MARKED TO SHOW CHANGES FROM PREVIOUS VERSION
As Filed with the Securities and Exchange Commission on June 17, 1997
REGISTRATION NO. 333-10287
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
CASDIM INTERNATIONAL SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 7379 83-0288100
-------- ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
Yehuda Shimshon, President
CASDIM INTERNATIONAL SYSTEMS, INC.
150 East 58th Street
New York, New York 10155
(212) 829-1700
Fax: (212)829-1705
(Address and telephone number of Registrant's principal
executive offices; Name, address and telephone
number of agent for service)
---------------------
Copies to:
Steven J. Glusband, Esq.
CARTER, LEDYARD & MILBURN
Two Wall Street
New York, New York 10005
(212) 732-3200
Fax: (212) 732-3232
Approximate date of commencement of proposed sale to the public: As
soon as practicable 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, 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 registration statement for the same
offering [X].
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box [ ].
UNDERTAKING PURSUANT TO RULE 414
This Registration Statement on Form SB-2, Registration No. 333-10287, has been
amended pursuant to Rule 414 of the Securities Act of 1933, as amended. On April
25, 1997, Casdim International Systems, Inc., a Colorado corporation, merged
into its wholly-owned subsidiary incorporated in the State of Delaware, Casdim
Delaware, Inc. (the "Surviving Corporation"), for the purpose of changing Casdim
International Systems, Inc.'s state of incorporation. Immediately prior to the
merger, the Surviving Corporation had only nominal assets or liabilities.
Pursuant to the terms of the merger, which was effected pursuant to Colorado
Statute and Delaware Statute, the Surviving Corporation acquired all of the
assets and assumed all of the liabilities and obligations of Casdim
International Systems, Inc. Additionally, the Surviving Corporation's name was
changed to Casdim International Systems, Inc. The merger was approved at the
Annual Meeting of Shareholders of Casdim International Systems, Inc. on October
16, 1996.
The Surviving Corporation expressly adopts all statements contained in Amendment
No. 1 to the original registration statement on Form SB-2, Registration No.
333-10287, as its own registration statement for all purposes of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
----------------------
Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers such additional shares as may become
available pursuant to anti-dilution provisions upon exercise of the warrants.
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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION
PROSPECTUS
2,171,002 Shares of Common Stock
CASDIM INTERNATIONAL SYSTEMS, INC.
This Prospectus relates to the resale by certain stockholders of Casdim
International Systems, Inc. (the "Company") of up to 2,171,002 shares of common
stock, of which 1,221,002 shares were issued by the Company in connection with
its May 1996 private placement. An additional 300,000 shares are being sold by
Cedarwood Trading & Investments Ltd., a principal stockholder. The Company will
not receive any proceeds from the sale of any of these 1,521,002 shares of
common stock. The remaining 650,000 shares of common stock are issuable upon
conversion of warrants (the "Warrants") issued to certain financial consultants
to the Company in May 1996. No assurance can be given as to if and when the
Warrants will be exercised. The holders of the 1,691,002 shares of common stock
and the holders of the Warrants are sometimes referred to in the Prospectus as
the "Selling Stockholders." The shares of common stock may be offered from time
to time by the Selling Stockholders in the over-the-counter market, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices.
The Company's common stock, par value $.01 per share (the "Common Stock")
is presently quoted on the Nasdaq Bulletin Board. Because there is no
established trading market, and only a limited number of market makers have
sporadically offered to purchase and sell shares of the Company's Common Stock,
during significant portions of the listed periods, reliable quotations for the
Common Stock have not been available. On June 16, 1997 the closing bid price for
the Common Stock as reported on the Nasdaq Bulletin Board was 1 11/32. See
"Price Range of Common Stock."
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS ASSOCIATED WITH
INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY, WHICH RISKS ARE
DESCRIBED UNDER THE CAPTION "RISK FACTORS" ON PAGE 6 .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE 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 June __, 1997
The Company will furnish its stockholders with annual reports containing
financial statements certified by independent public accountants and publish
quarterly reports containing unaudited financial data.
This Prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Company since the date hereof.
2
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
The Company
Casdim International Systems, Inc. and its subsidiaries (collectively
referred to herein as the "Company") is a multimedia and communications company
engaged in the development, marketing, sale and leasing of interactive,
informational and transactional kiosks. The Company is engaged in the
development of interactive televisions, which will be used to provide
interactive programs to link vendors and customers and to supply information and
transactions on demand. Another area of the Company's business is the
development of servers and communications applications for both satellite-based
networks and wide area networks ("WAN"), that will enable vendors to deliver
information services and effect transactions from their place of business.
The Company is a Delaware holding company, originally incorporated under
the laws of Colorado on January 5, 1988 under the name of S.W. Financial
Corporation for the purpose of acquiring an interest in one or more business
opportunities in the field of multimedia, information and communication
technology. In keeping with the stated corporate purpose, the then management of
the Company evaluated several business opportunities and, during the fiscal year
ended December 31, 1995, finalized the Company's first corporate acquisition.
The acquisition was effected by means of an agreement for the exchange of stock
and plan of reorganization dated November 21, 1995, (the "Exchange Agreement"),
by and among the Company, Casdim Interactive Systems USA, Inc. ("Casdim USA"), a
Nevada corporation, and Mr. Yehuda Shimshon. Mr. Shimshon acted on behalf of
himself and Cedarwood Trading & Investment Ltd. ("Cedarwood"), the then sole
shareholders of Casdim USA. Pursuant to the terms of the Exchange Agreement, the
Company acquired all the issued and outstanding shares of Casdim USA in exchange
for 425,000,000 shares of the Company. The Exchange Agreement, which became
effective on December 11, 1995, was approved at a special meeting of the
shareholders of the Company held on October 24, 1995 at which the shareholders
also approved: (i) renaming the Company Casdim International Systems, Inc.; (ii)
the 50:1 stock split of 76,700,000 shares, the then outstanding number of shares
of the Company, into 1,534,000 shares; and (iii) the appointment of Mr. Shimshon
as President and Chairman of the Board.
The Company maintains its principal executive offices at 150 East 58th
Street, New York, New York 10155, and its telephone number is 212-829-1700.
3
The Offering
Common Stock offered.................2,171,002 shares of Common Stock (the
"Shares")(1)
Common Stock to be outstanding
after the Offering................15,334,000 shares (2)
Use of proceeds......................The Company will not receive any
proceeds from the sale of the Shares by the
Selling Stockholders. The net proceeds to
be received by the Company from the
exercise of the Warrants, assuming the
exercise of all such Warrants, are
estimated to be approximately $650,000.
Such proceeds will be used for working
capital.
Nasdaq Bulletin Board Symbol.........CDMI
Risk Factors.........................Prospective investors should carefully
consider the matters set forth herein under
the caption "Risk Factors."
- --------------------
(1) Assumes the sale of 650,000 Shares to be issued upon exercise of the
Warrants.
(2) Does not include 500,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option Plan, 500,000 shares of Common
Stock issuable upon exercise of options granted to consultants to the
Company, and 200,000 Shares issuable upon exercise of warrants issued in
connection with the Company's May 1997 private placement. See "Description
of Capital Stock."
4
Summary Financial Data
Income Statement Data:
Year Ended December 31, Three Months Ended March 31,
----------------------- ----------------------------
1996 1995 1997 1996
---- ---- ---- ----
Sales............................................. $ 508,713 $2,011,110 $ 6,985 $253,007
Cost of sales..................................... 379,806 468,353 -- 31,785
--------- --------- --------- --------
Gross profit...................................... 128,907 1,542,757 6,985 221,222
------- --------- ------ -------
Selling, general and administrative
expenses...................................... 1,244,144 237,016 485,492 113,989
---------- --------- -------- -------
Income (loss) from operations..................... (1,115,237) 1,305,741 (478,507) 107,233
Other income (expenses):
Interest income............................... 21,309 -- 5,828 --
Dividend income................................ 35,673 -- -- --
Interest expense............................... (109,519) (75,272) (21,676) (18,710)
Investment activity gain (loss)................ -- (93,142) 145,402 --
Gain (loss) from foreign translation........... (51,860) (6,203) -- (18,134)
Income (loss) from operations before taxes........ (1,219,634) 1,131,124 (348,943) (70,389)
Income tax (expenses) benefit..................... -- (440,309) -- $(33,185)
----------- --------- ---------- --------
Net income (loss)................................. $(1,219,634) $ 690,815 $ (348,943) $ 37,204
=========== ========== ========== ========
Net earnings (loss) per share..................... $(.09) $.36 $(.0247) $.01
===== ==== ====== =====
Weighted average number of shares
outstanding.................................... 13,349,000 1,899,000 14,134,001 9,634,000
========== ========= ========== =========
Balance Sheet Data: December 31, March 31,
1996 1997
---- ----
Working capital........................... $ 898,151 $1,640,649
Total assets.............................. 4,335,191 4,344,346
Total debt ........................ 1,891,920 1,830,028
Stockholders' equity...................... 2,463,221 2,514,318
5
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
Business, Market and Shareholder Risks
Limited Operating History. Although the Company was incorporated in 1988,
it did not have any material ongoing operations until it acquired Casdim USA on
December 11, 1995. The Company is currently increasing its presence in the
United States and intends to substantially broaden its global activities. No
assurance can be given that the Company will be able to operate profitably,
especially as it expands its operations. See "Management's Discussion and
Analysis."
