-----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, Knjufqg/2txHw2bjKMMh9hnCCymacLiCQPNZN0GNguw1FA1i2ujmOUkfmy4hEpZz qWv6aYjxEsyoRGFXDqA3PA== 0000950130-00-001889.txt : 20000406 0000950130-00-001889.hdr.sgml : 20000406 ACCESSION NUMBER: 0000950130-00-001889 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000405 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEE INC CENTRAL INDEX KEY: 0001096857 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 830319519 STATE OF INCORPORATION: WY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27773 FILM NUMBER: 593825 BUSINESS ADDRESS: STREET 1: 214 S CENTER CITY: CASPER STATE: WY ZIP: 82601 BUSINESS PHONE: 3034228127 MAIL ADDRESS: STREET 1: 214 S CENTER CITY: CASPER STATE: WY ZIP: 82601 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 5, 2000 ------------------------------ Callmate Telecom International, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as Specified in its Charter Post-merger) Zee, Inc. - -------------------------------------------------------------------------------- (Prior name of Corporation pre-merger) Wyoming 000-27773 830-319-519 - ---------------------------- ----------- ------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation pre-merger) File Number) Identification No. pre-merger) Florida 59-3134518 - ---------------------------- ------------ (State or Other Jurisdiction (IRS Employer of Incorporation post-merger) Identification No. post-merger) 1 Wilton Street, Bradford, BD5 OAX, United Kingdom - -------------------------------------------------------------------------------- (New Address) Registrant's telephone number, including area code 011 44 1274 301 500 ------------------- Item 2. Acquisition or Disposition of Assets. (a) On March 31, 2000, Callmate Telecom International, Inc. ("Callmate") completed a merger with Zee, Inc., it's wholly-owned subsidiary, with Callmate being the surviving entity. A copy of the Articles of Merger and Plan of Merger are filed as exhibits to this Form 8-K and are incorporated in their entirety herein. (b) Callmate is an international, facilities-based provider of telecommunications and Internet services. Callmate was formed in 1997 by Mohammad Saff Gohir to exploit the potential provided by the deregulation of the United Kingdom telecommunications market and has developed its business by operating from a low overhead base and identifying several niche markets. Callmate has identified a market need for telecommunications services for the Asian community throughout the United Kingdom and this has formed the core of its business. In addition, through owning its own switching gear, Callmate has been able to "trade" in wholesale airtime and take advantage of both its own excess capacity and that of other carriers. Callmate's primary focus is the market for retail and wholesale services within the United Kingdom and Europe. Callmate also provides Internet credit card processing and settlement services to institutions, merchants and consumers. Callmate is a holding company that conducts business through the following operating subsidiaries: . Callmate Telecom Communications Ltd., our wholly-owned subsidiary in the United Kingdom and primary operating subsidiary which owns our state-of-the art switching and international gateway facilities. . Calltel (PVT) Ltd., a Pakistanian company, in which we hold a 65% interest and through which we provide pre-paid calling card services. . We have also reached an agreement to acquire a majority interest in American Multi Credit Inc., a Florida corporation, through which we will provide real time credit card processing over the Internet. A. Callmate Telecom Communication Ltd. - Product, Services and ------------------------------------------------------------ Technology - ---------- Callmate Telecom has installed state-of-the-art switching and International Gateway facilities. As a facilities-based international service provider, Callmate Telecom offers carriers and international companies seamless end-to-end connectivity through the existing global network of digital fiber optic and satellite communications links. Additionally, Callmate's rapidly- growing switching capacity holds the key to providing international communications services to destinations in Europe, Africa and Asia, without multiple or -2- "double- hop" satellite transmissions or through non-US carriers. These services throughout the European continent will enable Callmate Telecom to provide cost-efficient transport that non-facilities and facilities-based carriers alike can take advantage of to connect to Callmate Telecom's network and realize significant savings and network efficiency. Callmate Telecom also offers users a full range of enhanced services, including customized billing, Internet access, global virtual private networks, calling card services and international freephone and private lines in conjunction with approved operators. Users also have the option to offer Callmate Telecom's extensive array or services and features to their own customers. Callmate Telecom is licensed by the Department of Trade and Industry under Section 7 of the UK Telecommunications Act. This license gives Callmate Telecom the freedom to operate as a true `Free Trader' in the telecommunications market, allowing the company to build its own networks where and when necessary, or to utilize networks of other quality carriers. Callmate Telecom's current products and services includes: (i) Calling Card Services --------------------- Whether customers are travelling in their own country or abroad, we provide a hassle-free calling card service, one that can be used from any phone, at any time, and that provides customers with a reliable connection at the low Callmate Telecom rates, no matter where our customers are calling from or to. (ii) Resident Prepaid Accounts ------------------------- The Callmate Telecom residential pre-paid account allows our customers to make calls from their home phone in the UK to any country in the world. Callmate Telecom's residential pre-paid account saves our customers up to 95% on international calls and 50% on national calls. With the Callmate Telecom residential pre-paid account there are no access or minimum charges. Easy to use Whether our customers want to make national or international calls, they can call direct with the Callmate Telecom residential pre-paid account. Using a tone phone they simply: . Dial the Callmate Telecom Toll free access number or designated 1XXX number. . Our central exchange will automatically recognize your account from your Calling Line Identity (CLI) or will ask you for your unique 10 digit PIN access code. -3- . Dial the number you wish to reach in the same way you would using your original service provider. Voice instructions given by our systems will guide you throughout. Furthermore, when customers access the Callmate Telecom service, our central exchange automatically calculates the balance remaining and tells you this on pressing the * key. Each pre-paid account has a value set by our customers when they contract for the service and for which they receive a fixed amount of talk time. At any time customers can re-charge the credit levels on their Callmate Telecom residential pre-paid account, simply by phoning our customer service number on 0800 376 3000, quoting their account number, and then charge the value they require to their credit card. They can also re-credit their account using our automated top-up system, which will provide them with the top-up option whenever their credit