other officers as it may deem proper. Any officer may hold more than one office. However, if the corporation has only one stockholder, such stockholder may hold all offices. All officers shall serve for a term of one year and until their respective successors are elected, but any officer may be removed summarily with or without cause at any time by the vote of the majority of all of the Directors. Vacancies among the officers shall be filled by the Directors. The officers of the Corporation shall have such duties as generally pertain to their respective offices and as are required by law as well as such powers and duties as from time to time may be delegated to them by the Board of Directors. ARTICLE IV - NOTICES Section 1. Notice: Whenever the provisions of law, or of these By-Laws require notice to be given to any stockholder, director or officer, such notice shall be given in manner prescribed by said By-Laws, or in the absence of By-Laws in such manner as prescribed by the laws of the State of Virginia. Section 2. Waiver: A waiver of any notice in writing, signed by a stockholder, director or officer, whether before or after the time stated in said waiver for holding a meeting, shall be deemed equivalent to a notice required to be given to any stockholder, director or officer. ARTICLE V - STOCK CERTIFICATES Section 1. Form: Certificates of stock shall be issued in numerical order in such form as may be approved by the Board of Directors, and each stockholder shall be entitled to a certificate or certificate s signed by the President and by the Secretary with the corporate seal impressed upon them, certifying to the number of shares owned by him. Section 2. Transfers: All transfers of stock of the Corporation shall be made upon its books by surrender of the certificate for the shares transferred accompanied by an assignment in writing by the holder. Section 3. Replacements: In case of the loss, mutilation, or destruction of a certificate of stock, a duplicate certificate may be issued upon such terms not in conflict with law as the Board of Directors may prescribe. Section 4. Registered Stockholders: Registered stockholders only shall be entitled to be treated by the Corporation as the holders in fact of the stock standing in their respective names, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by these By-Laws or by the laws of Virginia. Section 5. Regulations: The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the capital stock of the Corporation, not inconsistent with the laws of Virginia, the Articles of Incorporation and these By-Laws. ARTICLE VI - SEAL Section 1. Seal: The Corporate Seal of the Corporation shall be of such size, shape, design and shall bear such words, numbers and inscription as may be determined and adopted by resolution of the Board of Directors. ARTICLE VII - AMENDMENT OF BY-LAWS Section 1. Amendments: The power to alter, amend or repeal the By-Laws or adopt new By-Laws shall be vested in the Board of Directors except as stated in Article II, Section 1. Section 2. Vote by Directors: Any alteration, amendment or repeal of these By-Laws or adoption of new By-Laws by the Board of Directors shall be by a majority of the whole Board of Directors at any regular or special meeting. ARTICLE VIII - CHECKS, NOTES AND DRAFTS Section 1. Signatures: Checks, notes, drafts and other orders for the payment of money shall be signed by such person or persons as the Board of Directors from time, to time may authorize. The signature of any such person may be a facsimile when authorized by the Board of Directors. ARTICLE IX - INDEMNIFICATION Section 1. Indemnification: Each person now or hereafter a director or Officer of the Corporation (and his heirs, executors and administrators) shall be indemnified by the corporation against all claims, liabilities, judgments, settlements, costs and expenses, including all attorney's fees, imposed upon or reasonably incurred by him in connection with or resulting from any action, suit, proceeding or claim to which he is or may be made a party, by reason of his being or having been a director or officer of the Corporation (whether or not a director or officer at the time such costs or expenses are incurred by or imposed upon him), except in relation to matters as to which he shall have been finally adjudged in such action, suit or proceeding to be liable for gross negligence or willful misconduct in the performance of his duties as such director or officer. In the event of any other judgment against such director or officer or in the event of a settlement, the indemnification shall be made only if the Corporation shall be advised, in the case none of the persons involved shall be or have been a director, by the Board of Directors of the Corporation, and otherwise by independent counsel to be appointed by the Board of Directors, that in its or his opinion such wilful misconduct in the performance of his duty, and in the event of a settlement, that such settlement was or is in the best interest of the Corporation. If the determination is