As filed with the Securities and Exchange Commission on January 25, 2002
Registration No. 333-76188
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
AMENDMENT NO. 1 TO
FORM S-3 ON FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
OCG TECHNOLOGY, INC.
(Exact name of Registrant as specified in its Charter)
__________________
Delaware 13-2643655
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
56 Harrison Street
New Rochelle, New York 10801
(914) 576-8457
--------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of Registrant's
principal executive offices)
__________________
Edward C. Levine, President
OCG TECHNOLOGY, INC.
56 Harrison Street
New Rochelle, New York 10801
(914) 576-8457
-------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable, and from time to time, after this Registration Statement
becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans,check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
_________________
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Offering Registration
Registered Registered(1) Per Share (2) Price Fee
- -----------------------------------------------------------------------------------------------
Common Stock, par value
$.01 per share......... 16,786,778 $.105 $1,846,545.58 $441.32
- -----------------------------------------------------------------------------------------------
<FN>
(1) Includes 12,861,056 shares upon exercise of Warrants. See "SELLING
STOCKHOLDERS" and "STOCKHOLDERS' EQUITY".
(2) Estimated solely for the purpose of computing the registration fee.
This amount was calculated pursuant to Rule 457 on the basis of
$.105 per share of Common Stock, based on the average of the
closing bid and asked prices of the Company's Common Stock as quoted
on the OTC Bulletin Board on December 28, 2001 a date within five (5)
business days prior to the date of filing this Registration Statement.
======================================================================
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
PROSPECTUS
- ----------
OCG TECHNOLOGY, INC.
------------------------
16,786,778 Shares
Common Stock
Par Value $.01 Per Share
-------------------------
This Prospectus relates to the offer and sale to the public of
16,786,778 shares of common stock, $.01 par value per share (the "Common
Stock") of OCG Technology, Inc. (the "Company") by certain stockholders of the
Company (the "Selling Stockholders") in the over-the-counter market, at market
prices prevailing at the time of the sale, or at prices otherwise negotiated.
None of the proceeds from the sale of these shares of Common Stock will be
received by the Company. The Selling Stockholders, and certain persons who
purchase shares from them, including broker-dealers acting as principals who
may resell the shares, may be deemed "underwriters", as that term is defined
in the Securities Act of 1933, as amended (the "Securities Act"). See "PLAN OF
DISTRIBUTION" and "SELLING STOCKHOLDERS".
The Company's Common Stock is traded in the over-the-counter market and
prices for the Common Stock are quoted on the OTC Bulletin Board symbol
"OCGT". The closing bid price of the Company's Common Stock as reported
December 28, 2001 was $0.10. See "PRICE RANGE OF COMMON STOCK AND DIVIDENDS".
It is anticipated that the Company will maintain a current prospectus
for a period of approximately 24 months from the date hereof. The Selling
Stockholders will pay or assume brokerage commissions or other charges and
expenses incurred in the sale of their shares of Common Stock.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. See "RISK FACTORS"
CONTAINED IN THIS PROSPECTUS BEGINNING ON PAGE 5
----------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 31, 2002.
TABLE OF CONTENTS
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OTHER THAN THOSE
CONTAINED OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
OR IN ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS, OR ANY PROSPECTUS SUPPLEMENT,
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR
AN OFFER TO ANY PERSON IN ANY JURISDICTION OR IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION WILL BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS, OR ANY PROSPECTUS SUPPLEMENT, NOR ANY SALE MADE HEREUNDER, OR
THEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF, OR THEREOF, OR THAT THE INFORMATION CONTAINED HEREIN, OR THEREIN,
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------
PAGE
----
FORWARD LOOKING STATEMENTS ................. 3
PROSPECTUS SUMMARY ......................... 3
RISK FACTORS ............................... 5
USE OF PROCEEDS ............................ 7
PLAN OF DISTRIBUTION ....................... 7
STOCKHOLDERS' EQUITY ....................... 8
PRICE RANGE OF COMMON STOCK AND DIVIDENDS... 10
SELLING STOCKHOLDERS ....................... 11
DESCRIPTION OF BUSINESS .................... 12
PROPERTIES ................................. 16
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS .................... 17
DIRECTORS, EXECUTIVE OFFICERS AND
CONTROL PERSONS .......................... 22
EXECUTIVE COMPENSATION ..................... 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT .................... 23
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS ............................. 24
DESCRIPTION OF SECURITIES .................. 24
FINANCIAL STATEMENTS ....................... 26
LEGAL MATTERS .............................. 49
EXPERTS .................................... 49
AVAILABLE INFORMATION ...................... 49
UNTIL FEBRUARY 25, 2002 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
The Company has informed the Selling Stockholders that the anti-manipulative
rules under the Securities Exchange Act of 1934, Rules 10b-2,10b-6 and 10b-7
promulgated thereunder, may apply to their sales in the market and has
furnished the Selling Stockholders with a copy of these Rules. The Company
has informed the Selling Stockholders of the need for delivery occupies of
this Prospectus in connection with any sale of securities registered hereunder.
FORWARD LOOKING STATEMENTS
Because we want to provide you with meaningful and useful information, this
prospectus contains certain forward-looking statements that reflect our
current expectations regarding our future results of operations, performance
and achievements. We have tried, wherever possible, to identify these forward-
looking statements by using words such as "anticipates," "believes,"
"estimates," "expects," "plans," "intends" and similar expressions. These
statements reflect our current beliefs and are based on information currently
available to us. Accordingly, these statements are subject to certain risks,
uncertainties and contingencies, including the factors set forth under "RISK
FACTORS," which could cause our actual results, performance or achievements
for 2002 and beyond to differ materially from those expressed in, or implied
by, any of these statements. You should not place undue reliance on any
forward-looking statements. Except as otherwise required by federal securities
laws, we undertake no obligation to release publicly the results of any
revisions to any such forward-looking statements that may be made to reflect
events or circumstances occurring after the date of this Prospectus or to
reflect the occurrence of unanticipated events.
PROSPECTUS SUMMARY
This section summarizes key aspects of this offering that are described in
greater detail elsewhere in this Prospectus and may not contain all of the
information that is important to you. This Prospectus includes information
about the Common Stock being offered as well as information regarding the
Company's business and detailed financial data. We encourage you to read this
Prospectus in its entirety.
The Company was incorporated under the laws of the State of Delaware as Data
Display Systems, Inc. on July 3, 1969. The Company's principal executive office
is located at 56 Harrison Street, Suite 501, New Rochelle, New York 10801, and
its telephone number is (914) 576-8457.
The Company: (a) owns and markets the PrimeCareTM Patient Management System
(the "Prime Care System"), a product of Prime Care Systems, Inc. ("PSI"), a
wholly owned subsidiary of the Company; (b) owns and markets secure, Internet
enhanced versions of parts of the PrimeCare(TM) System and the CodeComplierTM,
on separate (but linked) Web sites known respectively as YourOwnDoctor.com,
PrimeCareOnTheWeb.comTM and YourOwnHealth.comTM ; (c) separately markets the
CodeComplierTM, a software program which automatically computes Medicare's
Evaluation & Management ("E&M") codes, and was designed to be used in
conjunction with OCGT's PrimeCareTM System and; (d) created, maintains and
markets a Web site known as DeniseAustin.com. See "RISK FACTORS",
"DESCRIPTION OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATIONS". Unless the context requires otherwise, the "Company" or "OCGT"
includes its subsidiaries.
1. The PrimeCareTM System
---------------------- The principal markets for the PrimeCareTM System
are primary care physicians, medical clinics and staff health maintenance
organizations.
The PrimeCareTM System is an in-office, client server based, user friendly,
patient management system. It is patient, physician and staff interactive.
The PrimeCareTM System: (a) creates an electronic medical record (an "EMR")
which documents the patient/physician encounter; (b) is compliant with the
Federal Health Insurance Portability Accountability Act ("HIPAA");
(c) contains a database of approximately 280 symptom and problem oriented
Questionnaires to determine the patient's History of Present Illness ("HPI")
for both diagnostic and follow-up visits; (d) contains over 100,000 complaint
and disease state questions, over 1,600 diagnoses, 1,250 physician reference
articles, and 1,700 patient education articles;(e) enables the physician to
obtain their patients' detailed HPI without requiring physician or staff time;
(f) allows the physician to select and document the normal and abnormal
physical findings, assessments, tests, prescriptions and treatment plan for
the patient; (g) encrypts all medical data for storage; (h) eliminates
dictation and transcription costs; (i) permits patients to answer HPI
Questionnaires at their own speed and, at the patient's option, in English
or Spanish; (j) creates clinical and patient databases for outcomes
research; The PrimeCare System is fully functional in current Windows
operating environments, including Windows 95, 98, ME, and Windows NT, 2000.
The PrimeCare System can communicate with other practice management
systems used in medical facilities. This ability provides a method for these
systems to transfer information to the PrimeCareTM System, such as patient
demographics and appointment scheduling, and enables the PrimeCareTM System
to transfer information (such as billing information including E&M codes,
ICD9codes and CPT codes) to these other systems. However, no assurances can
be given that the PrimeCareTM System will be accepted and used by a
sufficient number of physicians to ensure its profitability. See "RISK
FACTORS", "DESCRIPTION OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS".
2. CodeComplierTM
-------------- The Company has also developed its CodeComplierTM, an
application software program that was designed to be used in conjunction with
the Company's PrimeCareTM System and its PrimeCareOnTheWeb.comTM.As each
item of information is entered into, and collected by, thePrimeCareTM System
during the patient encounter, the CodeComplierTM organizes the data in the
proper classification and, using the 1997 HCFA guidelines, automatically
calculates HCFA's Evaluation and Management code ("E&M code"), with an audit
trail, to be used for reimbursement from Medicare and other third party payors
for the office visit. However, no assurances can be given that the Company
can successfully market the product. See "RISK FACTORS", "DESCRIPTION OF
BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
3. PrimeCareOnTheWeb.com (the "PCW Site")
------------------------------------- The PCW Site is a Web site that
enables a physician or staff member to select HPI Questionnaires from the
PrimeCare System for a patient to complete, via the Internet. When the
interview is completed a Report is produced, containing the patient's HPI
and a list of the diagnostic possibilities, which is available for the
physician to review on the secure PCW Site. The PCW Site also gives the
physician access to the PrimeCareTM System's physician reference articles
and patient education materials. It also uses the CodeComplierTM to calculate
the E&M code for the history portion of the visit. The PCW Site: (a) is HIPAA
compliant; (b)protects all Internet communication and the confidentiality
rights of every user through a unique user ID and password for each
questionnaire to be answered, and through secure digital certificates from
VeriSignTM, (c)encrypts all data for storage; (d) creates a significant data
base for outcomes research; and (e) automatically provides registered
physicians with an individual Web site on YourOwnDoctorTM.com. No assurances
can be given that the PCW Site will be accepted and used by a sufficient
number of physicians, and if used that sufficient revenues could be received
from its use to ensure its profitability. See "RISK FACTORS", "DESCRIPTION
OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
4. YourOwnDoctor.com (the "YOD Site")
--------------------------------- The YOD Site is a Web community owned
and operated by PSI that: (a) provides free individual Web sites for
healthcare providers who register for the PCW Site; (b) enables physicians
to promote their own services through displaying credentials, including
photos, listing specialities, office hours, directions, maps, phone numbers,
e-mail addresses, and accepted insurance plans; (c) provides useful links to
other medical Web sites; (d) provides a direct link from a physician's site
to the PCW Site which enables patients to access and complete appropriate
HPI Questionnaires; (e) provides a direct link to the YourOwnHealth.comTM
site (see below) for use by patients. No assurances can be given that the
YOD Site will be accepted and used by a sufficient number of healthcare
providers, and if used that sufficient revenues could be received from its
use to ensure its profitability. See "RISK FACTORS", "DESCRIPTION OF
BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
5. YourOwnHealth.com (the "YOH Site")
---------------------------------- The YOH Site is a free, online health
and wellness Web site, which empowers YOH Site visitors to be better prepared
for their next visit to the doctor. The YOH Site offers: (a) the "Medical
Interview" that: (i) enables visitors to select and complete, securely and
anonymously, HPI Questionnaires. (The YOH Site contains 110 of the 280 HPI
Questionnaires contained in the PrimeCareTM System); (ii)generates and
provides to the visitor a detailed HPI Report based upon their responses to
the Questionnaires; (iii) permits the visitor to answer the Questionnaires in
either English or Spanish; (iv) encrypts all medical data and uses digital
certificates from VeriSignTM for Internet communication; (v) provides banner
links to the YOD Site and to Denise Austin's Web site at www.DeniseAustin.com.
(b) "YourOwnHealthTM Notebook": (i) is a secure depository for storage of
personal and family medical data for visitors who register and become Members;
(ii) can be accessed only through the use of a registered ID and Password
created by the Member; (iii)encrypts all medical data and uses digital
certificates from VeriSignTM for secure Internet communication; (iv) provides
a convenient way to keep track of personal health issues such as allergies,
immunizations, medications and others that can be kept and edited on
designated lists; (v) allows the Member to save the HPI Reports generated by
completed Questionnaires, and to add personal notes and reminders to the
record. (c) "YourOwnHealthTM Reference" provides extensive healthcare consumer
education material relating to diseases, disease management, medical
procedures and prescription and common over the counter medications,
including drug interaction. No assurances can be given that the YOH Site will
be accepted and used by a sufficient number of consumers, and if used that
sufficient revenues could be received from its use to ensure its
profitability. See "RISK FACTORS", "DESCRIPTION OF BUSINESS" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
6. DeniseAustin.com.
----------------- The Company created, operates and markets a fitness Web
site, known as www.DeniseAustin.com, for Denise Austin, a nationally known
fitness expert who has had a daily fitness show on television for over 14
years. Through a revenue sharing agreement with Denise Austin the Company
promotes and markets a variety of Denise Austin products on the Web site.
Visitors and fans are able to shop online for Denise Austin signature exercise
videos, books, equipment, gear, and private label apparel line and
nutraceuticals (when available); may sign up for her monthly news letter,
enjoy her fitness tips, exercises, motivation messages, and some of her
favorite health recipes. No assurances can be given that the Denise Austin
Site will be accepted and used by a sufficient number of consumers, and if
used that sufficient revenues could be received from sales to ensure its
profitability. See "RISK FACTORS".
7. Miscellaneous.
-------------- The Company believes that it could provide sufficient
working capital from operations through marketing its Internet products, the
Window 95/98/NT, ME versions of the PrimeCareTM System and CodeComplierTM.
Currently, the Company has no lines of credit and has no material commitments
for capital expenditures outstanding.
RISK FACTORS
1. Losses; Accumulated Deficit.
---------------------------- The Company has suffered losses from
operations during each of its last ten fiscal years, and for the three months
ended September 30, 2001. As a result of such losses, the Company had
incurred an accumulated deficit of $24,691,630, through September 30, 2001.