card goes below a certain level. To proceed in the automated top-up, they just follow the computer voice instructions to perform the re-charge on-line. The Callmate Telecom residential pre-paid account need never expire, provided customers re-charge its value as they use it. Moreover, on request every month, customers will receive a fully itemized bill, detailing the cost of every call made with the Callmate Telecom residential pre-paid account. The following summarizes Callmate Telecom residential pre-paid account benefits which make long distance calling convenient and less costly: . No Access Fees . No first minute surcharge . Per Minute billing . Standard call tariffs. Our customers pay the same Callmate Telecom low cost per-minute rate, giving savings of up to 80% against BT's charges . They can dial anywhere in the world via Callmate Telecom's Global Network -4- . No need to worry about receiving large monthly or quarterly bills, all calls made via the Callmate Telecom residential pre- paid account are already paid for . Callmate Telecom residential pre-paid account can be constantly re-charged by making a quick phone call to our customer service center, or using our automated recharge system, so our customers need never run out of telephone talk-time. . A fully itemized monthly record of all your calls (available on request) Callmate Pre-paid Residential Account Advanced Features (a) Quality Service Callmate's efficient digital switching systems and advanced fiber network ensures a high standard of communication quality 24 hours a day, 365 days a year. (b) Global Coverage Designed specifically for global travelers, the Callmate's Residential Account can be used directly from many countries using Callmate's Global Network and indirectly from virtually any country in the world using the Callmate International Call-back Service. (d) Follow-on Calls This feature enables our customers to make several calls without the need to re-dial the access, Card or PIN numbers. To use this feature do not hang up at the end of the call, but instead press the * button. (e) Calling Line Identity (CLI) Using this feature allows you to access your account with Callmate and place calls without the need to dial any PIN number. To take advantage of this feature, contact our customer service line and nominate a telephone number to be registered with the Callmate switching system. (f) Call Forwarding This feature lets you receive important calls on telephone numbers that you nominate including overseas numbers. (g) Voice Mail This feature allows you to receive and retrieve messages from your Callmate Voice Mail Service from anywhere in the world. (h) Speed Dial -5- You can program your card with the most frequent dialed numbers by creating your own list of telephone numbers and assigning special short speed dial codes to them. (i) Customer Service and Operator Assistance Friendly, professional and multilingual Customer Service and Operator Assistance teams support all these features. Our customer service representatives are efficiently trained to understand our customers' needs and provide the right answers to all their queries. Wherever they are, our operators will guide them through to ensure that they are successfully using the best service, which they deserve. (iii) Corporate Accounts ------------------ For businesses, Callmate Telecom can provide modestly priced international calls. Callmate Telecom will also provide freephone numbers (Callmate Telecom already has its own 0800 code - 0800 059 XXXX), local call numbers and national call numbers. (iv) International Call-back Service ------------------------------- For customers who travel outside the UK, Callmate Telecom provides a cost-effective communications service for international long distance telephony and facsimile services. Regardless of the caller's country location, a call can be made to any other country at savings of more than 60% as compared to placing the call through their traditional local telecommunications service provider. How does the call-back Service Work? Callmate Telecom uses a computer call re-origination system that lets you call to or from anywhere in the world as if you were calling from the United Kingdom. Our customers will have access to a telephone line that is based and tariffed within the UK, and this can charge highly competitive UK-based rates to anywhere in the world with savings over local carriers of up to 60% and more. Easy to Subscribe There are no membership or subscription fees and no rental or subscription billing charges. Customers pay only for the calls they make at the low rates quoted in the Callmate Telecom tariff. All charges are paid conveniently through a private or company credit card. Each month, Callmate Telecom sends our customers an itemized account of all their calls for each of their PIN numbers. We also can provide business clients with an analysis of their combined monthly traffic. For Business Travelers on the Move -6- If our customers are travelling to a number of different places and, for example, staying in different hotels, they can change the call back number so that the Callmate Telecom system calls them at their new location. This is done simply by dialing into a special "Admin" number and following a menu of voice prompts, which will tell them how to change the call back number. Instructions on how to use this valuable service is given when a new account is opened. Security The combination of the customer's access number and PIN number which is unique to the customer provides a high level of protection against fraud or unauthorized use of an account because the customer is the only person who knows both numbers. A customer can change the PIN as often as they like and for any reason. Freedom As a Callmate Telecom subscriber, customers can use our Call-back service to make international calls from any touch tone phone and only pay our "free market" prices, not the inflated rates of state-owned monopolies. And if customers use Call-back from their mobile phone, they pay our low cost rates, not other supplier's inflated rates. Call-Back Rates & Charges Since calls with the Call-Back service are always originated in the UK, charges are calculated by adding the rate from the switching system to their location and the rate from the switching system to their destination number. As an example, if a customer were in Australia and wanted to place a call to the USA, the following charges will apply: UK to Australia: 12pence per minute, UK to USA: 8pence per minute, total:20pence per minute. -7- [MAP APPEARS HERE] (Representation of process and charges of using Call-Back to connect from Australia to the USA) For Calls made to final-destination numbers in the UK from outside the country, 5pence per minute must be added to the rate of the country our customers are in. (v) Wholesale Products ------------------ If a company is a reseller or service provider of international telecommunications services of any kind, Callmate Telecom can provide a wide range of wholesale services, tailored to their individual needs and significantly reducing their costs. We provide a service package to meet their individual needs. There are no hidden costs and we can give even bigger discounts if traffic volumes are high. The service(s) they choose will depend on their international traffic levels and the types of services they provide to their customers. (vi) Services For Telecom Service Providers -------------------------------------- Switched Services: ------------------ Domestic Telephony (origination & termination) Transit Telephony Calls (national and international) International Telephony Calls (origination & termination) Re-file (to overseas destinations via Europe & USA) Free-phone numbers Local Charge Call (Lo-Call numbers) Premium Rate Numbers (with exceptional revenue share deals) Ancillary Switched Services: ---------------------------- Pre-paid cards (bespoke private label service) Video Conferencing Access Links: ------------ International Leased Circuits for Voice Data Multimedia High Bit Rate Applications -8- Managed Services: ---------------- (a) ATM, Frame Relay, X.25 Facilities Management, Equipment Housing, Equipment Co-location Switch (telcoms grade) Partitions Calling Card Services Platforms (e.g. affinity schemes, charities, airlines, etc) Dial-in (bulk PSTN access) Intelligent Network Services Billing Bureau Services Best Practice Engineering (b) Switched voice, data and fax traffic is carried from your network to our international gateway exchange by digital private line(s), then conveyed across our fibre links and routed on by our overseas switching partners through their own networks to the destination. (c) Our Access Link products also offer similar advantages for point- to-point Data Links over which applications such as LAN-LAN connection, file transfer, multimedia and video conferencing can be provided. (d) Our international gateway switch, based in London can connect to any type of switching system via dedicated access links. Dependent upon traffic volumes, this may be multiple 2 Megabit PDH links or STM1 or STM4 SDH links. B. CallTell (PVT) Ltd. ------------------- In July 1998 Callmate announced that it has subscribed for 65% of the issued capital of CallTell (PVT) Ltd. ("CallTell"). CallTell has been awarded one of only 3 pre-paid calling card licenses by the Pakistan Telecommunication Company Ltd. CallTell will operate and maintain a non exclusive pre-paid calling card service solely for outgoing international calls DTMF (tone) phones in Pakistan. CallTell also has signed a contract with the Pakistan State Oil Company to supply it with prepaid Telephone Calling Cards. C. American Multi Credit Inc. -------------------------- AMC is contractually connected to two banks, South Bank and Trust Company Ltd (SBT) and MultiCredit SA (MSA). AMC contracts hold exclusive settlement processing rights with regard to Internet credit card clearing transactions for both SBT and MSA. SBT has a primary membership status with MasterCard to conduct both issuing and acquiring business. SBT has a contract with MasterCard to issue MasterCard credit cards as well as acquiring and settling MasterCard charges for its participating merchants. The MIPS or communication lines to MasterCard are held at the AMC offices in Fort Lauderdale. -9- MSA has a primary membership status with Visa International which allows both issuing and acquiring business. The VAPS or communication lines to Visa International are held in Guatemala City. AMC is an international sales office under its exclusive contract with SBT and MSA. The contract with MasterCard allows SBT, through its credit card processing facility, to acquire as well as issue business international and domestically which offers a unique business opportunity. AMC is responsible for marketing these services for both banks. The banks have control over their own MIPS or VAPS as opposed to using a settlement processor like FDC, FTC, GPS or Nabanco. Most domestic banks and a high percentage of off-shore banks use one of these secondary processors and pay transaction fees to them based on a percentage of each transaction. Since both SBT and MSA have their own MIPS and VAPS and a contract with AMC for their use, AMC can therefore conduct business as a settlement processor offering payments services to other international and/or off-shore banks. AMC and the banks are leaders in the Internet credit card processing business as one of the first off-shore financial institutions offering secured credit card processing to merchants selling products and services over the Internet. AMC focuses on three primary member components of the e-commerce industry: banks; merchants; and Internet consumers. AMC provides software and positive and negative databases for financial institutions that offer real time settlement through existing credit card networks. The integration of our software, network and databases minimizes fraud and reduces chargebacks and credits. Merchants use our back office accounting software for real-time access to all of their account and transaction data. Demographics on their customer base are also stored and can be manipulated to support marketing and sales programs to target broad or specific market sectors of consumers. The consumer has access to the merchant via secured servers on the Internet where information can be freely submitted without security worries. (c) Callmate also provides telecommunication and Internet based services through the following entity in which it holds a minority interest: . INFONET: In January 2000, Callmate purchased a 25% equity interest in INFONET, the second largest Internet service provider (ISP) in Karachi, Pakistan. In addition, Callmate assumed management of INFONET, which currently has over 8,000 subscribers. Upon completion of the acquisition of INFONET, Callmate immediately enhanced the number of access ports by 120% and bandwidth by 400%. This will make INFONET's service much more efficient, leading to a projected doubling of subscribers in the near term. Prior to the acquisition, the existing ports were utilized with 95% capacity during peak hours. -10- Callmate intends to open a chain of Cybercafes which will be developed and managed by Callmate. If proven successful, the Callmate will initiate 20 facilities in year 2000 and franchise additional cafes nationwide to over 300 potential investors. The investors will be fully trained and qualified by Callmate, and if accepted, offered a turnkey operation. INFONET, under Callmate's management, will be selling these Cybercafes Internet and bandwidth. While enabling Callmate to earn royalties on the usage of the Company's Internet service, the Cybercafes will enhance the Company's customer base as these customers purchase their own hardware. This arrangement will also create an opportunity for greater Internet awareness in Pakistan. Callmate is not interested in becoming involved in or deriving royalties from the sales of coffee and/or food from Cybercafe operations. -11- Item 7. Financial Statements, Pro Form Financial Information and Exhibits. (a) Financial Statements The audited financial statements of Callmate for the fiscal years ended August 31, 1999 and 1998 and the unaudited interim period ended November 30, 1999 are included herein. In addition, pro forma financial statements reflecting the combined financial statements of Callmate and Zee at November 30, 1999 are included herein. (b) Exhibits Exhibit No. Description ----------- ----------- 10.1 Articles of Merger 10.2 Plan of Merger -12- Consolidated Financial Statements Callmate Telecom International, Inc. Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 Independent Auditors' Report Callmate Telecom International, Inc. Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 Contents Independent Auditors' Report on Consolidated Financial Statements...... F-1 Consolidated Financial Statements: Consolidated Balance Sheets.......................................... F-2 Consolidated Statements of Operations................................ F-3 Consolidated Statements of Changes in Stockholders' Deficit.......... F-4 Consolidated Statements of Cash Flows................................ F-6 Notes to Consolidated Financial Statements........................... F-7-F-13 Pro Forma Condensed Balance Sheet (unaudited)........................ F-14 Pro Forma Condensed Combined Statement of Operations................. F-15 Notes to Pro Forma Condensed Financial Statement (unaudited)......... F-17
