10QSB 1 0001.txt QUARTERLY REPORT FOR THE QTR ENDED 8/31/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 2000 Commission File Number: 17598 CONSYGEN, INC. (Exact name of Registrant as specified in its charter) Texas 76-0260145 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 125 South 52nd Street, Tempe, Arizona 85281 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (480) 394-9100 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) Yes [X] No [ ] and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 34,735,248 shares of Common Stock, $.003 par value, as of October 11, 2000. CONSYGEN, INC. INDEX PART I FINANCIAL INFORMATION: Item 1. Financial Statements. Consolidated Balance Sheet, August 31, 2000 2 Consolidated Statements of Operations - Three and Nine Months Ended August 31, 2000 and August 31, 1999 3 Consolidated Statements of Cash Flows - Three and Nine Months Ended August 31, 2000 and August 31, 1999 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II OTHER INFORMATION Item 5. Other Information 9 Item 6. Exhibits and Reports on Form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ugust 31, 2000 ------------ Current Assets: Cash and Cash Equivalents $ 2,948 Accounts Receivable 69,287 Inventory 213,066 Prepaid Expenses 212,394 Other Current Assets 708 ------------ Total Current Assets 498,403 ------------ Property and Equipment - Net 1,494,410 ------------ Other Assets: Debt Issuance Expense 65,275 Notes receivable 72,725 Other Assets 44,736 ------------ Total Other Assets 182,736 ------------ Total Assets $ 2,175,549 ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts Payable $ 319,737 Notes Payable 871,534 Capital Lease - Current portion 22,127 Accrued Liabilities 1,277,024 ------------ Total Current Liabilities 2,490,422 Convertible Debentures 1,186,810 Capital Lease - Long Term Portion 29,503 Mortgage - Long Term 532,708 Long-Term Debt 364,829 ------------ Total Liabilities 4,604,272 ------------ Commitments & Contingencies Stockholders' Equity : Common Stock, $.003 par Value, Authorized 40,000,000 Shares, Issued and outstanding 26,323,931 Shares at August 31, 2000 78,972 Additional Paid-in Capital 32,528,969 Accumulated Deficit (34,620,940) Treasury Stock, at cost (90,000 shares) (415,725) ------------ Total Stockholders' Equity (2,428,723) ------------ Total Liabilities and Stockholders' Equity $ 2,175,549 ============ The accompanying notes are an integral part of the financial statements. 2 CONSYGEN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended August 31, --------------------------- 2000 1999 ------------ ------------ Counterfeit Cop Revenue $ 799,574 $ 44,503 Software Services Revenue -- 73,365 ------------ ------------ Revenues 799,574 117,868 ------------ ------------ Costs and Expenses: Cost of Sales - Cop 199,273 9,243 Cost of Sales - Software Services -- 204,683 Software Development 295,540 125,175 Selling, General and Administrative Expenses 913,298 783,935 Interest Expense 247,198 97,014 Depreciation and Amortization 41,861 59,010 ------------ ------------ Total Costs and Expenses 1,697,170 1,279,060 ------------ ------------ Loss from Operations (897,596) (1,161,192) Interest Income -- 5,755 Other Income 341,711 27,493 Other Expenses -- (287,458) ------------ ------------ Net Loss $ (555,885) $ (1,415,402) ============ ============ Weighted Average Common Shares Outstanding 25,257,989 15,416,201 ============ ============ Net Loss per Common Share $ (0.02) $ (0.09) ============ ============ The accompanying notes are an integral part of the financial statements. 3 CONSYGEN, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the Three Months Ended August 31, -------------------------- 2000 1999 --------- ----------- Cash Flows from Operating Activities: Net Loss $(555,885) $(1,415,403) Adjustments to Reconcile Net Loss to Net Cash (Used) by Operating Activities: Depreciation and amortization 41,861 60,585 Write-off of investment in technology -- 230,000 Issuance of stock for professional fees Gain on variable stock option awards (341,436) Changes in Operating Assets and Liabilities: Accounts Receivable (19,825) (40,692) Inventories 199,272 (158,081) Prepaid Expenses and Other Assets 237,747 (682) Accounts Payable (15,740) 176,227 Accrued Liabilities 179,446 241,904 --------- ----------- Net Cash (Used) by Operating Activities (274,560) (906,142) --------- ----------- Cash Flows from Investing Activities: Utilization of certificate of deposit for inventory purchases -- 333,944 Purchase of technology -- (230,000) Advances on note receivable (34,200) Purchases of Furniture and Equipment (21,843) (72,497) Investment in joint venture (20,000) --------- ----------- Net Cash (Used) by Investing Activities (76,043) 31,447 --------- ----------- Cash Flows from Financing Activities: Proceeds from Sale of Common Stock 305,080 14,941 Payments of principal on loans (4,165) (3,056) Proceeds of Loans payable -- Related Parties 83,694 147,051 Proceeds on other notes payable -- Purchase of treasury stock (15,725) Payments of principal on capital lease obligations (18,938) (14,136) --------- ----------- Net Cash Provided by Financing Activities 349,946 144,800 --------- ----------- Net Decrease in Cash and Cash Equivalents (657) (729,895) Cash and Cash Equivalents --Beginning of Period 3,605 739,308 --------- ----------- Cash and Cash Equivalents --End of Period $ 2,948 $ 9,413 ========= =========== Supplemental Cash Flow Information: Cash Paid for Interest $ 49,470 $ 49,470 ========= =========== Non-Cash Financing and Investing Activities: Issuance of Common Stock as Loan Incentive $ -- $ 20,839 ========= =========== Conversion of debt to common stock $ 651,190 $ -- ========= =========== Issuance of common stock for prepaid professional fees $ 287,505 $ -- ========= =========== Issuance of common stock for equipment $ 283,500 $ -- ========= ===========
The accompanying notes are an integral part of the financial statements. 4 CONSYGEN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2000 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include the accounts of ConSyGen, Inc., a Texas corporation ("ConSyGen-Texas") and its wholly-owned subsidiary, ConSyGen, Inc., an Arizona corporation ("ConSyGen-Arizona"). Significant intercompany accounts and transactions have been eliminated. ConSyGen-Texas and its wholly-owned subsidiary ConSyGen-Arizona are hereafter collectively referred to as the "Company." In the opinion of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations and cash flows for the periods presented. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year due to external factors that are beyond the control of the Company. NOTE 2 - STOCKHOLDERS' EQUITY (DEFICIT) STOCK OPTIONS The Company issued stock options to employees that were later repriced. In accordance with APB No. 25, these options are now classified as variable awards. On the basis of the price of the Company's common stock at August 31, 2000, the decrease of $341,000 in the intrinsic value of those options was recognized as other income in the three months ended August 31, 2000. The Company intends to continue to compensate employees with stock options. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and the Notes thereto appearing elsewhere in the Report. The Company and its wholly-owned subsidiary, ConSyGen-Arizona, are herein collectively referred to as the "Company." 5 OVERVIEW Historically, we have developed pre-packaged software and proprietary products and services. However, we have recently moved our specific emphasis to identifying developing software-related business opportunities and technologies and providing timely and effective software-based solutions for these opportunities, while still maintaining our traditional emphasis on high-quality proprietary products and services. We are marketing the COUNTERFEIT COP through our Business Products Division. We have entered into distribution agreements with third parties with national domestic distribution networks, and we have incorporated ConSyGen s.r.o. in the Czech Republic to begin marketing the product in Europe. Now that CE certification has been secured, we expect European sales to begin in the 2nd quarter. We intend to continue the active marketing of this product through these distribution channels and others that we expect to create in the future. We are completing the first phase of the development of the BIZPAY SUITE software - a new "e-commerce" product. We have incorporated a new company, BizPay International, to hold our interests in various BizPay businesses around the world. We have established a joint venture with an Australian partner, and have signed several Memorandums of Understanding (MOU) with strategic partners to introduce the product in Europe, and several other locations around the world. Additionally, we have entered into a MOU with Cardservice International, a merchant processor, to develop the BizPay business in the United States. These transactions are subject to definitive agreements. Each of these transactions is quite complex, with different revenue models. Management is evaluating each opportunity to determine whether to pursue licensing fees, an equity stake in the ongoing business, or a combination of both as payment for our software. With the BizPay suite of products near Phase I completion, the Counterfeit Cop division, and the new multimedia division which we introduced in August, we will begin segment reporting in accordance with SFAS 