Potential Fluctuations in Operating Results; Seasonality. The Company's
operating results are likely to vary significantly in the future, depending on
factors such as the size and timing of significant orders and their fulfillment,
demand for the Company's products, changes in pricing policies by the Company or
its competitors, changes in the level of operating expenses, product life
cycles, personnel changes, changes in the Company's strategy, seasonal trends
and general domestic and international economic and political conditions, among
others. The timing of expansion in the United States and the rate at which
orders are obtained will also cause material fluctuations in the Company's
operating results. The Company's results may also be affected by currency
exchange rate fluctuations and economic conditions in the geographic areas in
which the Company operates. Due to the foregoing factors, revenues and operating
results are difficult to forecast.
The Company's expense levels are based, in significant part, on the
Company's expectations as to future revenues and are therefore relatively fixed
in the short-term. If revenue levels fall below expectations, net income is
likely to be disproportionately adversely affected because a proportionately
smaller amount of the Company's expenses varies with its revenues. During 1996
the Company's operations were negatively impacted as revenues declined and
operating expenses increased. No assurance can be given as to when the Company
will be able to return to profitability. The operating results of the Company
will likely fluctuate on a quarterly basis. Due to all the foregoing factors, in
some future quarter the Company's operating results may be below the
expectations of investors. In such event, the price of the Company's Common
Stock would likely be materially adversely affected. See "Selected Financial
Data" and "Management's Discussion and Analysis."
Absence of Nasdaq Listing. For most of the period since the completion of
its initial public offering on September 27, 1989, an active public trading
market did not develop for the Company's Common Stock. Because there is no
established trading market, and only a limited number of market makers have
sporadically offered to purchase and sell shares of the Company's Common Stock,
during significant portions of the listed periods, reliable quotations for the
Common Stock have not
6
been available. Although the Company intends to submit an application for the
Common Stock to be listed on the Nasdaq SmallCap Market ("SCM"), no assurance
can be given that the Common Stock will be accepted for listing. The possible
inclusion of the Common Stock on the Nasdaq system does not provide any
assurance that an active and liquid trading market will develop or be
maintained. See "Price Range of Common Stock."
Application of Penny Stock Rules; No Assurance of Nasdaq SmallCap Market
Listing. The Company's securities are subject to certain penny stock rules
promulgated by the Securities and Exchange Commission (the "Commission"). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise
exempt from such rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the Company's Common Stock.
The Company intends to apply to list its shares of Common Stock on the
Nasdaq SCM. The Board of Governors of the National Association of Securities
Dealers, Inc. has established new standards for the initial listing and
continued listing of a security on the Nasdaq SCM. The new standards for initial
listing require, among other things, that an issuer have net tangible assets of
$4,000,000; that the minimum bid price for the listed securities be $4.00 per
share; that the minimum market value of the public float (the shares held by
non-insiders) be at least $5,000,000; and that there be at least three market
makers for the issuer's securities. The maintenance standards require, among
other things, that an issuer have tangible assets of at least $2,000,000; that
the minimum bid price for the listed securities be $1.00 per share; that the
minimum market value of the "public float" be at least $1,000,000; and that
there be at least two market makers for the issuer's securities. There can be no
assurance that the Company will be able to satisfy the requirements for
obtaining or maintaining a Nasdaq listing.
Need to Manage a Changing Business. The Company is experiencing a period of
significant growth in the number of its employees, the scope of its operating
and financial systems and geographic areas of its operations. This growth has
resulted in new and increased responsibilities for management personnel and has
placed a significant strain upon the Company's management, operating systems and
financial resources. To accommodate such growth, compete effectively and manage
potential future growth, the Company must continue to implement and improve its
information systems, procedures and controls, and expand, train, motivate and
manage its work force. These demands will require the addition of new management
personnel. The Company's
7
future success will depend to a significant extent on the ability of its current
and future management personnel to operate effectively, both independently and
as a group. There can be no assurance that the Company's personnel, operating
systems, procedures and controls will be adequate to support the Company's
future operations. Any failure to implement and improve the Company's
operational, financial and management systems or to expand, train, motivate or
manage employees could have a material adverse effect on the Company's business,
operating results and financial condition. See "--Dependence on Key Personnel,"
"Business--Employees" and "Management."
Risks Associated with Expanding Distribution. To date, the Company has sold
and attempted to lease its kiosks through its in-house sales forces. The
Company's ability to achieve significant revenue growth in the future will
depend in large part on its success in recruiting and training sufficient direct
sales personnel. Although the Company intends to expand its direct sales force,
the Company may experience difficulty in recruiting qualified sales personnel.
There can be no assurance that the Company will be able to successfully expand
its sales force or that such expansion will result in an increase in revenues.
Any failure by the Company to expand its direct sales force would materially
adversely affect the Company's business, operating results and financial
condition. See "--Dependence on Key Personnel," "Business--Sales and Marketing."
Competition. The market for interactive kiosks, customized databases and
network integration is intensely competitive and characterized by rapidly
changing technology, evolving industry standards, frequent new product
introductions and rapidly changing customer requirements. The Company faces
competition from numerous companies, some of which are more established and have
greater financial and other resources than the Company. The Company's current
direct competitors, include among others, Golden Screens in Israel and Factura
Composites, Inc., Quick ATM, 1-Media, Aimtech, EDR Systems, Virtual Shopping
Inc., Rikon, and HSI in the United States.
The Company's competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements or devote greater
resources to the development, promotion and sale of their products than the
Company. The Company expects to face additional competition as other established
and emerging companies enter the interactive kiosk development market and new
products and technologies are introduced. Increased competition could result in
fewer customer orders, reduced gross margins and loss of market share, any of
which could materially adversely affect the Company's business, operating
results and financial condition. In addition, current and potential competitors
may make strategic acquisitions or establish cooperative relationships among
themselves or with third parties, thereby increasing the ability of their
products to address the needs of the Company's prospective customers.
Accordingly, it is possible that new competitors or alliances among current and
new competitors may emerge and rapidly gain significant market share. Such
competition could materially adversely affect the Company's ability to sell
additional licenses and maintenance and support renewals on terms favorable to
the Company. Furthermore, competitive pressures could require the Company to
reduce the price of its licenses and related services, which could materially
adversely affect the Company's business, operating results and financial
condition. There can be no assurance that the Company will be able to compete
8
successfully against current and future competitors, and the failure to do so
would have a material adverse effect upon the Company's business, operating
results and financial condition. See "Business--Competition."
Rapid Technological Change. The market in which the Company competes is
characterized by rapid technological change. The introduction of products
embodying new technologies and the emergence of new industry standards could
exert price pressures on the Company's products. The Company's future success
will depend upon its ability to address the increasingly sophisticated needs of
its customers by supporting existing and emerging hardware, software, database
and networking platforms and by developing and introducing new and enhanced
products on a timely basis that keep pace with such technological developments
and emerging industry standards and customer requirements. There can be no
assurance that the Company will be successful in developing and marketing new
products, that it will not experience difficulties that could delay or prevent
the successful development, introduction and sale of such enhancements or that
such enhancements will adequately meet the requirements of the marketplace and
achieve any significant degree of market acceptance, thereby materially
affecting the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis" and "Business-- Research and
Development."
Proprietary Rights and Risks of Infringement. The Company is dependent upon
its proprietary network technology and relies primarily on a combination of
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements, and reliable product maintenance are essential to establishing and
maintaining a technology leadership position. The Company seeks to protect its
software, documentation and other written materials under trade secret laws,
which afford only limited protection. There can be no assurance that others will
not develop technologies that are similar or superior to the Company's
technology. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. There can be
no assurance that the Company's means of protecting its proprietary rights in
the United States or abroad will be adequate or that competition will not
independently develop similar technology.
The Company is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by the Company of their intellectual property rights. In the
event of a successful claim of product infringement against the Company and
failure or inability of the Company to license the infringed or similar
technology, the Company's business, operating results and financial condition
would be materially adversely affected.
The Company relies and intends to rely in the future upon certain software
that it licenses from third parties, including software that is integrated with
the Company's internally developed
9
software. There can be no assurance that these third-party software licenses
will continue to be available to the Company on commercially reasonable terms.
The loss of, or inability to maintain, any such software licenses could result
in shipment delays or reductions until equivalent software could be developed,
identified, licensed and integrated which would materially adversely affect the
Company's business, operating results and financial condition.
Risk of Software Defects. Network multimedia products are internally
complex and frequently contain errors or defects, especially when first
introduced or when new versions or enhancements are released. Although the
Company has not experienced material adverse effects resulting from any such
defects or errors to date, there can be no assurance that, despite testing by
the Company and by current and potential customers, defects and errors will not
be found in current versions, new versions or enhancements after commencement of
commercial shipments, resulting in loss of revenues or delays in market
acceptance, which could have a material adverse effect upon the Company's
business, operating results and financial condition. See "Business--Research and
Development."
Dependence on Key Personnel. The Company's success depends to a significant
degree upon the continuing contributions of its key management, sales,
marketing, customer support and product development personnel. The loss of key
management or technical personnel could adversely affect the Company. The
Company believes that its future success will depend in large part upon its
ability to attract and retain highly-skilled managerial, sales, customer support
and product development personnel. The Company has at times experienced and
continues to experience difficulty in recruiting qualified personnel.
Competition for qualified software development, sales and other personnel is
intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. Competitors and others have in the past
and may in the future attempt to recruit the Company's employees. Failure to
attract and retain key personnel could have a material adverse effect on the
Company's business, operating results and financial condition. See
"Business--Research and Development," "--Employees" and "Management."