The Company is currently operating at a loss, and there can be no assurance
that the Company will operate at a profit in the future.
THE REPORT OF THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS IS
QUALIFIED AS TO CERTAIN MATTERS, INCLUDING THE COMPANY'S ABILITY TO OPERATE
AS A GOING CONCERN.
2. Impediments to Marketability of the Company's Products.
------------------------------------------------------- The financial
success of the Company is dependent upon its ability to successfully market
the PrimeCareTM System, PrimeCareOnTheWeb.com, YourOwnDoctor.com,
YourOwnHealth.com, CodeComplierTM, and DeniseAustin.com. See "DESCRIPTION OF
BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
The PrimeCareTM System.
---------------------- The PrimeCareTM System is a relatively new concept
in the management of a medical practice, and its success is dependent upon
its acceptance by healthcare providers. There can be no assurance that the
PrimeCareTM System will be accepted by a sufficient number of healthcare
providers to ensure its profitability. See "DESCRIPTION OF BUSINESS" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
PrimeCareOnTheWeb.com and YourOwnDoctor.com
------------------------------------------- are Web sites for healthcare
providers and are new concepts in the management of a medical practice and
their successes are dependent upon their acceptance by healthcare providers.
There can be no assurance that the PrimeCareOnTheWeb.com or YourOwnDoctor.com
will be accepted by a sufficient number of healthcare providers to ensure its
profitability. See "DESCRIPTION OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATIONS".
YourOwnHealth.com
----------------- is a Web site for consumers, and is a new concept in the
management of a medical problems. Its success is dependent upon its acceptance
and use by consumers. There can be no assurance that YourOwnHealth.com will
be accepted by a sufficient number of consumers to ensure its profitability.
See "DESCRIPTION OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS".
3. Competition.
------------ The Company has not identified any competitive patient
management system which embodies all the features of the PrimeCareTM System.
However, other companies market systems which may have some of the features of
the PrimeCareTM System, and some companies also market medical office
products, but they perform functions different than those performed by the
PrimeCareTM System. See "DESCRIPTION OF BUSINESS - Competition" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
There can be no assurance that other products will not be developed by third
parties, which products could adversely affect the marketability or
profitability of any, or all, of the Company's products. There can be no
assurances that the Company's products will ever be profitable.
4. Copyrights.
----------- The content of the PrimeCareTM System and each of the other
products is protected by copyrights.
5. Government Regulation.
---------------------- The Company is operating in the medical field,
which is subject to extensive federal, state and local regulation. Although the
Company believes that it complies with all such regulations, it cannot predict
the nature or effect of government regulations that might arise.
6. Liquidity, Capital Needs and Requirements.
------------------------------------------ To date, the Company has been
unable to provide sufficient working capital from operations, and therefore,
to fund its operations, has relied significantly on its sale of equity
interests in the Company, and from loans to it by some of its officers and
shareholders. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS", "STOCKHOLDERS EQUITY" and "FINANCIAL STATEMENTS".
7. Reliance on Few Products.
------------------------- The Company currently relies for its revenues
on the marketing of the PrimeCareTM System and its four Web sites. See
"DESCRIPTION OF BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATIONS".
8. Reliance Upon Key Personnel.
--------------------------- To a substantial extent, the Company is
dependent upon the key personnel of the Company, and upon the key personnel
of PSI, for its future profitability and success. See "DESCRIPTION OF
BUSINESS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS".
9. No Dividend Distributions.
-------------------------- The Company has never paid cash dividends on
its Common Stock. Payment of dividends is within the discretion of the
Company's Board of Directors, and will depend, among other factors, on
earnings, capital requirements and the operating and financial condition of
the Company. At the present time, the Company's anticipated requirements are
such, that it intends to follow a policy of retaining earnings, if any, in
order to finance the development of its businesses. See "PRICE RANGE OF COMMON
STOCK AND DIVIDENDS".
10. Board of Directors' Power to Create Preferred Stock.
---------------------------------------------------- On May 2, 1996,
a majority of the stockholders of the Company authorized the amendment of the
Company's Certificate of Incorporation. The amendment authorized the Company
to issue 50,000,000 shares of Common Stock, par value $.01 per share and
1,000,000 shares of Preferred Stock, par value $.10 per share, either of
which may be issued in series. The Board of Directors of the Company was
authorized to determine and alter the rights, preferences, privileges and
restrictions granted to, or imposed upon, each series of stock to be issued
by the Company. As a result, from time to time, differing series of Common
Stock and/or Preferred Stock could be created which may adversely affect the
voting power or other rights of the current stockholders In accordance with
this authority, the Board of Directors of the Company has created 100,000
shares of a Series C Convertible Preferred Stock, none of which has been
issued to date, and has created and issued 100,000 shares of a Series E
Preferred Stock. Only one class of Common Stock has been created. See
"DESCRIPTION OF SECURITIES".
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of their shares of Common Stock. See "PLAN OF
DISTRIBUTION".
PLAN OF DISTRIBUTION
The Common Stock offered hereby are being sold by the Selling Stockholders
acting as principal for each of their own accounts. The Company will receive
none of the proceeds from this offering.
The distribution of the shares offered hereby by the Selling Stockholders
is not subject to any underwriting agreement. The Company expects that the
Selling Stockholders will sell their shares of Common Stock covered by this
Prospectus through customary brokerage channels, either through broker-dealers
acting as agents or brokers for the seller, or through broker-dealers acting
as principals, who may then resell the shares in the over-the-counter market,
or at private sale or otherwise, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling
their shares of Common Stock to, or through, broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders and/or the
purchasers of the shares of Common Stock offered hereby for whom they may
act as agent (which compensation may be in excess of customary commissions).
The Selling Stockholders and any broker-dealers that participate with the
Selling Stockholders in the distribution of shares offered hereby maybe
deemed to be underwriters and any commissions received by them might be
deemed to be underwriting discounts and commissions under the Securities
Act.
One or more supplemental prospectuses will be filed pursuant to Rule 424
under the Securities Act to describe any material arrangements for the
resale of the shares offered hereby, when such arrangements are entered into
by the Selling Stockholders and any broker-dealers that participate in the
distribution of the said Common Stock.
The Selling Stockholders are not restricted as to the price or prices at
which they may sell their shares of Common Stock. Sales of such Common Stock
at less than the market prices may depress the market price of the Company's
Common Stock. Moreover, none of the Selling Stockholders, except Messrs.
Jeffrey P. Nelson, Jarema S. Rakoczy, W. Jordan Fitzhugh and Abdul H.
Jamaludeen (who are affiliates of the Company) is restricted as to the number
of shares of Common Stock which may be sold by them at any one time, and it
is possible that a significant number of shares of Common Stock could be sold
at the same time, which may also have a depressive effect on the market price
of the Company's Common Stock. However, it is anticipated that the sale of
the shares of Common Stock offered hereby will be made over the approximately
twenty-four month period commencing with the date of this Prospectus.
STOCKHOLDERS' EQUITY
The following table sets forth the equity of the Company's stockholders' as
at September 30, 2001 See "RISK FACTORS", "FINANCIAL STATEMENTS" and
"DESCRIPTION OF SECURITIES".
September 30, 2001
------------------
Stockholders' equity:
Preferred stock, authorized: 1,000,000 shares;
issued: 100,000 Series E shares, $.10 par value per share $ 10,000
Common stock, $.01 par value per share,
authorized: 50,000,000 shares; issued: 35,223,613 (1)(3) 352,236
Additional paid-in capital 24,682,592
Deficit (24,691,630)
Subscriptions receivable 33,000
------------
320,198
Less treasury stock, 12,500 shares at cost (62,500)
------------
Total Stockholders' equity $ 257,698
<FN>
(1) At September 30, 2001, an aggregate of 10,062,056 shares of Common Stock
were reserved with respect to the following warrants, exercisable:
at $1.00 per share, expiring October 2001 ..................................20,000
from $.26 to $.49 per share, expiring between November 2001 - June 2003....110,000
at $.65 per share, expiring December 2001 .................................150,000
at $.40 per share, expiring April 2002 ...................................100,000
at $.47 per share, expiring June 2002....................................1,787,000
at $.47 per share, expiring July 2002....................................1,227,000
at $.40 per share, expiring December 2002 ..................................50,000
at $.35 per share, expiring January 2003 ................................2,618,056
at $.40 per share, expiring February 2003 ..................................25,000
from $.15 to $.25 per share, expiring between September 2003 - June 2003....75,000
at $.10 per share, expiring July 2003 ...................................1,500,000
at $.10 per share, expiring August 2003 .................................1,400,000
at $.10 per share, expiring September 2003 ..............................1,000,000
---------
10,062,056
(2) At September 30, 2001, an aggregate of 500,000 warrants were issued
without shares of Common Stock reserved and the exercise of which is
conditioned upon the Company increasing the authorized number of shares of
Common Stock to one hundred million shares, said warrants being exercisable:
at $.10 per share, expiring September 2003 ................................500,000
(3) At December 28, 2001, an aggregate of 7,674,000 shares of Common Stock
were reserved for issuance with respect to the following Warrants exercisable:
from $.29 to $.49 per share, expiring between December 2001 - June 2002 ...100,000
at $.40 per share, expiring April 2002 ....................................100,000
at $.47 per share, expiring June 2002 .....................................517,000
at $.47 per share, expiring July 2002 .....................................267,000
at $.40 per share, expiring December 2002 ..................................50,000
at $.35 per share, expiring January 2003 ................................2,125,000
at $.40 per share, expiring February 2003 ..................................25,000
from $.15 to $.25 per share, expiring between September 2003 - June 2004 ...90,000
at $.10 per share, expiring July 2003 ...................................1,500,000
at $.10 per share, expiring August 2003 .................................1,900,000
at $.10 per share, expiring September 2003 ..............................1,000,000
---------
7,674,000
(4) At December 28, 2001, (i) an aggregate of 4,400,000 warrants were
issued without shares of Common Stock reserved for their exercise (the
"New Warrants"), and the exercise of these warrants is conditioned upon
the Company increasing the authorized number of shares of Common Stock
to one hundred million shares; and (ii) there be a modification with the
warrant holders' consent of an aggregate of 2,698,056 warrants,
previously issued with shares reserved thereby (the "Old Warrants"),
eliminating the requirement to reserve shares of Common Stock for
exercise of their warrants, and the exercise of these Old Warrants is
conditioned upon the Company increasing the authorized number of shares
of Common Stock to one hundred million shares:
New Warrants
- ------------
at $.10 per share, expiring August 2003 ................................1,000,000
at $.10 per share, expiring September 2003 ...............................500,000
at $.15 per share, expiring December 2004 ..............................2,900,000
---------
4,400,000
Old Warrants
- ------------
at $.25 per share, expiring June 2003 ..................................1,245,000
at $.25 per share, expiring July 2003 ....................................960,000
at $.25 per share, expiring January 2004 .................................493,056
---------
2,698,056
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol OCGT. Prior to February 19, 1998 the Company's Common Stock was traded
on the National Association of Securities Dealers Automatic Quotation
("NASDAQ") System ("NASDAQ Small Cap"), under the NASDAQ symbol OCGT. The
following table sets forth the range of high and low closing prices for the
Company's Common Stock for the periods indicated. Prices represent quotations
between dealers, without adjustments for retail markups, markdowns or
commissions, and may not represent actual transactions.
Fiscal Year Ended June 30, 2000 High Low
- ------------------------------- ---- ---
1st Quarter .5156 .2969
2nd Quarter .5312 .3125
3rd Quarter .4531 .2969
4th Quarter .3594 .1406
Fiscal Year Ended June 30, 2001
- -------------------------------
1st Quarter .1875 .1250
2nd Quarter .1562 .0469
3rd Quarter .3125 .0625
4th Quarter .1875 .0750
Fiscal Year Ending June 30, 2002
- --------------------------------
1st Quarter .0900 .0500
2nd Quarter (to December 28, 2001) .1900 .0600
As of June 30, 2001, the Company had approximately 1,339 record holders
of shares of its Common Stock, including stockholders whose shares are
registered in "nominee" or "street" name. See "STOCKHOLDERS' EQUITY'. The
closing bid price per share for the Company's Common Stock, as quoted on the
OTC Bulletin Board on December 28, 2001, was $.105.
The Company has never paid cash dividends on its Common Stock. Payment
of dividends are within the discretion of the Company's Board of Directors and
will depend, among other factors, on earnings, capital requirements and the
operating and financial condition of the Company. At the present time, the
Company's anticipated requirements are such that it intends to follow a policy
of retaining earnings, if any, in order to finance the development of its
businesses. See "RISK FACTORS".
SELLING STOCKHOLDERS
The following table sets forth the shares of Common Stock of the
Company owned by the Selling Stockholders (including shares reserved for
issuance upon exercise of Warrants), the number of shares of Common Stock to
be sold and the number of shares to be owned following such sale.
Shares Owned
Shares Owned Shares to be Following Sale
Name (% of Class)(1) Sold (1) (% of Class)
John Adams 80,000 40,000 40,000
James Bodensteiner 80,000 40,000 40,000
Dorothy Miller 80,000 40,000 40,000
Charity Nebbe 20,000 10,000 10,000
Douglas & Peggy Nebbe 80,000 40,000 40,000
Carver Nebbe 20,000 10,000 10,000
Jack Wilkinson 66,666 33,333 33,333
Richard Broadie 20,000 10,000 10,000
Frank Badger 100,000 50,000 50,000
Richard Hesslink 150,000 50,000 50,000
Mary Badger 14,000 7,000 10,000
Kirk Manfredi 33,332 16,666 16,666
Curtis Shiver 583,332(1.21%) 291,666 291,666
Nathan Nebbe 120,000 60,000 60,000
William Cochran 80,000 40,000 40,000
Ed Rathmell 80,000 40,000 40,000
Dennis Nebbe 962,670(1.99%) 526,335 336,335
John Johnson 20,000 10,000 10,000
Linda J. Nebbe, Successor Ttee 1,500,000(3.11%) 1,500,000 0
Glen M. Lloyd, Rev. Tr., u/a DTO
Erich Augustin 616,000(1.28%) 450,000 166,000
Cambridge Consulting Group 1,600,000(3.31%) 1,600,000 0
Diaz Corporation 1,163,706(2.41%) 819,000 344,706
Dolphin Investments Ltd. 1,611,112(3.34%) 1,611,112 0
W. Jordan Fitzhugh (a)(b) 725,000(1.50%) 235,000 490,000(1.01%)
Abdul H. Jamaludeen (a)(b) 300,000 300,000 0
Valorie Levine (c) 639,000(1.32%) 625,000 14,000
Zachary Levine (c) 639,000(1.32%) 625,000 14,000
Masterdisk Corporation 200,000 200,000 0
Jeffrey P. Nelson 1,499,000(3.10%) 1,000,000 499,000(1.03%)
Mark E. Nelson 676,000(1.40%) 375,000 301,000
Jarema S. Rakoczy 549,000(1.14%) 190,000 359,600
Wynne B. Stern, Jr. 925,000(1.92%) 475,000 450,000
Louis E. Teichholz 275,000 275,000 0
Woodcroft Limited 250,000 250,000 0
Vistaquest, Inc. 1,500,000(3.11%) 1,500,000 0
Lexus Partners Ltd. 400,000 400,000 0
Hookipa Capital 150,000 150,000 0
West Isle Ventures Ltd. 200,000 200,000 0
Mentor One Solutions 800,000(1.66%) 800,000 0
John J. Formicola 1,500,000(3.11%) 1,500,000 0
<FN>
(1) Includes shares reserved for issuance upon exercise of warrants. See
"CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS".