to be made by the Board of Directors, it may rely as to all questions of law on the advice of independent counsel. Such right of indemnification shall not be deemed exclusive of any rights to which he may be entitled under any ByLaw, agreement, vote of shareholders, or otherwise. Date: August 4, 1997 /s/ John G. Perry ------------------ -------------------------------- Director Date: August 1, 1997 /s/ Frank A. Maas ------------------ -------------------------------- Director ATTEST: /s/ Frank A. Maas - ---------------------------- Secretary EX-10 5 AGREEMENT EXHIBIT 10.1 AGREEMENT WITH DATA POWER, INC. LICENSE AGREEMENT WORLD WIDE VIDEO, INC. DATAPOWER INC. LICENSE AGREEMENT This AGREEMENT is made this 31st day of August, 1998 between World Wide Video, Inc. (WWV) a Colorado Corporation, (the "Company") having a place of business at 102A North Main Street, Culpeper, VA 22701 and DataPower ("DataPower") Power"), a Colorado Corporation, (the "Promisor") of 101-1425 West Pender Street, Vancouver, B. C. Canada V6G2S3. WITNESSETH: WHEREAS, WWV designs and manufactures leading edge technology and products for the Video Telephony market as described in WWV Confidential Business Plan dated June 5, 1997. (the "technology"); and WHEREAS, DataPower desires to acquire the exclusive license to manufacture, use, market and distribute the technology from WWV in accordance with the terms and conditions of this Agreement; NOW THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, and for good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of License. (a) Subject to the terms and conditions set forth in this Agreement, WWV hereby grants to DataPower the exclusive license, right and privilege to manufacture, use, market and distribute the technology during the term hereof in the Country of Canada. Furthermore, WWV grants to DataPower the rights of first refusal for the exclusive license to manufacture, use, market and distribute the technology for the regions of South Africa and Australia / New Zealand. (b) WWV shall furnish to DataPower the technology's, copies of all patents, registered designs, schematics, manufacturing information and drawings, and marketing information including any previous sales information and current sales information. All of the above shall be kept confidential by DataPower. Any Breach of this clause shall be a reason to terminate this agreement. (c) WWV shall cooperate fully with DataPower in its endeavors to manufacture, use and market the technology in its exclusive territories. DataPower agrees to reimburse all reasonable costs connected with WWV support, which will be agreed in writing by DataPower in conjunction with WWV 2. Term. Unless earlier terminated in accordance with the terms hereof, this Agreement shall continue for the period commencing the date hereof and ending March 15, 2008 and extend the term by mutual consent thereafter. 3. Consideration. (a) Convertible Debenture. DataPower to date advanced $50,000 by way of bridge finance to WWV. Upon delivery of 2 working prototypes DataPower, the Debenture will be converted into 250,000 free trading shares of WWV. Furthermore, WWV confirms that the company is in the process of filing for approval to trade on the OTC-BB. (b) Option to Purchase Additional Shares. WWV agrees to provide DataPower an option to purchase an additional 500,000 free trading shares for payment of $150,000 if such payment is made by September 23, 1998 or 15 business days after delivery of working prototypes, whichever shall be the later. Upon the signing of this License Agreement DataPower agrees that this payment is in addition and not a part of the Royalty payments described in number four (4) below. Further, WWV agrees to return, in full, without interest, the $50,000 loan to secure the rights if WWV cannot deliver working a United State's version of a commercial product to DataPower within three months (3) of the signing of this agreement. 4. Royalties. Said payment shall be made quarterly within sixty days of the end of each quarter. The royalty payments of 5% on wholesale sales of WWV's products. Attached to the payment shall be the proper accounting, which may be audited by WWV. 5. USA Marketing Rights. In consideration of the 250,000 of 144 shares in DataPower, WWV grants DataPower the non-exclusive rights to market to the US Government Military Bases. 6. First right to acquire the exclusive rights for South Africa. WWV agrees to provide DataPower with the first rights to acquire the exclusive rights for manufacturing, use, marketing and distribution of WWV products and technology for payment of $25,000 on or before December 30, 1998 and royalty payments of 5% on wholesale sales of WWV's products. 7. First right to acquire the exclusive rights for Australia and New Zealand. WWV agrees to provide DataPower with the first rights to acquire the exclusive rights for manufacturing, use, marketing and distribution of WWV products and technology for payment of $50,000 on or before January 30, 1999, and royalty payments of 5% on wholesale sales revenues of WWV's products. 