[LOGO APPEARS HERE] PNCCPAs ================================================================================ Independent Auditors' Report ---------------------------- Board of Directors Callmate Telecom International, Inc. Bradford, United Kingdom We have audited the accompanying consolidated balance sheet of Callmate Telecom International, Inc. as of August 31, 1999 and the related consolidated statements of operations, changes in stockholders' deficit, and cash flows for the years ended August 31, 1999 and 1998. These consolidated financial statements are the responsibility of the management of Callmate Telecom International, Inc. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. These standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Because of inadequacies in the Company's accounting records, we were unable to form an opinion regarding certain amounts recorded as revenues in the accompanying consolidated statement of operations for the year ended August 31, 1999 (stated at approximately $4,265,000). In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had revenues been susceptible to satisfactory audit tests, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Callmate Telecom International, Inc. as of August 31, 1999 and the results of its operations and its cash flows for the years ended August 31, 1999 and 1998 in conformity with generally accepted accounting principles. Certified Public Accountants Tampa, Florida March 31, 2000 Pender Newkirk & Company . Certified Public Accountants - -------------------------------------------------------------------------------- 100 South Ashley Drive . Suite 1650 . Tampa, Florida 33602 . (813) 229-2321 . Fax (813) 229-2359 Web Site: www.pncocpa.com - -------------------------------------------------------------------------------- Member of Private Companies Practice Section and SEC Practice Section of American Institute of Certified Public Accountants ================================================================================ Callmate Telecom International, Inc. Consolidated Balance Sheets
November 30, August 31, 1999 1999 --------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 1,800,796 $ 2,164,992 Cash held in trust accounts 2,217,993 1,482,886 Restricted cash and cash equivalents 164,013 160,866 Accounts receivable, trade 1,116,873 934,694 Accounts receivable, related parties 131,198 64,052 Prepaid expenses and other current assets 549,352 314,965 ------------------------- Total current assets 5,980,225 5,122,455 Property and equipment, net of accumulated depreciation 1,264,587 1,277,280 Other assets 981,262 568,999 ------------------------- $ 8,226,074 $ 6,968,734 ========================= Liabilities and Stockholders' (Deficit) Current liabilities: Accounts payable $ 5,804,144 $ 5,887,462 Advances from stockholders 1,881,860 653,735 Accrued expenses 57,734 74,430 Deferred revenue 750,535 755,274 ------------------------- Total current liabilities 8,494,273 7,370,901 ------------------------- Minority interest in consolidated subsidiary (61,051) (54,560) ------------------------- Stockholders' (deficit): Common stock; $.001 par value; 50,000,000 shares authorized; 14,200,000 shares issued and outstanding as of November 30, 1999 and August 31, 1999, respectively 14,200 14,200 Additional paid-in capital 846,800 846,800 Accumulated deficit (1,085,140) (1,237,991) Accumulated other comprehensive income 16,992 29,384 ------------------------- Total stockholders' (deficit) (207,148) (347,607) ------------------------- $ 8,226,074 $ 6,698,734 =========================
Read independent auditors' report. The accompanying notes are integral part of the consolidated financial statements. F-2 Callmate Telecom International, Inc. Consolidated Statements of Operations
Three Months Ended Year Ended August 31, November 30, -------------------------- 1999 1999 1998 -------------------------------------------- (Unaudited) Revenues $ 2,502,010 $19,361,837 $11,161,196 Cost of revenues 1,677,299 16,483,683 9,595,119 ------------------------------------------ 824,711 2,878,154 1,566,077 Selling, general and administrative expense 694,509 3,238,920 2,819,153 ------------------------------------------ Income (loss) from operations 130,202 (360,766) (1,253,076) ------------------------------------------ Other income: Interest 44,946 18,618 Other 17,225 257,376 ------------------------------------------ 17,225 302,322 18,618 ------------------------------------------ Minority interest in loss of consolidated subsidiary 5,424 56,811 ------------------------------------------ Income (loss) before taxes 152,851 (1,633) (1,234,458) Income taxes ------------------------------------------ Net income (loss) $ 152,851 $ (1,633) $(1,234,458) ========================================== Basic and diluted earnings (loss) per share $ .01 $ (.00) $ (.11) ========================================== Weighted average number of common shares used in basic and diluted earnings (loss) per share computation 14,200,000 12,929,333 11,000,000 ==========================================
Read independent auditors' report. The accompanying notes are integral part of the consolidated financial statements F-3 Callmate Telecom International, Inc. Consolidated Statements of Changes in Stockholders' Equity (Deficit) Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998
Accumulated Common Stock Additional Other ----------------------------- Paid-In Accumulated Comprehensive Shares Amount Capital Deficit Income ------------------------------------------------------------------------------------------ Stock issuance 1 $ 2 Foreign currency translation adjustment $ 7,760 Net loss for year $ (1,234,458) ------------------------------------------------------------------------------------------ Balance, August 31, 1998 1 2 (1,234,458) 7,760 Issuance of stock 9,999 15,998 Acquisition of company 11,000,000 11,000 (11,900) Recapitalization of company (10,000) (16,000) 10,000 Issuance of common stock, net of offering costs of $150,000 1,700,000 1,700 $ 698,900 Common stock issued for offering costs 1,500,000 1,500 148,500 Foreign currency translation adjustment 21,624 Net loss for the year (1,633) ------------------------------------------------------------------------------------------ Balance, August 31, 1999 14,200,000 14,200 846,800 (1,237,991) 29,384
Read independent auditors' report. The accompanying notes are integral part of the consolidated financial statements. F-4 Callmate Telecom International, Inc. Consolidated Statements of Changes in Stockholders' Equity (Deficit) Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998
Accumulated Common Stock Additional Other ----------------------------- Paid-In Accumulated Comprehensive Shares Amount Capital Deficit Income ------------------------------------------------------------------------------------------ Foreign currency translation adjustment (unaudited) (12,392) Net income for the period (unaudited) 152,851 ------------------------------------------------------------------------------------------ Balance, November 30, 1999 (unaudited) 14,200,000 $ 14,200 $ 846,800 $(1,085,140) $ 16,992 ==========================================================================================