Of the Selling Stockholders named above, the nature of the position,
office, or other material relationship which any such Selling Stockholder has
had within the past three years with the Company or any of its predecessors or
affiliates is as follows: (i) Edward C. Levine is its President and a
Director; (ii) Jeffrey P. Nelson is the Secretary and a Director; (iii) Jarema
S. Rakoczy is a Vice President of a subsidiary and a Director; (iv) Erich W.
Augustin was a Director and aVice President, (v) Wynne B. Stern, Jr. is
Counsel; (vi) a shareholder and officer of Masterdisk Corporation is the son
of the President of the Company; (vii) Louis Evan Teichholz is a member of the
Company's Medical Advisory Board; (viii) Mark E. Nelson is the brother of
Jeffrey P. Nelson; (ix) those whose name is followed by an "(a)", are former
directors, officers and/or stockholders of PSI, who acquired Common Stock
primarily in exchange for their share holdings in PSI; (x) those whose name
is followed by a "(b)" are currently officers of PSI; (xi) those whose name
is followed by a "(c)" are grandchildren of the President of the Company.
DESCRIPTION OF BUSINESS
General.
- -------
OCG Technology, Inc. with an extensive and specific commitment to healthcare
software and informatics technology created, owns, maintains, expands and
markets (i) the PrimeCare(TM) Patient Management System (the "PrimeCareTM
System") and the CodeComplierTM; (ii) secure Internet enhanced and targeted
components of the PrimeCareTM System, on Web sites known as
PrimeCareOnTheWeb.com, YourOwnDoctor.com, and YourOwnHealth.com; (iii)created,
maintains and markets a fitness Web site, known as www.DeniseAustin.com;
(iv) created, owns, and maintains the Cardiointergraph, a medical device used
for the early detection of coronary artery disease; (v) until July 28, 1999,
the date on which the business was sold (see: "Disposition of Assets", below),
marketed turnkey computer systems and consulting services to providers of
medical services through Mooney-Edwards Enterprises, Inc. d/b/a Medical
Information Systems ("MIS"), a wholly owned subsidiary of OCGT. OCG
Technology, Inc. was incorporated as Data Display Systems, Inc. on July 3,
1969.
OCGT's principal executive office is located at 56 Harrison Street, New
Rochelle, New York 10801 and its telephone number is (914) 576-8457.
Disposition of Assets.
- ---------------------
On August 2, 1999, pursuant to the terms of an Asset Purchase Agreement,
Mooney-Edwards Enterprises, Inc.("MIS"), a wholly owned subsidiary of OCGT,
sold substantially all of its assets, as at July 28, 1999, to Medical Manager
Southeast, Inc.("MM"); and MM assumed substantially all of MIS' liabilities
related to operations as of July 28, 1999. The gross purchase price equaled
($402,806).
Products Overview.
- ------------------
PrimeCareTM Products
--------------------
PrimeCareTM Patient Management System ("the PrimeCareTM System")
---------------------------------------------------------------is an
in-office client server based, user friendly, patient management system. It
also is patient, physician and staff, interactive. The PrimeCareTM System:
(i) creates an electronic medical record documenting the patient physician
encounter; (ii) is compatible with practice management and billing systems,
EMR and CPR systems; (iii) is Health Insurance Portability Accountability Act
("HIPAA") compliant; (iv) is designed for use in ambulatory clinics, group
and individual practices; (v) uses an authoritative and comprehensive
knowledge database of approximately 280 symptom and problem oriented patient
History of Present Illness ("HPI") Questionnaires for diagnostic and follow-up
office visits; (vi) collectively contains over 100,000 complaint and disease
state questions, over 1,600 diagnoses, 1,250 physician reference articles,
1,700 patient education articles; (vii) allows the staff to schedule the
appropriate HPI Questionnaire and enter the vital signs; (viii) interacts
directly with the patient by having the patient select the answers that apply
to their problem from the HPI Questionnaire; (ix) does not require the
patient to have computer or typing skills; (x) enables the physician to
obtain their patients' detailed HPI by having the patient answer the HPI
Questionnaire without requiring physician or staff time; (xi) allows the
physician to interact directly with the PrimeCareTM System to select and
document the normal and abnormal physical findings, assessments, tests,
prescriptions and treatment plan for the patient; (xii) automatic (real time)
calculation of HCFA's Evaluation and Management code, with full audit trail,
used for determining the reimbursement level by Medicare and other third
party payors for the office visit; (xiii) helps prevents E&M code down
grading by HCFA due to "insufficient documentation"; (xiv) encrypts all
medical data for storage; (xv) eliminates dictation and transcription costs;
(xvi) reduces risk of malpractice liability due to errors of omission and
"failure to consider"; (xvii) permits patients to answer HPI questionnaires
at their own speed and at the patient's option in English or Spanish;
(xviii) creates significant clinical and patient databases for outcomes
research; and (xix) allows staff to schedule HPI Questionnaire for patient
interview via the Internet and allows patient to answer HPI Questionnaires
via PrimeCareOnTheWebTM (see next section, PrimeCareOnTheWebTM).
When the patient arrives at the doctors office, the designated staff member
selects the appropriate Questionnaire based upon the patient's chief complaint
and/or symptom and enters the patient's vital signs. The patient is then
seated at a computer or web browser and answers complaint-specific questions
by using either the number keys or mouse to indicate answers that apply to
them. No typing or computer skills are required. The software also has
bilingual capabilities, allowing Spanish-speaking patients to interact in
their preferred language. When the patient has completed the Questionnaire,
the PrimeCareTM System creates a Preliminary Report (the "Report") for the
physician to review before examining the patient. The Report contains the
patient's current problems, medications and allergies, all positive and
significant negative subjective responses, vital signs and an alphabetical
list of the diagnostic possibilities with the patient's responses that
triggered each diagnostic possibility. By freeing up the time physicians
would normally have to spend asking patient history questions and recording
responses, the PrimeCareTM System permits physicians to see more patients
and to spend more quality time with them. The PrimeCareTM System is also
easy for physicians to understand and use . The same simple key stroke or
mouse click process allows the physician or appropriate staff member to
select and document the: physical findings (normal and abnormal),
assessment, select tests, treatment plan, prescribed medications, drug
interaction checks, and patient education materials distributed and schedule
follow-up visits. The physician or appropriate staff member can also type
a comment that further expands upon an answer given in the patients HPI,
physical finding, assessment, treatment plan, prescriptions, or about any
subject that may be appropriate. At the conclusion of the encounter a final
summary report of the visit, patient educational materials, and
prescriptions are printed for the patient.
The PrimeCareTM System: standardizes the patient record; assures consistency
in patient care; creates a patient database for clinical and outcomes
research; offers, both local and remote, means for utilization review and
quality assurance audits; improves the quality of care; increases efficiency
and productivity of the physician's practice; automatically generates a
problem list; incorporates patient care algorithms and clinical practice
guidelines; permits, both local and remote, on-line electronic retrieval of
patient record and hard copy print out with appropriate security controls;
enables rapid access to important patient data for clinical care; contains and
provides patient education, complaint oriented and medication specific;
provides physician reference materials.
The PrimeCare System is fully functional in current Windows operating
environments including Windows 95, 98, ME, and Windows NT, 2000. PSI's
interfaces enable the PrimeCare(TM) System to communicate with other practice
management systems used in medical facilities. This provides a method for
these systems to transfer information to the PrimeCare(TM) System, such as
patient demographics and appointment scheduling, and the PrimeCare(TM) System
to transfer information (such as billing information including E&M codes, ICD9
codes and CPT codes) to these other systems.
The PrimeCare(TM) System has other enhancements and features which include:
(1) voice command recognition capability (for physicians only) and touch
screen which may be used by both, patient and physician. All keystrokes,
mouse clicks are duplicated by the touch screen and/or voice command hardware
and software. (2) The PrimeCareTM System uses either Microsoft's SQL Server
or Interbase, as a database. This expands the flexibility of the PrimeCareTM
System since it enables medical facilities that are using MS SQL Server
database for practice management systems and other software to add
PrimeCareTM without purchasing an additional database. Both databases support
distributed processing in local and wide area networks.
Code ComplierTM:
---------------- OCGT has also developed Code ComplierTM an
application software program that was designed to be used in conjunction with
OCGT's PrimeCareTM System and PrimeCareOnTheWeb.comTM. As each item of
information is entered into and collected by the PrimeCareTM System during the
patient encounter, the CodeComplierTM organizes the data in the proper
classification and using the 1997 HCFA guidelines, automatically calculates
HCFA's Evaluation and Management code level, with full audit trail, used for
determining the reimbursement level by Medicare and other third party payors
for the History, Physical Findings and Decision Making sections the office
visit. It totally eliminates the time and effort which would otherwise be
required by physician office personnel to complete this task. CodeComplierTM
takes the guess work out of E&M compliance. However, no assurances can be
given that OCGT's marketing plan will succeed.
PrimeCareOnTheWeb.com (the "PCW Site"):
-------------------------------------- The PCW Site is a unique
physician and patient interactive Site that: (i) uses the HPI questionnaires
for diagnostic and follow-up office visits, physician reference articles,
patient education material, CodeComplierTM for real time calculation of E&M
code and scheduler portion of the PrimeCareTM System; (ii) enables physicians
to obtain their patient's detailed HPI by having the patient answer HPI
Questionnaires via the Internet without requiring physician time; (iii) saves
the physician and staff the time required to obtain the HPI, thus allowing
them to give more attention to each patient and/or see more patients; (iv)
produces an extremely comprehensive HPI that includes all of the "yes"
answers, pertinent negatives and a list of the diagnostic possibilities with
the answers that support each diagnostic consideration; (v) is HIPAA
compliant; (vi) protects all Internet communication and the confidentiality
rights of every user through a unique user ID and password per questionnaire
to be answered and secure digital certificates from VeriSignTM, (vii)
encrypts all data for storage; (viii) creates a significant data base for
outcomes research; and (ix) automatically provides registered physicians
individual Web sites on YourOwnDoctorTM.com.
YourOwnDoctor.com (the "YOD Site"):
---------------------------------- The YOD Site is a web
community created, owned, operated and maintained by PSI that: (i) provides
free individual Web sites for physicians, physician groups, and other
healthcare providers that register for PrimeCareOnTheWebTM; (ii) enables
physicians to promote their services through displaying credentials, including
photos of each physician and staff in the office, listing specialities, office
hours, directions, maps, phone numbers, e-mail addresses, and accepted
insurance plans; (iii) provides useful links to other medical sites; (iv)
provides a direct link from physician site to PCW that enables patient to
access appropriate HPI Questionnaire and complete; (v) provides direct link
to YourOwnHealth.comTM for use by patients.
YourOwnHealth.com (the "YOH Site"):
---------------------------------- The YOH Site is a unique,
free online health and wellness site and empowers healthcare consumers to be
better prepared for their next visit to the doctor. The YOH Site offers: (1)
the "Medical Interview" that: (i) enables visitors to securely and
anonymously select and complete from 110 of the 280 diagnostic problem
specific HPI Questionnaires contained in the PrimeCareTM System; (ii)
generates and makes available to the visitor a detailed HPI report based upon
their responses; (iii) permits the visitor to answer the Questionnaires in
either English or Spanish; (iv) encrypts all medical data and uses digital
certificates from VeriSignTM for Internet communication; (v) provides banner
links to the YOD Site and www.DeniseAustin.com. (2) "YourOwnHealthTM
Notebook": (i) is a secure depository for storage of personal and family
medical data for Registered Members; (ii) can be accessed only through the
use of registered IDs and Passwords; (iii) encrypts all medical data and uses
digital certificates from VeriSignTM for Internet communication; (iv) provides
a convenient way to keep track of personal health issues such as allergies,
immunizations, medications and others that can be kept and edited on
designated lists; (v) allows the Member to save the completed Questionnaire
HPI report and to add personal notes and reminders to the record. (3)
"YourOwnHealthTM Reference" provides extensive healthcare consumer education
material relating to diseases, disease management, medical procedures and
prescription and common over the counter medications, including drug
interaction.
Marketing:
---------- The principal markets for the PrimeCare(TM) System are
ambulatory/outpatient medical facilities, such as, primary care physicians,
medical clinics and staff health maintenance organizations.
The PrimeCareTM System is marketed as a service, on a pay for use
basis, with a maximum charge of $1.50 per patient visit. This marketing
method eliminates a significant financial commitment to purchase the software,
plus monthly maintenance charges for updates, and ties the cost directly to
use. Physician users have stated that the financial benefits derived by the
physician from use of the PrimeCareTM System exceeds the cost per patient
visit. According to the American Medical Association, there are over 650,000
physicians in the U.S. creating a very large potential market for the System.
OCGT estimates that as many as 250,000 of these physicians could use the
PrimeCareTM System routinely. However, no assurances can be given that the
marketing plan will succeed.
Competition:
----------- OCGT has not identified any competitive patient
management system which embodies all the features of the PrimeCare(TM) System,
in particular the complaint specific, interactive Questionnaires completed by
the patient and the report generated by the patient's responses. However,
other companies market systems which may have some of the features of the
PrimeCare(TM) System and some companies market medical office products which
perform different functions than those performed by the PrimeCare(TM) System.
To date, market penetration by both PSI and its competitors has been very
small.
Fitness Web Site:
---------------- OCGT designed, created, operates, maintains and
markets a fitness and wellness Site known as www.DeniseAustin.com. Through a
revenue sharing agreement with Denise Austin, a nationally known fitness
expert who has had a daily fitness show on television for over 14 years, OCGT
promotes and markets a variety of Denise Austin products on the web site.
Visitors and fans are able to shop online for their favorite Denise Austin
signature exercise videos, books, equipment, gear, and private label apparel
line and nutraceuticals (when available), as well as sign up for her monthly
news letter, enjoy fitness tips, exercises, motivation messages, and some of
her favorite healthy recipes.
Marketing:
--------- OCGT has expanded the comprehensive shopping area
which offers a broad range of noncompeting products within the fitness
industry. OCGT will share income from two sources - advertising revenues and
e-commerce. YourOwnHealth is currently positioned at the Denise Austin Web
Site with banners and sponsorship of the monthly newsletter which directs
traffic to YourOwnHealth . YourOwnHealth will take full advantage of the
opportunity to position its interactive tools directly from
www.DeniseAustin.com to facilitate a greater increase of traffic over the
existing flow.