International Operations. International operations are subject to inherent
risks, including the impact of possible recessionary environments in multiple
foreign markets, costs of localizing products for foreign markets, longer
receivables collection periods and greater difficulty in accounts receivable
collection, unexpected changes in regulatory requirements, difficulties and
costs of staffing and managing foreign operations, reduced protection for
intellectual property rights in some countries, potentially adverse tax
consequences and political and economic instability. There can be no assurance
that the Company will be able to sustain or obtain revenues from international
operations or that the foregoing factors will not have a material adverse effect
on the Company's future revenues and, consequently, its business, operating
results and financial condition.
The revenues of the Company's Israeli subsidiary, Casdim Interactive
Systems Ltd. ("Casdim Israel") are generally denominated in the local Israeli
currency. The Company does not currently engage in any hedging activities. There
can be no assurance that fluctuations in currency
10
exchange rates in the future will not have a material adverse impact on the
Company's revenues from international sales and thus impact the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis" and "Business--Sales and Marketing."
Future Capital Needs. Although the Company recently raised $1.5 million in
a private placement, the Company may require additional capital to satisfy its
capital requirements in the next 12 months. The Company's future capital
requirements will depend on many factors, including continued progress in its
expansion plans and its ability to successfully develop new and enhanced
products. To the extent its existing capital resources are insufficient to fund
the Company's operating and financial requirements, it may be necessary to raise
additional funds through public or private financings. Any equity or debt
financings, if available at all, may cause dilution to the Company's
then-existing stockholders. See "Management's Discussion and Analysis--Liquidity
and Capital Resources."
Concentration of Ownership. Mr. Yehuda Shimshon and Cedarwood Trading &
Investments Ltd. ("Cedarwood"), a company in which Mr. Shimshon has a
controlling interest, beneficially own approximately 53.8% of the Company's
outstanding Common Stock. As a result, Mr. Shimshon is able to exercise control
over most matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such concentration
of ownership may have the effect of delaying or preventing a change in control
of the Company. See "Principal and Selling Stockholders."
Shares Eligible for Future Sale. Upon consummation of this Offering, the
Company will have 15,334,000 shares of Common Stock outstanding, substantially
all of which, other than the shares of Common Stock held by Mr. Shimshon and
Cedarwood, are freely tradable. Mr. Shimshon and Cedarwood beneficially own in
the aggregate 8,250,000 shares of Common Stock of the Company and may be deemed
"affiliates" of the Company as such term is defined under the Securities Act.
They have agreed not to offer, sell, contract to sell or otherwise dispose of
any shares or any securities convertible into, exercisable or exchangeable for
shares of Common Stock of the Company (other than 300,000 shares of Common Stock
which are being offered hereby), for a period of three years in the case of Mr.
Shimshon, and two years in the case of Cedarwood. No predictions can be made as
to the effect, if any, that market sales of shares of existing stockholders or
the availability for future sale of such shares or shares in this Offering will
have on the market price of the Common Stock prevailing from time to time. The
prevailing market price of the Common Stock after the Offering could be
adversely affected by future sales of substantial amounts of Common Stock by
existing stockholders. See "Principal and Selling Stockholders," "Shares
Eligible for Future Sale" and "Plan of Distribution."
Substantial Number of Shares of Common Stock Reserved for Issuance Upon
Exercise of Outstanding Options and Warrants. The Company has reserved from its
authorized but unissued Common Stock (i) 650,000 shares of Common Stock which
are subject to this Offering and issuable upon exercise of warrants; (ii)
500,000 shares of Common Stock issuable upon exercise of options
11
given to consultants to the Company; (iii) 500,000 shares of Common Stock
issuable under the Company's 1996 Stock Option Plan (the "1996 Plan") and (iv)
200,000 shares of Common Stock issuable upon exercise of warrants issued in
connection with the Company's May 1997 private placement. The existence of the
outstanding options and warrants may prove to be a hindrance to future
financings by the Company. In addition, the exercise of any options may dilute
the net tangible book value of the Common Stock.
No Dividends. The Company has never paid a dividend nor does it intend to
make any dividend payments for the foreseeable future. See "Dividend Policy."
Risks Relating to the Company's Operations in Israel
Operations in Israel. Casdim Israel's operations are directly affected by
economic, political and military conditions there. For information with respect
to certain factors concerning the State of Israel, risks related to its economic
and political situation and special programs provided by the State of Israel
relating to research and development, exports and taxation, see "Management's
Discussion and Analysis," "Israeli Taxation" and "Conditions in Israel." The
loss of the various research and development grants and tax benefits afforded to
the Company by the State of Israel would negatively impact its results of
operations in the future.
Some of the Company's officers and employees are currently obligated to
perform annual reserve duty in the Israel Defense Forces and are subject to
being called for active duty at any time upon the outbreak of hostilities. While
the Company has operated effectively under these requirements, no prediction can
be made as to the effect on the Company of any expansion of such obligation. See
"Business -- Employees."
Impact of Inflation and Currency Fluctuations. The dollar cost of the
Company's operations in Israel is influenced by the extent to which any increase
in the rate of inflation in Israel is not offset (or is offset on a lagging
basis) by a devaluation of the NIS in relation to the dollar. During the three
years ended December 31, 1996, the rate of inflation in Israel exceeded the rate
of devaluation of the dollar against the NIS. In 1995 and 1996, the rate of
inflation in Israel was 8.1% and 10.6%, respectively, while the rate of
devaluation was 3.9% and 3.7%, respectively.
12
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders. The net proceeds to be received by the Company from
the exercise of the Warrants, assuming the exercise of all such warrants, are
estimated to be approximately $650,000. The proceeds of the exercises, if any,
will be used for working capital.
PRICE RANGE OF COMMON STOCK
Since completion of its public offering on September 27, 1989, a public
trading market has not developed for the Company's common stock, $0.01 par value
(the "Common Stock"). Because there is no established trading market, and only a
limited number of market makers have sporadically offered to purchase and sell
shares of the Company's Common Stock, during significant portions of the listed
periods, reliable quotations for the Common Stock have not been available.
High Low
---- ---
1995
- ----
First Quarter................................... No Bid No Bid
Second Quarter.................................. No Bid No Bid
Third Quarter................................... No Bid No Bid
Fourth Quarter.................................. No Bid No Bid
1996
- ----
First Quarter................................... $1 1/8 $ 7/32
Second Quarter.................................. 5 3/4 1/2
Third Quarter .................................. 5 1/4 2 3/4
Fourth Quarter.................................. 5 1/2 4 1/16
1997
- ----
First Quarter .................................. $3 1/2 $1 1/32
Second Quarter (through June 16, 1997).......... 2 7/16 1 13/32
The Nasdaq Bulletin Board symbol for the Company's Common Stock is CDMI. As
of June 6, 1997, there were approximately 33 holders of record and 300
beneficial owners of the Company's Common Stock.
13
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future.
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company at March 31, 1997, without any adjustment to reflect the sale of the
Shares by the Company upon exercise of the Warrants:
March, 31 1997
--------------
Total short-term debt.......................................... $ 804,671
==========
Long-term debt................................................. 1,025,357
---------
Stockholders' equity:
Common Stock, $.01 par value; 30,000,000 shares
authorized; 14,134,000 shares issued and outstanding;
14,784,000 shares issued and outstanding,
as adjusted (1)........................................... 985
Additional paid in capital..................................... 3,545,268
Less treasury stock............................................ (1,425)
Retained earnings.............................................. (1,030,510)
TOTAL STOCKHOLDERS' EQUITY..................................... 2,514,318
------------
TOTAL CAPITALIZATION...........................................$ 4,344,346
============
(1) Does not include 500,000 shares of Common Stock reserved for issuance
pursuant to the Company's 1996 Stock Option Plan, 500,000 shares of Common
Stock issuable upon exercise of options granted to consultants to the
Company, 650,000 shares of Common Stock issuable upon exercise of warrants
issued to certain financial consultants to the Company, 1,200,000 shares of
Common Stock issued in a private placement on May 22, 1997, and 200,000
Shares issuable upon exercise of warrants issued in connection with the
Company's May 1997 private placement.
14
SELECTED FINANCIAL DATA
The following selected financial data for each of the years ended December
31, 1995, and 1996, are derived from the Company's consolidated financial
statements set forth elsewhere in this Prospectus. The Company's financial
statements were examined by Hocker, Lovelett, Hargens & Yennie, P.C. whose
report with respect to such financial statements appears in this Prospectus. The
consolidated balance sheet data at December 31, 1995 and 1996, is derived from
audited consolidated financial statements previously filed with the Commission.
The consolidated statement of operations data for the three-month periods ended
March 31, 1996 and 1997 and the consolidated balance sheet data at March 31,
1997 are derived from unaudited consolidated financial statements which, in the
opinion of the Company, reflect all adjustments necessary for a fair
presentation of the Company's financial position and results of operations for
such periods.