8. Termination. (a) This Agreement shall terminate upon written notice at the discretion of either party hereto in the event the other party shall voluntarily or involuntarily enter bankruptcy, reorganization, arrangement, receivership or any similar proceedings or declare itself to be insolvent or bankrupt. If either party is involved in any of the foregoing events, such party shall immediately notify the other in writing of the occurrence of such event. (b) Upon expiration or termination of this Agreement for any reason, DataPower shall cease and terminate the use of the technology. (c) Termination of this Agreement for any reason shall not release either party of any liability accrued through the date of such termination, nor effect in any way the survival of any claim arising from any breach of any right, duty or obligation of any party hereto accrued hereunder as of the date of such termination. 9. Indemnification. WWV agrees, for WWV's products produced by WWV, to indemnify, defend and hold harmless DataPower from and against any and all claims, losses, suits, damages, costs and liabilities relating to or arising from its manufacture, distribution, use or sale of products using the technology or the breach by WWV of any of its warranties or representations contained herein. WWV will not be responsible for any changes made by DataPower to the provided U.S. based product manufacturing information to meet jurisdictional, territorial and other requirements. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado as applied to residents of the State of Colorado without regard to conflict of law principles. (b) WWV represents and warrants to DataPower that (i) WWV is the owner of the technology, (ii) WWV has the right and authority to grant to DataPower the license to use the technology in the manner provided for herein (iii) the grant by WWV of the license provided for herein-does not violate or conflict with any agreement, instrument or commitment, or any law, rule, regulation, court order or proceeding, to which WWV is a party or is bound. 11. Prior Agreements. This Agreement supersedes all prior Agreements. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above. LICENSOR: WORLD WIDE VIDEO, Inc. - ----------------------------- John G. Perry, President LICENSEE: DataPower, Inc. - ------------------------------ Brian Harris, President EX-10 6 SHARE EXCHANGE AGREEMENT EXHIBIT 10.2 SHARE EXCHANGE AGREEMENT SHARE EXCHANGE AGREEMENT THIS AGREEMENT, made this 12th day of May, 1998 by and between Mr. John G. Perry, an individual and Frank A. Maas, an individual being the sole shareholders of World Wide Video, Inc., a Virginia corporation having its principal offices at 14327 Smith Road, Culpeper, Virginia on the one hand (hereinafter collectively referred to as the "Sellers"), and World Wide Video, Inc. a Colorado corporation, having it's principal offices at 14327 Smith Road, Culpeper, Virginia (hereinafter the "Buyer"),on the other hand. The Sellers and Buyer are sometimes herein referred to as "Parties" and/or "Party." R E C I T A L S WHEREAS, Sellers are the owners and holders of all the issued and outstanding capital stock of World Wide Video, Inc. a Virginia corporation (the "Company"); and WHEREAS, Sellers are willing to sell, and Buyer is willing to buy, all of the Sellers' shares in the Company for shares in the Buyer corporation; IT, IS, THEREFORE, MUTUALLY AGREED, in consideration of the covenants and representations herein contained: Section 1. Agreement to Effect Tax-Free Merger. Sellers and Buyer will adopt a plan of reorganization pursuant to the provisions of the Internal Revenue Code, Section 368(a)(1)(B), and will take all necessary steps to effectuate such a plan as soon as possible. Section 2. Sellers' Agreement to Transfer Stock. Sellers will transfer to the Buyer Two Hundred (200) shares of the Company's Common Stock, said shares represent all of the issued and outstanding shares of the Company. Section 3. Buyer's Agreement to Deliver Stock. For each share of stock of the Company so transferred, Buyer will issue and deliver to each Seller individually fifty thousand (50,000) shares of fully paid and nonassessable common stock in Buyer, evidenced by certificates of stock in full compliance with all applicable laws, rules and regulations (including the requirements of transfer agents, registrars, and the Stock Exchange on which the shares of the Buyer will be listed for trading). Section 4. Warranties of Sellers. Sellers hereby represent and warrant jointly and severally that: a. The Company is duly organized and in good standing under the laws of the State of Virginia; has the corporate powers to carry on its business as now conducted; is duly qualified as a foreign corporation in good standing in each state where such qualification is necessary; and has no subsidiaries nor any interest in any firm, partnership or other corporation. b. Copies of the Articles of Incorporation of the Company all amendments thereto, the Company's Bylaws and all its minutes