-----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, EjcCcUNlfUAja9NUd5N8gKxmVzcrRTpVZY1dWGvp0AoSzV+Fa+ted7JqQnKYZI2x PHg6aHQ4L2X7xk73EFuiXg== 0001020568-02-000015.txt : 20021120 0001020568-02-000015.hdr.sgml : 20021120 20021119182038 ACCESSION NUMBER: 0001020568-02-000015 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISTINCTIVE DEVICES INC CENTRAL INDEX KEY: 0000059963 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 131999951 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-02749 FILM NUMBER: 02833942 BUSINESS ADDRESS: STREET 1: ONE BRIDGE PLAZA SUITE 100 CITY: FORT LEE STATE: NJ ZIP: 07024 BUSINESS PHONE: 5612744233 MAIL ADDRESS: STREET 1: ONE BRIDGE PLAZA SUSITE 100 CITY: FORT LEE STATE: NJ ZIP: 07024 FORMER COMPANY: FORMER CONFORMED NAME: LMC DATA INC DATE OF NAME CHANGE: 19761021 10QSB 1 dd930q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from ____ to ____ Commission file number 0-2749 DISTINCTIVE DEVICES, INC. (Name of small business issuer in its charter) Delaware* 13-1999951 (State of incorporation or organization) (IRS Identification No.) One Bridge Plaza, Ste. 100, Fort Lee, NJ 07024 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (201)363-9922 N/A (Issuer's former address) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes(X) No( ) 7,008,582 shares of issuer's common stock, $.001 par value, were outstanding at November 14, 2002. Issuer has no other class of common equity. *Distinctive Devices, Inc., a Delaware corporation, is filing this Form 10-QSB as the successor registrant to Distinctive Devices, Inc., a New York corporation, pursuant to Rule 12g-3(a) of the Securities Exchange Act of 1934. CONTENTS Page PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheet-- September 30, 2002 3 Condensed Consolidated Statements Of Operations-- Three months and nine months ended September 30, 2002 and 2001 February 5, 1998 (Inception) to September 30, 2002 4 Condensed Consolidated Statements Of Changes In Stockholders' Equity-- Inception to September 30, 2002 5 Condensed Consolidated Statements Of Cash Flows-- Nine months ended September 30, 2002 and 2001 February 5, 1998 (Inception) to September 30, 2002 6 Notes To The Condensed Consolidated Financial Statements 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 11 PART II - OTHER INFORMATION Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14 Item 3. CONTROLS AND PROCEDURES 14 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14 Item 6. EXHIBITS AND REPORTS ON FORM 8-K 15 SIGNATURES 16 PART 1 - FINANCIAL INFORMATION Item 1.- FINANCIAL STATEMENTS DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) September 30, 2002 ------------ ASSETS Current Assets Cash and cash equivalents $ 129,743 Accounts receivable 178,669 Inventories 102,550 Loans receivable 360,771 Prepaid expenses and advances 171,552 Assets of discontinued operations and assets held for sale 88,375 ------- Total Current Assets 1,031,660 Property and equipment, net 268,933 Goodwill 11,221 Other assets 31,645 --------- $ 1,343,459 ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 83,533 Accrued professional fees 25,967 ------- Total Current Liabilities 109,500 Convertible subordinated debentures 400,000 ------- Total Liabilities 509,500 ------- Minority interest 2,116 ------- Stockholders' Equity (Note 14) Preferred Stock, $1 par, 1,000,000 shares authorized; Convertible Preferred Stock, Series C, $1 par: 60,000 shares designated; 10,000 outstanding 10,000 Convertible Preferred Stock, Series D, $1 par: 250,000 shares designated, 173,333 outstanding 173,333 Common Stock, $.30 par, 20,000,000 shares authorized; 3,189,137 shares outstanding 956,741 Additional paid-in capital 4,026,347 Deficit accumulated during the development stage (4,334,578) --------- 831,843 --------- Total Stockholders' Equity $ 1,343.459 ========= The accompanying notes are an integral part of these financial statements. DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Period From Three Months Ended Nine Months Ended February 5,1998 September 30, September 30, (Inception) to 2002 2001* 2002 2001* September 30, 2002 ------- ------ ------ ------ ------- Revenue Operating $ (70,882) $ - $ 727,713 $ - $ 727,713 Other - 33,500 - 33,500 35,888 Cost of goods sold 34,342 - (685,637) - (685,637) Operating expenses (196,767) (205,621) (592,221) (778,253) (2,657,982) -------- ------- ------- ------- --------- Operating loss (233,307) (172,121) (550,145) (744,753) (2,580,018) Other income (expense): Interest expense (10,005) - (30,005) - (30,005) Interest and other income 5,598 4,066 7,938 18,483 107,413 Loss on disposal of equipment - - - - (6,500) -------- ------- ------- ------- ------- Other income (expense), net (4,407) 4,066 (22,067) 18,483 70,908 -------- ------- ------- ------- ------- (237,714) (168,055) (572,212) (726,270) (2,509,110) Minority interest - - - - 191,866 ------- ------- ------- ------- --------- Loss from continuing operations (237,714) (168,055) (572,212) (726,270) (2,317,244) ------- ------- ------- ------- --------- Discontinued operations: Loss from discontinued operations, net of tax benefit of $0 after valuation allowance - - - - (1,605,078) Loss on sale and write-down of assets from discontinued operations, net of tax benefit of $0 after valuation allowance - (303,007) (58,784) (351,091) (412,256) ------- -------- ------- ------- ------- Loss from discontinued operations - (303,007) (58,784) (351,091) (2,017,334) ------- -------- ------- ------- --------- Net loss $ (237,714) $ (471,062) $ (630,996) $(1,077,361) $(4,334,578) ======= ======= ======= ========= ========= Weighted average shares of common stock outstanding (1) 3,189,137 2,894,137 3,189,137 2,875,372 2,235,018 ========= ========= ========= ========= ========= Loss per share - basic and diluted: Loss from continuing operations $(0.07) $(0.06) $(0.18) $(0.25) $(1.04) Loss from discontinued operations - (0.10) (0.02) (0.12) (0.90) ---- ---- ---- ---- ---- Net loss per share - basic and diluted $(0.07) $(0.16) $(0.20) $(0.37) $(1.94) ==== ==== ==== ==== ==== (1) The weighted average shares of common stock outstanding are not adjusted for potential effects of the Company's convertible preferred stock or its convertible subordinated debentures because of their antidilutive effect. *During the three and nine months ended September 30, 2001, the Company primarily focused its efforts in one segment, developing its wireless ISP business which has been discontinued (Note 13). The accompanying notes are an integral part of these financial statements.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
Addi- Deficit Total Preferred tional Shares Accumulated Stock Stock Common Stock Paid-in to be During the Devel- Holders' Shares Amount Shares Amount Capital Issued opment Stage Equity Initial issuance of shares for cash - $ - 1,000,000 $ 300,000 $ (299,700) - $ - $ 300 Net loss - 1998 - - - - - - (195) (195) --- ---- --------- ------- ------- --- ---- --- Balance at December 31, 1998 - - 1,000,000 300,000 (299,700) - (195) 105 Issuance of shares for cash - - 341,890 102,567 699,597 - - 802,164 Acquisition of net assets on recapitalization - - 686,650 205,995 (1,666) - - 204,329 Issuance of shares for finder's fee - - 20,286 6,086 85,198 - - 91,284 Net loss - 1999 - - - - - - (606,764) (606,764) Balance at --- --- ------ ----- ------ --- ------- ------- December 31, 1999 - - 2,048,826 614,648 483,429 - (606,959) 491,118 Issuance of shares for cash - - 526,135 157,841 2,998,969 - - 3,156,810 Issuance of shares for acquisition of minority interest - - 285,606 85,681 (85,681) - - - Shares to be issued for finder's fee - - - - - 73,034 - 73,034 Reduction of minority interest - - - - - - 21,193 21,193 Net loss - 2000 - - - - - - (1,783,914) (1,783,914) --- --- --- --- --- --- --------- --------- Balance at December 31, 2000 - - 2,860,567 858,170 3,396,717 73,034 (2,369,680) 1,958,241 Issuance of shares for acquisition of minority interest - - 30,410 9,123 (9,123) - - - Issuance of shares for finder's fee - - 3,160 948 72,086 (73,034) - - Issuance of shares for acquisition of shares of subsidiary - - 295,000 88,500 - - - 88,500 Exchange of common for Series C preferred shares 10,000 10,000 (208,333) (62,500) 52,500 - - - Issuance of shares for cash - - 208,333 62,500 37,500 - - 100,000 Net loss - 2001 - - - - - - (1,333,902) (1,333,902) ------ ------ ------- ------ ------ ----- --------- --------- Balance at December 31, 2001 10,000 10,000 3,189,137 956,741 3,549,680 - (3,703,582) 812,839 Issuance of Series D preferred shares 173,333 173,333 - - 476,667 - - 650,000 Net loss - - - - - - (630,996) (630,996) ------- ------- -------- ------ --------- ----- ------- ------ Balance at September 30, 2002 183,333 $ 183,333 3,189,137 $ 956,741 $4,026,347 - $(4,334,578) $ 831,843 ======= ======= ========= ======= ========= ==== ========= ======= The accompanying notes are an integral part of these financial statements.
DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Period From Nine Months Ended February 5, 1998 September 30, (Inception) to 2002 2001 September 30, 2002 Cash flows from operating activities $ (917,331) $ (664,118) $(2,827,840) ------- ------- --------- Cash flows from investing activities: Acquisition of equipment (57,369) (29,188) (922,726) Proceeds from sale of equipment - - 2,500 Issuance of notes receivable (360,771) (8,000) (380,771) Payments received on notes receivable - - 20,000 Cash received on acquiring Webpulse - - 13,117 Cash effect of recapitalization - - 398,904 -------- ------ ------- Net cash (used in) investing activities (418,140) (37,188) (868,976) ------- ------ ------- Cash flows from financing activities: Issuance of convertible debentures - - 400,000 Minority interest - - 2,116 Issuance of preferred stock 650,000 - 650,000 Issuance of common stock - 73,034 4,254,265 ------- ------ --------- Net cash provided by financing activities 650,000 73,034 5,306,381 ------- ------ --------- Increase (decrease) in cash from continuing operations (685,471) (628,272) 1,609,565 ------- ------- --------- Net cash provided by (used in) discontinued operations 125,256 - (1,479,822) ------- ------- --------- Cash Beginning of period 689,958 985,032 - ------- ------- --------- End of period $ 129,743 $ 356,760 $ 129,743 ======= ======= =======
The accompanying notes are an integral part of these financial statements. DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF CONSOLIDATION (NOTE 14) The accompanying unaudited condensed consolidated financial statements include the accounts of Distinctive Devices, Inc. and its subsidiaries, Webpulse Consulting, Inc., Distinctive Devices (India), PLC (96.6% owned) and International Gemsource, Inc. Eagleview Industries, Inc. had been inactive and was liquidated effective December 31, 2001. NOTE 2: INTERIM FINANCIAL DATA In the opinion of management, the accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and generally accepted accounting principles for interim financial information. These financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The annual financial statements of the Company as of December 31, 2001 should be read in conjunction with these statements. The financial information included herein has not been audited. However, management believes the accompanying unaudited interim financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the consolidated financial position of the Company as of September 30, 2002 and the results of operations for the three months and nine months and the period from February 5, 1998 (inception) to September 30, 2002, and cash flows for the nine months ended September 30, 2002 and 2001 and the period from February 5, 1998 (inception) to September 30, 2002. The results of operations and cash flows for the nine-month period are not necessarily indicative of the results of operations or cash flows for the year ending December 31, 2002. NOTE 3: REVENUE RECOGNITION Sales are recognized when goods are shipped in response to a customer's order, pricing is final or determinable, and collection is reasonably assured. The Company generally gives its gemstone customers the right to return merchandise purchased and records an accrual at the time of sale for the effect of the estimated returns. NOTE 4: INVENTORIES Inventories consist primarily of gemstones, held by a subsidiary. Inventories are stated at cost, which approximates market, on the first-in, first-out, basis. NOTE 5: LOANS RECEIVABLE Loans receivable at September 30, 2002 consists of an advance made to Real Time Systems Ltd. of $360,771 which calls for repayment within one year at 12% annual interest, payable quarterly. NOTE 6: PREPAID EXPENSES AND ADVANCES The Company advanced funds to vendors to be utilized toward the future production of the vendors' finished goods. At September 30, 2002, such advances aggregated $167,382. DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 7: ASSETS HELD FOR SALE Assets held for sale represent equipment and inventories related to the Company's discontinued wireless ISP operations which have been segregated and written down to their net realizable value. During the nine months ended September 30, 2002, certain assets held for sale were sold resulting in a loss of $58,784 of which $4,125 was a write-down of equipment to its net realizable value. NOTE 8: CONVERTIBLE SUBORDINATED DEBENTURES The Company has $400,000 principal amount of 10% convertible subordinated debentures outstanding (the "Debentures") which mature in 2006. The Debentures are convertible into common stock at the holder's option at conversion prices ranging from $1.50 in 2002 to $4.50 in 2006. The Debentures may be redeemed by the Company, in whole or in part, at percentages of principal ranging from 105% in 2002 to 101.25% in 2006. The Debentures are subordinated to obligations for any money borrowed from financial institutions. NOTE 9. CAPITAL STRUCTURE (NOTE 14) Convertible Preferred Stock The Company has 1,000,000 shares of preferred stock, par value $1, authorized. The Board has authority to issue the shares in one or more series and to fix the designation, preferences, powers and other rights as it deems appropriate. Series C: The Company has designated 60,000 shares as Series C convertible preferred stock of which 10,000 shares are outstanding. Each such share is convertible into 20.83 shares of common stock. Series D: In 2002, the Company designated 250,000 shares as Series D convertible preferred stock of which 173,333 shares were issued on August 6, 2002 for $650,000. Each share is convertible into 20.83 shares of common stock and has the same rights as Series C except that it is senior to all shares currently outstanding in the event of liquidation. All Series C and Series D shares outstanding will be automatically converted, on a 20.83 to 1 basis, to common stock, following shareholder approval of an increase in common share capital to a number of common shares sufficient for conversion of all preferred shares outstanding. Until such approval, each preferred share has voting, dividend and liquidation rights equivalent to 20.83 shares of common stock. Common Stock The Company has 20,000,000 authorized shares of common stock, par value $.30. Common stock has one vote per share for election of directors and all other matters submitted to a vote of stockholders. Shares of common stock do not have cumulative voting, preemptive, redemption or conversion rights. DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10. NEW SUBSIDIARY In January 2002, the Company organized International Gemsource, Inc., a Delaware corporation, based in the Company's offices in Fort Lee, New Jersey. The subsidiary is engaged in trading rough and polished gemstones. NOTE 11. GOING CONCERN As shown in the accompanying financial statements, the Company incurred net losses of $237,714, $630,996 and $4,334,578 during the three months and nine months ended September 30, 2002, and the period from February 5, 1998 (inception) to September 30, 2002, respectively. The Company's working capital at September 30, 2002 of approximately $922,000 is not sufficient to fund operations at the current level. These factors raise a substantial doubt about the Company's ability to continue as a going concern. Management of the Company is considering acquiring or merging with an operating company, commencing new operations and obtaining financing through the issuance of debt and stock. The ability of the Company to continue as a going concern is dependent on management's ability to continue to obtain financing, to successfully implement its business plan and to establish profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 12. SEGMENT INFORMATION The Company reports segments based upon the management approach. The management approach designates the internal reporting that is used by management for making operating decisions and assessing performance. For the three months and nine months ended September 30, 2002, the Company operated three segments, Distribution of RTA Equipment, Gemstone Trading and Software Development.