131. The Counterfeit Cop division, which is currently our only operational division, earned $197,317 in the quarter on revenues of $799,574. Neither the BizPay division nor the multimedia division had any revenue in the quarter ended August 31, 2000. We continued to invest in the development of both divisions. Expenses for the BizPay division were $893,889 for the quarter, and start up expenses for the multimedia division were $47,048. Both divisions will begin to contribute revenue during the current fiscal year. We have been involved in material litigation with holders (the "Debenture Holders") of our 6% Convertible Debentures Due May 29, 2003 (the "Debentures"). In 1998, the Debenture Holders filed a lawsuit against us based upon our failure to honor their requests to convert the Debentures to common stock (the "Debenture Litigation"). In January 1999, the Debenture Holders and other plaintiffs (together, the "Plaintiffs") filed related lawsuits against us and certain of our former officers, and others, to recover damages for alleged intentional and calculated defamation (the "Defamation Litigation"). On April 11, 2000, we entered into a definitive Settlement Agreement and Conditional Release with the Plaintiffs to settle the Debenture Litigation and the 6 Defamation Litigation. Provided that we honor our obligations under the Settlement Agreement and the Debentures, which we intend to do, the settlement will fully and finally resolve the Debenture Litigation and the Defamation Litigation. Under the Settlement Agreement, we have agreed to honor the terms of the Debentures (and the related common stock purchase warrants) and to convert the principal and accrued interest on the Debentures into our common stock as the Debenture Holders request such conversion and as permitted under the Debentures. As of August 31, 2000, and October 10, 2000, approximately $2,241,000 and $2,663,000 respectively in principal amount of the Debentures has been converted into shares of our common stock in partial implementation of the settlement. In addition, we have agreed to pay (in common stock, to be issued as the Debentures are converted) an additional $350,000 in liquidated damages, which amount was accrued in the third quarter of the year ending May 31, 2000. We have agreed to perform additional non-monetary obligations under the Settlement Agreement which, while they represent material terms of the Settlement Agreement and Conditional Release, we believe we can successfully perform without a material adverse financial impact. We are involved in litigation with a former officer and director relating to his claims for indemnification and reimbursement of legal expenses in connection with the Defamation Litigation, and for breach of an employment agreement with respect to stock options. The former executive seeks damages, including substantial exemplary and punitive damages, and an order requiring us to honor stock options. Although we believe that the settlement of the Defamation Litigation mitigates potential damages in this litigation, the outcome of this litigation, and its potential financial impact on us, cannot be estimated fully at this time. However, at the present time, we believe that the claims for exemplary and punitive damages relating to both the indemnity and stock option claims are wholly without merit. We are involved in litigation with a former customer who has alleged that we breached an agreement to provide software conversion services and to test its software for the ability to function in the year 2000 and beyond. While the lawsuit seeks a substantial amount of damages, we intend to defend this action vigorously and to assert set-offs and counterclaims in these proceedings. The outcome and potential financial impact of this litigation on us cannot yet be estimated. MATERIAL CHANGES IN RESULTS OF OPERATIONS NET LOSSES. For the three months ended August 31, 2000, we incurred a net loss of approximately $555,885, compared with a net loss of $1,415,402 for the three months ended August 31, 1999, a decrease of approximately $859,517. An explanation of these losses is set forth below. REVENUE. For the quarter ended August 31, 2000, we had revenues of $799,574, compared to $44,503 for the same quarter in the previous year. The increase in revenue reflects growth in revenues from sales of the COUNTERFEIT COP product. Although Counterfeit Cop revenue for the quarter grew approximately 1800% from the same quarter a year ago, our master distributors have not yet significantly contributed to the revenue growth. 