Income Statement Data:
Year Ended December 31, Three Months Ended March 31,
----------------------- ----------------------------
1996 1995 1997 1996
---- ---- ---- ----
Sales............................................... $ 508,713 $ 2,011,110 $ 6,985 $ 253,007
Cost of sales....................................... 379,806 468,353 -- 31,785
--------- --------- ------ --------
Gross profit........................................ 128,907 1,542,757 6,985 221,222
------- --------- ------ -------
Selling, general and administrative expenses........ 1,244,144 237,016 485,492 113,989
----------- --------- ------- ---------
Income (loss) from operations....................... (1,115,237) 1,305,741 (478,507) 107,233
Other income (expenses):
Interest income................................ 21,309 -- 5,828 --
Dividend Income................................ 35,673 -- -- --
Interest expense............................... (109,519) (75,272) (21,676) (18,710)
Investment activity gain (loss)................ -- (93,142) 145,402 --
Gain (loss) from foreign translation........... (51,860) (6,203) -- (18,134)
Income (loss) from operations before taxes.......... (1,219,634) 1,131,124 (348,943) (70,389)
Income tax (expenses)............................... -- (440,309) -- (33,185)
----------- ---------- --------- -------
Net income (loss)................................... $(1,219,634) $ 690,815 $(348,943) $ 37,204
=========== ========= ========= ========
Net earnings (loss) per share....................... $(.09) $.36 $(.0247) $.01
===== ==== ======= =====
Weighted average number of shares
outstanding.................................... 13,349,000 1,899,000 14,134,001 9,634,000
========== ========== ========== =========
Balance Sheet Data: December 31, March 31,
1996 1997
---- ----
Working capital..................... $ 898,151 $1,640,649
Total assets........................ 4,355,191 4,344,346
Total debt .................. 1,891,920 1,830,028
Stockholders' equity................ 2,463,271 2,514,318
-15-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying condensed
financial statements. The discussion and analysis contains trend analysis and
other forward-looking statements. Actual results could differ materially from
those projected in the forward-looking statements as a result of changes in the
economy, changes in the Company's product sales mix and other factors which may
be beyond the Company's control.
Background
In November 1995, the Company issued 8,500,000 shares of common stock after
giving effect to a 50:1 reverse stock split, to acquire 100% of Casdim
Interactive Systems USA, Inc. ("Casdim USA"), the owner of 100% of the voting
and equity shares of Casdim Interactive Systems, Ltd. ("Casdim Israel"). Prior
to the acquisition of Casdim USA, the Company did not have any significant
operations. The business combination has been accounted for using the pooling
method of accounting. Upon the completion of the exchange of shares, the Company
changed its name from S.W. Financial Corp. to Casdim International Systems,
Inc.
Results of Operations
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996.
Kiosk and associated sales by the Company's wholly owned Israeli subsidiary
decreased to $6,985 during the quarter ended March 31, 1997 from $253,007 in the
comparable 1996 quarter. The decrease in sales was principally attributable to
the Company's decision to concentrate its resources on entering the North
American market and the failed efforts of its Israeli subsidiary to lease
kiosks. The Company expects that the revenues of its Israeli subsidiary will
increase in 1997 as a result of its recently acquired right to install
interactive multimedia informational and transactional kiosks at Ben Gurion
Airport and 13 smaller Israeli airports. Additionally, Casdim Israel was granted
exclusive rights by an Israeli insurance company to sell insurance products
through its kiosks at the Ben Gurion Airport. The Company is developing software
to allow Israeli citizens to purchase insurance prior to their departing Israel
for trips abroad.
As a result of the Company's limited sales in the first quarter of 1997, it
did not record any costs of sales as compared to $31,785 in costs in the 1996
first quarter. As a result, the Company's gross profit for 1997 first quarter
was $6,985 compared to $221,222 in the 1996 first quarter. The Company expects
its gross margins to vary in the future depending on the nature and volume of
its revenues.
16
Selling, general and administrative expenses increased to $485,492 in the
1997 first quarter from $113,989 in the 1996 first quarter, due primarily to the
increased marketing costs associated with the Company's efforts to penetrate the
North American market and costs associated with the maintenance of executive
offices in New York City. The Company anticipates that selling, general and
administrative expenses will continue to increase in 1997 a result of the
planned increases in expenses relating to its Information on Demand System ("IOD
System") and the joint venture with Dick Clark Ventures.
In 1997 the Company capitalized approximately $263,000 of product
development costs, principally relating to the IOD System.
During the 1997 first quarter, the Company had other income of $129,554 as
compared to other expenses of $36,844 in the 1996 first quarter. In the 1997
first quarter, the Company was able to offset its increased interest expenses
with interest and dividend income from the investment of the proceeds of its May
1996 private placement and a $145,402 gain from the sale of marketable
securities. The Company does not expect to invest in marketable securities
during the foreseeable future. The Company expects interest expenses to increase
in 1997.
For the quarter ended March 31, 1997, the Company had a loss from
operations of $348,943 as compared to income from operations of $70,389 for the
1996 comparable quarter. The Company's operating loss in the 1997 first quarter
was due primarily to the increase in the Company's selling, general and
administrative expenses and the decline in sales.
As a result of the foregoing, the Company's net loss was $348,943 or $.0247
per share for the quarter ended March 31, 1997 as compared to net income of
$37,204 or $.01 per share for the quarter ended March 31, 1996.
Years Ended December 31, 1996 and 1995.
Sales decreased to $508,713 during the year ended December 31, 1996 from
$2,011,110 in 1995. The decrease in sales was principally attributable to the
Company's decision to (i) concentrate its resources on entering the North
American market, (ii) its failed efforts to lease kiosks, and (iii) the
determination of one of the Company's major customers to postpone deliveries of
kiosks until its financial condition improves.
Cost of sales decreased to $379,806 in 1996 from $468,353 in 1995,
principally as a result of the Company's lower level of sales. As a result, the
Company's gross profit for 1996 was $128,907 compared to $1,542,757 in 1995. The
Company expects its gross margins to vary in the future depending on the nature
and volume of its revenues.
Selling, general and administrative expenses increased to $1,244,144 in
1996 from $237,016 in 1995, due primarily to the increased marketing costs
associated with the Company's efforts to
17
penetrate the North American market, costs associated with the establishment of
executive offices in New York City, increased compensation, legal and accounting
costs, and a charge in the second quarter of 1996 of approximately $164,000
arising from the issuance of stock options to the Company's former public
relations firm. The Company anticipates that selling, general and administrative
expenses will continue to increase in 1997 a result of the planned increases in
expenses relating to its IOD System and the joint venture with Dick Clark
Ventures.
In 1996 the Company capitalized approximately $943,000 of product
development costs, principally relating to the IOD System.
During 1996, the Company had other expenses of $104,397 as compared to
other expenses of $174,617 in 1995. In 1995, the Company had a $93,142 loss from
its investment activity, resulting from unsuccessful investments made in 1995
prior to the acquisition of Casdim USA. In 1996, the Company was able to offset
part of the increased foreign currency translation losses and interest expenses
with interest and dividend income from the investment of the proceeds of its May
1996 private placement. The Company expects interest expenses to increase in
1997.
For the year ended December 31, 1996, the Company had a loss from
operations of $1,219,634 as compared to income from operations of $1,131,124 for
1995. The Company's operating loss in 1996 was due primarily to the increase in
the Company's selling, general and administrative expenses and the decline in
sales.
In 1995, the Company's income tax expense was $ 440,309.
As a result of the foregoing, the Company's net loss was $1,219,634 or $.09
per share for 1996 as compared to net income of $690,815 or $.36 per share for
1995.
Liquidity and Capital Resources
At March 31, 1997, the Company had $932,020 in cash and $1,640,649 in
working capital as compared to $915,520 in cash and $898,151 in working capital
at December 31, 1996. The Company's financial position was enhanced in the first
quarter of 1997 as a result of its receipt of $400,000 upon the exercise of
warrants issued in the 1996 private placement. In addition, the Company's
financial position benefitted from the conversion of $1,000,000 of its Israeli
subsidiary's short-term debt into long-term debt. On May 22, 1997, the Company
completed a private placement of 1,200,000 shares of Common Stock and 200,000
warrants, exercisable at $1.00 per share, to three offshore investors and
received $1,500,00 in gross proceeds. The Company has agreed to register the
shares of Common Stock issued in the private placement in a future registration
statement.
Among the factors that will affect the Company's working capital in the
future will be (i) the amount and timing of the expenditures required to
complete the development, installation and testing of the IOD System, and (ii)
the timing of a $500,000 capital contribution which the Company has agreed to
make to the joint venture with Dick Clark Ventures. Another factor which will
affect
18
working capital is the collectability of a receivable of approximately $300,000
from Kupat Holim Leumit, an Israeli health maintenance organization, which is
over one year old.
Management believes that the Company may require additional financing of
approximately $1.5 million during the next six to eighteen months, mainly to
fund the installation and testing of the IOD System at various Ramada Inn sites.
No assurance can be given that sufficient financing on either an equity or debt
basis will be available to the Company or that it will be available at
advantageous terms. To the extent sufficient financing is not available, the
Company will attempt to stretch out the costs associated with the Ramada project
so that it will be able to continue its operations through 1997.
19
BUSINESS
The Company is a multimedia and communications company engaged in the
development, marketing, sale and leasing of interactive, informational and
transactional kiosks. The Company is engaged in the development of interactive
televisions, which will be used to provide interactive programs to link vendors
and customers and to supply information and transactions on demand. Another area
of the Company's business is the development of servers and communications
applications for both satellite-based networks and wide area networks ("WAN"),
that will enable vendors to deliver information services and effect transactions
from their place of business.
Recent Developments
In 1996 the Company devoted substantial managerial time and capital
resources to its efforts to enter the North American market. The Company
determined that the best use for its technology in the North American market was
in the context of the lodging industry and in the transmission of electronic
data via satellite.