are contained in its minute books as provided in Schedule "A" annexed hereto are correct. c. The shares of the Company to be transferred hereunder constitute all of its outstanding shares and it has issued and will issue no other shares. There are no open options, contracts, calls, commitments or demands of any kind relating to authorized but unissued stock of the Company. The shares of the Company to be transferred hereunder are fully paid and nonassessable, free and clear of all encumbrances, liens, claims, equities and liabilities of every nature and Sellers will convey clear and unencumbered title thereto to the Buyer. d. The financial statements in Schedule "B" annexed hereto (and made part hereof) all other financial statements prepared by the Company audits books of account and records are true and correct. They have been prepared in conformity with generally accepted accounting principles, correctly reflect valid transactions and values and present a true and correct statement as of their respective dates of the Company's financial condition. The Company has no liabilities or obligations except those disclosed on the financial statements in Schedule "B" those incurred in the normal and regular conduct of its business since the date of said financial statements and those set forth in the written contracts listed in Schedule "C" annexed hereto, the originals of which have been exhibited to Buyer and initialed by both sides. There is no power of attorney for any purpose now in force given by the Company to any person or organization. e. All assets set forth on the books of the Company are in existence, in possession of the Company and are located at 14327 Smith Road, Culpeper, Virginia. The Company has clear and unencumbered title to all of its property including, without limitation, the property listed in Schedule "D" annexed hereto, except for the encumbrances set forth after the description of each item of property in said Schedule. All said assets are in good operating condition and repair and in compliance with all zoning and building laws and all state and local ordinances; and there are no violations pending with respect thereto. All accounts receivable and notes receivable of the Company are current and collectible except to the extent that a reserve for bad debts has been established on its books for such accounts and notes. The Company's patents, patent applications, copyrights, trademarks and trade names are valid and in good standing both in the United States and abroad. f. All the parties with whom the Company has contractual arrangements are complying therewith and none of them are in default; nor is the Company in default under any contract or obligation. The Company has no purchase commitments or contracts to be performed by it except as made in the ordinary course of business and as disclosed to Buyer and except those set forth in Schedule "C". No such commitments are in excess of the normal, ordinary and usual requirements of the business of the Company or at a price in excess of current market. No contract imposes a liability on the Company in excess of One Hundred Thousand Dollars ($100,000.00 ) except those listed in Schedule "C". The Company has no collective bargaining agreement with its employees except as set forth in Schedule "C." The Company has no deferred compensation, bonus, profit sharing, pension or retirement arrangement of any kind; nor is it now paying any pension, deferred compensation or retirement allowance except as set forth in Schedule "Ell annexed hereto. The Company has no contracts for the sale, merchandising or distribution of its products except such as it may cancel on notice of Thirty (30) days to the other contracting party. g. Since the date of the balance sheet set forth in Schedule "B" there has not been: (i) Any event, condition or change materially and adversely affecting the Company's business, including its relations with its employees or any labor union; (ii) Any loss, damage or destruction of the Company's property except items covered by insurance for which claims are pending as described in Schedule F annexed hereto; (iii) Any declaration or payment of dividend or other distribution with respect to the Company's stock nor has it made any payment for redemption, purchase or acquisition of its stock or agreed to do so; or (iv) Any general increase in compensation or any declaration or payment of any bonus to the Company's directors officers, employees or agents, or any increase to any individual employee exceeding Ten Thousand Dollars ($10,000) per year. h. The only directors and officers of the Company are: Director and President: John G. Perry Director, Vice-President and Secretary-Treasurer: Frank A. Maas The Company has no officer or other employee to whom it has paid more than ten thousand Dollars ($10,000.00) during the year preceding the date of this Agreement. i. All income and other taxes of the Company have been paid or adequate reserves therefor have been set up on the books of the Company. The Federal income tax