Competition:
----------- Denise Austin's Daily Workout is the number one
fitness show on television with over one million viewers each weekday morning.
Ms. Austin top-selling videos have sold over 4 million copies, capturing 28%
of the fitness video market.
Medical Information Systems
--------------------------- MIS, a Florida corporation was acquired by
OCGT on June 25, 1992. Substantially all of the assets of MIS were sold to MM
and MM assumed substantially all of the liabilities as of July 28, 1999. See
"DESCRIPTION OF BUSINESS - Disposition of Assets". MIS was the area dealer for
MM. The sale was made under the dealer acquisition program initiated by MM in
1997 when it became publicly held. MIS marketed computer systems to providers
of medical services.
Cardiointegraph
- ---------------
OCGT has developed a diagnostic instrument for the early detection of coronary
heart disease, known as the Cardiointegraph, which takes the electrical
impulses generated by a patient during the course of a conventional
electrocardiogram ("ECG"), and through a series of integrations and
normalizations, displays these signals in a different visual format, known as
a Cardiointegram ("CIG"). In OCGT's opinion, a CIG provides the examining
physician with a method for identifying patients with apparently normal ECG's
who may actually have coronary heart disease.
Marketing
--------- OCGT has been unable to generate sufficient revenues
to fund its operations or to operate at a profit. Although a CIG was sold
during the fiscal year ended June 30, 2001, to date, OCGT has not derived
substantial revenues from the sale of CIGs and there can be no assurance that
OCGT will ever be able to market the CIG.
Competition
----------- OCGT believes that the CIG does not compete directly
with any other diagnostic method. However, the CIG does compete generally
with other diagnostic methods, such as stress testing and thallium perfusion
stress tests. In the past, OCGT sold its product through medical
distributors, a sales and marketing method employed by other medical equipment
manufacturers.
Patent Protection
----------------- OCGT's primary patent expired in November 1986.
In June 1985 a new method patent was granted to OCGT which expires in the year
2002. This new patent covers OCGT's method for correctly detecting in a
repeatable fashion the proper base line which is essential to accurately
compute the CIG. OCGT owns trademark registrations in the United States for
"OCG".
Government Regulation
- ---------------------
OCGT is operating in the medical field which is subject to extensive
federal, state and local regulations. The CIG is a "device" under the Food,
Drug and Cosmetic Act of 1938, as amended (the "Act"). On December 29, 1981,
OCGT was formally advised by the Food and Drug Administration ("FDA") that
OCGT had clearance to market the CIG, subject to the general controls and
provisions of the Act. The FDA designated the CIG to be in regulatory class
II. OCGT believes that it is presently in compliance with all federal, state
and local regulations.
Neither the PrimeCare(TM) System, nor the CodeComplierTM require FDA filings.
Employees
- ---------
OCGT employs three full time employees, all of whom are non-salaried officers.
Its subsidiary, PSI employs five salaried employees including officers, four
of whom are full time and one is part time. All are salaried.
PROPERTIES
OCGT leases approximately 1,000 square feet of office space at 56 Harrison
Street, New Rochelle, New York where it maintains its executive and sales
office. The lease bears an annual rental of $20,952 until June 30, 2003.
However, it may incur annual increases based on an escalation provision in the
lease until its expiration on June 30, 2003.
PSI leases approximately 3,634 square feet of office space in Newport News,
VA. The lease bears an annual rental $42,665 until expiration on May 31, 2004.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
General
- -------
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere
herein. The following discussion contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, and OCGT intends that such
forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements include predictions, estimates and other
statements that involve a number of risks and uncertainties. See "RISK
FACTORS". While this outlook represents OCGT's current judgment on the future
direction of the business, such risks and uncertainties could cause actual
results to differ materially from any future performance suggested herein.
OCGT has experienced recurring losses from operations and has relied on the
sale of equity interests in OCGT to fund its operations. If necessary, OCGT
intends to provide additional working capital through the sale of equity
interests in OCGT. Although, in the past, OCGT has been able to provide
working capital through such sales, there can be no assurances that OCGT will
succeed in its efforts, which creates a doubt about its ability to continue as
a going concern. The results of operations for prior periods are based on
OCGT's continuing operations.
A. Fiscal 2001 Compared to Fiscal 2000
Results of Operations
- ---------------------
Results of operations related to MIS have not been included in the discussion
since MIS' assets were sold as at July 28, 1999.
Total revenues decreased to $53,955 for the year ended June 30, 2001, from
$79,412 for 2000. Cost of sales was unchanged.
Marketing general and administrative expenses decreased $294,183 for the year
ended June 30, 2001, as compared to 2000, due primarily to the accelerated
write-off of proprietary technology related to the creation of PrimeCareTM
System, and a decrease in amortization.
Liquidity and Capital Resources
- -------------------------------
At June 30, 2001, OCGT had a current ratio of 1.01 to 1, compared to 1.35 to 1
as of June 30, 2000. Although its net loss from operations, for the year ended
June 30, 2001, was $558,132, a significant part of that loss resulted from
non-cash charges of approximately $429,478, which accounted for 76.95% of the
total loss from operations.
Cash on hand and accounts receivable were $17,249 at June 30, 2001. During the
year ended June 30, 2001, OCGT received $240,000 in cash through the sale of
equity interests. Subsequent to June 30, 2001, OCGT received an additional
$101,000 in cash through the sale of equity interests. Although, in the past,
OCGT's principal means of overcoming its cash shortfalls from operations was
from the sale of OCGT's Common Stock and the exercise of Warrants, there can
be no assurances that OCGT will be able to overcome future cash shortages from
operations in this manner.
Disposition of Assets.
- ---------------------
On August 2, 1999, pursuant to the terms of an Asset Purchase Agreement,
Mooney-Edwards Enterprises, Inc.("MIS"), a wholly owned subsidiary of OCGT,
sold substantially all of its assets, as at July 28, 1999, to Medical Manager
Southeast, Inc.("MM"); and MM assumed substantially all of MIS' liabilities
related to operations as of July 28, 1999. The gross purchase price equaled
($402,806).
Products and Competition.
- ------------------------
OCGT acquired PSI on May 16, 1994. PSI owns all right, title and interest in
the PrimeCareTM System, which is protected by copyrights.
OCGT has products that are of significant benefit to healthcare providers,
their patients, consumers, pharmaceutical companies and other companies in the
healthcare industry and fitness field. Physicians agree that the most
important and time consuming part of any medical encounter is the collection
of the patient's detailed history of present illness ("HPI"). As a result of
increased patient loads and stringent documentation demands, many physicians
do not have the time necessary to obtain a patient's detailed HPI, even
though as many as 8 of every 10 patients the diagnosis can be obtained from a
detailed HPI.
Products:
-------- The Company (i) owns and markets the PrimeCareTM System, (ii)
owns and markets secure, Internet enhanced versions of parts of the
PrimeCare(TM) System and the CodeComplierTM, on separate (but linked) Web
sites known respectively as YourOwnDoctor.com, PrimeCareOnTheWeb.comTM and
YourOwnHealth.comTM ; (iii) separately markets the CodeComplierTM and; (iv)
created, maintains and markets a Web site known as DeniseAustin.com. See
"DESCRIPTION OF BUSINESS - Products Overview" and "RISK FACTORS".
Competition:
----------- OCGT has not identified any competitive patient management
system which embodies all the features of the PrimeCare(TM) System; in
particular, as regards the complaint specific, interactive Questionnaires
completed by the patient and the Report generated by the patient's responses.
OCGT believes that it has the only in-office patient management system and Web
sites which enable physicians to obtain the patient's detailed HPI by having
the patient answer problem-specific HPI Questionnaires on a PC in the office
or via the Internet. This HPI is obtained without requiring the use of
physician time. However, other companies market systems which may have some
of the features of the PrimeCare(TM) System, and some companies market medical
office products which perform different functions than those performed by the
PrimeCare(TM) System. To date, market penetration by both PSI and its
competitors has been very small.
The Market:
- ----------
OCGT's markets for: (a) the PrimeCare System, the PCW Site and the YOD Site
are ambulatory/outpatient medical facilities, such as, primary care
physicians, medical clinics, group practices, health maintenance
organizations, and in general, healthcare providers other than those providing
care to patients confined to hospital beds; and (b) the YOH Site is for the
use of the general public.
According to the American Medical Association, there are in excess of 675,000
physicians in the U.S. OCGT estimates that, of this group, at least 300,000
physicians would benefit from the use of OCGT's healthcare products.
According to a Harris Interactive nationwide survey of practicing physicians
released March 28, 2000,
- 51% of physicians access the Internet from their personal office areas
- 34% of physicians access the Internet in their clinical work areas
It is reasonable, therefore, to assume that, at the present time, 150,000
physicians have the capability to use OCGT's Web sites from their office, and
100,000 can use it from various areas of their office. It should be noted that
the Harris survey is approximately two years old.
The Pew tracking report shows the continuing growth in Internet access, with
an 18% increase in the last six months of the year 2000. It is therefore
reasonable to assume that the potential market is currently actually larger
and is continuing to grow.
The Pew Internet & American Life Project: An Internet tracking report,
released on February 18, 2001, stated, "Comparing figures gathered in our
tracking survey in May and June with figures gathered between Thanksgiving and
Christmas, we find that the number of American adults with Internet access
grew from about 88 million to more than 104 million in the second half of
2000." This is an 18% increase in six months.
The Pew Internet & American Life Project: An online life report, released
November 26, 2000, stated that "Fifty-two million American adults, or 55% of
those with Internet access, have used the Web to get health or medical
information." It further stated that, "a majority of them go online at least
once a month for health information. A great many health seekers say the
resources they find on the Web have a direct effect on the decisions they make
about their health care and on their interactions with doctors." This report
signifies a very large, continually growing potential market for OCGT's YOH
Site.
Revenue Sources and Marketing Strategy:
- -------------------------------------- During the fiscal year ending June
30, 2001, OCGT's marketing efforts had been concentrated on its Web products.
However, during its next quarter, significant interest and current
opportunities have arisen for marketing the PrimeCareTM System as part of a
major, multi-year international healthcare information management program..
Successful completion of these contracts would produce very significant
revenues for OCGT. There can be no assurance, however, that this project will
move forward or in the event that it does, that the PrimeCareTM System will be
selected.
Advertising Revenues.
- -------------------- An article appearing in CNET News.com from
Knowledge@Wharton.com, August 7, 2000 stated, ".... Pharmaceutical companies
currently spend $2 billion in direct-to-consumer advertising. Johnson &
Johnson has said it will move 40 percent of its ad budget to the Internet. If
everyone moves 40 percent to the Internet, that's almost $1 billion....".
This should create the availability of significant advertising dollars for the
Company's Web products which are viewed by consumers.
Physicians see, on average, 500 patients per month. OCGT believes that this
segment of the healthcare market is capable of generating the greatest
activity at its Web sites and thus, the largest amount of advertising
revenues.
In an effort to maximize the healthcare provider's desire to use OCGT's Web
Sites, OCGT devised a marketing strategy which gives each healthcare provider
a share of the revenues generated through that providers use of OCGT's Web
products. In addition, OCGT gives physicians free access to, and use of, its
Web products. Its "revenue sharing" concept is supported by an October 2000
survey, conducted by Medem, the secure patient-physician e-health network,
founded by the nation's leading medical specialty societies and the American
Medical Association (AMA), released on November 6, 2000, which stated "that
physicians overwhelmingly believe in the value of a robust Web site for their
practice. In addition, half of physicians surveyed said they would be more
interested in using e-mail to communicate with patients if they were
reimbursed for it." The survey also stated, "These results show that
physicians embrace the concept of online communications with their patients if
a clear office function is addressed or an increased office efficiency can be
demonstrated." OCGT's products should meet those criteria.
The fact that the physicians share in the advertising revenues is a strong
motivation for physicians to use OCGT's healthcare Web sites. Their use would
relieve OCGT of the enormous costs normally associated with driving traffic to
Web sites.
The advertising revenue potential from patients viewing impressions on the HPI
Questionnaires may be substantial. Patient interactive HPI Questionnaires
average 25 screen pages per Questionnaire. Each page has room for two
sponsorships by advertisers and up to 7 ad impressions, for a total of 9
impressions per page. Assuming only 5 of the 9 impressions per page are sold
at $.03 per impression (a $30 cost-per-thousand rate), potential revenue per
Questionnaire is $3.75. Physicians average 500 patient visits per month.
Therefore, assuming that a physician spends an aggregate of two months on
vacations, holidays, seminars, conferences, etc. the potential annual ad
revenue per physician using OCGT's PCW is $18,750.Therefore, 1,000 physicians
could generate $18,750,000 per year.
Outcomes Research.
- ----------------- Potentially, OCGT could receive fees for conducting
outcomes research for pharmaceutical companies and teaching hospitals. OCGT
anonymizes, encrypts and stores both the completed diagnostic and follow-up
Questionnaires. This ever-growing medical database can be analyzed in various
ways to determine the effectiveness of treatment plans, medications, etc.
Licensing Fees:
- -------------- OCGT believes that annual licensing fees from large fixed
population groups, which includes, but is not limited to, labor unions,
medical insurance companies, HMOs, military forces and correctional
facilities, can be a source of revenues.
Targeting The Market:
- -------------------- OCGT's primary focus is on targeting healthcare
provider organizations whose physicians can drive the most traffic to OCGT's
Web sites. OCGT is attempting to establish business relationships with
organizations that currently deal with healthcare providers. These
organizations consist of healthcare providers, marketers of software and
hardware, such as, office management system vendors, any other healthcare Web
sites. OCGT would enter into revenue sharing agreements with these
organizations. OCGT currently recruits and trains these organizations through:
(a) its sales and marketing staff; and (b) through independent consultants.
The independent consultants are compensated solely on a commission basis.
OCGT intends to expand both its in house staff and its consultant network.
To date, the Company has entered into an agreement with Hackensack University
Medical Center ("HUMC"). The agreement provides for the use of the Company's
Web sites by HUMC's medical services organization ("MSO"), North Jersey
Medical Management Services, L.L.C. This MSO has over 1,000 physicians.
HUMC, and its Physicians Hospital Organization, have created www.HUMCMD.net ,
the only complete Physician/Patient Internet Service Provider ("ISP")
providing top quality Internet connectivity to members of its physician
network, plus access to key internal HUMC applications.
The HUMCMD site has both a "Physician Portal" and "Patient Portal". The site
currently contains the OCGT's PCW Site and YOH Site. The Company is dependent
upon HUMC's marketing efforts to its Staff Physicians.
The Company has also contracted with Advantage Healthcare Net ("AHN") for use
of the Company's Web sites by AHN's 260+ Members organizations and their
2,500+ physicians. AHN is a regional group purchasing organization covering
North Dakota, South Dakota, Minnesota and eastern Montana. AHN maintains an
Intranet for its members use. The AHN Intranet features links to the
Company's Web sites. AHN has a marketing campaign to its members about its
Intranet and includes information about the benefits its physician members
will derive from using the Company's Web sites. The Company is dependent upon
AHN's for this market.