The Company and Dick Clark International Cable Ventures Ltd. ("Dick Clark
Ventures") have agreed to enter into a joint venture, to be known as Technology
Transfer Corporation, to exploit certain satellite transmission licenses held by
an affiliate of Dick Clark Ventures in Mexico. These licenses, granted by the
Secretaria de Communicaciones y Transports ("SCT") of Mexico, allow for the
installation or utilization of shared teleports, for the bi-directional
transmission of voice, video and data within the footprint of the Mexican
Government's two Solidaridad satellites. The Company has agreed to contribute
$500,000 to the joint venture which will design, install and operate an advanced
communications platform based on the satellite platform. When activated, the
satellite network is intended to provide a variety of electronic services,
currently unavailable on a wide scale in Mexico. Initially, the joint venture
intends to provide electronic transactional services under the trade name
DataMex(TM) which service will include transactional banking via an
interconnected ATM network, point of purchase transactions and international
funds transfers. No assurance can be given that this joint venture will be
successful in developing the network or that it will be able to raise sufficient
capital for the initiation of its proposed business.
On March 26, 1997, the Company and Ramada Franchise Systems, Inc. ("RFS"),
a wholly owned subsidiary of HFS Incorporated, announced their agreement to
enter into "alpha" and beta" testing of Casdim's integrated Information on
Demand System (the "IOD System"). The IOD System incorporates interactive TV,
Internet, video-on-demand, E-mail, and a club member facility. The IOD System is
designed to utilize a WAN to link video and data servers via satellites and/or
cable TV systems. Hotel guests will access their TV through the RFS/Casdim
default channel. Access to various services including E-mail, stock quotes,
sports scores, video-on-demand, airline and car rental reservations and
residential real estate listings will be provided to the hotel guest by the IOD
System. Under the proposed arrangement, Casdim will derive revenues from
advertising, vendor
20
commissions and user fees. RFS currently has over 120,000 lodging rooms in its
franchise network. The Company and RFS have agreed to enter into an agreement
for full system implementation of the IOD System, pursuant to which RFS will
exclusively recommend the IOD System to all of its franchises, upon the
successful completion of the alpha and beta testing at various Ramada Inn
locations. The testing of the IOD System is scheduled to be completed in March
1998. No assurance can be given that such testing will prove successful, or that
the Company will be able to raise sufficient funds to install its IOD System
within the Ramada Inn franchise system.
The Company recently acquired the right to install interactive multimedia
informational and transactional kiosks at Ben Gurion Airport and 13 smaller
Israeli airports. Additionally, Casdim was granted exclusive rights by an
Israeli insurance company to sell insurance products through its kiosks at the
Ben Gurion Airport. The Company is developing software to allow Israeli citizens
to purchase insurance prior to their departing Israel for trips abroad.
Products
Historically, the Company's main products and services consisted of:
o the sale and lease of multimedia kiosks; and
o the development and sale of databases, kiosk and kiosk home
pages, servers, and communications applications.
Multimedia Kiosks. The Company's kiosks offer a form of interactive
computerization which allows for easy consumer access to products, services, and
information. Consumers are able to access promotional and educational
information as well as purchase goods and services. Each kiosk consists of a
free-standing, electronic, informational and transactional booth combining a
number of computer peripheral technologies which collect and dispense
information and services. The kiosks are designed to be flexible and
user-friendly in order to meet the diverse needs of users, and are usually
placed in a highly visible and active location to provide services and
information to a wide audience. The kiosks include up-to-date technology in PC
hardware, multimedia, LAN, WAN, satellite communication and applications
generators and are comprised of a processor, disk drives, keyboard, video
display, touch screen, magnetic card reader, a scanner, and printer. Depending
on the application, kiosks may or may not be connected to one or more host
systems.
The manufacture and assembly of kiosks entail five distinct steps:
o Manufacturing of the Kiosk Enclosure. The manufacturing process
takes approximately one to two months, depending on whether the order
consists of an existing model or a new design. Although choice of a
suitable enclosure design is usually chosen from one of the Company's
existing standard models, new designs may be manufactured at the customer's
request. The creation of a new enclosure model takes approximately two to
three months during which a prototype is built and tested and an operating
plan is developed. The enclosures are
21
designed by Zog Ltd., an Israel-based industrial design company, which also
oversees the manufacturing process.
o Purchase of Hardware Components. Most of the hardware used in the
kiosks' operating systems is standard and not customized, which provides
the Company with flexibility when a change of manufacturer is needed or
technical modifications are required. The hardware components include
computers and expansion cards, a touchscreen, magnetic card reader, a
printer and communications equipment. Generally, the Company selects a
hardware supplier after comparing the equipment of three or more suppliers
for quality, reliability and durability, as well as adaptability to the
other components in the system, and the supplier's quality of service,
manufacturer's warranty and selling price.
o Integration and Adaptation of Software, Database and Graphics. This
process includes a system design stage, design of the user-interface and
connection of the application components into one complete system. Such
components can include a logging component to register activities made at
the kiosk stand, and a component for display of advertising during idle
time.
o Testing. The retrieval and content of the of information provided by
the individual system is tested before shipping. Great importance is placed
on building mechanisms that will enable easy updates of content items and
automatic distribution of such information to the kiosks.
o Connection of Kiosk Units. This process entails the preparation of
the required infrastructure for connecting a kiosk to the Company's central
control room. Such connections may be implemented through the use of
standard telephone lines, ISDN lines, local Ethernet network, frame relay
lines, point to point lines, or satellite network. The choice of
communication line depends on the number of sites to be connected, the
number of kiosks on the site, the quantity of information to be relayed,
and the frequency of transactions, and the type of project (i.e. credit
card company, medical data bank, etc.). Gilat - Satellite Communications
provides VSATs and hubs for the kiosks' satellite wide area network.
The sales price of a kiosk in Israel, including both equipment and
technology, ranges from $10,000 to $25,000. As of June 6, 1997, the Company has
sold or installed approximately 80 kiosks.
The Company has targeted a base selling price of approximately $15,000 per
unit in the U.S. as a consequence of the increased level of competition in the
U.S. market. In the U.S., prices may range from $13,000 to $150,000 for a highly
sophisticated kiosk.
In 1996, the Company attempted to emphasize the leasing of kiosks to
shopping malls where they would be placed in strategic locations offering a
diverse network of information and transaction capabilities. In great measure,
the Company was unsuccessful with this marketing approach because it was unable
to obtain long-term exclusive agreements from the shopping malls. Recently, the
Company began to negotiate with several malls in an attempt to obtain long-term
agreements.
22
No assurance can be given that these negotiations will be successful. The
Company has determined that it will in the future concentrate on the sale of
kiosks and obtaining fees from advertising and coupon distribution from kiosks
installed by the Company in high traffic, public areas.
The Company provides technical support to its customers, at approximately
15% of the total value of the system provided. The Company's information and
control center is located at its head office in Petah Tikva, from which it
monitors all kiosks on the network in real time, allowing for tracking of usage,
up and down time, information received, access time and a multitude of other
functions. This network has been designed to provide flexibility, and the
Company believes it provides an advantage over its competitors' non-networked
kiosks.
Development and Sale of Databases, Kiosk and Internet Home Pages, Servers,
and Communications Applications. The charge for developing a customer's
interactive program ranges from $20,000 to $200,000. Depending on the project,
the Company's experienced staff is able to respond to every customer's needs
concerning data structure by developing, building, maintaining, and connecting
customized databases to the Company's kiosk network.
Sales, Marketing and Distribution
In 1996, the Company expended substantial efforts on its strategy of
entering the North American market and achieved preliminary success by entering
into relationships with RFS for its IOD System and with Dick Clark Ventures for
the transmission of electronic services via satellite. The Company intends to
devote a substantial portion of its resources to the development and
implementation of the technologies for these projects. No assurance can be given
that these projects will be successful or that the Company will be able to raise
sufficient funding for such projects.
With respect to its historical kiosk business, the Company has developed a
multi-dimensional approach to the information services market by targeting the
underutilized "leisure time" market. The "leisure time" market refers to time
spent between the home and the office, where the customer is more predisposed to
shop or require access to services. The Company has approached the market from
two different avenues. First, targeting markets which are currently
underutilized and have not yet been identified as market niches. Secondly, the
Company attempts to turn kiosks located in high traffic public areas into profit
centers. The markets which the Company targets need not be related, different
information channels can co-exist on a single kiosk, and the consumer can then
choose which channel to use.
Research and Development
The Company directs its R&D efforts into the integration between various
products in the areas of multimedia platforms, and the development of software,
video and audio products, and animation software, network technologies (LAN,
WAN), and products involved in the areas of fiber distributed data interface
(FDDI) and asynchronous transfer mode (ATM). This approach results
23
in relatively low cost R&D and allows the Company to integrate a wide range of
multimedia applications.
Simultaneously with the development of kiosks for ongoing projects, the
Company is in the process of developing sub-systems for general use in various
other applications, including:
o HMTL Kiosk: This type of kiosk is suitable for use when vast
amounts of information must be displayed simultaneously, or when the use
of Hypertext Markup Language is required.
o Mall Kiosk: This type of information kiosk enables shoppers to find
a certain store within a mall either alphabetically or by category. The
system also provides printed directions to store locations.
o Bit Technology: The transfer of existing operating systems to 32 bit
technology.
o Updated Central Control System: For controlling the status of the
kiosks and their informational content, receiving reports from the kiosks,
managing service calls and distribution of updates for software and
day-to-day contents.
o Video Conference and Cartographic Information Display System: This
will provide consumers with the ability to engage in video conferencing.
o Continuous Advertising: This component will display advertisements
on a separate screen will be used solely for this purpose. This system will
include a mechanism for determining the frequency and availability of
advertisements according to the amount for transmission time sold.
No assurance can be given that the Company will be able to successfully
complete the development of its IOD System or the technology for its proposed
venture with Dick Clark Ventures.