Read independent auditors' report. The accompanying notes are integral part of the consolidated financial statements. F-5 Callmate Telecom International, Inc. Consolidated Statements of Cash Flows
Three Months Ended Year Ended August 31, November 30, --------------------------- 1999 1999 1998 ------------------------------------------ (Unaudited) Operating activities Net income (loss) $ 152,851 $ (1,633) $(1,234,458) ---------------------------------------- Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities: Depreciation 65,965 205,291 41,776 Minority interest in net loss of subsidiary (5,424) (56,811) Bad debt expense 414,525 1,707,030 Foreign currency translation adjustment (12,392) 21,624 7,760 Loss on disposal of property and equipment 33,551 (Increase) in: Accounts receivable (182,179) (240,417) (2,815,832) Other receivables, related parties (67,146) (25,632) (38,420) Other assets (146,650) (778,666) (95,298) Increase (decrease) in: Accounts payable (83,318) 3,213,858 2,672,704 Accounts payable, related parties (23,706) 23,706 Accrued expenses (16,696) (135,967) 210,397 Deferred income (4,739) (477,073) 1,232,347 ---------------------------------------- Total adjustments (452,579) 2,150,577 2,946,170 ---------------------------------------- Net cash (used) provided by operating activities (299,728) 2,148,944 1,711,712 ---------------------------------------- Investing activities Change in restricted cash (3,147) 2,624 (163,490) Deposit on stock purchase and exchange agreement (500,000) Minority interest in equity of consolidated subsidiary (1,067) 2,251 0 Acquisition of property and equipment (53,272) (1,023,182) (534,716) ---------------------------------------- Net cash used by investing activities (557,486) (1,018,307) (698,206) ---------------------------------------- Financing activities Proceeds from stockholder advances 493,018 20,849 ---------------------------------------- Net (decrease) increase in cash (364,196) 1,151,486 1,013,506 Cash, beginning of period 2,164,992 1,013,506 ---------------------------------------- Cash, end of period $ 1,800,796 $ 2,164,992 $ 1,013,506 ========================================
Supplemental disclosure of non-cash financing activities: In November 1998, the Company issued 1,500,00 shares of common stock valued at $150,000 for offering costs in connection with a private placement offering. Read independent auditors' report. The accompanying notes are integral part of the consolidated financial statements. F-6 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 1. Background Information, Acquisitions, and Subsequent Event Callmate Telecom International, Inc. (formerly known as Skin Tight, Inc.) was incorporated in July 1992 and merged effectively December 2, 1998 with Callmate Telecom (UK) Limited, a private limited company incorporated in Leeds, England in 1996. Prior to this acquisition, Callmate Telecom International, Inc. was a development stage enterprise. Pursuant to this merger, Callmate Telecom International, Inc. issued 10,000,000 shares of its stock for all of the stock of Callmate Telecom (UK) Limited. As a result of this acquisition, the stockholders of Callmate Telecom (UK) Limited effectively acquired Callmate Telecom International, Inc. and control thereof. Accordingly, this acquisition has been accounted for as a reverse acquisition for financial statement purposes. The number of authorized, issued, and outstanding shares of common stock has been restated in the accompanying consolidated financial statements to reflect the subsequent change in the common stock as if the acquisition had occurred August 1, 1997. Calltel PVT Limited, a private limited company, was incorporated in Karachi, Pakistan in May 1999. Callmate Telecom (UK) Limited owns 65 percent of Calltel PVT Limited. The aforementioned companies will hereinafter be referred to as the "Company." The Company's principal line of business is the sale of prepaid calling cards throughout the United Kingdom, Sweden, Germany, and Pakistan. In addition, the Company provides to customers in the United Kingdom residential prepaid account services, business account services, and international call-back services. The Company's headquarters is located in Bradford, United Kingdom. On October 30, 1999, the Company entered into an exchange and stock purchase agreement with American Multicredit, Inc. (AMC), a Florida corporation, and Diaspora Finance Limited (Diaspora), a Nevis, West Indies corporation. The terms of the agreement call for the Company to purchase two shares of common stock of AMC at a cost of $250,000 per share. In addition, the Company will issue 3,500,000 shares of Class B common stock to the stockholders of AMC and Diaspora in exchange for 500 and 501 shares of common stock of AMC and Diaspora, respectively. As a result of the purchase and exchange, the Company will own a 50.1 percent interest in both AMC and Diaspora. As of March 31, 2000, the Company has not issued or received any of the aforementioned stock as the agreement has not yet closed. The $500,000 paid by the Company to AMC has been reflected as a deposit in other long-term assets in the accompanying November 30, 1999 consolidated balance sheet. Effective March 31, 2000, the Company entered into a share purchase agreement with Zee, Inc. (Zee), a Wyoming corporation, and the stockholders of Zee. The Company agreed to purchase all 660,000 shares of the outstanding common stock of Zee at a cost of $.02 per share. As a result of this transaction, Zee will become a wholly owned subsidiary of the Company. This transaction will be accounted for as a purchase of Zee by the Company. Read independent auditors' report. F-7 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 1. Background Information 2. Significant Accounting Policies The significant accounting policies followed are: The consolidated financial statements as of November 30, 1999 and August 31, 1999 and the period and year then ended present the accounts of Callmate Telecom International, Inc. and its wholly owned subsidiary, Callmate Telecom (UK) Limited, which includes a 65 percent interest in Calltel PVT Limited. The consolidated financial statements for the year ended August 31, 1998 present the accounts of Callmate Telecom (UK) Limited. All significant intercompany accounts and transactions have been eliminated. The consolidated financial statements as of November 30, 1999 and for the three months then ended are unaudited. In the opinion of management of the Company, the unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for a fair presentation of the financial position and results of operations of the Company as of November 30, 1999 and the three months then ended. Results of the three months ended November 30, 1999 are not necessarily indicative of the results to be expected for the entire fiscal year. Effective August 31, 1999, Callmate Telecom (UK) Limited changed its fiscal year-end from July 31st to August 31st. The consolidated financial statements for the year ended August 31, 1998 include the financial information of Callmate Telecom (UK) Limited for the 11-month period August 1, 1997 through July 1998. The consolidated financial statements for the year ended August 31, 1999 include the financial information of Callmate Telecom (UK) Limited for the 13-month period August 1, 1998 through August 31, 1999. As there was minimal financial activity for the month of August 1997, this presentation does not have a material