OCGT continues to market the PrimeCare System and the CodeComplier as turnkey
systems within a physician's office.
Fitness Web Site:
- ---------------- OCGT designed, created, operates, maintains and markets a
fitness and wellness Web site known as www.DeniseAustin.com. Through a
revenue sharing agreement with Denise Austin, a nationally known fitness
expert who has had a daily fitness show on television for over 14 years, OCGT
promotes and markets a variety of Denise Austin products on the Web site.
Visitors and fans are able to shop online for their favorite Denise Austin
signature exercise videos, books, equipment, gear, and private label apparel
line and nutraceuticals (when available), as well as sign up for her monthly
news letter, enjoy fitness tips, exercises, motivation messages, and some of
her favorite healthy recipes.
Marketing:
--------- OCGT has expanded the comprehensive shopping area on the DA
Web site which offers a broad range of noncompeting products within the
fitness industry. OCGT will share income from two sources - advertising
revenues and e-commerce. YourOwnHealth is currently positioned at the Denise
Austin Web Site with banners and sponsorship of the monthly newsletter which
directs traffic to YourOwnHealth . YourOwnHealth intends to take advantage of
the opportunity to position its interactive tools directly from
www.DeniseAustin.com to facilitate a greater increase of traffic.
Competition:
----------- Denise Austin's Daily Workout is reputed to be the number
one fitness show on television with over one million viewers each weekday
morning. Her videos have sold over 4 million copies.
OCGT believes that it could obtain sufficient working capital from operations
through marketing its Internet products, the PrimeCareTM System and
CodeComplierTM.
Currently, OCGT has no lines of credit and has no material commitments for
capital expenditures outstanding.
B. Three months ended September 30, 2001 compared to September 30, 2000
Results of Operations
- --------------------- Total revenues decreased $14,235 for the three months
ended September 30, 2001, as compared to the same period for 2000, primarily
because there were no sales of OCGT's CIG and the termination of an Internet
license. Revenues of OCGT, and PSI were $0 and $14,235 respectively, for the
three months ended September 30, 2001.
Marketing, general and administrative expenses increased $35,150 for the three
months ended September 30, 2001, as compared to the same period for 2000,
primarily as a result of an increase of expenditures for business development.
Liquidity and Capital Resources
- ------------------------------- At September 30, 2001, OCGT had a current
ratio of .57 to 1, compared to .7 to 1 as of September 30, 2000. Its net loss
from operations, for the three months ended September 30, 2001, was $174,969,
of which, loss from non-cash charges of $115,227, accounted for 66% of its
total loss from operations. OCGT has experienced recurring losses from
operations, and has been unable to provide sufficient working capital from
operations. It has relied on the sale of equity interests in OCGT, the
exercise of Warrants and loans from stockholders to fund its operations.
OCGT's auditors have included an explanatory paragraph regarding the ability
of OCGT to continue as a "going concern". See "FINANCIAL STATEMENTS".
Cash on hand and accounts receivable were $23,876 at September 30, 2001. OCGT
also has $33,000 of demand notes receivable which relate to the exercise by
holders of their Warrants. See "DESCRIPTION OF BUSINESS". In the past, OCGT's
principal means of overcoming its cash shortfalls from operations was from the
sale of OCGT's Common Stock. During the three months ended September 30,
2000, OCGT received $101,000 in loans from stockholders. Although, in the
past, OCGT has been able to provide working capital through the sale of equity
interests in OCGT, loans from shareholders and through the exercise of
Warrants, there can be no assurances that OCGT will be able to do so in the
future.
Disposition of Assets.
- --------------------- On August 2, 1999, pursuant to the terms of an Asset
Purchase Agreement, MIS, a wholly owned subsidiary of OCGT, sold
substantially all of its assets to MM and MM assumed substantially all of the
liabilities related to operations. The sale was effected as at July 28, 1999
for a purchase price equal to $402,806.
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
Name Age Position
---- --- --------
Edward C. Levine 73 President and Director
Jarema S. Rakoczy 58 Vice President and Director
Jeffrey P. Nelson 56 Secretary and Director
Directors are elected at the annual stockholder's meeting, and serve until the
next annual meeting. Officers are elected by the Board of Directors.
Edward C. Levine has been the President of OCGT since 1976, and a Director of
the Company since 1973. Mr. Levine is an attorney and a member of the Bar of
the State of New York.
Jarema S. Rakoczy, has served as a Director of OCGT since August 1987, and a
Vice President since March 1985. He first became associated with OCGT in
January, 1983. Mr. Rakoczy devotes part of his professional time to OCGT's
affairs. Mr. Rakoczy served as Eastern Manager at Hittman Medical Systems
from September 1980 to December 1982; as Regional Sales Manager at American
Optical Medical Division from February 1976 to September 1980; and as Vice
President at Pratt Electronics from June 1968 to November 1974. Mr. Rakoczy
has been self-employed as a sales and marketing consultant.
Jeffrey P. Nelson, has served as a Director of OCGT since November 1991, and
as its Secretary since June 1992. He has been an Executive Vice President of
OCGT since November 1997. Mr. Nelson served as Vice President, Asset Based
Finance Division, of Marine Midland Bank, NA from December 1986 through 1990.
Mr. Nelson was self-employed as a real estate financing consultant from
January 1991 through November 1991.
EXECUTIVE COMPENSATION
Compensation of Directors
- -------------------------
Directors serve without compensation.
Compensation of Officers
- ------------------------
The following table presents certain specific information regarding the
compensation of the Chairman and President of OCGT who received no
compensation other than the compensation set forth in the following tables.
No Officer of OCGT had total salary, bonus or other compensation exceeding
$100,000.
Summary Compensation Table
--------------------------
(a) (b) (c)
Long-term Compensation Awards
Name & Principal Fiscal Year Ended Securities Underlying
Position June 30, Options/SARs
- ---------------- ----------------- -----------------------------
Edward C. Levine, 2001 - 0 -
President and Chief 2000 200,000
Executive Officer 1999 300,000
Option Grants in Last Fiscal Year
---------------------------------
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price
Name Granted Fiscal Year ($/Share) Expiration Date
- ---------------- ------------ ----------- ----------- ---------------
Edward C. Levine none N/A N/A N/A
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
The following table sets forth certain information regarding the exercise of
stock options during the fiscal year ended June 30, 2001 and the fiscal year
ended value of unexercised options for OCGT's named executive officers.
Value of Unexercised
Shares Value Number of Unexercised In-the-money Options at
Acquired on Realized Options at Fiscal Year-End Fiscal Year End (1)
Name Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -------------- ----------- -------- --------------------------- -------------------------
E. C. Levine -0- -0- 500,000 / 0 $0 / 0
J. S. Rakoczy -0- -0- 90,000 / 0 0 / 0
J. P. Nelson -0- -0- 300,000 / 0 0 / 0
<FN>
_____________________
Notes: (1) Calculated based on the excess of the closing market price of
OCGT's common stock as reported on the OTC Bulletin Board on
June 30, 2001 over the option exercise price.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of September 30, 2001 certain information
with respect to Common Stock ownership of (i) each person known by OCGT to
own beneficially more than 5% of the shares of OCGT's Common Stock, (ii) all
directors, and (iii) all Officers and Directors as a group.
Name and Address of Amount & Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- ------ ------------------- -------------------- --------
Common Edward C. Levine 538,826 - direct 1.52%
56 Harrison Street
New Rochelle, NY 10801
Common Jarema S. Rakoczy 359,600 - direct 1.02%
56 Harrison Street
New Rochelle, NY 10801
Common Jeffrey P. Nelson 499,000 - direct 1.42%
56 Harrison Street
New Rochelle, NY 10801
Common All directors and 1,397,426 - direct 3.96%
officers as a group
(3 Persons)
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During December 2001, the Company authorized the issuance of, and thereafter
issued, warrants to purchase shares of its Common Stock as follows: Edward C.
Levine 750,000 warrants; Jeffrey P. Nelson 700,000 warrants; and Jarema S.
Rakoczy 100,000 warrants; all at $.15 per share. The exercise of these
warrants is conditioned upon the Company increasing the authorized number of
shares of Common Stock to one hundred million shares.
During December 2001, the Company modified, with the warrant holders' consent,
an aggregate of 2,698,056 warrants, previously issued with shares reserved
thereby, eliminating the requirement to reserve shares of Common Stock for
exercise of their warrants, and the exercise of these warrants is conditioned
upon the Company increasing the authorized number of shares of Common Stock
to one hundred million shares. In consideration the exercise price was
reduced from $.47 to $.25and the exercise period was extended one year.
Included in this group were: Edward C. Levine 500,000 warrants; Jeffrey P.
Nelson 300,000 warrants; and Jarema S. Rakoczy 90,000 warrants.
During June and July, 2000, the Company borrowed $85,000 from the son of
the Company's President. See "DESCRIPTION OF SECURITIES - Convertible
Notes".
On February 29, 2000, the Company authorized the issuance of, and thereafter
issued, 150,000 shares of the Company's common stock were issued to retire
debt in the amount of $37,374. The creditor is the son of the Company's
President.
On July 26, 1999, the Company authorized the issuance of, and thereafter
issued, warrants to purchase shares of its Common Stock as follows: Edward
C. Levine 200,000 warrants; Jeffrey P. Nelson 150,000 warrants; and Jarema
S. Rakoczy 60,000 warrants; all at $.47 per share.
On June 22, 1999 the Company authorized the issuance of, and thereafter
issued, warrants to purchase shares of its Common Stock as follows: Edward
C. Levine 300,000 warrants; Jeffrey P. Nelson 150,000 warrants; Erich W.
Augustin 150,000 warrants, and Jarema S. Rakoczy 30,000 warrants; all at
$.47 per share.
On June 22, 1999, the Company authorized the issuance of, and thereafter
issued, warrants to purchase 200,000 shares of its common stock at $.47
per share to Masterdisk Corporation in payment of the use of space and
administrative support services for the year ended May 31, 2000. A
shareholder and officer of Masterdisk Corporation is the son of the Company's
President.
On December 8, 1998, the Company authorized and issued warrants to acquire
150,000 shares of the Company's common stock at an exercise price of $0.65
which expire December 10, 2001. These warrants were issued to Erich W.
Augustin, an Officer and Director of the Company.
DESCRIPTION OF SECURITIES
Common Stock
------------ The Company is authorized to issue 50,000,000 shares of
Common Stock, $.01 par value per share. Such shares may be issued in series
by the Board of Directors (hereinafter, the "Board"), each series having such
voting powers, designations, preferences, rights, qualifications, limitations
and restrictions as may be deemed appropriate by the Board. The Board may act
without the necessity of further stockholder action, except to the extent
required by the Certificate of Incorporation, the General Corporation Law of
the State of Delaware, or other applicable laws and regulations. To date, only
one series of Common Stock has been issued. Each holder of Common Stock is
entitled to one vote per share at all stockholders' meetings. No share of
Common Stock is entitled to any preference over any other share, and each
share of Common Stock is equal in all respects to every other share of Common
Stock There are no preemptive rights to purchase additional shares by virtue
of the fact that a person is a stockholder of the Company. Stockholders do not
have the right to cumulate their votes for the election of directors.
Accordingly, the holders in the aggregate of shares in excess of 50% of the
outstanding shares of Common Stock (and Series C and Series E Preferred Stock
- - see below under "Preferred Stock") can elect all of the members of the
Company's Board. Holders of Common Stock are entitled to such dividends as may
be declared from time to time by the Board of Directors in its discretion, on
a ratable basis, out of funds legally available there for, and to a pro rata
share of all assets available for distribution upon liquidation, dissolution
or the winding up of the affairs of the Company. Payments of dividends and/or
distributions in respect of the Common Stock can only be made if funds for the
same are available after payment (or provisions for such payment) has been
made in respect of Preferred Stock. See "DESCRIPTION OF SECURITIES - Preferred
Stock."
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Common Stock.
Preferred Stock
--------------- The Company is authorized to issue 1,000,000 shares of
Preferred Stock,$.10 par value per share, which shares may be issued in series
by the Board, each series having such voting powers, designations,
preferences, rights, qualifications, limitations and restrictions as may be
deemed appropriate by the Board, without the necessity of further stockholder
action, except to the extent required by the Certificate of Incorporation, the
General Corporation Law of the State of Delaware or other applicable laws and
regulations.
The Board has designated 100,000 shares as Series C Preferred Stock, of
which the preferences and other rights, and the qualifications, limitations or
restrictions thereof, include the following: (1) the shares are convertible
into one hundred shares of Common Stock for each share of Series C Preferred
Stock converted, provided: (i) that there is no increase in the number of the
Company's authorized shares of Common Stock, then only to the extent
authorized by the Company's Board; or in the alternative, (ii) in the event
that the Company's Stockholders shall authorize the Corporation's Board to
increase the number of the Corporation's authorized shares of Common Stock to
at least one hundred million authorized shares and, as a result the number is
so increased; (2) the holders shall have one hundred (100) votes per share
held and shall have the right to vote for any purpose that the holders of the
Company's Common Stock may vote; (3) dividends shall not be cumulative and
shall be distributable out of the aggregate of all cash dividends declared by
the Company in any year, such cash dividends, if any, shall be calculated in
an amount per share of Series C equal to one hundred (100)times of the amount
per share of dividends distributable to the holders of one share of the Common
Stock; and (4) in the event of any voluntary or involuntary liquidation,
dissolution or other winding up of the affairs of the Company, the holders of
the Series C Preferred Stock shall be entitled to receive out of the assets
and funds of the Company to be distributed, an amount per share equal to one
hundred (100) times of the amount per share to be distributed to the holders
of one share of the Common Stock.
The Board has designated 100,000 shares as Series E Preferred Stock, of
which the preferences and other rights, and the qualifications, limitations or
restrictions thereof, include the following: (1) the shares are
nonconvertible; (2) the holders shall have the right to vote for any purpose
on the same basis as the holders of the Company's Common Stock; (3) dividends
shall not be cumulative and shall be distributable out of the aggregate of all
cash dividends declared by the Company in any year, and shall be calculated as
follows: the aggregate amount of all cash dividends declared and to be
distributed by the Company to all classes of its stockholders in a fiscal
year shall be multiplied by a fraction, the (A) numerator of which shall be an
amount equal to fifty (50%) percent of the net profits of the Company's
subsidiary,"MIS", for the prior fiscal year; and the (B) denominator of which
shall be the sum of the said net profits of the Company (including those of
MIS) for such prior fiscal year; (4) the shares may be redeemed, in whole or
in part, at the option of the Company, at the price of $30.00 per share, plus
all accrued and unpaid dividends thereon, at any time commencing three years
after the date of issuance. On June 25, 1992, 100,000 shares of Series E
Preferred Stock were issued in conjunction with the acquisition of MIS. On
August 2, 1999, the Company sold the business conducted by MIS through the
sale of substantially all of the assets and substantially all of the
liabilities related to operations. See "DESCRIPTION OF BUSINESS". During
December 2001, the Company converted 67,000 shares of Series E Preferred Stock
into 200,000 shares of the Company's Common Stock
Convertible Notes
----------------- On November 12, 2001, the Company's Board of Directors
authorized the issue of Convertible Notes (the "Notes") to those (the
"Lenders") that the Company is currently indebted to, in the amount of
approximately $400,000. The Notes have the following features and provisions:
(1) the Notes are convertible, in whole or in part, into Series C Preferred
Stock (see below);(2) the conversion rate is seven dollars and fifty cents
($7.50) per share of Series C Preferred Stock; (3) the Notes will be secured
by the shares of common stock of PrimeCare Systems, Inc. held by the Company
with each Lender sharing in the collateral to the extent of the ratio of that
Lender's loan bears to the total of such loans outstanding; (4) the maturity
date of their Notes shall be eighteen months after the date of issue; and (5)
the Company has the right to issue additional Notes for future borrowing, and
each new Lender will share in the collateral pro rata.