Competition
The electronic information distribution market is rapidly evolving and is
competitive. The Company believe that most of its competitors have greater
financial resources and name recognition than the Company. In addition, some of
these competitors, including LodgeNet Entertainment Corp. and Spectravision,
currently offer information products which include some of the services to be
included in the Company's IOD System. Accordingly, these competitors may have an
advantage in competing with the Company since its system is not operational as
yet. In addition, the Company expects to face competition from new entrants into
its markets. Such competition could materially adversely effect the Company's
business, operating results and financial condition. There can be no
24
assurance that the Company will be able to compete successfully against current
or future competitors.
The Israeli kiosk market is a relatively small one in which the Company
believes it is a leading competitor. The Company's main competitors in Israel
are Golden Screens and Interactive Information Ltd. Golden Screens has been in
operation for approximately six years specializing primarily in the public and
government sectors and does not service private organizations. Its kiosks offer
fewer features and less updated technological and multimedia design than the
Company's product. Golden Screen's kiosks do not operate in "real time," and lag
behind the Company's kiosks in multimedia, computer technology and applications.
Interactive Information Ltd. has been in operation for approximately two years
and, to date, services only the hotel industry.
A number of companies are active in the field of information kiosks in
North America. Management believes that Factura Composites, Inc. is the market
leader in kiosk manufacturing in the United States. Other companies active in
the field include: Quick ATM, 1-Media, Aimtech, EDR Systems, Virtual Shopping
Inc., Rikon Corporation, and HSI. All of these companies have greater financial
resources than the Company. There are also a large number of companies in the
field of touch screens, peripherals and applications software. The Company
believes that its high standard of product and innovative approach to the market
will allow the Company to compete favorably in the U.S. and Israeli markets.
Government Regulation
The Company believes that it is not currently subject to any federal
regulations with respect to the sale of kiosks in the United States; however,
the placement of kiosks may be subject to local zoning and other regulations.
The Company's proposed joint venture with Dick Clark Ventures will be subject to
regulation by the SCT of the Government of Mexico and may be subject to federal
regulations with respect to the transmission of data by satellite into the
United States.
Trademarks and Patents
In January 1995, the Company acquired a pending patent (No. 108935) for its
medical kiosks from CSS Ltd., an affiliated company owned by Mr. Yehuda
Shimshon, for $500,000. This patent is pending both in Israel and the United
States. The Company does not have any registered trademarks.
Employees
At June 6, 1997, the Company and its subsidiaries employed 31 persons, 13
in research and development and technical support, 8 in marketing and sales, and
10 in operations and administration.
25
Properties
The Company's executive offices are currently located in approximately
3,700 square feet of office space at 150 East 58th Street, New York, New York.
The lease for such facilities has a term of five years and two months, with an
annual rental of approximately $134,000.
The Company's research and development facility is located in the
industrial zone of Petah Tikva, Israel. The premises, which consist of
approximately 7,600 square feet and five parking bays, are shared with CSS Ltd.
The Company utilizes approximately 3,000 square feet to house its
administrative, marketing and technical departments. The lease provides for
monthly rentals of $6,840 per month of which half of such amount is linked to
changes in the Israeli Consumer Price Index ("CPI"). The Company pays its
pro-rata share of the lease costs for the premises. The lease expires on
December 31, 1997 and may be renewed for five additional years.
Legal Proceedings
The Company has been advised that the Securities and Exchange Commission
has entered a formal order of private investigation in connection with the
offer, purchase or sale of securities of the Company. The Company has not been
advised by the Staff of the Commission of the status of the investigation. There
can be no assurance that the Commission will not initiate a proceeding against
the Company and/or certain of its former or present affiliates in connection
with its investigation, which proceeding could adversely affect the Company.
Conditions in Israel
The following information is intended to advise prospective investors of
certain conditions in Israel that could affect the Company.
Political Conditions
Since the establishment of the State of Israel in 1948, a state of
hostility has existed, varying as to degree and intensity, among Israel and
various Arab countries, which has led to a number of armed conflicts in the past
and continues to create security and economic problems for Israel. A peace
agreement was signed between Israel and Egypt in 1979, and limited economic and
full political relations have been established between the two countries. A
peace treaty between Israel and the Hashemite Kingdom of Jordan was signed in
1994, ending the state of war along Israel's longest border, pursuant to which
full political and economic relations were formally established.
Since December 1987, civil unrest has existed in the territories which came
under Israel's control in 1967. In September 1993, Israel entered into a
Declaration of Principles with the Palestine Liberation Organization (the
"PLO"), which sets forth a basic framework for continued negotiations between
Israel and the PLO with respect to ending the state of hostility between such
parties. In
26
April 1994, negotiations between Israel and the PLO resulted in the signing of
an interim agreement to grant Palestinian Arabs limited autonomy in certain of
the Territories administered by Israel; in September 1995, Israel and the PLO
signed an additional agreement regarding the transfer of civil administration to
the Palestinian Authority in other areas of the Territories and the Israeli Army
has withdrawn from certain of such areas as well. No prediction can be made as
to whether any other written agreements will be entered into between Israel and
its neighboring countries, whether a final resolution of the area's problems
will be achieved, the nature of any such resolution, or whether the civil unrest
in the administered territories will continue and to what extent the unrest will
have an adverse impact on Israel's economic development or on the operations of
the Company in the future.
Most adult male permanent residents of Israel under the age 51 are, unless
exempt, obligated to perform approximately 26 days of military reserve duty
annually. Additionally, all such residents are subject to being called to active
duty at any time under emergency circumstances. The male officers and employees
of the Company are generally currently obligated to perform annual reserve duty.
While the Company and its personnel have operated effectively under these
requirements, no assessments can be made as to the full impact on the Company's
work force or business if conditions should change and no prediction can be made
as to the effect on the Company of any expansion or reduction of these
obligations.
Certain countries and companies participate in a boycott of Israeli
companies and others doing business in Israel or with Israeli companies. The
Company, however, believes that the boycott will not have a material adverse
impact on the Company's business.
On November 4, 1995, Prime Minister Yitzhak Rabin was assassinated. In June
1996, following general elections a new Israeli government was formed, headed by
the newly elected Prime Minister, Benjamin Netanyahu of the Likud Party. In
January 1997, Israel and the Palestinian Authority reached an accord with
respect to the Israeli withdrawal from Hebron. Israel has entered into various
agreements with certain Arab countries and the PLO, and various declarations
have been signed in connection with the efforts to resolve some of the economic
and political problems in the Middle East. Nevertheless, there has recently been
a series of terrorist attacks in Israel. No prediction can be made as to whether
a full resolution of these problems will be achieved or as to the nature of any
such resolution. To date, Israel has not entered into a peace treaty with either
Lebanon or Syria.
27
Economic Conditions
In 1995, for the sixth consecutive year, the economy of Israel experienced
significant expansion. During calendar years 1990 through 1995, Israel's gross
domestic product increased by 5.0%, 6.2%, 6.7%, 3.4%, 6.5% and 7.06%,
respectively. The Israeli government's monetary policy contributed to relative
price and exchange rate stability during most of these years despite fluctuating
rates of economic growth and a high rate of unemployment.
Israel's economy has been subject to numerous destabilizing factors,
including a period of rampant inflation in the early- to mid-1980s, low foreign
exchange reserves, fluctuations in world commodity prices, military conflicts
and civil unrest. For these and associated reasons, the Israeli Government has
intervened in sectors of the Israeli economy, employing among other means,
fiscal and monetary policies, import duties, foreign currency restrictions and
control of wages, prices and exchange rates, and has frequently reversed or
modified its policies in all these areas. The Company believes that the rate of
inflation in Israel has not had a material effect on its business activities to
date because (i) most of the Company's activities are funded or paid in United
States dollars or NIS indexed to the dollar, and (ii) Israeli inflation,
although still significant, has been relatively stable over the last several
years. The inflation rates for 1995 and 1996 were 8.1% and 8.2%, respectively.
In the event that inflation in Israel were to return to such high levels as
would have a significant negative impact on Israel's economy as a whole, the
Company's results of operations and financial position could be materially
adversely affected.
The defense burden, the absorption of immigrants and the development of the
economy have resulted in high balance of payments deficits in Israel for many
years. The main sources of capital to finance the deficits have been military
and economic aid from the United States (including loan guarantees), reparations
and other remittances to Israeli residents, sales of bonds (primarily in the
United States), intragovernmental, institutional and free market loans and
contributions from the international Jewish community. Although the Company
knows of no planned reductions or delays in such sources of capital, the Israeli
economy could suffer serious adverse consequences if such sources of capital
were to be reduced by material amounts.
Trade Agreements
Israel is a member of the United Nations, the International Monetary Fund,
the International Bank for Reconstruction and Development and the International
Finance Corporation. Israel is a signatory to the General Agreement on Tariffs
and Trade, which provides for reciprocal lowering of trade barriers among its
members.
Israel became associated with the European Union by an agreement concluded
in 1975 which confers certain advantages with respect to Israeli exports to most
of the European countries and obliges Israel to lower its tariffs with respect
to imports from those countries over a number of years.
28
In September 1992, Israel signed a free trade agreement with the European
Free Trade Association ("EFTA"), the members of which are Austria, Finland,
Iceland, Liechtenstein, Norway, Sweden and Switzerland. The agreement, which
became effective on January 1, 1993, entitles the exporting countries of EFTA
trading with Israel to conditions similar to those that the countries of the
European Union enjoy when trading with the United States.