returns of all years to and including the calendar year 1998 and the results of such audits are properly reflected in the financial statements set forth in schedule "B". No litigation, governmental investigation or proceeding is pending, threatened or in prospect against the Company or with respect to any of the shares to be transferred hereunder; and Sellers have no knowledge of any action pending or threatened to change the zoning or building ordinances affecting the Company's real property or any threatened or pending condemnation of such property. The Company has taken all corporate actions and filed all reports and returns required of it by law; and has complied with all applicable state, Federal and local laws, ordinances and regulations. j. Sellers, the Company, its directors, officers, agents and employees will disclose to Buyer all information known to them with respect to the operations and finances of the Company, including, without limitation, all information required to determine the tax basis of the Company's property or necessary in any way to any tax liability of the Company; and to that end Buyer may inspect, copy and reproduce any of the Company's tax returns, accounting and other records. The statements made and information given to Buyer relating to the transaction covered by this Agreement are true and accurate and no material fact has been withheld from Buyer; and Sellers have no knowledge of any development or threatened developments that would have a materially adverse effect on the Company's business. Section 5. Restrictive Covenant. For a period of three (3) years from date of closing the Seller will, without the consent of Buyer, enter the employ of any person, firm or corporation engaged in a business in the State of Colorado in competition with the present business of the Company; nor will any of them engage or assist any one else to engage, directly or indirectly, as principal, agent, employee, shareholder, officer or otherwise in any such business. For a breach of this covenant, Buyer shall have the right to an injunction and damages. Section 6. Stock Transfer Restriction on Shares Acquired by Sellers. For a period of three (3) years from date of closing the Seller will not sell, assign, or transfer or otherwise dispose of the shares of the Buyer corporation which he will acquire hereunder except to trusts for the benefit of or as gifts to members of the immediate family of any of the Sellers, or as security for a loan, provided that the transferee or pledgee of such shares agrees by prior written agreement to be bound by the provisions of this Section 6. Such agreement must be examined and approved by Buyer or its counsel. As liquidated damages for breach of this Section 6, sellers will pay Buyer fifty cents ($0,50) per share for every share actually sold within said three (3) year period. Section 7. Buyer's Right to Deliver Converted Stock. If between the date hereof and the closing, there is a change in the condition, capital or capital structure of the Buyer by virtue of which its common stock is converted into other shares of its own or of another corporation, delivery of such converted shares equivalent to the number of shares of common stock due to the Sellers hereunder, shall be good delivery and due performance by Buyer under this Agreement. Section 8. Cooperation. Sellers will deliver to Buyer, at and after closing, all orders, checks, communications and information received by them or the Company relating to or belonging to the Company. Sellers will execute upon request and deliver all instruments, papers or documents and do all other acts that may be necessary or desirable in the opinion of Buyer's counsel to perfect or record any right, title or interest relating to the property of the Company or to the shares to be transferred to the Buyer hereunder; or to aid in any legal proceeding relating to any such matter. Unless the need therefor is due to any default of Sellers, the expense involved shall be borne by Buyer. Section 9. Warranties to Survive Closing. The terms, conditions, warranties and representations of this Agreement shall survive the closing. Buyer, however, shall be under a duty to make prompt investigations; and, except for breaches of the restrictions set forth above in Sections 5 and 6, all claims which are not made within two (2) years of closing shall be deemed waived. Section 10. Buyer's Right to Rescind. If any warranty or representation made herein by Sellers is breached, is untrue, or if full information has not been disclosed by them to Buyer about the Company, Buyer may rescind this Agreement in addition to any other legal remedies that it may have. Notice of rescission shall be given to sellers in writing. Within ten (10) days after receipt of such notice, Sellers shall return to Buyer all consideration received by them under this Agreement and promptly thereafter, Buyer will return to them the shares of stock in the Company transferred to Buyer. Section 11. Notices. All notices shall be in writing and shall be served by registered