FINANCIAL STATEMENTS
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
FINANCIAL REPORT
JUNE 30, 2001 AND 2000
TABLE OF CONTENTS
- -----------------
PAGE
----
Independent auditors' report F-1
Consolidated financial statements:
Balance sheet F-2
Statement of operations F-3
Statement of shareholders' equity F-4
Statement of cash flows F-5
Notes to financial statements F-7
ARTHUR YORKES & COMPANY LLP
Certified Public Accountants
15 West 39th Street
New York, New York 10018
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
OCG Technology, Inc. and Subsidiaries
New York, New York
We have audited the accompanying consolidated balance sheet of OCG Technology,
Inc. and Subsidiaries as of June 30, 2001, and the related consolidated
statements of operations, cash flows and changes in shareholders' equity for
the years ended June 30, 2001 and 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of OCG Technology, Inc. and Subsidiaries as of June 30, 2001, and the
consolidated results of their operations and their cash flows for the years
ended June 30, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1,
the Company has experienced recurring losses from operations that raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/Arthur Yorkes & Company LLP
---------------------------
ARTHUR YORKES & COMPANY LLP
New York, New York
October 4, 2001
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
ASSETS
Current assets:
Cash $ 7,775
Accounts receivable 9,474
Other current assets 304,654
-------------
Total current assets 321,903
Property and equipment, net 42,440
Capitalized software costs, net 376,193
Other assets 4,972
-------------
$ 745,508
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 63,841
Note payable 255,000
-------------
Total current liabilities 318,841
-------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, 1,000,000 shares authorized;
Series E Preferred Stock, $.10 par value,
100,000 shares issued and outstanding 10,000
Common stock, 50,000,000 shares authorized;
$.01 par value, 35,223,613 shares issued
and outstanding 352,236
Additional paid-in-capital 24,676,592
Accumulated deficit (24,516,661)
Stock subscriptions receivable (33,000)
-------------
489,167
Less: Treasury stock, at cost (12,500 shares) (62,500)
-------------
Total shareholders' equity 426,667
-------------
$ 745,508
=============
See notes to consolidated financial statements
F-2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,
2001 2000
Revenues $ 53,955 $ 79,412
------------- -------------
Costs and expenses:
Marketing, general and administrative 183,081 477,264
Depreciation and amortization 104,314 86,174
Product development costs 325,164 362,152
Interest income - net (472) (1,731)
------------- -------------
Total costs and expenses 612,087 923,859
------------- -------------
Loss from continuing operations (558,132) (844,447)
------------- -------------
Discontinued operations:
Profit from operations of Mooney Edwards - 16,707
Income from sale of business - 341,180
------------- -------------
- 357,887
------------- -------------
Net loss $ (558,132) $ (486,560)
============= =============
Basic and fully diluted net loss per share:
Continuing operations $ (.02) $ (.03)
Discontinued operations .00 .01
------------- -------------
$ (.02) $ (.02)
============= =============
Weighted average number of
common shares outstanding 33,889,153 31,223,399
============= =============
See notes to consolidated financial statements
F-3
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2001 AND 2000
Preferred Stock Common stock Additional
$.10 par $.01 par Paid-in Accumulated Subscription Treasury
Shares Amount Shares Amount Capital Deficit Receivable Stock Total
------- ------- ---------- -------- ----------- ------------ ----------- --------- -----------
Balance at
June 30, 1999 100,000 $10,000 30,581,557 $305,815 $23,951,577 $(23,471,969) $(361,000) $(62,500) $ 371,923
Issuance of
stock for
services - - 200,000 2,000 81,180 - - - 83,180
Issuance of
warrants
for services - - - - 24,000 - - - 24,000
Sale of stock
and conversion
of notes
payable - - 1,394,000 13,940 334,444 - - - 348,384
Collection
of stock
subscription
receivable - - - - - - 5,000 - 5,000
Net loss - - - - - (486,560) - - (486,560)
------- ------- ---------- -------- ----------- ------------ --------- -------- ----------
Balance at
June 30, 2000 100,000 10,000 32,175,557 321,755 24,391,201 (23,958,529) (356,000) (62,500) 345,927
Issuance of
stock for
services - - 430,000 4,300 47,572 - - - 51,872
Issuance of
warrants
for services - - - - 24,000 - - - 24,000
Sale of stock - - 2,618,056 26,181 213,819 - - - 240,000
Collection
of stock
subscription
receivable - - - - - - 323,000 - 323,000
Net loss - - - - - (558,132) - - (558,132)
------- ------- ---------- -------- ----------- ------------ --------- -------- ----------
Balance at
June 30, 2001 100,000 $10,000 35,223,613 $352,236 $24,676,592 $(24,516,661) $ (33,000) $(62,500) $ 426,667
======= ======= ========== ======== =========== ============ ========== ======== ==========
See Accompanying Notes to Consolidated Financial Statements.
F-4
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
2001 2000
Cash flows from operating activities:
Net loss $ (558,132) $ (486,560)
----------- -----------
Adjustments to reconcile net loss to net cash
Used in operating activities:
Gain on sale of subsidiary - (341,180)
Depreciation and amortization 104,314 86,174
Gain from sale of discontinued operations - (16,707)
Issuance of stock and warrants for services
and other expenses 75,872 144,564
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (2,449) 1,443
Receivable sale of business 39,908 (9,487)
Prepaid expenses and other assets (259,349) 148,675
Other assets - (1,792)
(Decrease) increase in:
Accounts payable and accrued expenses 17,235 (6,984)
Due to affiliate - (10,500)
Due to officer - (15,122)
Note payable - related party - 38,655
----------- -----------
Total adjustments (24,469) 17,739
----------- -----------
Net cash used in operating activities (582,601) (468,821)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (355) (14,807)
Capitalized software development costs (215,098) (255,838)
Proceeds from sale of business - 357,887
----------- -----------
Net cash provided by investing activities (215,453) 87,242
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 240,000 -
Reduction of stock subscription receivable 323,000 5,000
Proceeds from issuance of notes payable 205,000 311,000
----------- -----------
Net cash provided by financing activities 768,000 316,000
----------- -----------
Net (decrease) increase in cash (30,054) (65,579)
Cash, beginning of year 37,829 103,408
----------- -----------
Cash, end of year $ 7,775 $ 37,829
See notes to consolidated financial statements
F-5
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
2001 2000
-------- --------
Supplemental disclosure of cash flows information:
Interest paid $ 71 $ 596
======== ========
Supplemental disclosure:
Non-cash investing and financing activities:
For services rendered during the year the company issued an additional
430,000 shares of common stock.
See notes to consolidated financial statements
F-6
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
1. Summary of significant accounting policies:
Business:
OCG Technology, Inc. ("OCG") together with its subsidiaries is engaged
in the development, marketing, and distribution of software and
diagnostic products for the healthcare industry.
In the fourth quarter of fiscal 1999, OCG completed a strategic
reappraisal of its business. This reappraisal refocused OCG's efforts
with respect to PrimeCare Systems, Inc. ("PSI") and the deployment of
its PrimeCare Patient Management System (the "System") from an in-house
legacy system to a state of the art, Internet based solution. The
System now enables patients to provide their care providers with their
medical history through secure Internet. Additionally, in April 1999,
OCG launched a new website, YourOwnHealth.com. This site facilitates
consumer access to quality medical information. OCG expects to generate
revenues from its Internet businesses through advertising and
sponsorship. In fiscal 1999, OCG wrote-off $199,314 of previously
capitalized software costs associated with the legacy system.
In July 1999, OCG sold the net assets of its wholly-owned subsidiary,
Mooney Edwards Enterprises, Inc. ("Mooney Edwards") (see Note 2).
Mooney Edwards was engaged in the development and distribution of third
party computer software and support services for the medical community
for the processing of bills (including insurance claims), bookkeeping,
and office management. These consolidated financial statements present
Mooney Edwards as a discontinued operation.
Inherent in OCG's business are various risks, including its limited
operating experience in the Internet segment of the healthcare market,
the limited history of commerce over the Internet, its unproven
business model, and uncertainties regarding its ability to develop
revenues.
Basis of Presentation:
The accompanying consolidated financial statements have been prepared
assuming that OCG will continue as a going concern. OCG has
experienced recurring losses from operations that raises substantial
doubt about its ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Management intends to sell debt and/or equity in order to continue the
operations of the business. There can be no assurance that OCG will be
able to raise sufficient capital to continue its operations and/or
generate adequate cash flow from operations.
F-7
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
1. Summary of significant accounting policies: (continued)
Principles of consolidation:
The consolidated financial statements include the accounts of OCG and
its subsidiaries, all of which are wholly-owned. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Property, equipment and depreciation:
Property and equipment are stated at cost. Machinery and equipment and
equipment held under fee for service arrangements are being deprecated
on a straight-line basis over their estimated useful life of five (5)
years.
Capitalized software costs:
OCG has capitalized software costs for their existing programs that
have reached the technological feasibility status.
Revenue recognition:
Mooney Edwards recognizes sales of computer software systems when
delivery has been made and substantially all of the services to be
provided by OCG have been completed.
OCG recognizes revenues from fees charged to medical providers for the
use of the System as the services are provided.
Revenues from sponsorships, advertising and other arrangements are
recognized during the period in which the sponsorship or advertisement
is displayed, provided that no significant performance obligations
remain and collection of the related receivable is probable.
F-8
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
1. Summary of significant accounting policies: (continued)
Net loss per share:
OCG has adopted Statement of Financial Accounting Standards No. 128
("SFAS 128") that requires the reporting of both basic and diluted
earnings per share. Basic net loss per share is computed by dividing
net loss available to common shareowners by the weighted average number
of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock. Potentially dilutive securities are excluded from the
fully diluted loss per share calculation for 2001 and 2000 because
their effect would be antidilutive.
Accounting for stock based compensation:
OCG has chosen to adopt the disclosure requirements of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), and to continue to account for stock-based
compensation in accordance with Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" ("APB 25"). Under APB
25, OCG has not recognized compensation expense with respect to such
awards because the exercise price of options and warrants granted to
employees has approximated the fair market value of the common stock at
the respective grant dates.
Research and development:
Research and development costs are expensed as incurred.
Cash:
OCG considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents. There were no cash
equivalents at June 30, 2001 and 2000.
2. Net assets held for sale:
In July 1999, OCG sold the net assets of Mooney Edwards for
approximately $400,000.
F-9
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
2. Net assets held for sale: (continued)
The following summarizes the results of operations for the two
years ended June 30, 2001 and 2000 for Mooney Edwards:
2001 2000
--------- ---------
Net sales $ - $ 72,623
--------- ---------
Cost of sales - 17,318
Operating expenses - 38,598
--------- ---------
Total expense - 55,916
--------- ---------
Net profit (loss) $ - $ 16,707
========= =========
3. Property and equipment:
Property and equipment consists of the following:
2001 2000
--------- ---------
Equipment held under fee for
service arrangements $ 366,675 $ 366,675
Machinery and equipment 290,684 290,329
--------- ---------
657,359 657,004
Less: Accumulated depreciation 614,919 579,348
--------- ---------
$ 42,440 $ 77,656
========= =========
Depreciation expense was $35,571 and $60,174 for the years ended
June 30, 2001 and 2000, respectively.
4. Note payables:
Note payables are unsecured, due on demand, and bears interest at 1%
above the prime rate per annum.
F-10
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
5. Shareholders' equity:
Preferred stock:
On July 12, 1984, the shareholders of OCG approved the creation of a
class of 1,000,000 shares of preferred stock, and authorized the Board
of Directors to establish and designate the number of shares and
relative rights, preferences and limitations of such preferred stock.
Series E Preferred Stock:
In June 1992, the Board of Directors designated 100,000 shares of
Preferred Stock as Series E Preferred Stock. These shares were issued
in conjunction with the acquisition of Mooney Edwards. These shares:
(i) are non-convertible with the right to vote on the same basis as the
holders of OCG's common stock, (ii) may be redeemed in whole or in part
at the option of OCG at a price of $30 per share plus all accrued and
unpaid dividends thereon, and, (iii) have the right to dividends which
are not cumulative and are limited to a fraction of all cash dividends
declared and to be distributed by OCG to all classes of its
shareholders in any fiscal year, the (A) numerator of which shall be an
amount equal to fifty (50%) percent of the net profits of Mooney
Edwards for the prior fiscal year; and the (B) denominator of which
shall be the sum of the net profits of OCG (including those of Mooney
Edwards) for such prior fiscal year, and no more. No dividends to
Series E Preferred shareholders were due at June 30, 2001 and 2000 (see
Note 9 regarding sale of Mooney Edwards).
Common stock:
In fiscal 2001 OCG sold 2,618,056 shares of common stock in private
placements for $240,000.
In fiscal 2000 OCG sold 1,394,000 shares of common stock in private
placements for $348,384.
In Fiscal 2001, OCG issued 430,000 shares of common stock for services
rendered.
In Fiscal 2000, OCG issued 200,000 shares of common stock for services
rendered.
Stock subscriptions receivable:
Demand notes receivable of $33,000 is outstanding at June 30, 2001.
These notes were issued to various individuals including Officers and
Directors of OCG in connection with their fiscal 1998 exercise of
warrants for the purchase of common stock and are collateralized by
common stock of OCG owned by these individuals.
F-11
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
5. Shareholders' equity: (continued)
Warrants:
OCG accounts for warrants granted to employees and directors under APB
No. 25. Had compensation costs of these warrants been determined
consistent with SFAS No. 123, OCG's consolidated net loss and net loss
per share would have been as follows:
2001 2000
----------- ------------
Net loss as reported $ - $ (486,560)
Net loss pro forma - (781,040)
Primary loss per share as reported - (.02)
Primary loss per share pro forma - (.03)
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts.
All transactions with individuals other than those considered
employees, as set forth within the scope of APB No. 25, have been
accounted for under the provisions of SFAS No. 123 during fiscal 2001
and 2000.