impact on the August 31, 1999 and 1998 consolidated financial statements. The preparation of consolidated 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 disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Read independent auditors' report. F-8 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 2. Significant Accounting Policies (continued) Cash and cash equivalents consist of cash deposits in operating and short- term investment accounts. At November 30, 1999 and August 31, 1999, $2, 217,993 and $1,482,886, respectively, of the Company's cash and cash equivalents is held in trust by the Company's attorney. This cash was raised from the sale of the Company's common stock and advances from the certain stockholders. At November 30, 1999 and August 31, 1999, $164,013 and $160,866, respectively, of the Company's cash and cash equivalents is held as a restricted deposit for transaction processing. A portion of the Company's sales are made on credit to various customers based on each customer's ability to pay. Based on management's review of accounts receivable, no allowance for doubtful accounts is needed at November 30, 1999 or at August 31, 1999 to cover losses arising from accounts receivable. Property and equipment are recorded at cost. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, generally ranging from three to five years. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in income. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that included the enactment date. Read independent auditors' report. F-9 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 2. Significant Accounting Policies (continued) The Company follows Statement of Financial Accounting Standards Board No. 130, "Reporting Comprehensive Income" (FASB No. 130). FASB No. 130 established standards for the reporting and display of comprehensive income (net income and other comprehensive income) and its components in consolidated financial statements. Other comprehensive income includes all non-stockholder changes in equity and is reflected in the stockholders' deficit section of the consolidated balance sheets. Other comprehensive income consists of foreign currency translation adjustments associated with the translation of the functional currencies of Callmate Telecom (UK) Limited (pounds) and Calltel PVT Limited (rupees) into the reporting currency of Callmate Telecom International, Inc. (U.S. dollars). The Company recognizes revenue from the sale of prepaid calling cards at the time the cards are used. Any sales for which cards have not been used are reported as deferred revenue. The Company recognizes revenues from all other telecommunications services at the time the services are provided. Provisions for discounts, returns, and other adjustments are provided for in the same period the related revenues are recorded. Advertising costs are charged to operations when incurred. Advertising expense for the three months ended November 30, 1999 and the years ended August 31, 1999 and 1998 were $164,484, $476,330, and $237,138, respectively. Basic earnings (loss) per common share is calculated by dividing net earnings (loss) by the average number of common shares outstanding during the year. Diluted loss per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive stock options. There are no potentially dilutive stock options outstanding for the periods presented. Read independent auditors' report. F-10 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 3. Property and Equipment Property and equipment consist of:
November 30, August 31, 1999 1999 ------------------------- (Unaudited) Furniture and equipment $ 40,757 $ 37,489 Office equipment 125,196 99,531 Machinery and equipment 1,422,855 1,381,016 ---------- ---------- 1,588,808 1,518,036 Less accumulated depreciation 324,221 240,756 ---------- ---------- $1,264,587 $1,277,280 ========== ==========
4. Lease Commitments and Related Party Transactions The Company leases certain vehicles, equipment, and operating facilities under operating leases with various terms. The following is a schedule by year of the future minimum lease payments required under those leases with an initial or remaining non-cancelable lease term in excess of one year as of November 30, 1999:
Period Ending November 30, ------------- 2000 $ 157,395 2001 157,395 2002 156,257 2003 143,743 2004 143,743 Thereafter 2,024,380 ---------- $2,782,913 ==========
Read independent auditors' report. F-11 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 4. Lease Commitments and Related Party Transactions (continued) Total rent expense under operating leases amounted to $15,306, $20,095, and $27,817 for the three months ended November 30, 1999 and the years ended August 31, 1999 and 1998, respectively. Not included in the above amounts are $35,936 and $95,829 for the three months ended November 30, 1999 and the year ended August 31, 1999, respectively, of rent expense relating to two operating facilities leased from a related party. All amounts due under the lease agreements were waived for the aforementioned periods. The leases are effective from January 1, 1999 through December 31, 2019 and call for annual rentals aggregating $139,743. Accounts receivable, related parties at November 30, 1999 and August 31, 1999 consist of $131,198 and $64,052, respectively, due from a director of the Company. The amounts are due on demand, are non-interest bearing, and are unsecured. Advances from stockholders at November 30, 1999 and August 31, 1999 consist of 1,881,860 and 653,735, respectively. The amounts are due on demand, are non-interest bearing, and are unsecured. The above related party transactions are not necessarily indicative of the amounts that would have been incurred had comparable transactions been entered into with independent parties. 5. Income Taxes The Company has incurred operating losses since its inception that have been carried forward and, therefore, no tax liabilities have been incurred for the periods presented. These operating losses give rise to a deferred tax asset and are as follows:
November 30, August 31, 1999 1999 ------------- ----------- (Unaudited) Deferred tax asset $ 433,300 $ 494,400 Allowance (433,300) (494,400) -------------------------- $ 0 $ 0 ==========================
The Company has available at August 31, 1999 approximately $1,236,100 of unused operating loss carryforwards that may be applied against future taxable income, which would reduce taxes payable by approximately $494,400 in the future. These operating loss carryforwards expire beginning in 2019. Income tax benefits resulting from the utilization of these carryforwards will be recognized in the year in which they are realized for federal and state tax purposes. During the period ended November 30, 1999 the Company utilized approximately $153,000 of these operating losses; therefore, no provision for income taxes has been recorded in the November 1999 consolidated financial statements. Read independent auditors' report. F-12 Callmate Telecom International, Inc. Notes to Consolidated Financial Statements Three Months Ended November 30, 1999 (Unaudited) and Years Ended August 31, 1999 and 1998 6. Segment Information The Company's operations are classified into two principal reportable segments that provide services to different geographic regions. Revenues and long-lived assets of these reportable segments are as follows:
Three Months Ended Year Ended August 31, November 30, ---------------------------------- 1999 1999 1998 ----------------------------------------------- Revenues: Europe $2,226,136 $19,356,60 $11,161,196 Pakistan 275,874 5,230 ----------------------------------------------- $2,502,010 $19,361,837 $11,161,196 =============================================== Operating income (loss): Europe $ 221,286 $ (582,528) $(1,253,076) Pakistan (32,723) (163,507) ------------------------------------------------ 188,563 (746,035) (1,253,076) Elimination entries (58,361) 385,269 ------------------------------------------------ $ 130,202 $ (360,766) $(1,253,076) ================================================ Depreciation Expenses: Europe $ 65,711 $ 204,798 $ 41,776 Pexistan 254 493 -- ------------------------------------------------ $ 65,965 $ 205,291 $ 41,776 ================================================ Three Months Ended Year Ended November 30, August 31, 1999 1999 ----------- ----------- Identifiable Assets: United Kingdom $ 7,661,747 $ 6,722,876 Pakistan 943,680 925,560 ------------------------- 8,605,427 7,648,436 Elimination entries (379,353) (679,702) ------------------------- $ 8,226,074 $ 6,968,734 =========================
Read independent auditors' report. F-13
CALLMATE TELECOM INTERNATIONAL, INC. PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) NOVEMBER 30, 1999 Pro Forma Adjustments Pro Forma Callmate Zee, Inc. Increase (Decrease) Combined ---------------------------------------------------------------------- Assets: Current Assets Cash and cash equivalents $1,800,796 $ 404 $ (13,200) $ 1,788,000 Cash held in trust accounts 2,217,993 2,217,993 Restricted cash and cash equivalents 164,013 164,013 Accounts receivable, trade 1,116,873 1,116,873 Accounts receivable, related parties 131,198 131,198 Prepaid expenses and other current assets 549,352 549,352 ------------- ----------- ------------------- --------------- Total current Assets 5,980,225 404 (13,200) 5,967,429 Property and Equipment, net of a/d 1,264,587 1,264,587 Other Assets 981,262 750 12,540 994,552 ------------- ----------- ------------------- --------------- $8,226,074 $ 1,154 $ (660) $ 8,226,568 ============= =========== =================== =============== Liabilities & S/E: Current Liabilities Accounts Payable $5,804,144 $ 5,804,144 Advances from stockholders 1,881,860 1,881,860 Accrued Expenses 57,734 57,734 Deferred Revenue 750,535 750,535 ------------- ----------- ------------------- --------------- Total Current Liabilities 8,494,273 8,494,273 Minority interest in consolidated subsidiary (61,051) (61,051) Stockholders Equity Common Stock 14,200 660 (660) 14,200 Additional Paid in Capital 846,800 840 (840) 846,800 Retained Earnings (1,085,140) (346) 840 (1,084,646) Accumulated other comprehensive income 16,992 16,992 ------------- ----------- ------------------- --------------- Total stockholders' deficit (207,148) 1,154 (660) (206,654) ------------- ----------- ------------------- --------------- $8,226,074 $ 1,154 $ (660) $ 8,226,568 ============= =========== =================== ===============
See notes to unaudited pro forma condensed combined financial statements. F-14 CALLMATE TELECOM INTERNATIONAL, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS Three months ended November 30, 1999
Pro Forma Adjustments Pro Forma Callmate Zee, Inc. Increase (Decrease) Combined ------------------------------------------------------------------------------------- Sales $ 2,502,010 $ 2,502,010 Cost of Sales 1,677,299 1,677,299 ------------------- -------------- ----------------------- ------------------ Gross Profit 824,711 824,711 Selling, G&A 694,509 161 660 695,330 ------------------- -------------- ----------------------- ------------------ Income from Operations 130,202 (161) (660) 129,381 Other Income 17,225 17,225 Minority Interest in loss of consolidated subsidiary 5,424 5,424 ------------------- -------------- ----------------------- ------------------ Income (loss) before taxes $ 152,851 $ (161) $ (660) $ 152,030 ===================================================================================== Basic and diluted earnings (loss) per share $ 0.01 ==================
See notes to unaudited pro forma condensed combined financial statements. F-15
CALLMATE TELECOM INTERNATIONAL, INC. PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS For the year ended August 31, 1999 Pro Forma Adjustments Pro Forma Callmate Zee, Inc. Increase (Decrease) Combined ------------------------------------------------------------------------------------- Sales $19,361,837 $19,361,837 Cost of Sales 16,483,683 16,483,683 ------------------- -------------- ------------------------ ------------------ Gross Profit 2,878,154 2,878,154 Selling, G&A 3,238,920 161 660 3,239,741 ------------------- -------------- ------------------------ ------------------ Income from Operations (360,766) (161) (660) (361,587) Other Income 359,133 359,133 ------------------- -------------- ------------------------ ------------------ Net loss $ (1,633) $ (161) $ (660) $ (2,454) ===================================================================================== Basic and diluted earnings (loss) per share $ (0.00) ==================
See notes to unaudited pro forma condensed combined financial statements. F-16 CALLMATE TELECOM INTERNATIONAL, INC. NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (A) The following pro forma adjustments reflect Callmate's purchase of Zee, Inc. Pro forma adjustments include the estimated direct costs of acquisition ($13,200) which has been allocated to goodwill and is being amortized over 20 years on the straight line basis. (B) Operations of the Zee, Inc. for the period January 1, 1999, through December 31, 1999, are included in both the pro forma statements of operations for the year ended August 31, 1999 and the three months ended November 30, 1999. These amounts do not materially affect the results of operations for either periods presented. The balance sheet of Zee, Inc. as of December 31, 1999 is presented for November 30, 1999, since these amounts are not materially different. F-17 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CALLMATE TELECOM INTERNATIONAL, INC. Date: April 5, 2000 By: /s/ Mahmoud Hashmi ------------------- --------------------------------- Mahmoud Hashmi Chief Executive Officer EX-10.1 2 ARTICLES OF MERGER EXHIBIT 10.1 ARTICLES OF MERGER OF ZEE, INC. (A Wyoming Corporation) INTO CALLMATE TELECOM INTERNATIONAL, INC. (A Florida Corporation) The Undersigned, being President of Callmate Telecom International, Inc. a Florida corporation, and the President of Zee, Inc., a Wyoming corporation, hereby certify as follows: 1. A merger has been approved by the boards of directors of Callmate Telecom International, Inc., a Florida corporation, and Zee, Inc., a Wyoming corporation. 