or certified mail directed to the addresses of the parties as herein above set forth. By due notice any party may designate a different address. Section 12. Entire Agreement. This Agreement constitutes the entire contract of the parties concerning the subject matter hereof and supersedes all previous negotiations, understandings and agreements of the parties with reference hereto. Any change, termination or attempted waiver of any of the provisions hereof shall be binding only if made in writing and as regards the Buyer only if signed by an officer thereof. Section 13. Counterparts. Separate counterparts of this Agreement may be signed and together they shall constitute one agreement. Section 14. Broker and Broker's Commission. Sellers represent and warrant that no Broker, finder, agent or similar intermediary has acted for or on behalf of the Seller in connection with this Agreement or the transactions contemplated hereby, and no broker, finder, agent or similar intermediary is entitled to any broker's, finder's or similar fee or other commission in connection therewith based on any agreement, arrangement or understanding with the Seller or any action taken by the Seller. Section 15. Interim Provisions. During the period between the execution of this Agreement and the closing: a. Sellers will see to it that the Company will continue business in its normal manner and among other things keep its insurance in effect, comply with all laws and use its best efforts to retain the services and goodwill of its personnel and good relations with its suppliers, dealers and customers. b. Sellers will obtain such clearances as may be required from the Department of Justice, Federal Trade Commission, Internal Revenue Service and other governmental agencies as may be necessary; and will have the Buyer added as an insured to the Company's existing insurance policies. c. Sellers shall be obligated to prevent the Company from taking any extraordinary action. Specifically, and without limitation, no increases or bonuses shall be given to executives; no long-term contracts shall be entered into; no declarations or dividends, amendments to the articles of incorporation of bylaws, dispositions of property, creation of mortgages, liens or debts, large capital outlays, redemption's of stock, mergers or consolidations, shall be made. d. Buyer shall have the option to terminate this contract if any of the provisions of paragraph (b) or (c) immediately preceding are not complied with; or if any injunction is issued against the transaction herein set forth; or if any substantially adverse change occurs in the Company's business, in labor or legislative matters affecting the Company, or in general business conditions; or if there is substantial destruction, damage or loss of the Company's property. Section 16. Closing. The closing of this transaction shall take place at 10:00 AM on May 15th, 1998 or at such earlier date as the parties stipulate in writing. At the closing Sellers shall deliver to Buyer: Certificates for the stock described in Section 2 hereof, indorsed in blank with all necessary documentary transfer tax stamps affixed and with signatures guaranteed by a bank or trust company. b. Resignations of directors and officers of the Company. c. General releases by the Sellers of all claims that they may have to the date of closing against the Company or the Buyer or the directors, officers, agents and employees of either of them. d. Certified copies of consent of the shareholders of the Company to this Agreement and of the resolution of its board of directors in favor of the Agreement, if such consent or resolution is required by law or by the Company's articles of incorporation or its bylaws. e. The complete and correct corporate minute books, articles of incorporation, bylaws and stock transfer books of the Company and its books of account, records, correspondence, files, documents and all other papers necessary to manage and operate the affairs of the Company. f. All deeds, bills of sale, insurance policies, contracts, mortgages, leases, assignments and all other documents pertaining to any property owned by the Company or used in its operations; and assignments to the Company duly executed by Sellers of all inventions, patents, patent applications, copyrights, formulas, manufacturing methods, trade secrets and trademarks owned by the Sellers or in which they may have any interest, relating to any product or process used by the Company in its business. g. Copies of resolutions of the board of directors of the Company certified by its Secretary in the form specified by the banks or trust companies with which the Company does business, revoking all prior authorizations and authorizing only the following persons to sign checks, to deal with the bank accounts and to have access to the safe deposit box of the Company. h. Copies of the minutes of the board of directors of the company (and office shareholders, if necessary), certified by its Secretary, electing officers and directors of the company and appointing