The fair value of each warrant grant is estimated on the date of grant
using the Black Scholes option pricing model with the following
weighted average assumptions:
2001 2000
-------- --------
Risk-free interest rate - 5.922%
Expected dividend yield - -
Expected lives - 3
Expected stock price volatility - 155%
F-12
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
5. Shareholders' equity: (continued)
Warrants: (continued)
Warrants issued for services generally vest immediately. Warrant
activity for the years ended June 30, 2001 and 2000 is summarized as
follows:
2001 2000
Outstanding at beginning of year 4,689,000 5,896,000
Warrants granted 2,717,056 1,227,000
Warrants canceled (1,380,000)(2,434,000)
---------- ---------
Outstanding at end of year 6,026,056 4,689,000
OCG issued warrants for the following:
Exercise Value of
Warrants Price Warrants
--------- -------- --------
2001
Non-compensatory:
Attached to sale
of stock 2,717,056 $.35 -
2000
Non-compensatory:
Employees and
directors 1,227,000 $.47 -
--------- ------- --------
3,944,056 $ -
========= ======= ========
F-13
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
5. Shareholders' equity: (continued)
Warrants: (continued)
At June 30, 2001, 6,026,056 shares of OCG common stock were reserved
for future issuance with respect to the following warrants:
Expiration Exercise Price Common Shares
---------- -------------- -------------
October 2001 $1.00 20,000
November 2001 - June 2002 $.26 - $.49 50,000
December 2001 $.65 150,000
April 2002 $.40 100,000
June 2002 $.47 1,762,000
July 2002 $.47 1,227,000
December 2002 $.40 50,000
January 2003 $.35 2,618,056
February 2003 $.40 25,000
September 2003 - June 2004 $.15 - $25 24,000
------------
6,026,056
============
6. Commitments and contingencies:
The Company is obligated under two leases for their office space.
The first lease expires June 30, 2003 at an annual rent of $20,952.
The second lease expires May 31, 2004 at an annual rental of $42,665.
The minimum lease payments under the above lease are as follows:
Year Ended
June 30, Amount
---------- ------------
2002 $ 63,617
2003 63,617
2004 42,665
------------
$ 169,899
F-14
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001 AND 2000
6. Commitments and contingencies: (continued)
In September 1995, PSI entered into a consulting agreement with a major
health care provider (the "Consultant") to provide advise for changes
necessary to assure the medical content of the System is current and
accurate and meets the criteria of currently accepted clinical
practice. The Consultant will also be furnishing and/or updating
physician and patient educational materials, additional diagnostic and
follow-up programs and algorithms, appropriate practice guidelines and
suggesting changes and/or additions to diagnostic and follow-up
programs. PSI has agreed that the compensation of the Consultant will
be 15% of the gross revenues actually received and collected by PSI
from users of the System.
7. Income taxes:
At June 30, 2001, OCG had net operating loss carryforwards of
approximately $12,300,000 which will expire at various dates from 2002
through 2021 subject to certain limitations. The deferred tax asset
arising from net operating loss carry forwards are offset by a 100%
valuation allowance due to the uncertainty as to their realization.
OCG has entered into numerous equity transactions which may
significantly limit the utilization of these net operating losses,
pursuant to Internal Revenue Code Section 382. OCG has not performed
a study to determine the effects of Section 382, and accordingly is
unable to determine the annual limitations which may be imposed
pursuant to Section 382.
8. Related party transactions:
A. Certain OCG officers received 410,000 warrants at an exercise price
of $.47 per share. These warrants expire July 2002.
B. Certain of OCG's officers served without cash compensation for the
years ended June 30, 2001 and 2000.
9. Subsequent events:
Internet service agreement:
In July 2000, the company entered into an Internet service agreement
with a medical center for the use of its medical websites. Through use
of these websites, OCG expects to receive advertising revenue from its
advertisers. The company has entered into a revenue sharing agreement
whereby the medical center will receive 30% of all advertising
revenues.
Sale of subsidiary:
OCG is contemplating the retirement of the preferred stock issue with
the sale of the Mooney Edwards subsidiary.
F-15
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS
For the Quarterly Period Ended September 30, 2001
INDEX
FINANCIAL INFORMATION PAGE NUMBER
- ---------------------- -----------
Consolidated Condensed Balance Sheets
September 30, 2001 and June 30, 2001 1
Consolidated Condensed Statements of Loss for
the Three Months Ended September 30, 2001 and 2000 2
Consolidated Condensed Statements of Cash Flow for
the Three Months Ended September 30, 2001 and 2000 3
Notes to Consolidated Condensed Financial Statements 4
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2001 JUNE 30, 2001
ASSETS (UNAUDITED) (AUDITED)
Current Assets:
Cash $ 21,612 $ 7,775
Receivables, trade 2,264 9,474
Inventory 8,856 0
Other current assets 219,920 304,654
------------- -------------
Total current assets 252,652 321,903
Property and equipment, net of accumulated depreciation of
($585,069) ($577,765) 35,136 42,440
Capitalized software costs, net of accumulated amortization
($118,290) ($ 94,743) 386,058 376,193
Other assets 4,972 4,972
------------- -------------
Total assets $ 678,818 $ 745,508
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 57,120 $ 63,841
Notes payable 356,000 255,000
Bank loans payable 8,000 0
------------- -------------
Total current liabilities 421,120 318,841
------------- -------------
Shareholders' equity: (Note 4)
Preferred stock $.10 par value, Series E 10,000 10,000
Common stock $.01 par value 352,236 352,236
Additional paid-in capital 24,682,592 24,676,592
Deficit (24,691,630) (24,516,661)
Subscription receivable ( 33,000) ( 33,000)
------------- -------------
320,198 489,167
Less treasury stock, at cost (62,500) (62,500)
------------- -------------
Total shareholders' equity 257,698 426,667
------------- -------------
Total liabilities and shareholders' equity $ 678,818 $ 745,508
============= =============
See accompanying notes to consolidated condensed financial statements
1
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30,
2001 2000
----------- -----------
Revenue:
Sales $ 10,774 $ 24,909
----------- -----------
Costs and expenses:
Cost of sales 1,994 0
Marketing, general and administrative 76,669 43,513
Depreciation and Amortization 30,851 25,135
Product development costs 76,229 130,922
Interest - net 0 (476)
----------- -----------
Total Expenses 185,743 199,094
----------- -----------
Net Loss $ (174,969) $ (174,185)
=========== ===========
Weighted average number of Common
Shares outstanding during period 33,951,661 32,320,485
=========== ===========
Loss per Common Share $ ($0.01) $ ($0.01)
=========== ===========
See accompanying notes to consolidated condensed financial statements
2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2001 2000
Cash flows from operating activities:
Net income (loss) $ (174,969) $ (174,185)
---------- ----------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 30,851 25,135
Issuance of stock and warrants for services 6,000 6,000
Changes in assets and liabilities
(Increase) decrease in receivables 7,210 (2,794)
(Increase) decrease in notes receivable (sale of business) 0 39,908
(Increase) decrease in other current assets 84,736 23,522
(Increase) decrease in inventory (8,856) 0
(Decrease) in accounts payable and accrued expenses (6,722) (14,928)
---------- ----------
Total adjustments 113,219 76,843
---------- ----------
Net cash used in operating activities (61,750) (97,342)
---------- ----------
Cash flows from investing activities:
Capitalized software development costs (33,412) 0
(Increase)decrease in property and equipment 0 (355)
Cash flows from financing activities:
Increase (decrease)in notes 101,000 35,000
Increase (decrease)in bank loans 8,000 0
Proceeds from issuance of common stock 0 75,000
---------- ----------
Net cash changes from investing and financing activities 75,588 109,645
---------- ----------
Net increase (decrease) in cash 13,838 12,303
Cash, beginning of period 7,774 37,829
---------- ----------
Cash, end of period $ 21,612 $ 50,132
========== ==========
See accompanying notes to consolidated condensed financial statements
3
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, (which, together with its subsidiaries,
unless the context otherwise requires, is referred to as "OCGT"), the
accompanying unaudited consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of September 30, 2001 and the
results of operations for the three months ended September 30, 2001 and 2000
and the statements of cash flows for the three months ended September 30, 2001
and 2000. The June 30, 2001 balance sheet has been derived from the Company's
audited financial statements.
The results of operations for the three months ended September 30, 2001
are not necessarily indicative of the results to be expected for the full
year.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes thereto included in the Company's latest annual report on Form 10-
KSB.
The accompanying consolidated financial statements have been prepared on
a going concern basis which contemplates continuity of operations and
realization of assets and liquidation of liabilities in the ordinary course of
business. Because of significant operating losses, the Company's ability to
continue as a going concern is dependent upon its ability to obtain sufficient
additional financing and, ultimately, upon future profitable operations. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
2. Earnings per share is computed using the weighted average number of
shares outstanding during the periods. The effect of warrants outstanding
would be anti-dilutive.
3. Other assets decreased due primarily to the amortization of the value
previously assigned under a Black Scholes calculation to warrants issued for
marketing and corporate services to be rendered and rent and other services.
This value continues to be amortized over the life of the services rendered .
4. Capital Changes:
During the three months ended September 30, 2001, for services rendered
in accord with the terms of a consulting agreement, warrants were issued to
purchase a total of 15,000 shares of the Company's common stock at exercise
prices ranging between $0.15 to $0.25 per share with exercise dates of said
warrants expiring between July 1 to September 1, 2003. The Company reflected a
total expense of $6,000 for the three month period ending September 30, 2001.
During the three months ended September 30, 2001, for business
development services to be rendered in accord with the terms of a consulting
agreement, OCGT issued warrants to purchase an aggregate of 1,500,000 shares
of the Company's common stock at exercise price $0.10 per share with an
exercise date of said warrants expiring July 31, 2003.
During the three months ended September 30, 2001, for business
development services to be rendered in accord with the terms of a consulting
agreement, OCGT issued warrants to purchase an aggregate of 400,000 shares
of the Company's common stock at exercise price $0.10 per share with an
exercise date of said warrants expiring August 31, 2003.
During the three months ended September 30, 2001, for business
development services to be rendered in accord with the terms of a consulting
agreement, OCGT issued warrants to purchase an aggregate of 200,000 shares
of the Company's common stock at exercise price $0.10 per share with an
exercise date of said warrants expiring August 31, 2003.
During the three months ended September 30, 2001, for business
development services to be rendered in accord with the terms of a consulting
agreement, OCGT issued warrants to purchase an aggregate of 800,000 shares
of the Company's common stock at exercise price $0.10 per share with an
exercise date of said warrants expiring August 31, 2003.
During the three months ended September 30, 2001, for business
development services to be rendered in accord with the terms of a consulting
agreement, OCGT issued warrants to purchase an aggregate of 1,500,000 shares
of the Company's common stock at exercise price $0.10 per share with an
exercise date of said warrants expiring September 30, 2003.
The Company has agreed to replace its current promissory notes with
secured convertible notes which will enable the holders to convert their loans
into a class of convertible preferred stock to be created.
LEGAL MATTERS
Legal matters in connection with the validity of the issuance of the
securities offered hereby will be passed upon for the Company by Wynne B.
Stern, Jr., 1890 Palmer Avenue, Suite 302, Larchmont, New York 10538, as
counsel. Mr. Stern owns, and has warrants to purchase, shares of Common Stock.
See "SELLING STOCKHOLDERS".
EXPERTS
The consolidated balance sheets of OCG Technology, Inc. and its
subsidiaries, as of June 30, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
periods then ended, and the related financial statement schedules included in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 2001,
have been audited by Arthur Yorkes & Company LLP, independent certified public
accountants, whose qualified report thereon, (which includes an explanatory
paragraph regarding the ability of the Company to continue as a going
concern), is provided in this Prospectus, and have been given upon the
authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: the New York Regional
office, 233 Broadway, New York, N.Y. 10279; and at its Chicago Regional
office, Northwestern Atrium Center, 500 West Madison Street, Suite
1400,Chicago, Illinois 60661. Copies of such material can be obtained from the
commission, at prescribed rates, by addressing written requests for such
material to the Public Reference Section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site (http:/www.sec.gov) through which the Company's periodic reports and
other information may can be retrieved. This Prospectus does not contain all
information set forth in the Amendment No. 1 to Form S-3 on Form SB-2
Registration Statement (together with any amendments thereto, hereinafter
referred to as the "Registration Statement") and exhibits thereto, which the
Company has filed with the Commission under the Securities Act, and to which
reference is hereby made.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Registrant is a Delaware corporation. Section 145 of the Delaware
General Corporation Law generally provides that a corporation is empowered to
indemnify any person who is made a party to a proceeding or threatened
proceeding by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or was, at the request of the
corporation, serving in any of such capacities in another corporation or other
enterprise. This statute describes in detail the right of a Delaware
corporation to indemnify any such person. Article Tenth of the Registrant's
amended Certificate of Incorporation provides:
No director shall be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty
by such director as a director, except (i) for 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)
pursuant to Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation
Law is amended after approval by the stockholders of this
provision to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability
of any director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the Delaware General
Corporation Law, 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 appeal or modification.
Article VI of the By-laws, as amended, of the Registrant provides generally
for indemnification of all such directors, officers, employees and agents to
the full extent permitted under the above-referenced section 145 of Delaware
General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM. 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
-------------------------------------------
The Company will bear all costs and expenses in connection with the sale
and distribution of the shares being registered. The following table sets
forth the costs and expenses of the sale of such shares:
Description Amount
----------- ---------
Securities and Exchange Commission filing fee... $ 441.32
Legal and accounting fees....................... $1,000.00*
Miscellaneous................................... $1,000.00*
- -----------
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
---------------------------------------
During April 1999, upon the exercise of Warrants, the Company issued 50,000
shares of its Common Stock, $0.01 par value per share as follows: 15,000
shares to Carver Nebbe, upon his payment of an exercise price of $0.40 per
share, an aggregate of $6,000; 15,000 shares to Charity Nebbe, upon her
payment of an exercise price of $0.35 per share, an aggregate of $5,250; and
20,000 shares to Nathan Nebbe, upon his payment of an exercise price of $0.35
per share, an aggregate of $7,000. All three of these recipients were
familiar with OCGT's business plans and made the investment decision on the
basis of material information disclosed to them by OCGT. Issuance was made in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933.
On August 24, 1999, the Company issued 833,333 shares of its Common Stock,
$.01 par value per share, to Forwad Corporation, a creditor, in cancellation
of $225,000 of loans made to the Company at a price of $0.27 per share, in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933. Forwad Corporation was familiar with OCGT's
business plans and made the investment decision on the basis of material
information disclosed to them by OCGT.
On November 22, 1999, the Company issued 100,000 shares of its Common Stock,
$.01 par value per share, to Denise Austin ("DA") as part of the compensation
to be paid to DA under the terms of an agreement which authorized the
Company's wholly owned subsidiary to create and market the Web site known as
"DeniseAustin.com" The shares were valued at $42,187, or at a price of
$0.42187 per share. Issuance was made in reliance upon the exemption from
registration contained in Section 4(2) of the Securities Act of 1933.