In 1985, Israel and the United States entered into an agreement to
establish a Free Trade Area, which is intended to ultimately eliminate all
tariff and certain non-tariff trade between the two countries. Under the
Agreement, most products received immediate duty free status in 1985, staged
reductions are taking place on others and reductions on tariffs relative to a
third category may be accelerated prior to 1995, by which all tariffs are to be
eliminated.
Israel is the only country that has free-trade area agreements with the
United States, the European Union and the EFTA states. Additionally, the end of
the Cold War has enabled Israel to establish commercial and trade relations with
a number of other nations, including China, Russia, and the nations of Eastern
Europe, with which Israel had not previously had such relations.
29
MANAGEMENT
Executive Officers and Directors
The Directors and Executive Officers of the Company are:
Name Age Position
- ---- --- --------
Yehuda Shimshon.......... 44 Chairman of the Board, President and
Chief Executive Officer
Doron Leave.............. 43 Vice President of Operations, Acting
Chief Financial Officer and Director
Ilan Mintz............... 34 Director
Israel Shimshon.......... 67 Director
David Tamir.............. 53 Director
Gary P. Tober............ 47 Secretary
Yehuda Shimshon, 44, Chairman of the Board, President, CEO, and Chief
Financial Officer of the Company since December 1995, began his career in the
Israeli Defense Forces and rose to the rank of Captain. Upon his discharge from
the Israel Defense Forces in 1977, he began a career as a consultant to
organizations active in international trade throughout Europe and Africa. Mr.
Shimshon became active in the field of computer research, developing and writing
programs which led to the establishment by him of Casdim Software Systems Ltd.
in 1986, an Israeli company which develops clinical laboratory management
systems ("CSS Ltd."), and Casdim Interactive Systems Ltd. in 1994, an Israeli
company and wholly-owned subsidiary of the Company which designs and develops
interactive kiosks and customized databases and performs network integration
("Casdim Israel"). Mr. Shimshon has been the Chief Executive Officer of these
companies since their inception.
Doron Leave, 43, a director of the Company since August 1996, has been the
Company's Vice President of Operations since July 1996 and has served as Acting
Chief Financial Officer since May 1997. From September 1990 to July 1996, Mr.
Leave was employed by Bank Hapoalim Ltd., most recently as Branch Manager of its
Allenby, Tel Aviv branch. Mr. Leave holds a degree in Business Administration
from Tel Aviv University.
30
Ilan Mintz, 34, a director of the Company since December 1995, has been
principally employed in various executive positions with CSS Ltd. Mr. Mintz
began his employment with CSS Ltd., a company wholly owned by Mr. Shimshon, in
1990 as manager of the Customer Support and Training Division. In June 1993 he
became the director of the Marketing Division of CSS Ltd. and has served as
General Manager since January 1995.
Israel Shimshon, 67, a director of the Company since March 1996, has been
principally employed as the managing director of Hagadish Insurance Agency, an
Israeli general insurance agency, since 1953. Israel Shimshon is the father of
Yehuda Shimshon.
David Tamir, 53, a director of the Company since May 1996, is currently
engaged as an independent consultant. From May 1992 to December 1995, Mr. Tamir
was president of Powerspectrum Technology, a majority-owned subsidiary of Geotek
Communications, Inc. ("Geotek"), a wireless communications provider. From
January 1996 to May 1996, Mr. Tamir was employed in Israel by Geotek in a
non-executive position. From 1990 until May 1992, Mr. Tamir served as a
representative of the Israeli Armament Development Authority in Washington, D.C.
Mr. Tamir was initially elected to the Company's Board of Directors as the
designee of the investors in the Company's 1996 Private Placement.
Gary P. Tober, 47, Secretary of the Company since December 1995, has been a
member of the law firm of Lane Powell Spears Lubersky of Seattle for over five
years. Mr. Tober practices in the areas of international business law, taxation,
and international investment law.
The Company's Board of Directors has appointed an audit committee
consisting of Messrs. Ilan Mintz and David Tamir.
All directors of the Company hold office until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Officers serve at the pleasure of the Board of Directors. Mr. Israel Shimshon, a
director of the Company, is the father of Mr. Yehuda Shimshon, the Chairman,
President, and CEO of the Company. All of the executive officers, other than Mr.
Tober, devote their full time to the operations of the Company.
Key Employee
Dr. Adam Livny joined the Company in August 1997 as Director,
Communications Systems. Dr. Livny holds a Ph.D. degree in Electrical Engineering
from Polytechnic University of New York, a M.Sc. degree in Electrical
Engineering from Polytechnic Institute of Brooklyn, and a B.Sc. degree in
Electrical Engineering from the Technion, Israel Institute of Technology. Prior
to joining the Company, he was a senior research engineer for over 25 years with
Rafael, the Israeli governmental authority for warfare systems development.
While affiliated with Rafael, Dr. Livny served as Vice President of Development
of Carcom/Rafael from 1993 to August 1996, where he
31
was responsible for research and development of mobile satellite communications
systems. He was engaged in the development of many advanced communications
systems while employed by Rafael. During the years 1987 through 1990, Dr. Livny
was on leave from Rafael and served as the Chief Scientist of the Israeli
Ministry of Communications.
Executive Compensation
The following table sets forth information concerning the total
compensation during the last three fiscal years for the Company's executive
officers whose total salary in fiscal 1996 totaled $100,000 or more:
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Securities Underlying
Name and Principal Position Year Salary ($) Options (#)
- --------------------------- ---- ---------- -----------
Yehuda Shimshon 1996 $240,000 --
President, Chief Executive Officer and 1995 -- --
Chairman of the Board 1994 -- --
The aggregate value of all other perquisites and other personal benefits
furnished in each of the last three years to each of these executive officers
was less than the greater of $50,000 or 10% of each officer's salary for such
year.
There are currently no employment agreements between the Company and any of
its officers. The Company has not paid any cash remuneration to its outside
directors for their services as Directors in the last three years.
STOCK OPTIONS
The following table provides information concerning stock options held in
1996 by each of the executive officers named above in the Summary Compensation
Table. There were no options granted to any officers in 1996.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Shares
Shares Underlying Unexercised Value of Unexercised in the
Acquired on Value Options at FY-End (#) Money Options at FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
Yehuda Shimshon, President, -- -- -- --
Chief Executive Officer and
Chairman of the Board
32
CERTAIN TRANSACTIONS
In October 1995, Casdim Israel entered into an agreement with CSS Ltd., a
company wholly owned by Yehuda Shimshon. Pursuant to this agreement, Casdim
Israel paid CSS Ltd. $700,000 for services and products to be supplied by CSS
Ltd. to the Company. These products and services included: (i) adaptation of the
Scope(TM) LIS system operating in the 140 laboratories of Kupat Holim Klalit
("Kupat Holim") to work with the medical kiosk; (ii) development and
implementation of a central data base for laboratory test results; (iii)
implementation of the "Laboratory Test Results Central Data Base" to work with
the 140 laboratories and 400 clinics of Kupat Holim; and (iv) communication
software and adaptation of various interfaces between CSS Ltd. and Casdim
Israel's products. The agreement also provided that in the event Kupat Holim or
other companies purchased the above-mentioned products from CSS Ltd., the
proceeds, up to the sum of $700,000 would be repaid to Casdim Israel. To date,
CSS Ltd. has paid Casdim Israel $50,000.
Also in October 1995, Casdim Israel loaned CSS Ltd. $300,000 at a rate of
interest linked to the Israeli CPI, which loan was repaid in 1996. In January
1995, Casdim Israel purchased a pending patent from CSS Ltd. relating to the
medical multi-media kiosks for the sum of $500,000.
On November 21, 1995 the Company entered into an agreement with Casdim USA
and Mr. Yehuda Shimshon. Mr. Shimshon acted on behalf of himself and Cedarwood,
the then sole shareholders of Casdim USA. Pursuant to the terms of the Exchange
Agreement, the Company acquired all the issued and outstanding shares of Casdim
USA in exchange for 425,000,000 shares of the Company. The Exchange Agreement,
which became effective on December 11, 1995, was approved at a special meeting
of the shareholders of the Company held on October 24, 1995 at which the
shareholders also approved: (i) renaming the Company Casdim International
Systems, Inc.; (ii) the 50:1 stock split of 76,700,000 shares, the then
outstanding number of shares of the Company, into 1,534,000 shares; (iii) the
relocation of the Company's headquarters from Colorado to Nevada; and (iv) the
appointment of Mr. Shimshon as President and Chairman of the Board. As of
December 31, 1995, the Company had 9,634,000 shares outstanding, of which 44.1%
was owned by Mr. Shimshon and 44.1% was held by Cedarwood, a company in which he
holds a controlling interest. At the time of the exchange, Mr. Shimshon and
Cedarwood were each 50% shareholders of Casdim USA.
Under a public relations retainer agreement with Sunrise Financial Group
Inc. ("Sunrise"), the Company agreed to issue Sunrise options to purchase up to
700,000 shares of its common stock at a price of $1.00 per share as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares of
common stock were to vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. In March 1997, the public relations
retainer agreement with Sunrise was terminated. Sunrise will retain the option
to purchase up to 300,000 shares of the Company's common stock.
33
In July 1996 the Company entered into a one year consulting agreement with
WEDA Consultants N.V., a project consulting firm with which David Tamir is
affiliated. Under the terms of the consulting agreement, WEDA received a monthly
retainer of $10,000 and was granted options to purchase 100,000 shares of common
stock, which were to vest ratably over two years, beginning on the first
anniversary of the grant. The agreement was terminated in April 1997.