the following as its officers: President, John G. Perry Vice-President, Secretary-Treasurer; Frank A. Maas i. Agreements in writing by each of the present and previous officers and directors of the Company that he or she will disclose to Buyer all trade secrets relating to the products of, or processes used by, the Company; that he or she will not by himself or herself or with others, use such trade secrets directly or indirectly; and that he or she will transfer and assign to the Company all inventions, patents, copyrights and patent applications in which he or she has any right, title or interest relating to any product of, or process used by, the Company or relating to its business. j. The written opinion of counsel for the Company that: i. The company is duly organized and existing as a corporation in good standing under the laws of the State of Virginia and duly qualified as a foreign corporation in good standing in each state where such qualification is necessary. ii. All corporate and other proceedings required of the company have been duly and properly taken; all reports and returns required to be filed by it have been duly filed; and it has complied with all applicable state, federal and local laws, to the best of counsel's knowledge. iii. Counsel has no knowledge of any claim against the Company or of any litigation pending or threatened or in prospect against it; or of any defects or limitations of the Company's title to any of its property. iv. The shares of the Company are validly issued to the Sellers, fully paid and nonassessable, and the certificates held by them (to be delivered to Buyer) represent all the issued and outstanding shares of the Company; and that there are no restrictions by statute, in the Company's articles of incorporation or amendments thereto, in its bylaws, minutes, stock certificates or in any shareholders' agreement that may limit the right or power of the Buyer with respect to said shares or that may constitute a lien, claim or encumbrance or equity therein. v. Counsel has no knowledge of facts that may adversely affect the prospective title of Buyer to said shares or of any claim against them. k. With respect to real estate owned by the Company: policies of title insurance running to the Company for each parcel for the fair market value of said property as described in Schedule D a survey showing all improvements and showing title to be marketable as described in said policies. The policies shall be in standard form issued by a company duly qualified in the state where the particular parcel is located. Estoppel certificates from each institution or lender to whom the Company is indebted and from each holder of a lien on its property. Section 17. Successors Bound. This Agreement shall be binding and inure to the benefit of the respective successors and assigns of the parties hereto. Any change or division of interest of the Seller, caused in any manner, shall be reported to the Buyer by due notice, stating the nature of the change or division and designating a specific person and address for transmittal of notices and deliveries. IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. JOHN G. PERRY, an individual Seller - ----------------------------------- John G. Perry, an individual FRANK A. MAAS, an individual Seller Frank A. Maas, an individual Schedule A "Company Organizational Documents" Schedule "A "defines and discloses the Company's Organizational Documents. These documents are attached and include: Articles of Incorporation of the Company It's Bylaws It's Minutes Schedule B "Financial Statements" Schedule "B" defines and discloses the Company's financial statements. Balance Sheet Income Statement Schedule C "Written Contracts" Schedule "C" defines and discloses the Company's written contracts. These include: Schedule D "Property" Schedule D defines and discloses the Property owned by Company Schedule E Retirement Plans None, the Company has no retirement Plans. EX-23 7 CONSENT OF ACCOUNTANT EXHIBIT 23.1 CONSENT OF ACCOUNTANT THOMPSON, GREENSPON & CO., P.C. Certified Public Accountants Management Consultants To the Board of Directors World Wide Video, Inc. Culpeper, Virginia We hereby consent to the use of our report, dated January 21, 1999, in the Form 10-SB of World Wide Video, Inc., as filed with the Securities and Exchange Commission. /s/ Thompson, Greenspon & Co., P.C. Fairfax, Virginia May 26, 1999 -------------------------------------------------- 3930 Walnut Street Fairfax, VA 22030-4790 (703) 385-8888 FAX (703) 385-3940 E-Mail Address - tgc@tgccpa.com Home Page Address - http://www.tgccpa.com EX-27 8 FDS --
5 12-MOS 6-MOS SEP-30-1999 SEP-30-1999 SEP-30-1998 MAR-31-1999 0 4,039 0 0 122,448 37,323 0 0 28,324 131,570 257,906 259,832 19,050 19,050 0 0 343,056 334,131 175,780 236,882 0 0 0 0 0 0 1,044 1,091 166,232 101,112 343,056 334,131 0 876 0 10,562 0 1,750 0 1,750 471,076 216,632 0 0 (2,750) 0 (468,326) (207,820) 0 0 (468,326) (207,820) 0 0 0 0 0 0 (468,326) (207,820) .06 .02 .06 .02
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