On January 5, 2000, the Company issued 100,000 shares of its Common Stock,
$.01 par value per share, to The Stock Advisor, Inc. as full and complete
compensation for public relations services. The shares were valued at
$40,993, or at a price of $0.4099 per share. Issuance was made in reliance
upon the exemption from registration contained in Section 4(2) of the
Securities Act of 1933.
On January 5, 2000, the Company issued 200,000 shares of its Common Stock,
$.01 par value per share, to Forwad Corporation, a creditor, in cancellation
of $50,000 of loans made to the Company, or at a price of $0.25 per share, in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933. Forwad Corporation was familiar with OCGT's
business plans and made the investment decision on the basis of material
information disclosed to them by OCGT.
On November 30, 2000, the Company issued 150,000 shares of its Common
Stock, $.01 par value per share, to Douglas G. Levine, a creditor, in
cancellation of $34,384 of loans made to the Company, or at a price of $0.25
per share, in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act of 1933. Douglas G. Levine was familiar
with OCGT's business plans and made the investment decision on the basis of
material information disclosed to them by OCGT.
On November 30, 2000, the Company issued 264,000 shares of its Common
Stock, $.01 par value per share, to Diaz Corporation, a creditor, in
cancellation of $66,000 of loans made to the Company, or at a price of $0.25
per share in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act of 1933. Diaz Corporation was familiar
with OCGT's business plans and made the investment decision on the basis of
material information disclosed to them by OCGT.
On November 30, 2000, the Company issued 600,000 shares of its Common Stock,
$.01 par value per share, to Forwad Corporation, a creditor, in cancellation
of $150,000 of loans made to the Company, or at a price of $0.25 per share, in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933. Forwad Corporation was familiar with OCGT's
business plans and made the investment decision on the basis of material
information disclosed to them by OCGT.
In December, 2000, the Company issued 555,556 shares of its Common Stock, $.01
par value per share, to Dolphin Investments, Ltd., a creditor, in cancellation
of $75,000 of loans made to the Company, or at a price of $0.135 per share, in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933. Dolphin Investments, Ltd. was familiar with
OCGT's business plans and made the investment decision on the basis of
material information disclosed to them by OCGT.
On March 27, 2001, the Company issued 1,000,000 shares of its Common Stock,
$.01 par value per share, to the Glen M. Lloyd, Rev. Tr. u/a DTO 7/20/90,
Linda J. Nebbe, Ttee, for the total payment to the Company of $80,000, or at
a price of$0.08 per share, in reliance upon the exemption from registration
contained in Section 4(2) of the Securities Act of 1933. Dennis Nebbe,
financial advisor to the Trust, is familiar with OCGT's business plans and
made the investment decision on the basis of material information disclosed to
them by OCGT.
On March 27, 2001, the Company issued 125,000 shares of its Common Stock,
$.01 par value per share, to Curtis Shiver, a shareholder of the Company, for
the total payment to the Company of $10,000, or at a price of $0.08 per share,
in reliance upon the exemption from registration contained in Section 4(2)
of the Securities Act of 1933. Curtis Shiver is familiar with OCGT's business
plans and made the investment decision on the basis of material information
disclosed to them by OCGT.
On March 27, 2001, the Company issued 187,500 shares of its Common Stock,
$.01 par value per share, to Diaz Corporation, a creditor, in cancellation of
$15,000 of loans made to the Company, or at a price of $0.08 per share in
reliance upon the exemption from registration contained in Section 4(2) of
the Securities Act of 1933. Diaz Corporation was familiar with OCGT's
business plans and made the investment decision on the basis of material
information disclosed to them by OCGT.
On March 27, 2001, the Company issued 750,000 shares of its Common Stock,
$.01 par value per share, to Dolphin Investments, Ltd., a creditor, in
cancellation of $60,000 of loans made to the Company, or at a price of $0.08
per share, in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act of 1933. Dolphin Investments, Ltd. was
familiar with OCGT's business plans and made the investment decision on the
basis of material information disclosed to them by OCGT.
On October 22, 2001, the Company issued 100,000 shares of its Common Stock,
$.01 par value per share, to The Stock Advisor, Inc. as full and complete
compensation for public relations services. The shares were valued at
$12,063, or at a price of$0.12 per share. Issuance was made in reliance upon
the exemption from registration contained in Section 4(2) of the Securities
Act of 1933.
On October 22, 2001, the Company issued 80,000 shares of its Common Stock,
$.01 par value per share, to Private Capital Group, Inc. as full and complete
compensation for consulting services in financial matters and corporate
planning. The shares were valued at $9,648, or at a price of $0.12 per share.
Issuance was made in reliance upon the exemption from registration contained
in Section 4(2) of the Securities Act of 1933.
On October 22, 2001, the Company issued 250,000 shares of its Common Stock,
$.01 par value per share, to LiquideT, Inc. as full and complete compensation
for public relations services. The shares were valued at $30,000, or at a
price of $0.12 per share. Issuance was made in reliance upon the exemption
from registration contained in Section 4(2) of the Securities Act of 1933.
ITEM 27. EXHIBITS
--------
Exhibit No. Description
- ----------- -----------
3.1(a)** Certificate of Incorporation of Registrant filed July 3, 1969
(incorporated by reference to Exhibit 3.1(a) to the Annual Report
on Form 10-K for the Year ended June 30, 1985).
3.1(b)** Certificate of Amendment of Certificate of Incorporation filed
March 28, 1973 (incorporated by reference to Exhibit 3.1(b) to
the Annual Report on Form 10-K for the Year ended June 30, 1985).
3.1(c)** Certificate of Ownership and Merger filed June 21, 1974
(incorporated by reference to Exhibit 3.1(c) to the Annual Report
on Form 10-K for the Year ended June 30, 1985).
3.1(d)** Certificate of Change of Agent and Location of Registrant filed
December 16, 1976 (incorporated by reference to Exhibit 3.1(d) to
the Annual Report on Form 10-K for the Year ended June 30, 1985).
3.1(e)** Certificate of Amendment of Certificate of Incorporation filed
December 26, 1985 (incorporated by reference to Exhibit 3.1(e) to
the Annual Report on Form 10-K for the year ended June 30, 1987).
3.1(f)** Certificate of Resolutions Creating Series A Convertible
Preferred Stock filed January 23, 1986 (incorporated by
reference to Exhibit 3.1(f) to the Annual Report on Form 10-K for
the year ended June 30, 1987).
3.1(g)** Certificate of Correction filed to Correct A Certain Error in the
Certificate of Amendment of the Certificate of Incorporation
filed March 26, 1986 (incorporated by reference to Exhibit 3.1(g)
to the Annual Report on Form 10-K for the year ended June 30,
1987).
3.1(h)** Certificate of Correction filed to Correct Certain Errors in
the Certificate of Stock Designation filed March 26, 1986
(incorporated by reference to Exhibit 3.1(h) to the Annual
Report on Form 10-K for the year ended June 30, 1987).
3.1(i)** Certificate of Amendment of Certificate of Incorporation filed
August 18, 1987 (incorporated by reference to Exhibit 3.1(i) to
the Annual Report on Form 10-K for the year ended June 30, 1988).
3.1(j)** Certificate of Change of Agent and Location of Registrant filed
April 9, 1991 (incorporated by reference to Exhibit 3.1(j) to the
Annual Report on Form 10-K for the Year ended June 30, 1991).
3.1(k)** Certificate of Resolutions Creating Series E Convertible
Preferred Stock filed June 19, 1992 (incorporated by reference
to Exhibit 3.1(k) to the Annual Report on Form 10-K for the year
ended June 30, 1992).
3.1(1)** Certificate of Correction filed to Correct Certain Errors in the
Certificate of Amendment of the Certificate of Incorporation
filed June 19, 1992 (incorporated by reference to Exhibit 3.1(1)
to the Annual Report on Form 10-K for the year ended June 30,
1992).
3.1(m)** Certificate of Amendment of Certificate of Incorporation filed
June 7, 1996 (incorporated by reference to Exhibit 3(i).10 to the
Annual Report on Form 10-KSB for the year ended June 30, 1996).
3.1(n)** Certificate of Resolutions Creating Series B Convertible
Preferred Stock filed May 3, 1994 (incorporated by reference
to Exhibit 4 to the Current Report on Form 8-K filed June 1,
1994).
3.1(o)** Certificate of Amendment No.1 Filed to Modify the Certificate of
Designation Creating Series B Preferred Stock filed August 30,
1996 (incorporated by reference to Exhibit 4.5 to the Annual
Report on Form 10-KSB for the year ended June 30, 1996).
5 * Opinion of Wynne B. Stern, Jr.
23.1 * Consent of Arthur Yorkes & Company LLP
23.2 * Consent of Wynne B. Stern, Jr. (included in Exhibit 5)
- -----------------
* Filed herewith
ITEM 28. UNDERTAKINGS
------------
See Item 24.
In this Registration Statement, OCGT is including undertakings required
pursuant to Rule 415 of the Securities Act.
Under Rule 415 of the Securities Act, OCGT is registering securities
for an offering to be made on a continuous or delayed basis in the future.
The registration statement pertains only to securities (a) the offering of
which will be commenced promptly, will be made on a continuous basis and may
continue for a period in excess of 30 days from the date of initial
effectiveness and (b) are registered in an amount which, at the
time the registration statement becomes effective, is reasonably expected to
be offered and sold within two years from the initial effective date
of the registration.
Based on the above-referenced facts and in compliance with the
above-referenced rules, OCGT includes the following undertakings in this
Registration Statement:
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period, in which offers or sales of securities are
being made, a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement; and
(iii) include any additional or changed material information on the plan
of distribution.
(2) For determining any liability under the Securities Act of 1933, as
amended, to treat each post-effective amendment as a new Registration
Statement of the securities offered, and the offering of such securities at
that time shall be the initial bona fide offering thereof.
(3) File a post-effective to remove from registration any of the securities
that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on this Amendment No. 1 to Form S-3
on Form SB-2 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, there unto duly authorized, in the City of
New Rochelle, State of New York, on January 25, 2002.
OCG TECHNOLOGY, INC.
/s/ Edward C. Levine
--------------------
By: Edward C. Levine, President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Edward C. Levine
----------------
Edward C. Levine President and Director January 25, 2002
/s/ Jeffrey P, Nelson
-----------------
Jeffrey P. Nelson Secretary and Director January 25, 2002
/s/ Jarema S. Rakoczy
-----------------
Jarema S. Rakoczy Director January 25, 2002
EXHIBIT INDEX
Exhibit No. Description Page
5 * Opinion of Wynne B. Stern, Jr.
23.1 * Consent of Arthur Yorkes & Company LLP
23.2 * Consent of Wynne B. Stern, Jr.
- --------------
* Filed herewith
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
OCG Technology, Inc.
New Rochelle, New York
We hereby consent to the use in this Registration Statement of OCG
Technology, Inc., on Amendment No.1 to Form S-3 on Form SB-2, of our report
dated October 4, 2001 of OCG Technology, Inc. for the years ended June 30,
2001 and 2000, which are part of this Registration Statement, and to all
references to our firm included in this Registration Statement.
/s/Arthur Yorkes and Company LLP
--------------------------------
New York, New York Arthur Yorkes and Company LLP
January 22, 2002 Certified Public Accountants
EXHIBIT 23.2
Wynne B. Stern, Jr.
Attorney At Law
1890 Palmer Avenue, Suite 302
Larchmont, NY 10538
January 22, 2002
OCG Technology, Inc.
56 Harrison Street
5th Floor
New Rochelle, New York 10801
Attn: Edward C. Levine
Re: OCG Technology. Inc. (the "Company")
Registration Statement on Form S-3, as Amended
----------------------------------------------
Gentlemen:
At your request, we have examined the form of the Registration Statement
on Form S-3 filed with the Securities and Exchange Commission (the "SEC")
on January 2, 2002, and Amendment No. 1 to Form S-3 on Form SB-2 thereto to
be filed with the SEC on or about January 22, 2002 (collectively, the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 16,786,778 shares of its common stock,
$.01 par value per share (the "Stock").
In rendering the following opinion, we have examined and relied only upon
the documents and certificates of officers and directors of the Company as
are specifically described below. ln our examinations we have assumed the
genuineness of all signatures, the authenticity, accuracy and completeness of
the documents submitted to us as originals, and the conformity with the
original documents of all documents submitted to us as copies. Our examination
was limited to the following documents and no others:
1. Certificate of Incorporation of the Company, as amended to date.
2. By-Laws of the Company, as amended to date.
3. Resolutions adopted by the Board of Directors of the Company.
4. The Company's most recent Annual Report on Form 10-KSB.
5. The Company's most recent Quarterly Report on Form 10-QSB.
6. Certain corporate books and records.
7. Officer and Director representation letters.
We have not undertaken, and do not intend to undertake, any independent
investigation beyond such documents and records, or to verify the adequacy or
accuracy of such documents and records.
Based on the foregoing, it is our opinion that the Stock which has been
issued, and to the extent authorized, which will be issued upon due exercise
of the warrants and payment therefor, subject to the effectiveness of the
Registration Statement and compliance with applicable blue sky laws, is, and
upon due execution of the warrants and payment therefor, will be, duly and
validly authorized, fully-paid and non assessable.
We express no opinion as to compliance with the securities or "blue sky"
laws of any state in which the Stock is proposed to be offered and sold or as
to the effect, if any, which noncompliance with such laws might have on the
validity of issuance of the Stock.
We hereby Consent to the filing of this opinion as an exhibit to any
filing made with the Securities and Exchange Commission, or under any state
or other jurisdictions' securities act for purposes of registering,
qualifying or establishing eligibility for an exemption from registration or
qualification of the Stock in connection with the offering described in the
Registration Statement. Other than as provided in the preceding sentence
this opinion (i) is addressed solely to you; (ii) may not be relied upon by
any other party; (iii) covers only matters of Federal law, and nothing in
this opinion shall be deemed to apply any such opinion to the laws of any
other jurisdiction; (iv) may not be quoted or reproduced or delivered by
you to any other person; and (v) may not be relied upon by you, or by
anyone else, for any other purpose whatsoever. Nothing herein shall be
deemed to relate to, or constitute, an opinion concerning any matters not
specifically set forth above.
By giving you this opinion and consent, we do not admit that we are an
expert with respect to any part of the Registration Statement or any
Prospectus within the meaning of the term "expert" as used in Section 7
of the Securities Act of l933, as amended, or the Rules and Regulations
of the Securities and Exchange Commission promulgated thereunder.
The information set forth herein is as of the date of this letter. We
disclaim any undertaking to advise you of changes which may be brought
to our attention after the effective date of the Registration Statement.
Very truly yours,
/s/Wynne B. Stern, Jr.
----------------------
Wynne B. Stern, Jr.