Distribution of RTA Gemstone Software Equipment Trading Development Corporate Consolidated For the three months ended September 30, 2002: Revenue $ - $ (75,626) $ 4,744 $ - $ (70,882) Operating income (loss) - (9,564) (44,487) 179,256) (233,307) Other income (expense) - - 5,276 (9,683) (4,407) Income (loss) from continuing operations - (9,564) (39,211) (188,939) (237,714) For the nine months ended September 30, 2002: Revenue 374,614 347,113 5,986 - 727,713 Operating income (loss) 44,698 (9,508) (140,341) (444,994) (550,145) Other income (expense) - - 5,621 (27,688) (22,067) Income (loss) from continuing operations 44,698 (9,508) (134,720) (472,682) (572,212) Assets $158,169 $126,672 $717,140* $341,478** $1,343,459
*Includes assets of DDI-India, located in India, of $621,172. **Includes assets held for sale of $88,375. NOTE 13. DISCONTINUED OPERATIONS On July 2, 2001, the Board of Directors of the Company approved the discontinuation of its wireless ISP business operations. Accordingly, the Company segregated the assets, liabilities and operating expenses as of September 30, 2001. NOTE 14. SUBSEQUENT EVENTS At a Special Meeting of Shareholders, held September 30, 2002, stockholders of Distinctive Devices, Inc., a New York corporation ("DDI-NY"), approved an increase in the authorized shares of common stock to 100,000,000 shares, a reverse split of the Company's outstanding common stock and a migratory merger into its wholly-owned subsidiary, Distinctive Devices, Inc., a Delaware corporation (DDI-DE). In early November 2002, (i) the common shares of DDI-NY were reverse split on a one-for-six basis, (ii) the Company's Class C and Class D preferred shares were converted into 3,819,445 common shares of DDI-NY thereby increasing the number of such shares outstanding to 7,008,582 and (iii) DDI-NY was merged into DDI-DE on a share-for-share basis. As a result of the merger, DDI-DE, the surviving corporation, has authorized common share capital of 50,000,000 shares, par value $.001, of which 7,008,582 shares are now outstanding, and preferred share capital of 5,000,000 shares, par value $.001, of which none are now outstanding. DISTINCTIVE DEVICES, INC. AND SUBSIDIARIES (Development Stage Companies) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 14. (continued) The financial statements, as of September 30, 2002, have been retroactively adjusted to reflect the one-for-six reverse split of the common stock but have not been so adjusted for the subsequent conversion of preferred shares to common nor the change in par value of the common stock as a result of the migratory merger. The following pro forma condensed stockholders' equity gives effect to the above events as if they had occurred on September 30, 2002:
As Reported in Pro Forma Accompanying Adjustments for Pro Forma Financial Subsequent Stockholders' Statements Events Equity ---------- --------- --------- Preferred stock $ 183,333 $ (183,333) (2) $ - Common stock 956,741 (953,552) (1) 7,008 3,819 (2) Additional paid-in capital 4,026,347 953,552 (1) 5,159,413 179,514 (2) Deficit accumulated during the development stage (4,334,578) - (4,334,578) --------- --------- Total stockholders' equity $ 831,843 $ 831,843 ======== =======
(1) Change in par value of common stock. (2) Conversion of preferred stock to common stock. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Plan of Operation Efforts continue to market the products and services offered by our operating divisions, namely, design and development of IT solutions for client businesses in India, gemstone trading on an international basis and distribution of multi-access DSL landline equipment to legacy telephone companies (telcos) in India, Russia and elsewhere. We believe that discussions now underway with the two largest telcos in India may lead to significant equipment orders in the near future. The foregoing activities are principally managed by our subsidiary in India, Distinctive Devices (India), PLC ("DDI-Indi"), headquartered in Mumbai (Bombay). To augment its IT service solutions, DDI-India has reseller agreements with Sun Microsystems, Citrix Systems and Baan (of Germany), among others. Also, DDI-India recently began enrolling students in classes conducted by the University of Phoenix under an arrangement with Hughes Escort Communications whereunder Hughes delivers class materials, graphics and lectures in real time, via satellite, to classrooms located at DDI-India's offices in Mumbai. The curriculum offered can lead to undergraduate and graduate degrees in a range of subjects. Our classrooms are also utilized for employee training purposes by local offices of multi-national companies. Corporate information centers, worldwide, transmit course materials to their Mumbai employees via satellite. Local firms served by DDI- India to date include Citibank, Compaq and Xerox. To assure sources of supply for the multi-access equipment that DDI-India markets to telcos, the Company has loaned and advanced more than $500,000 to the key producer of these products, a firm in India, to provide working capital to fulfill current and future purchase orders. Funds for this purpose became available from the Company's private placement of preferred stock in August 2002 (more below). Preliminary discussions have been held with regard to the possible acquisition of this key vendor. Operating Results Net sales for the nine months ended September 30, 2002 were $727,713. During the last three months of this period, diamonds previously sold were returned by a customer resulting in negative sales of $70,882. Given the time required to completely inspect large quantity gemstone shipments, such returns are not unusual in this industry. After adjustments for other income and interest expense, the net loss from continuing operations for the nine months ended September 30, 2002 amounted to $572,212 compared to $726,270 a year earlier, primarily due to a reduction in operating expenses from $778,253 in 2001 to $592,221 in 2002. For the three months ended September 30, 2002, the loss from continuing operations was $237,714 compared to $168,055 in the prior year, primarily due to the return of goods in 2002, mentioned above. After accounting for losses incurred on the disposal and write-down of assets from discontinued operations, the net loss for the nine months ended September 30, 2002 amounted to $630,996, compared to $1,077,361 a year earlier. For the three months then ended, the net loss was $237,714 compared to $471,062 in 2001. During the nine-month period in 2002, $125,256 was realized from the sale of assets from discontinued operations. Liquidity Working capital at September 30, 2002 approximated $922,000, as a consequence of the issuance of 173,333 shares of Class D Preferred Stock for $650,000 in August 2002. (See Notes 9 and 14 to the within financial statements). Even so, unless sales increase and profits are realized, added working capital will be needed at a future date. No assurance can be given that the future placement of new securities can be accomplished, or would not be dilutive to current shareholders. Special Meeting of Shareholders A Special Meeting in lieu of an Annual Meeting of Shareholders was held on September 30, 2002, at which time holders approved proposals to (i) elect management's slate of five nominees as directors, (ii) change the Company's state of incorporation from New York to Delaware, (iii) ratify the Company's 2001 Stock Option Plan, (iv) authorize the Board of Directors to reverse split the Company's outstanding Common Stock within a range of one-for-four to one-for-ten, (v) increase the number of authorized shares of Common Stock to 100,000,000 and Preferred Stock to 5,000,000, with a change in par value to $.001 per share for each class of stock and (vi) amend the Certificate of Incorporation to eliminate certain liabilities of directors of the Company. Immediately after the shareholder meeting adjourned, directors determined that the reverse split of Common Stock would be effected on a one-for six basis. Subsequent Events After September 30, 2002, and in compliance with the foregoing shareholder actions, the New York corporation ("DDI-NY"), by amendment to its Certificate of Incorporation, increased its authorized common share capital. This enabled DDI-NY to automatically convert all outstanding preferred shares, namely, 10,000 shares of Class C and 173,333 shares of Class D Preferred Stock, into 22,916,666 pre-split shares of Common Stock. As a consequence, DDI-NY had 42,051,490 pre-split common shares, and no preferred shares, outstanding. Subsequently, DDI-NY reverse split the common shares on a one-for-six basis, reducing such outstanding shares to 7,008,582. Thereafter, DDI-NY was merged into a wholly-owned Delaware subsidiary, Distinctive Devices, Inc. (DDI-DE), on a share-for-share basis. DDI-DE's authorized capital now comprises 50,000,000 shares of Common Stock, $.001 par value, and 5,000,000 shares of Preferred Stock, also $.001 par. Except for the reduction in common share capital to 50,000,000 shares, other relevant matters approved by the DDI-NY shareholders on September 30, 2002 are similarly included in DDI-DE's Certificate of Incorporation. A Current Report on Form 8-K, with exhibits, was filed for an event of November 5, 2002, which more fully describes the foregoing Subsequent Events. On November 12, 2002, the Common Stock of DDI-DE began trading on the Bulletin Board under a new symbol, DDVS. The DDI-NY shares (symbol DDEV) no longer trade. Risks and Uncertainties The Company is subject to all the risks inherent in an early stage company in the software, IT systems and telecommunication industries. These risks include, but are not limited to, a limited operating history, limited resources, dependence upon consumer and business acceptance of our products and services, the changes taking place in the electronic commerce industry and the general economic climate. The Company is also exposed to foreign currency exchange rate risk as to its assets and liabilities denominated in currencies other than the U.S. dollar, primarily the Indian rupee. The Company's operating results may be materially affected by the foregoing factors. STATEMENTS CONTAINED HEREIN AND ELSEWHERE IN THIS REPORT CONCERNING FUTURE ACTIVITIES, PERFORMANCE OR INTENTIONS ARE FORWARD-LOOKING STATEMENTS WHICH, BY THEIR NATURE, INVOLVE RISK AND UNCERTAINTY BECAUSE THEY RELATE TO EVENTS, AND DEPEND ON CIRCUMSTANCES, THAT WILL OCCUR IN THE FUTURE, MANY OF WHICH ARE NOT WITHIN THE COMPANY'S CONTROL. ACTUAL RESULTS AND EVENTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS AS THE RESULT OF KNOWN OR UNKNOWN RISKS, UNCERTAINTIES AND/OR OTHER FACTORS AND THERE CAN BE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE CORRECT. PART II OTHER INFORMATION Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS In August 2002, the Company issued 173,333 shares of Series D Convertible Preferred Stock to a director of the Company for $650,000. The transaction is exempt pursuant to Section 4 (2) of the Securities Act. No underwriter was involved with this transaction. Item 3. CONTROLS AND PROCEDURES Our President, Treasurer and Chief Financial Officer has concluded, based on an evaluation made within 90 days of the filing of this report, that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the previously mentioned evaluation. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) A Special Meeting In Lieu of an Annual Meeting of Shareholders (the "Meeting") of Distinctive Devices, Inc., a New York corporation ("DDI-NY"), was held on September 30, 2002. (c) The following matters were voted upon at the Meeting, including votes cast for, against or withheld, as well as the number of abstentions and broker non-votes, as to each matter, including a separate tabulation with respect to each director nominee. (i) A tabulation with respect to votes cast for director nominees follows: Authority For Withheld Sanjay Mody 33,508,588 348,670 Alexander Ammosov 33,558,228 299,030 Earl M. Anderson, Jr. 33,494,488 362,770 Walter E. Freeman 33,556,588 300,670 Shrikant C. Mehta 33,558,558 298,670 The Company has no other directors. (ii) Approve a change in the state of incorporation from New York to Delaware. For: 28,576,625 Against: 242,670 Broker Non-Votes: 4,978,333 Abstain: 60,140 (iii) Ratify adoption of the 2001 Stock Option Plan For: 27,839,771 Against: 1,019,183 Broker Non-Votes: 4,978,333 Abstain: 19,971 (iv) Authorize directors to effect a reverse split of common shares (within a range between one-for-four and one-for-ten). For: 32,486,401 Against: 1,364,371 Broker Non-Votes: None Abstain: 6,481 (v) Approve an increase in authorized Common Stock to 100,000,000 shares and Preferred Stock to 5,000,000 shares, and to change the par value of each class to $.001. For: 25,974,315 Against: 2,867,112 Broker Non-Votes: 4,978,333 Abstain: 37,731 (vi) Approve an amendment to the Certificate of Incorporation to eliminate certain liabilities of directors to the Company. For: 33,194,484 Against: 576,768 Broker Non-Votes: None Abstain: 86,106 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 2.1 (1) Agreement and Plan of Merger, dated July 24, 2002, between DDI-NY and DDI-DE. 3.1 (2) Certificate of Amendment to Certificate of Incorporation for DDI-NY, filed July 31, 2002 with the Secretary of State of the State of New York. 3.2 (2) Certificate of Amendment to Certificate of Incorporation for DDI-NY, filed November 5, 2002 with the Secretary of State of the State of New York. 3.3 (3) Certificate of Incorporation and By Laws for DDI-DE, filed July 10, 2001, with the Secretary of State of the State of Delaware. 3.4 (2) Certificate of Merger of DDI-NY into DDI-DE, filed November 5, 2002 with the Secretary of State of the State of New York. 3.5 (2) Certificate of Merger of DDI-NY into DDI-DE, filed November 6, 2002 with the Secretary of State of the State of Delaware. 4.1 (3) DDI-DE 2002 Stock Option Plan. 10.1 (3) Stock Purchase Agreement between DDI-NY and Mr. Shrikant C. Mehta. 99.1 (2) Press Release dated November 11, 2002. 99.2 (3) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.3 (3) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 99.4 (3) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1) Incorporated by reference to Exhibit A of the Definitive Proxy Statement of DDI-NY dated August 28, 2002. (2) Incorporated by reference to Items 5 and 7 of the Report on Form 8-K filed for an event of November 5, 2002. (3) Filed herewith. (b) Reports on Form 8-K No Reports on Form 8-K were filed during the three months ended September 30, 2002. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DISTINCTIVE DEVICES, INC. (Registrant) Dated: November 18, 2002 By: /s/ SANJAY MODY ------------------- Sanjay Mody President and CEO Treasurer and CFO EX-3 3 ex3-3.txt EXHIBIT 3.3 CERTIFICATE OF INCORPORATION OF DISTINCTIVE DEVICES, INC. The undersigned, for the purpose of organizing a corporation pursuant to the provisions of the General Corporation Law of the State of Delaware (the "DGCL"), does make and file this Certificate of Incorporation and does hereby certify as follows: First: Name. The name of the corporation is DISTINCTIVE DEVICES, INC. (hereinafter referred to as the "Corporation"). Second: Registered Office. The registered office of the Corporation is to be located in the City of Wilmington, County of New Castle, in the State of Delaware. The name of its registered agent is the Corporation Service Company, whose address is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. Third: Purposes. The nature of the business or purposes to be conducted or promoted by the Corporation are to engage in any lawful act or activity for which corporations may be organized under the DGCL. Fourth: Capital Stock. A. Authorized Shares. The total number of shares of stock which the Corporation shall have authority to issue is Fifty Five Million (55,000,000) shares, of which Fifty Million (50,000,000) shares shall be Common Stock of the par value of $.001 per share (hereinafter called "Common Stock") and Five Million (5,000,000) shares shall be Preferred Stock of the par value of $.001 per share (hereinafter called "Preferred Stock"). B. Provisions relating to Preferred Stock. Shares of Preferred Stock may be issued from time to time in series, and the Board of Directors of the Corporation is hereby authorized, subject to the limitations provided by law, to establish and designate one or more series of the Preferred Stock, to fix the number of shares constituting each series, and to fix the designations, powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of each series and the variations and the relative rights, preferences and limitations as between series, and to increase and to decrease the number of shares constituting each series. The authority of the Board of Directors of the Corporation with respect to each series shall include, but shall not be limited to, the authority to determine the following: (i) The designation of such series. (ii) The number of shares initially constituting such series. (iii) The increase, and the decrease to a number not less than the number of the outstanding shares of such series, of the number of shares constituting such series theretofore fixed. (iv) The rate or rates, and the conditions upon and the times at which dividends on the shares of such series shall be paid, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or on any other series of stock of the Corporation, and whether or not such dividends shall be cumulative, and, if such dividends shall be cumulative, the date or dates from and after which they shall accumulate. (v) Whether or not the shares of such series shall be redeemable, and, if such shares shall be redeemable, the terms and conditions of such redemption, including, but not limited to, the date or dates upon or after which such shares shall be redeemable and the amount per share which shall be payable upon such redemption, which amount may vary under different conditions and at different redemption dates. (vi) The rights to which the holders of the shares of such series shall be entitled upon the voluntary or involuntary liquidation, dissolution or winding up of, or upon any distribution of the assets of, the Corporation, which rights may be different in the case of a voluntary liquidation, dissolution or winding up than in the case of such an involuntary event. (vii) Whether or not the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if such shares shall have such voting rights, the terms and conditions thereof, including, but not limited to, the right of the holders of such shares to vote as a separate class either alone or with the holders of shares of one or more other series of Preferred Stock and the right to have more than one vote per share. (viii) Whether or not a sinking fund or a purchase fund shall be provided for the redemption or purchase of the shares of such series, and, if such a sinking fund or purchase fund shall be provided, the terms and conditions thereof. (ix) Whether or not the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation, and, if provision be made for conversion or exchange, the terms and conditions of conversion or exchange, including, but not limited to, any provision for the adjustment of the conversion or exchange rate or the conversion or exchange price. (x) Any other relative rights, preferences and limitations. C. Provisions relating to Common Stock. (i) Subject to the preferential dividend rights applicable to shares of the Preferred Stock, as determined by the Board of Directors of the Corporation pursuant to the provisions of part B of this Article FOURTH, the holders of shares of the Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation. (ii) Subject to the preferential liquidation rights and except as determined by the Board of Directors of the Corporation pursuant to the provisions of part B of this Article FOURTH, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, the holders of shares of the Common Stock shall be entitled to receive all of the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares of the Common Stock held by them. (iii) Except as otherwise determined by the Board of Directors of the Corporation pursuant to the provisions of part B of this Article FOURTH, the holders of shares of the Common Stock shall be entitled to vote on all matters at all meetings of the stockholders of the Corporation (or consents in lieu of a meeting), and shall be entitled to one vote for each share of the Common Stock entitled to vote at such meeting (or a consent in lieu of a meeting), voting together with the holders of the Preferred Stock who are entitled to vote, and not as a separate class. Fifth: Incorporator. The name and mailing address of the incorporator is: Name Mailing Address Bruce A. Rich c/o Thelen Reid & Priest LLP 40 West 57th Street New York, NY 10019 Sixth: Compromise. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Seventh: Board of Directors and By-Laws. All corporate powers shall be exercised by the Board of Directors, except as otherwise provided by statute or by this Certificate of Incorporation, or any amendment thereof, or by the By-Laws. Directors need not be elected by written ballot. The By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation, except as otherwise provided by law, but any by-law made by the Board of Directors is subject to amendment or repeal by the stockholders of the Corporation. Eighth: Limited Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i)for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii)for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii)under Section 174 of the DGCL, or (iv)for any transaction from which the director derived any improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. Ninth: Indemnification. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, or by or in the right of the Corporation to procure judgment in its favor, by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, in accordance with and to the full extent permitted by statute. Expenses (including attorneys' fees) incurred in defending any civil, criminal administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, manager, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under this Certificate of Incorporation, the By-Laws or any agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a direc tor, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named, hereby declares and certifies that the facts herein stated are true, and accordingly has hereunto set his hand this 9th day of July, 2001. --------------------------- Bruce A. Rich, Incorporator BY-LAWS OF DISTINCTIVE DEVICES, INC. ARTICLE I Stockholders' Meetings; Voting ------------------------------ Section 1.1. Annual Meetings. An annual meeting of stockholders shall be held for the election of directors on the first Monday in May of each year, if not a legal holiday, and, if a legal holiday, then on the next day not a legal holiday, at 10:00 o'clock in the forenoon at such time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. Any other proper business may be transacted at the annual meeting. Section 1.2. Special Meetings. Special meetings of stockholders may be called at any time by the Chairman of the Board, the President, the Board of Directors, or as provided in Section 2.2, to be held at such date, time and place either within or without the State of Delaware as may be stated in the notice of the meeting. A special meeting of stockholders shall be called by the Secretary upon the written request, stating the purpose of the meeting, of stockholders who together own of record at least [twenty-five percent (25%)] of the outstanding shares of stock entitled to vote at such meeting. Section 1.3. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. The Corporation shall, at the written request of any stockholder, cause such notice to such stockholder to be confirmed to such other address and/or by such other means as such stockholder may reasonably request, provided that if such written request is received after the date any such notice is mailed, such request shall be effective for subsequent notices only. Section 1.4. Adjournments. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.5. Quorum. At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these by-laws, the holders of a majority of the outstanding shares of each class of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum. With respect to any matter on which stockholders vote separately as a class, the holders of a majority of the outstanding shares of such class shall constitute a quorum for a meeting with respect to such matter. Two or more classes or series of stock shall be considered a single class for purposes of determining existence of a quorum for any matter to be acted on if the holders thereof are entitled or required to vote together as a single class at the meeting on such matter. In the absence of a quorum the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided by Section 1.4 of these by-laws until a quorum shall attend. Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 1.7. Voting; Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of any class of stock entitled to vote thereon present in person or by proxy at such meeting shall so determine. At all meetings of stockholders for the election of directors, such election and all other elections and questions shall, unless otherwise provided by law or by the certificate of incorporation or these by-laws, be decided by the vote of the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at the meeting, voting as a single class. Section 1.8. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Section 1.10. Consent of Stockholders in Lieu of Meeting. To the extent provided by any statute at the time in force, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, by any statute, by the certificate of incorporation or by these by-laws, the meeting and prior notice thereof and vote of stockholders may be dispensed with if the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted shall consent in writing to such corporate action without a meeting by less than unanimous written consent and notice thereof shall be given to those stockholders who have not consent in writing. ARTICLE II Board of Directors Section 2.1. Powers; Number; Qualifications. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the certificate of incorporation. The number of Directors which shall constitute the whole Board of Directors shall not be less than one (1) nor more than nine (9). Within such limits, the number of directors may be fixed from time to time by vote of the stockholders or of the Board of Directors, at any regular or special meeting, subject to the provisions of the certificate of incorporation. Section 2.2. Election; Term of Office; Resignation; Removal; Vacancies; Special Elections. Except as otherwise provided in this Section 2.2, the directors shall be elected annually at the annual meeting of the stockholders. Each director (whenever elected) shall hold office until the annual meeting of stockholders or any special meeting of stockholders called to elect directors next succeeding his election and until his successor is elected and qualified or until his earlier resignation or removal, except as provided in the certificate of incorporation. Any director may resign at any time upon written notice to the Board of Directors or to the Chairman of the Board or to the President of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. Any director may be removed with or without cause at any time upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote for the election of such director, given at a special meeting of such stockholders called for the purpose. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of directors shall be increased, the directors then in office shall continue to act, and such vacancies may be filled by a majority of the directors then in office, though less than a quorum; provided, however, that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series shall be filled by a majority of the directors elected by such class or classes or series thereof then in office though less than a quorum or by a sole remaining director so elected. Any such vacancies or newly created directorships may also be filled upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote for the election of directors, given at a special meeting of the stockholders called for the purpose. Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given. Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, by the President or by any two directors. Reasonable notice thereof shall be given by the person or persons calling the meeting. Section 2.5. Telephonic Meetings Permitted. Unless otherwise restricted by the certificate of incorporation or these by-laws, any member of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this by-law shall constitute presence in person at such meeting. Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors the presence of a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of at least a majority of the directors present at any meeting at which a quorum is present shall be necessary to constitute and shall be the act of the Board unless the certificate of incorporation or these by-laws shall otherwise provide. In case at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall attend. Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.8. Action by Directors Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consents thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III Committees Section 3.1. Committees. The Board of Directors may, by resolution passed by a majority of the total number of directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board, and unless otherwise restricted by the certificate of incorporation or these by-laws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, to the full extent permitted by law. Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of all such members present at a meeting shall be the act of such committee, and in other respects each committee shall conduct its business pursuant to Article II of these by-laws. ARTICLE IV Officers Section 4.1. Officers; Election. As soon as practicable after the annual meeting of stockholders in each year, the Board shall elect a President and a Secretary. The Board may also elect a Chairman of the Board, one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and may give any of them such further designations or alternate titles as it considers desirable. Any number of offices may be held by the same person. Section 4.2. Term of Office; Resignation; Removal; Vacancies. Except as otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until the first meeting of the Board after the annual meeting of stockholders next succeeding his election, and until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Board or to the President of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time, provided that such action by the Board shall require the vote of a majority of the whole Board. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall or may be filled for the unexpired portion of the term by the Board at any regular or special meeting in the manner provided in Section 4.1 for election of officers following the annual meeting of stockholders. Section 4.3. Chairman of the Board. The Chairman of the Board or, if there is not a Chairman of the Board, the President, shall be the chief executive officer and shall have general charge and supervision of the business of the Corporation. In addition, he shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. He shall have and may exercise such powers and perform such other duties as are, from time to time, assigned to him by the Board and as may be provided by law. Section 4.4. President. The President shall be the chief operating officer and shall perform all duties incident to such office, and such other duties as, from time to time, may be assigned to him by the Board or as may be provided by law. Section 4.5. Vice Presidents. The Vice President or Vice Presidents, at the request of the President or in his absence or during his inability to act, shall perform the duties of the President, and when so acting shall have the powers of the President. If there be more than one Vice President, the Board of Directors may determine which one or more of the Vice Presidents shall perform any of such duties; or if such determination is not made by the Board, the President may make such determination; otherwise any of the Vice Presidents may perform any of such duties. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be assigned to him or them by the Board or the President or as may be provided by law. Section 4.6. Secretary. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose; he shall see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; he shall be custodian of the records of the Corporation; he may affix the corporate seal to any document the execution of which, on behalf of the Corporation, is duly authorized, and when so affixed may attest the same; and, in general, he shall perform all duties incident to the office of secretary of a corporation, and such other duties as, from time to time, may be assigned to him by the Board or the President or as may be provided by law. Section 4.7. Treasurer. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by or under authority of the Board of Directors; if required by the Board, he shall give a bond for the faithful discharge of his duties, with such surety or sureties as the Board may determine; he shall keep or cause to be kept full and accurate records of all receipts and disbursements in books of the Corporation and shall render to the President and to the Board, whenever requested, an account of the financial condition of the Corporation; and, in general, he shall perform all the duties incident to the office of treasurer of a corporation, and such other duties as may be assigned to him by the Board or the President or as may be provided by law. Section 4.8. Other Officers. The other officers, if any, of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in a resolution adopted by the Board of Directors which is not inconsistent with these by-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Board may require any officer, agent or employee to give security for the faithful performance of his duties. ARTICLE V Stock Section 5.1. Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors, or 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. If such certificate is manually signed by one officer or manually countersigned by a transfer agent or by a registrar, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. ARTICLE VI Miscellaneous Section 6.1. Seal. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 6.2. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or these by-laws. Section 6.3. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 6.4. Dividends. Dividends upon the stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, bonds, in property, or in shares of stock, subject to the provisions of the Certificate of Incorporation. Section 6.5. Reserves. Before the payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purposes as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve. Section 6.6. Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 6.7. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 6.8. Offices. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The Corporation may also have offices at such other places within or outside the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE VII Amendments Section 7.1. Amendments. These by-laws may be altered, amended or repealed at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment or repeal be contained in the notice of such special meeting. ARTICLE VIII Indemnification Section 8.1. General. The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person, or a person of whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or any predecessor of the Corporation, or serves or served any other enterprise as a director, officer, employee or agent at the request of the Corporation or any predecessor of the Corporation. For purposes of this Article, references to "the Corporation" shall be deemed to include any subsidiary of the Corporation now or hereafter organized under the laws of the State of Delaware. Section 8.2. Advances. The Corporation shall pay any expenses reasonably incurred by a director or officer in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation under this Article or otherwise. The Corporation may, by action of its Board of Directors, provide for the payment of such expenses incurred by employees and agents of the Corporation as it deems appropriate. Section 8.3 Non-Exclusive. The rights conferred on any person under this Article shall not be deemed exclusive of any other rights that such person may have or hereafter acquire under any statute, provision of the Corporation's Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise. All rights to indemnification and to the advancement of expenses under this Article shall be deemed to be provided by a contract between the Corporation and the director, officer, employee or agent who serves in such capacity at any time while these By-Laws and any other relevant provisions of the Delaware General Corporation Law and any other applicable law, if any, are in effect. Any repeal or modification thereof shall not affect any rights or obligations then existing. EX-4 4 ex4.txt EXHIBIT 4.1 DISTINCTIVE DEVICES, INC. 2002 STOCK OPTION PLAN 1 Purpose. This 2002 Stock Option Plan (the "Plan") of Distinctive Devices, Inc., a Delaware corporation (the "Company"), is intended to provide incentives: (i) to certain directors, officers, employees and other persons who perform services for or on behalf of the Company and any subsidiaries of the Company (collectively, the "Subsidiaries") by providing them with opportunities to purchase capital stock in the Company pursuant to options granted hereunder which qualify as "incentive stock options" under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs") or which do not qualify as ISOs ("Non-Qualified Option" or "Non-Qualified Options"); and (ii) to individuals who are directors but not also employees of the Company and the Subsidiaries ("Non-Employee Directors"), and to individuals who are members of any advisory board or an independent consultant to the Company or its Subsidiaries, by providing them with opportunities to purchase capital stock in the Company pursuant to Non-Qualified Options. Both ISOs and Non-Qualified Options are referred to hereinafter individually as an "Option" and collectively as "Options,s and persons to whom Options are granted are referred to hereinafter individually as an "Optionee" and collectively as Optionees. As used herein, the term Subsidiary means "subsidiary corporation" as that term is defined in Section 424(f) of the Code. 2 Administration of the Plan. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the Committee), each member of which shall be a Non-Employee Director within the meaning of Rule 16b-3 or any successor provision (Rule 16b-3) under the Securities Exchange Act of 1934, as amended (the Exchange Act). The Committee shall consist of two or more members. Subject to the terms of the Plan, the Committee shall have the authority to (i) determine which persons (from among the class of persons eligible under Section 4 hereof to receive Options; (ii) determine the number of shares which may be issued under each Option; (iii) determine the time or times at which Options may be granted; (iv) determine the exercise price of shares subject to each Option, which price shall not be less than the fair market value as specified in Section 6; (v) determine (subject to Sections 7 and 9) the time or times when each Option shall become exercisable and the duration of the exercise period; (vi) determine whether restrictions are to be imposed on shares subject to Options and the nature of such restrictions, if any, and (vii) interpret the Plan and prescribe and rescind rules and regulations relating to it. If the Committee determines to issue a Non-Qualified Option, it shall take whatever actions it deems necessary, under Section 422 of the Code and the regulations promulgated thereunder, to ensure that such Option is not treated as an ISO. The interpretation and construction by the Committee of any provisions of the Plan or of any Option granted under it shall be final. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best. No member of the Committee or of the Board of Directors of the Company shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted under it. 3 Stock. The stock delivered under this Plan shall be the Company's Common Stock, par value $.001 per share (the Common Stock), either authorized and unissued, treasury stock or shares purchased on the open market. The aggregate number of shares which may be issued pursuant to the Plan is [2,000,000], subject to adjustment as provided in Section 13. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the unpurchased shares subject to such Option shall again be available for grants of Options under the Plan. 4 Eligible Employees and Others. ISOs and Non-Qualified Options may be granted to individuals who are employees of the Company and its Subsidiaries, including officers and directors who are also employees at the time the Option is granted. Non-Qualified Options may be granted to Non-Employee Directors and independent contractors and consultants to the Company and its Subsidiaries, affiliates or any entity in which the Company has an interest, or who are deemed by the Committee to be in a position to perform such services in the future. Granting of any Option to any person shall neither entitle that person to, nor disqualify him from, participation in any other Option grant. 5 Term of Plan; Granting of Options. The term of the Plan will commence on the date of adoption of the Plan by the Company's Board of Directors, subject to approval by stockholders within one year of adoption, and terminate on the day immediately preceding the tenth anniversary of said adoption, except as to Options outstanding on that date and subject to earlier termination as provided in Sections 9 and 10 hereof. Options may be granted under the Plan at any time during the term of the Plan. The date of grant of an Option under the Plan shall be the date specified by the Committee at the time it grants the Option; provided, however, that such date shall not be prior to the date on which the Committee acts to approve the grant. No Option shall be granted pursuant to the Plan after [September 2012]. 6 Minimum Exercise Price; ISO Limitations. 6.1 Price for Non-Qualified Options. The exercise price per share for each Non-Qualified Option granted under the Plan shall not be less than the fair market value of the Common Stock on the date of grant of the Option, and in no event shall be less than the minimum legal consideration required therefor under the laws of the State of Delaware or the laws of any jurisdiction in which the Company or its successors in interest may be organized. 6.2 Price for ISOs. The exercise price per share for each ISO granted under the Plan shall not be less than the fair market value per share of Common Stock on the date of such grant. In the case of an ISO to be granted to an employee owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary (a "10% Employee"), the price per share for such ISO shall not be less than one hundred ten percent (110%) of the fair market value per share of Common Stock on the date of grant. For purposes of determining stock ownership under this Section, the rules of Section 424(d) of the Code shall apply. 6.3 $100,000 Annual Limitation on ISO Vesting. To the extent that, in the aggregate under this Plan and all incentive stock option plans of the Company and any Subsidiary, ISOs become exercisable for the first time by an employee during any calendar year with respect to stock having a fair market value (determined at the time the ISOs were granted) in excess of $100,000, such excess amount of stock shall be deemed to have been granted as a Non-Qualified Option, and not as an ISO. 6.4 Determination of Fair Market Value. If at the time an Option is granted under the Plan, the Company's Common Stock is publicly traded," fair market value" shall be determined as of the last business day for which the prices or quotes discussed in this sentence are available prior to the date such Option is granted and shall be (i) the mean (on that date) of the high and low prices of the Common Stock on the principal national securities exchange on which the Common Stock is traded, if the Common Stock is then traded on a national securities exchange; (ii) the average of the last reported sale prices of the Common Stock on the NASDAQ National Market or Small Cap Market (or other interdealer quotation system), for the five trading dates immediately preceding the date of grant, if the Common Stock is not then traded on a national securities exchange; or (iii) the average of the closing bid prices (or average of bid prices) last quoted (on that date) by the OTC Electronic Bulletin Board or other established quotation service for over-the-counter securities for the five trading dates immediately preceding the date of grant, if the Common Stock is not reported on the NASDAQ National Market or Small Cap Market (or other interdealer quotation system); but in no event shall the exercise price be less than the closing prices on the date of grant. However, if the Common Stock is not publicly traded at the time an Option is granted under the Plan, the "fair market value" shall be deemed to be the fair value of the Common Stock as determined by the Committee in good faith after taking into consideration all factors which it deems appropriate, including, without limitation, recent sale and offer prices of the Common Stock in private transactions negotiated at arm's length. 7 Option Duration. Subject to earlier termination as provided in Sections 9 and 10, each Option shall expire on the date specified by the Committee, but not more than (i) ten (10) years from the date of grant in the case of Non-Qualified Options, (ii) ten (10) years from the date of grant in the case of ISOs generally, and (iii) five (5) years from the date of grant in the case of ISOs granted to a 10% Employee, as determined under Section 6.2. Subject to earlier termination as provided in Sections 9 and 10, the term of each ISO shall be the term set forth in the original instrument granting such ISO, except with respect to any part of such ISO that is converted into a Non-Qualified Option pursuant to Section 16. 8 Exercise of Option. Subject to the provisions of Sections 9 through 12, each Option granted under the Plan shall be exercisable as follows: 8.1 Vesting. The Option shall either be fully exercisable on the date of grant or shall become exercisable thereafter in such installments as the Committee may specify, provided that an Option granted to a director or executive officer of the Company may not vest earlier than six (6) months from the date of grant. 8.2 Full Vesting of Installments. Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option, unless otherwise specified by the Committee. 8.3 Partial Exercise. Each Option or installment may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable. 8.4 Acceleration of Vesting. The Committee shall have the right to accelerate the date of exercise of any installment of any Option, provided that the Committee shall not, without the consent of an Optionee, accelerate the exercise date of any installment of any Option granted to any employee as an ISO if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Section 6.03. 9 Termination of Employment. If an Optionee ceases his employment with, or service by, the Company and all Subsidiaries other than by reason of death or disability as defined in Section 10 or by the Company or any Subsidiary for cause, no further installments of his Options shall become exercisable, and his Options shall terminate after the passage of one (1) year from the date of termination of his employment or service (or three (3) months as to ISOs), but in no event later than on their specified expiration dates, during which period he shall have the right to exercise any Options exercisable by him on the date of termination of employment, subject to exercise for such other periods as determined by the Committee at the time of grant. Options held by an Optionee whose termination of employment or service is for cause shall terminate upon such termination. For purposes of this Section 9 only, employment or service shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable to illness, military obligations or governmental service). A bona fide leave of absence with the written approval of the Committee shall not be considered an interruption of employment or service under this Section 9, provided that such written approval contractually obligates the Company or any Subsidiary to continue the employment or service of the Optionee after the approved period of absence. Options granted under the Plan shall not be affected by any change of employment or service within or among the Company and Subsidiaries, so long as the Optionee continues to be an employee or independent contractor or advisor of the Company or any Subsidiary. Nothing in the Plan shall be deemed to give any Optionee the right to be retained in employment or other service by the Company or any Subsidiary for any period of time. The Committee may, in its sole discretion, change the termination period for any Option from the period provided for in this Section 9 o in Section 10 to a period less than the respective periods specified herein. 