2. No vote of Shareholders is necessary because 100% of the outstanding shares of Zee, Inc., are owned by Callmate Telecom International, Inc. a) The corporation, Callmate Telecom International, Inc. is the sole survivor and the name of the corporation Callmate Telecom International, Inc.; b) The Articles of Incorporation will not differ from Articles of Incorporation prior to merger; c) Each shareholder of the corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations and relatives rights immediately after the effective date of the merger; d) The voting power of the number of shares outstanding immediately after the merger will not be changed from that existing prior to the merger since no shares are being issued as a result of the merger; e) the number of participating shares outstanding immediately after the merger is the same as immediately before the merger and there will be no change in share; and f) The Board of Directors of each corporation has adopted a resolution approving the Plan of Merger, which is attached hereto as Exhibit A. 3) The merger shall be effective on March 31, 2000 or as soon thereafter as the Articles of Merger are filed with the Secretary of State of Wyoming. Zee, Inc. Callmate Telecom International, Inc. By: /s/ Percy S. Chopping Jr. By: /s/ Mahmoud Hashmi --------------------------- -------------------- ************************** STATE OF COLORADO ) )ss. COUNTY OF JEFFERSON ) On this 30 day of March, 2000, before me, a Notary Public, personally appeared Percy J. Chopping Jr. President of Zee, Inc., and executed on this date the foregoing instrument for the purposes therein contained, by signing on behalf of the above named corporations as a duly authorized officer. IN WITNESS WHEREOF, I have hereunto set my hand and official seal. /s/ Sandra M. Laird ----------------------------- Notary Public Address: 200 So Center St. ---------------------- Casper Wyo 82601 My Commission Expires: July 15, 2001 - ------------------------- STATE OF FLORIDA ) )ss. COUNTY OF BROWARD ) On this 30 day of March, 2000, before me a Notary Public, personally appeared________________, President of Callmate Telecom International, Inc., and executed on this date the foregoing instrument for the purposes therein contained, by signing on behalf of the above named corporations as a authorized officer. IN WITNESS WHEREOF, I have hereunto set my hand and official seal. /s/ Lara Sonsenko ----------------------------- Notary Public Address: 1000 Corp Dr #320 ---------------------- Ft. Laud, FL 33334 My Commission Expires: 1-27-01 [SEAL] - ---------------------- EX-10.2 3 PLAN OF MERGER EXHIBIT 10.2 Exhibit A PLAN OF MERGER THIS PLAN OF MERGER (this "Plan of Merger"), dated as of March 31, 2000, is among Zee, Inc., a Wyoming corporation ("Company"), and Callmate Telecom International, Inc., a Florida corporation (the "Parent") (collectively "Constituent Corporations"). WHEREAS, Parent owns 100% of the shares of the Company and the parties thereto have agreed to the merger of the Company with and into Parent; and WHEREAS, Parent, as the sole shareholder of the Company and, the respective Boards of Directors of Parent and the Company,) have each approved the merger of the Company into Parent in accordance with the Florida Business Corporation Act (the "BCA") and WHEREAS, this Plan of Merger shall be filed with Articles of Merger with the Secretaries of State of Florida and Wyoming in order to consummate the merger of the Company with and into Parent; and WHEREAS, Parent and the Company have agreed to execute and file this Plan of Merger as provided under the Florida BCA and Wyoming law. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Parent and the Company hereby agree as follows: 1. The Merger. At the Effective Time (as defined in Section 1.3 hereof), ---------- in accordance with this Plan of Merger, and Wyoming Law and the BCA, the Company shall be merged (such merger being herein referred to as the "Merger") with and into the Parent, the separate existence of the Company shall cease, and Parent shall continue as the surviving corporation. Parent hereinafter sometimes is referred to as the "Surviving Corporation." 2. Effect of the Merger. When the Merger has been effected, the Surviving -------------------- Corporation shall retain the name "Callmate Telecom International, Inc."; and the Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties of each of the Corporations; and all and singular, the rights, privileges, powers and franchises of each of the Constituent Corporations and all property, real, personal and mixed, and all debts due to either of the Corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of such corporations shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the Surviving Corporation as they were of the Constituent Corporations, and the title to any real estate vested by deed or otherwise, in any such Constituent Corporations, shall not revert or be in any way impaired by reason of the Merger, but all rights of creditors and all liens upon any property of any of said Constituent Corporations shall be preserved unimpaired, and all debts, liabilities and duties of the respective Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. 3. Consummation of the Merger. The parties hereto will cause the Merger -------------------------- to be consummated by filing with the Secretary of State of Florida and Wyoming an article of merger and this Plan of Merger in such form as required by, and executed in accordance with, the relevant provisions of the Wyoming Law and the Florida BCA (the time of such filing being the "Effective Time" and the date of such filing being the "Effective Date"). 4. Articles of Incorporation; Bylaws; Directors and Officers. The --------------------------------------------------------- Articles of Incorporation and bylaws of the Surviving Corporation shall be identical with the Articles of Incorporation and bylaws of the Parent as in effect immediately prior to the Effective Time until thereafter amended as provided therein and under the Florida Law. 5. Conversion of Securities. At the Effective Time, by virtue of the ------------------------ Merger and without any action on the part of Parent, the Company or the holder of any of the shares (the "Shares") of common stock, (the "Common Stock") of the Company: (a) Each Share issued and outstanding immediately prior to the Effective Time shall remain as issued and outstanding common stock of parent without change. (b) Each Share which is held in the treasury of the Company or which is owned by any direct or indirect subsidiary of the Company shall be canceled and retired, and no payment shall be made with respect thereto. (c) Each outstanding or authorized subscription, option, warrant, call, right (including any preemptive right), commitment, or other agreement of any character whatsoever which obligates or may obligate the Parent to issue or sell any additional shares of its capital stock or any securities convertible into or evidencing the right to subscribe for any shares of its capital stock or securities convertible into or exchangeable for such shares, if any, shall remain unchanged. (d) Each share of Common Stock of Company issued and outstanding immediately prior to the Effective Time shall be retired into treasury, of the Surviving Corporation. (e) No Fractional Shares and no certificates or scrip representing such fractional Merger Shares, shall be issued; 6. Taking of Necessary Action; Further Action. Each of Parent, and the ------------------------------------------ Company shall use all reasonable efforts to take all such actions as may be necessary or appropriate in order to effectuate the Merger under the Florida Law, Wyoming law or federal law as promptly as possible. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of the Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of either of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully authorized in the name of their corporation or otherwise to take, and shall take, all such lawful and necessary action. IN WITNESS WHEREOF, Parent, and the Company have caused this Plan of Merger to be executed as of the date first above written. CALLMATE TELECOM INTERNATIONAL, INC. (A Florida corporation) By /s/ Mahmoud Hashmi -------------------------- ZEE, INC. (A Wyoming corporation) By: /s/ Percy S. Chopping Jr. ------------------------- -----END PRIVACY-ENHANCED MESSAGE-----