7 COST OF SALES. For the quarter ended August 31, 2000, the primary cost of sales expense is the cost of obtaining COUNTERFEIT COP units from our supplier. These costs represent approximately 25% of related revenue. SOFTWARE RESEARCH AND DEVELOPMENT EXPENSES. For the quarter ended August 31, 2000, software development expenses were $295,540, compared with $125,175 for the comparable prior period. The increase in software development expenses represents the large investment we made in the development of the BizPay product. We have added staff with specialized skills where appropriate, and have used consultants as needed. As we proceed through beta testing, the initial product roll out, and the development of subsequent phases of BizPay, including the wireless applications, we do not expect a significant decrease in software development expenses. We intend to begin capitalizing certain software development costs when proprietary software products have reached technological feasibility. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $913,298 for the quarter ended August 31, 2000, compared with $785,935 for the identical quarter in the previous year, an increase of $127,363. The increase in selling, general and administrative expenses is primarily attributable to increased expenses related to the sale of the Counterfeit Cop, and the creation of the BizPay and multimedia business lines. We have been working with our Counterfeit Cop master distributors to create marketing materials and train their alliance partners and salespeople, including at least a half dozen on site training sessions. We made an investment to obtain CE registration for the Counterfeit Cop product, which will allow us to market the product in Europe and other areas. INTEREST EXPENSE. For the three months ended August 31, 2000, interest expense was $247,198, compared with $97,014 for the same quarter in the previous year, an increase of $150,184. The increase in interest expense is primarily composed of $153,702 of accelerated amortization of deferred financing costs due to conversion of the debentures. DEPRECIATION AND AMORTIZATION EXPENSE. For the quarter ended August 31, 2000, depreciation and amortization expense was $41,861, compared with $59,010 for the previous year. The decrease indicates that there has been no major growth in depreciable items, primarily due to a shortage of operating capital. As we have retired some depreciable assets, we have primarily replaced them with leased assets. Additionally, the development of the BizPay products has required an investment in hardware and software. For the most part, the necessary equipment has been leased at prevailing market rates. OTHER INCOME. Other Income was $341,711 in the three months ended August 31, 2000, compared to $27,493 in the corresponding quarter of the previous year. We re-priced numerous options granted to employees in the year ended May 31, 1999. Under the Proposed Interpretation, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, AN INTERPRETATION OF APB OPINION NO. 25, issued by 8 the Financial Accounting Standards Board, these constitute variable awards that require us to recognize other income if the stock price declines and compensation expense if it increases. The price of our common stock has not recently been higher than the re-priced exercise price of these options. The income is a direct result of the decline in our stock price. MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company has continued to suffer material operating losses and is experiencing difficulties meeting its current obligations, including regular payroll obligations. Although revenue has increased substantially, current revenue levels are still inadequate to meet all of the company's obligations. The Company is attempting to raise sufficient equity capital to meet its current obligations and to implement its new business plan. However, the Company has experienced difficulty in doing so and there can be no assurance that it will be successful in raising capital or implementing its new business plan. The Company has utilized significant resources in software development, research and marketing efforts. The investment in the Bizpay technology alone was over $893,000. Those efforts must continue in order for the Company to be successful in the implementation of its new strategic direction. The Company will require additional capital, most likely from private placement equity, in order to meet its obligations and to implement its new strategic direction. As of August 31, 2000, the Company had $2,900 in cash and cash equivalents compared with approximately $3,600 at May 31, 1999. The Company had working capital deficit of approximately $1,992,000 at August 31, 2000, compared with a working capital deficit of approximately $2,298,000 at May 31, 2000, a decrease in working capital deficit of approximately $306,000. The increase in working capital is