10 Death; Disability. 10.1 Death. If an Optionee ceases his employment with or service by the Company and all Subsidiaries by reason of his death, any Option may be exercised, to the extent of the number of shares with respect to which he could have exercised it on the date of his death, by his estate, personal representative or beneficiary who has acquired the Option by will or by the laws of descent and distribution at any time within one (1) year from the date of the Optionee's death or such later date as fixed by the Committee as to Non-Qualified Options, but in no event later than on their specified expiration dates. 10.2 Disability. If an Optionee ceases his employment with or service by the Company and all Subsidiaries by reason of his disability, he shall have the right to exercise any Option held by him on the date of termination of employment, to the extent of the number of shares with respect to which he could have exercised it on that date, at any time prior to one (1) year from the date of the termination of the Optionee's employment or service or such later date as fixed by the Committee as to Non-Qualified Options, but in no event later than on their specified expiration dates. For the purposes of the Plan, the term "disability" shall mean permanent and total disability as defined in Section 22(e)(3) of the Code or successor statute. 11 Assignability. No Option shall be assignable or transferable by the Optionee except (i) by will or by the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order or Title I of the Employee Retirement Income Security Act or (iii) with respect to Non-Qualified Options, to a spouse or lineal descendant or lineal ascendant of the Optionee. 12 Terms and Conditions of Options. Options shall be evidenced instruments (which need not be identical) in such forms as the Committee may from time to time approve (the Option Agreements). The Option Agreements shall conform to the terms and conditions set forth in Sections 6 through 11 hereof and may contain such other provisions as the Committee deems advisable which are not inconsistent with the Plan, including restrictions applicable to shares of Common Stock issuable upon the exercise of Options. The Committee may from time to time confer authority and responsibility on one or more of its own members and/or one or more officers of the Company to execute and deliver the Option Agreements. The proper officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of the Option Agreements. 13 Adjustments. Upon the occurrence of any of the following events, an Optionee's rights with respect to Options granted to him hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in the written agreement between the Optionee and the Company relating to such Option: 13.1 Stock Dividends and Stock Splits. If the shares of Common Stock shall be subdivided or combined into a smaller or greater number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, the number of shares of Common Stock deliverable upon the exercise of Options shall be appropriately decreased or increased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination or stock dividend. 13.2 Consolidations or Mergers. If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Company's assets or otherwise (an Acquisition), the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the Successor Board), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the shares then subject to such Options the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition; (ii) upon written notice to the Optionees, provide that all Options must be exercised, to the extent then exercisable, within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the fair market value of the shares subject to such Options (to the extent then exercisable) over the exercise price thereof. 13.3 Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company (other than a transaction described in Section 13.02) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, an Optionee upon exercising an Option shall be entitled to receive for the purchase price paid upon such exercise the securities he would have received if he had exercised his Option prior to such recapitalization or reorganization. 13.4 Change in Control. In the event of a change in control of the Company, all Options under the Plan which are not fully vested shall vest 100% and shall be immediately exercisable. For purposes of this Plan, a change in control shall mean any of the following events: (a) the Company receives a report on Schedule 13D filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Exchange Act disclosing that any person, group, corporation or other entity is the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the outstanding Common Stock of the Company; (b) any person (as such term is defined in Section 13(d) of the Exchange Act), group, corporation or other entity other than the Company or any Subsidiary, purchases shares pursuant to a tender offer or exchange offer to acquire any Common Stock of the Company for cash, securities or any other consideration, provided that after consummation of the offer, the person, group, corporation or other entity in question is the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of twenty percent (20%) or more of the outstanding Common Stock of the Company (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire common stock); (c) the stockholders of the Company approve (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other property, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or (d) there shall have been a change in a majority of the members of the Board of Directors of the Company within a twenty-four (24) month period unless the election or nomination for election by the Company's stockholders of each new d rector was approved by the vote of two-thirds of the directors then still in office who were in office at the beginning of the twenty-four (24) month period. 13.5 Modification of ISOs. Notwithstanding the foregoing, any adjustments made pursuant to Section 13.01, 13.02, 13.03 or 13.04 with respect to ISOs shall be made only after the Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a modification of such ISOs (as that term is defined in Section 424 of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments. 13.6 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, each Option will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Committee. 13.7 Issuances of Securities. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Options. No adjustments shall be made for dividends paid in cash or in property other than securities of the Company. 13.8 Fractional Shares. No fractional shares shall be issued under the Plan and the Optionee shall receive from the Company cash in lieu of such fractional shares. 13.9 Adjustments. Upon the happening of any of the events described in Section 13.01, 13.02, 13.03 or 13.04 above, the class and aggregate number of shares set forth in Section 3 hereof that are subject to Options which previously have been or subsequently may be granted under the Plan shall also be appropriately adjusted to reflect the events described in such subparagraphs. The Committee or the Successor Board shall determine the specific adjustments to be made under this Section 13 and, subject to Section 2 hereof, its determination shall be conclusive. 14 Means of Exercising Options. An Option (or any installment or portion of an installment thereof) shall be exercised by giving written notice to the Company at its principal office address. The notice shall identify the Option being exercised and specify the number of shares as to which such Option is being exercised, accompanied by full payment of the purchase price therefor either: (a) in United States dollars in cash or by check; (b) at the discretion of the Committee, through delivery of shares of Common Stock having a fair market value equal as of the date of the exercise to the cash exercise price of the Option; or (c) at the discretion of the Committee, by any combination of (a) and (b) above. If the Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (b) or (c) of the preceding sentence, such discretion shall be exercised in writing at the time of the grant of the Option in question. An Optionee shall not have the rights of a stockholder with respect to the shares covered by his Option until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 13 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued. 15 Termination or Amendment of Plan. The Board of Directors may terminate or amend the Plan in any respect at any time; however, without the approval of the Companys stockholders obtained within twelve (12) months before or after the Board of Directors adopts a resolution authorizing any such termination or amendment, the Board of Directors may not so terminate or amend the Plan if prior stockholder approval is then required by Section 16(b) of the Exchange Act, applicable Delaware law or tax law, or the rules of any applicable national securities exchange or national stock quotation system on which the Common Stock may then be listed or traded. Except as otherwise provided in this Section 15, in no event may action of the Board of Directors or stockholders alter or impair the rights of an Optionee, without his consent, under any Option previously granted to him. 16 Notice to Company of Disqualifying Disposition. By accepting an ISO granted under the Plan, each Optionee agrees to notify the Company in writing immediately after making a Disqualifying Disposition, as described in Sections 421, 422 and 424 of the Code and regulations thereunder, of any stock acquired under the Plan (or stock received in a transaction described in Section 424(b) or 424(c)(1)(B) of the Code, relating to distributions of stock with respect to stock acquired under the Plan and certain tax-free exchanges of stock acquired under the Plan for other stock or securities). A Disqualifying Disposition (with certain exceptions) is generally any disposition within two (2) years of the date the ISO was granted or within one (1) year of the date the ISO was exercised, whichever period ends later. With respect to stock held jointly with right of survivorship, a termination of such joint tenancy may constitute a Disqualifying Disposition. This Section 16 shall be made binding upon the Optionee and upon any transferee of stock described in this Section to whom Section 424(c)(4)(B) of the Code applies. 17 Withholding of Additional Income Taxes. Upon the exercise of a Non-Qualified Option or the making of a Disqualifying Disposition (as defined in Section 16), the Company may withhold taxes in respect of amounts that constitute compensation includible in gross income, whenever the Company determines that such withholding is required. The Committee in its discretion may condition the exercise of an Option on the Optionee's making satisfactory arrangement for such withholding. In addition to tax withholding, government regulations may impose reporting or other obligations on the Company with respect to the Plan. For example, the Company may be required to send tax information statements to employees and former employees that exercise ISOs. 18 Governing Law, Construction. The validity and construction of the Plan and the agreements evidencing Options shall be governed by the laws of the State of Delaware, or the laws of any jurisdiction in which the Company or its successors in interest may be organized. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires. Adopted by the Board of Directors on ____________, 2002 Adopted by the Stockholders on ___________, 2002 EX-10 5 ex10-1.txt EXHIBIT 10.1 STOCK PURCHASE AGREEMENT AGREEMENT, dated as of July 31, 2002, between Distinctive Devices, Inc., a New York corporation, having an address at One Bridge Plaza, Suite 100, Fort Lee, NJ 07024 (the "Company"), and Shrikant C. Mehta, having an address c/o Distinctive Devices, Inc., One Bridge Plaza, Suite 100, Fort Lee, NJ 07024 (the "Purchaser"). BACKGROUND The Company has designated 250,000 shares of its Preferred Stock, $1.00 par value, as Series D Convertible Preferred Stock, (the "Series D Preferred Stock"). The Purchaser desires to purchase 173,333 shares (the "Purchased Shares") of the authorized Series D Preferred Stock from the Company, and the Company desires to sell the Purchased Shares to the Purchaser, on the terms and conditions set forth below. NOW, THEREFORE, the parties hereto for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged hereby, agree as follows: 1. Sale of Series D Preferred Stock; Purchase Price. 