primarily attributable to the draw down of our Counterfeit Cop inventory as sales have increased. The Company had convertible debentures outstanding of $1,838,000 and $1,259,000 at May 31, 2000 and at August 31, 2000. Although the Counterfeit Cop division was profitable, The Company continued to incur losses due to the ongoing development of Bizpay and the formation of the Multimedia division. During the quarter ended August 31, 2000, the Company's operations used approximately $274,000 in cash, an average of approximately $91,000 per month. If the Company continues to incur significant losses, the Company's liquidity could be materially and adversely affected. The Company does not currently have any established bank credit facility, and there can be no assurance that the Company will be able to obtain the additional capital in the form of debt or equity financing necessary to continue its operations if no significant sales are realized. The Company does not intend to require material capital expenditures in the short term. However, as discussed above, the Company will require cash to implement its new strategic direction. IMPACT OF INFLATION Increases in the inflation rate are not expected to effect the Company's operating expenses. Although the Company has no current plans to borrow additional funds, if it were to do so at variable interest rates, any increase in interest rates would increase the Company's borrowed funds. SEASONALITY Our operations are not affected by seasonal fluctuations, although our cash flows may at times be affected by fluctuations in the timing of cash receipts from large contracts. Management believes that the cash-flow of the two major product lines in our new strategic direction will not be impacted by large purchases or seasonal factors. PART II -- OTHER INFORMATION ITEM 5. OTHER INFORMATION. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The list of Exhibits which are filed with this report or incorporated by reference herein is set forth in the Exhibit Index that appears following the signature page, which Exhibit Index is incorporated herein by this reference. (b) Reports on Form 8-K. The Company filed form 8-K on 12/30/98, which reported a legal action against the Company, on December 3, 1998, for specific performance of the provisions of the Debentures which permit the holders to convert the debt evidenced by the debentures into shares of the Company's common stock. On December 28, 1998, the Company filed an answer in that action denying that, under the pertinent circumstances, the Company is obligated to effect any such conversion. The Company also filed a counterclaim against the holders, and new claims against certain agents of the holders, in the same action, alleging that the holders and the agents made material misrepresentations in connection with the purchase and sale of the Debentures and made unlawful short sales of the Company's common stock. The Company filed form 8-K on March 22, 2000, detailing the settlement term sheet agreed to with the debenture holders. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONSYGEN, INC. Date: October 12, 2000 By: /s/ A. Lewis Burridge ------------------------------------ A. Lewis Burridge, President (Principal Executive Officer) 10 EXHIBIT INDEX 2 Plan of Acquisition between the Registrant and the stockholders of ConSyGen, Inc., an Arizona corporation, dated August 28, 1996, filed as Exhibit 2 to the Registrant's Current Report on Form 8-K dated September 5, 1996 and incorporated herein by reference. 3.1 Articles of Incorporation of the Registrant, as amended. (1) 3.2 Amended and Restated By-Laws of the Registrant. (4) 4.1 Specimen common stock certificate, filed as Exhibit 4.B to the Registrant's Registration Statement on Form S-18, File No. 33-22900 - FW, and incorporated herein by reference. 4.2 Form of Common Stock Purchase Warrant used in connection with issuance of warrants to purchase an aggregate of 1,000,000 shares of the Registrant's Common Stock, $.003 par value. (2) 4.3 Subscription Agreement used in connection with the Rule 506 sale of Convertible Debentures in the aggregate principal amount of $3,500,000 (including form of Convertible Debenture, form of Warrant, and form of Registration Rights Agreement, attached as Exhibits A, B and D, respectively, to the Subscription Agreement). (6) 4.4 Form of Common Stock Purchase Warrant to purchase an aggregate of 10,000 shares issued in partial payment of finders' fees in connection with sale of Convertible Debentures in aggregate principal amount of $3,500,000. (6) 4.5 Form of Subscription Agreement used in connection with Rule 506 sale of 120,000 shares for gross proceeds of $1,080,000. (1) 4.6 Form of Subscription Agreement used in connection with Rule 506 sale of 152,000 shares for gross proceeds of $882,500. (1) 4.7 Form of Common Stock Purchase Warrant to purchase 200,000 shares issued to consultant, Howard R. Baer, on August 1, 1997. (1) 4.8 Form of Common Stock Purchase Warrant to purchase 100,000 shares issued to Howard R. Baer's designee, Kevin C. Baer, on August 1, 1997. (1) 4.9 Subscription Agreement used in connection with Rule 506 sale of 900,000 shares for gross proceeds of $5,276,250. (3) 4.10 Form of Subscription Agreement used in connection with issuance of 30,747 shares in payment of indebtedness in the aggregate amount of $250,575. (3) 4.11 Common Stock Purchase Warrant to purchase 100,000 shares issued to a consultant's designee, Irvington International Limited, as of November 10, 1997. (3) 4.12 Agreement dated as of July 17, 1998 between the Registrant and Tom S. Dreaper relating to employment and grant of options to purchase 1,000,000 shares of common stock of the Registrant. (6) 4.13 Agreement entitled "Transfer of Complete Rights in Software Program between ConSyGen, Inc. and F&M Investments, L.L.C.", filed as Exhibit 4.13 to the Registrant's Current Report on Form 8-K dated July 2, 1999 and incorporated herein by reference. 4.14 Amendment dated August 13, 1998, to 6% Convertible Debenture Subscription Agreement and related Registration Rights Agreement dated May 29, 1998, filed as Exhibit 4.13 to the Registrant's Registration Statement on Form S-3, File No. 333-61869, and incorporated herein by reference. 4.15 Form of Subscription Agreement used in connection with private placement of 4,498,000 units, consisting of one share of the Registrant's common stock and a warrant to purchase one share of common stock, for total cash consideration of $1,124,500. 4.16 Form of Common Stock Purchase Warrant used in connection with issuance of warrants to purchase an aggregate of 4,498,000 shares of Registrant's Common Stock, $0.003 par value. 4.17 Option Agreement for 1,000,000 shares of the Registrant's common stock, dated April 17, 2000, issued to consultant, Howard R. Baer. 10.7 Registrant's 1996 Non-Qualified Stock Option Plan. (2) 10.8 Registrant's Second Amended and Restated 1997 Non-Qualified Stock Option Plan. (8) 10.9 Consulting Agreement between the Registrant and M.H. Meyerson & Co., Inc. dated August 19, 1996. (5) 10.10 Form of Indemnification Contract between the Registrant and each executive officer and director of the Registrant. (3) 10.11 Agreement between the Registrant and Carriage House Capital, Inc., effective as of September 1, 1997, terminating all existing agreements between the Registrant and Carriage House Capital, Inc., and its affiliates. (3) 10.12 Registrant's Form of Settlement Term Sheet between the Registrant and the Debenture Parties (Thomson Kernaghan, et al). (7) 10.13 Settlement Agreement and Conditional Release between the Registrant and the Debenture Parties dated April 20, 2000. (9) 10.14 Agreement between the Registrant and Saviar and Spaeth, dated January 11, 2000. 16 Letter dated September 24, 1998 from Wolinetz, Gottlieb & Lafazan, P.C. to the Securities and Exchange Commission, filed as Exhibit 16 to the Registrant's Current Report on Form 8-K dated September 22, 1998 and incorporated herein by reference. 21 List of Subsidiaries of the Registrant. (9) 99.1 Registrant's 2000 Combination Stock Option Plan. (10) ---------- * Filed herewith. (1) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31, 1997, and incorporated herein by reference. (2) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31, 1996, and incorporated herein by reference. (3) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Registration Statement on Form S-1, File No. 333-40649, and incorporated herein by reference. (4) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference. (5) Filed as Exhibit No. 10.10 to the Registrant's Annual Report on Form 10-K for the year ended May 31, 1997, and incorporated herein by reference. (6) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Annual Report on Form 10-K for the year ended May 31, 1998, and incorporated herein by reference. (7) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Annual Report on Form 8-K dated March 22, 2000, and incorporated herein by reference. (8) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Quarterly Report on Form 10-Q for the quarter ended August 31, 1998, and incorporated herein by reference. (9) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Annual Report on Form 10-KSB for the year ended May 31, 2000, and incorporated herein by reference. (10) Filed as an Exhibit, with the same Exhibit number, to the Registrant's Registration Statement on Form S-8, dated May 4, 2000, and incorporated herein by reference.