1.1 Sale. Subject to the terms and conditions set forth herein, the Purchaser hereby purchases 173,333 shares of Series D Preferred Stock from the Company constituting the Purchased Shares, and the Company hereby sells the Purchased Shares to the Purchaser for the aggregate purchase price of $650,000 (the "Purchase Price"). Pursuant to 912(c)(1) of the New York Business Corporation Law, the Board of Directors of the Company approves of the purchase of the Purchased Shares by the Purchaser. 1.2 Closing. The closing (the "Closing") of the transaction contemplated hereby is taking place simultaneously with the execution and delivery of this Agreement. At the Closing, the parties are making the following deliveries to each other: (a) The Company is delivering to the Purchaser a certificate registered in the name of the Purchaser representing all of the Purchased Shares, receipt of which is acknowledged by the Purchaser; and (b) The Purchaser is delivering the Purchase Price to the Company by check or wire transfer to an account designated by the Company, receipt of which is acknowledged by the Company. 2. Representations, Warranties and Covenants of the Company. The Company represents and warrants to the Purchaser that: 2.1 Organization; Qualification The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Company is duly qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction where the character of its properties, owned or leased, or the nature of its activities make such qualification necessary. 2.2 Corporate Power. The Company has all requisite corporate power to enter into this Agreement, to sell the Purchased Shares and to carry out and perform its obligations under the terms of this Agreement. All corporate action on the part of the Company necessary for the authorization, execution, delivery and performance by the Company of this Agreement and for the authorization, issuance and delivery of the Purchased Shares issuable upon payment therefor has been taken. This Agreement constitutes a valid and binding agreement of the Company enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity. 2.3 No Restrictive Agreements The issuance and delivery of the Purchased Shares to the Purchaser is not subject to any preemptive rights."Upon the delivery of the Purchased Shares, the Purchaser will acquire the beneficial and legal, valid and indefeasible title to the Purchased Shares, free and clear of all pledges, liens, charges, claims or options of any kind, except for restrictions on transfer under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws." 2.4 Capitalization The Company's authorized capital stock consists of 20,000,000 shares of Common Stock, $.05 par value (the "Common Stock"), of which 19,134,824 shares are issued and outstanding, and 1,000,000 shares of Preferred Stock, 60,000 shares of which have been designated as Series C Preferred Stock, of which 10,000 shares are issued and outstanding, and 250,000 shares of which have been designated as Series D, none of which is outstanding. All of the issued and outstanding shares of Common Stock and Series C Preferred Stock are validly issued, fully paid and non-assessable. The Purchased Shares being issued to the Purchaser pursuant to this Agreement upon issuance will be validly issued, fully paid and non-assessable shares of Series D Preferred Stock. The shares of Common Stock underlying the conversion rights of the Purchased Shares upon conversion in accordance with the terms of the Series D Preferred Stock and after a recapitalization (the "Recapitalization") of the Common Stock increasing the number of authorized shares and reducing the par value to $.001 per share, upon issuance will be validly issued, fully paid and non-assessable shares of Common Stock. 2.5 SEC Reports. The Company is subject to filing reports with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The information in the Company's annual report on Form 10-KSB for the fiscal year ended December 31, 2001 and Form 10-QSB for the fiscal quarter ended March 31, 2002 is in all material respects complete and correct. 2.6 Stockholders Meeting. The Company shall use its best efforts to promptly call and hold a Special Meeting of Shareholder in accordance with the New York Business Corporation Law and the Exchange Act, at which Meeting the shareholders will vote upon the Recapitalization as described in Section 2.4, a proposed reverse stock split of the Common Stock, a proposed corporate migration to the State of Delaware, and such other matters as the Company's Board of Directors may propose. 3. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company that: 3.1 Knowledge. As a member of the Board of Directors of the Company, the Purchaser is aware of the current business, prospects and financial condition of the Company and the market for its Common Stock, has reviewed the reports recently filed by the Company under the Exchange Act, and has had the opportunity to discuss the Company's prospects with its management. In addition, the Purchaser understands the restrictions on resale or other transfer of the Series D Shares (and any underlying shares of Common Stock) as they have not been registered under the Securities Act. 3.2 Authority. The Purchaser has the power and authority to enter into this Agreement and to purchase the Series D Preferred Stock, and the purchase is consistent with his investment objectives. 4. Preemptive Rights. 4.1 Right. If at any time and from time to time, for a period of eighteen (18) months from the date of this Agreement, the Board of Directors authorizes the Company to sell (the "Sale"), solely for cash, shares of Common Stock (the "Shares"), or shares of Preferred Stock or other securities (the "Derivative Securities") that are exercisable for, convertible into or exchangeable for shares of Common Stock in a private placement transaction pursuant to the exemption from registration under Regulation D of the Securities Act, the Company shall send a written notice to the Purchaser of such authorization (the "Notice of Preemptive Rights") offering the Purchaser the right to participate in such Sale. For purposes of this Section, a "Sale" shall not include (a) an issuance of Shares directly or underlying options or other rights granted to employees, officers, consultants or directors under an agreement or an employee benefit plan or otherwise as incentive or compensation, (b) an issuance of Shares either directly or underlying Derivative Securities in whole or in part in consideration for services, (c) the issuance as part of an acquisition transaction, (d) an issuance to a party who the Board of Directors determines would be a strategically important shareholder, or (e) upon the exercise of any Derivative Securities which were outstanding on the date of this Agreement. Any Shares not purchased by the Purchaser pursuant to this Section 4 may be sold, issued or granted within ninety (90) days after deliver of the Notice of Preemptive Rights, at the same price and terms as offered for sale to the Purchaser hereunder. 4.2 Notice of Preemptive Right. The Notice of Preemptive Rights shall specify the total aggregate number of Shares to be issued, the price and other terms of the proposed Sale, the amount of Shares or Derivative Securities to which the Purchaser is entitled to purchase and the period during which the Purchaser may elect to participate in the purchase. The Notice of Preemptive Rights shall be sent to the Purchaser at least ten (10) days prior to the anticipated closing date of the Sale. If the Purchaser desires to participate in the Sale, the Purchaser shall notify the Company by sending a notice of acceptance which must be received by the Company within the time period specified in the applicable Notice of Preemptive Rights. 4.3 Effectiveness. The purpose of the preemptive right in this Section 4 is to accommodate the Purchaser's desire to have the opportunity to maintain his beneficial percentage interest (on a fully diluted basis) in the Company's Common Stock upon certain issuances by the Company. If (i) the Purchaser fails to purchase at least fifty percent (50%) of the Shares or Derivative Securities offered in the Notice of Preemptive Rights in any Sale which closes, or (ii) the Purchaser sells or otherwise disposes of fifty percent (50%) of the securities beneficially owned by him upon the closing of the Purchase herein, the Purchaser's rights under this Section 4 shall terminate with respect to any subsequent Sale. 5. Miscellaneous. 5.1 Survival. All representations and warranties and other agreements made by the Company and the Purchaser in this Agreement shall survive the Closing for a period of one (1) year. 5.2 Additional Action. Each of the Purchaser and the Company shall, upon the request of the other, from time to time, execute and deliver promptly to the other party all instruments and documents of further assurances or otherwise and will do any and all such acts and things as may be reasonably required to carry out the obligations of such party hereunder and to consummate the transactions contemplated hereby. 5.3 Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective estates, heirs, executors, successors and assigns. 5.4 Governing Law. This Agreement shall in all respects be governed by the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. 5.5 Entire Agreement. This Agreement constitutes the entire arrangement between the parties with respect to the subject matter herein and cannot be changed, modified, discharged or terminated except by a writing signed by the party against whom enforcement of any change, modification, discharge or termination is sought. 5.6 Waiver. No waiver shall be deemed to be made by any party of any of his rights hereunder unless the same shall be in writing, and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the waiving party of the obligations of the other party in any other respect at any other time. 5.7 Notices. Any notice, demand or other communication to be given hereunder by either party to the other shall be in writing and shall be mailed by certified mail, return receipt requested, sent by recognized overnight courier or delivered against receipt to the party to whom it is to be given to the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in accordance with the provisions of this Section 5.7). 5.8 Captions. The captions used in this Agreement are for convenience only and shall not be deemed as, or construed as, a part of this Agreement. 5.9 Counterparts, Facsimile Execution. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument. Facsimile execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes. IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement as of the date first above written. DISTINCTIVE DEVICES, INC. ----------------------- By: Sanjay S. Mody Title: President ------------------------ SHRIKANT C. MEHTA EX-99 6 ex99-2.txt EXHIBIT 99.2 DISTINCTIVE DEVICES, INC. Certificate Pursuant to Section 906 Of Sarbanes-Oxley Act of 2002 The undersigned, Sanjay Mody, the President, Chief Executive Officer, Treasurer and Chief Financial Officer of Distinctive Devices, Inc. (the "Company"), DOES HEREBY CERTIFY that: 1. The Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2002 (the "Report") fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and 2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 14th day of November, 2002. /s/ SANJAY MODY ----------- Sanjay Mody President, Chief Executive Officer, Treasurer and Chief Financial Officer EX-99 7 ex99-3.txt Exhibit 99.3 CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Sanjay Mody, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Distinctive Devices, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ SANJAY MODY -------------- Sanjay Mody President and Chief Executive Officer EX-99 8 ex99-4.txt Exhibit 99.4 CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Sanjay Mody, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Distinctive Devices, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ SANJAY MODY -------------- Sanjay Mody Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----