34
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the aggregate
and percentage ownership of the Company's Common Stock as of June 6, 1997 and
the percentage ownership as adjusted to reflect the sale of the 2,171,002 shares
of Common Stock offered hereby by the Company and the Selling Stockholders
pursuant to this Offering, by (i) each person known by the Company to
beneficially own more than five percent of the Company's Common Stock, (ii) each
of the Company's directors, (iii) each of the executive officers and (iv) all
directors and executive officers as a group.
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
----------------- Number --------------
Number of % of Shares of Shares Number of % of Shares
Name and Address Shares Outstanding to be Sold Shares Outstanding
---------------- ------ ----------- ---------- ------ -----------
Yehuda Shimshon(1)............................ 8,250,000(2) 53.8% -- 7,950,000 51.8%
Cedarwood Trading & Investment
Ltd.(1)..................................... 4,000,000 26.1 300,000 3,700,000 24.1%
Doron Leave(1)................................ -- -- -- -- *
Ilan Mintz(1)................................. -- -- -- -- *
Israel Shimshon(1)............................ -- -- -- -- *
David Tamir(1)................................ 29,162 * 29,162 -- *
Gary P. Tober(1).............................. -- -- -- -- *
Frank P. Brosens.............................. 365,000 2.4 365,000 -- *
Nathan Low.................................... 413,334 2.7 413,334 -- *
RBC Inc....................................... 66,668 * 66,668 -- *
Tinicum Investors............................. 365,000 2.4 365,000 -- *
Andrew Hart................................... 11,000 * 11,000 -- *
Pelican Securities & Investments Ltd.......... 100,000(3) * 100,000(3) -- *
Softbreeze Ltd................................ 250,000(3) 1.6 250,000(3) -- *
Montaraz Limited.............................. 250,000(3) 1.6 250,000(3) -- *
Wideglobe Ltd................................. 50,000(3) * 50,000(3) -- *
All Executive Officers and Directors as a
group (4 persons)............................. 8,250,000 53.8% -- 7,950,000 51.8%
______________
* Less than 1%
(1) The address for Mr. Yehuda Shimshon is 150 East 58th Street, New York, New
York 10155. The address for Cedarwood Trading & Investment Ltd.
("Cedarwood") is c/o Bank of Bermuda, 6 Front Street, Hamilton HM 11,
Bermuda. The address for Messrs. Doron Leave, Ilan Mintz, Israel Shimshon
and David Tamir is 5 Haofan Street, Kiryat-Arie, P.O. Box 3599, Petah
Tikva, Israel 49130. The address for Mr. Tober is 1420 Fifth Avenue, Suite
4100, Seattle, Washington 98701-2338.
(2) Includes 4,000,000 shares held by Cedarwood, in which entity Mr. Yehuda
Shimshon has a controlling beneficial interest. Accordingly, he is deemed
to be the beneficial owner of such shares.
(3) Shares issuable upon exercise of currently exercisable Warrants.
35
SHARES ELIGIBLE FOR FUTURE SALE
At June 6, 1997, the Company had 15,334,000 shares of Common Stock
outstanding. Of these shares, approximately 10,000,000 shares of Common Stock
which are not the subject of this Prospectus, are "restricted securities" within
the meaning of Rule 144 under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares for at
least one year, is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of (i) 1% of the number of then
outstanding shares or (ii) the average weekly trading volume of such shares
during the four calendar weeks preceding each such sale. Sales under Rule 144
are also subject to certain manner-of-sale provisions, filing requirements and
the public availability of certain information about the Company.
No precise predictions can be made of the effect, if any, that market sales
of restricted shares or their eligibility for sale under Rule 144 will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the restricted shares on the public market could
adversely affect such market price and could impair the Company's future ability
to raise capital through the sale of equity securities.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, of which 15,334,000 shares of Common Stock are currently
outstanding as of June 6, 1997. All issued and outstanding shares of Common
Stock of the Company are, and the Shares offered hereby when issued and paid for
will be, validly issued, fully paid and nonassessable. The Shares do not have
preemptive rights and are not convertible or redeemable.
The Company is incorporated in Delaware and its certificate of
incorporation authorizes the issuance of 30,000,000 shares of Common Stock, par
value $.01 per share, with no provision for preferred shares.
Common Stock
The holders of shares of Common Stock have one vote per share. None of the
shares have or will have preemptive or cumulative voting rights, be redeemable,
or be liable for assessments or further calls. None of the shares will have any
conversion rights.
The holders of shares of any class of common stock are entitled to
dividends when and as declared by the Board of Directors from funds legally
available therefor and, upon liquidation, to
36
share pro rata in any distribution to stockholders. The Company does not
anticipate declaring or paying any cash dividends for the foreseeable future.
See "Dividend Policy."
The shares of Common Stock beneficially owned by Mr. Shimshon and Cedarwood
aggregate approximately 53.8% of the shares of Common Stock currently
outstanding and will amount to 51.8% of the shares of Common Stock to be
outstanding upon completion of the Offering hereby. They will be able to
exercise substantial influence over the election of directors and other issues
which are submitted to the stockholders of the Company. See "Risk
Factors--Control."
Transfer Agent and Registrar
TranSecurities Corporation of Spokane, Washington acts as transfer agent
and registrar for the Common Stock.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time as market
conditions permit in the over-the-counter market, or otherwise, at prices and
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The Shares offered hereby may be sold without
limitation by one or more of the following methods: (i) a block trade in which a
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (ii) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; (iv) face-to-face transactions between sellers and purchasers
without a broker-dealer or otherwise. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
Selling Stockholders in amounts to be negotiated immediately prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act, in
connection with such sales.
The Selling Stockholders have advised the Company that they will comply
with Rule 10b-6 promulgated under the Exchange Act in connection with all sales
of Shares issuable upon exercise of the Warrants or otherwise offered
hereby.
The Company will pay the expenses of this Offering which expenses are
estimated to be approximately $75,000.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon by Carter, Ledyard & Milburn, New York, New York.
37
EXPERTS
The financial statements of Casdim International Systems, Inc. at December
31, 1995 and 1996 and for the two years in the period ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited by
Hocker, Lovelett, Hargens & Yennie, P.C., independent accountants, as set forth
in their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company files certain reports and other information with the
Commission. Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 or at the Regional Offices of the
Commission: Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web site at
http://www.sec.gov. which contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form SB-2 under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Shares offered hereby. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement and to the financial statements
and exhibits filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or other documents are not necessarily complete,
and in each instance reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
38
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants............................................... F-2
Consolidated Balance Sheets at December 31, 1996 and 1995....................... F-3
Consolidated Statements of Income for the years ended December 31, 1996 and 1995 F-5
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1996 and 1995................................................................... F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1996 and
1995............................................................................ F-7
Notes to Consolidated Financial Statements...................................... F-9
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31, 1997 and December 31, 1996............. F-17
Consolidated Statements of Income for the three months ended
March 31, 1997 and 1996................................................... F-18
Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996................................................... F-19
Notes to Interim Consolidated Financial Statements.............................. F-20
F-1
=========================================
HOCKER, LOVELETT, HARGENS, & YENNIE, P.C.
=========================================
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
CASDIM INTERNATIONAL SYSTEMS, INC.
We have audited the accompanying consolidated balance sheets of CASDIM
INTERNATIONAL SYSTEMS, INC. (a Colorado corporation) and its subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for the years then ended. These consolidated
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatements. 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 the 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 financial position of CASDIM INTERNATIONAL
SYSTEMS, INC. and its subsidiaries as of December 31, 1996 and 1995 and the
results of their operations, stockholders' equity and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ Hocker, Lovelett, Hargens & Yennie, P.C.
March 21, 1997
Riverton, Wyoming
F-2
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
ASSETS ---- ----
CURRENT ASSETS
Cash and cash equivalents $ 915,527 $ 26
Accounts receivable
Trade 438,807 155,783
Other - Note 2 1,236,667 1,202,505
Investments 173,596 --
------- ------
Total 2,764,597 1,358,314
PROPERTY AND EQUIPMENT - NOTE 3
Property and equipment 225,361 111,727
Less accumulated depreciation (36,435) (20,919)
Net 188,926 90,808
OTHER ASSETS
Patent, net - Note 4 400,000 467,659
Start-up and organization
costs, - net - Note 4 48,304 --
Deposits 10,200 --
Product development costs - Note 6 943,164 --
------- -------
1,401,668 467,659
TOTAL $4,355,191 $1,916,781
========== ==========
See accompanying notes to consolidated financial statements
F-3
CASDIM INTERNATIONAL SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY ---- ----
CURRENT LIABILITIES
Accounts payable
Trade $ 52,675 $ 38,763
Other - Note 5 469,355 465,417
Current maturities of debt - Note 10 1,344,416 674,702
-- --------- -------
Total 1,866,446 1,178,882
LONG-TERM DEBT
Accrued severance pay, net - Note 7 25,474 12,986
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY -- 72,372
------ ------
TOTAL 1,891,920 1,264,240
STOCKHOLDER'S EQUITY
Common stock, $.00001 par value,
500,000,000 shares authorized
13,634,000 shares issued and
outstanding, 285,000 shares
held in treasury stock 985 945
Additional paid in capital 3,145,268 194,480
Less treasury stock (cost) (1,425) (1,425)
Retained earnings (deficit) (681,557) 458,541
-------- -------
Total 2,463,271 652,541
--------- -------
TOTAL $4,355,191 $1,916,781
========== ==========
See accompanying notes to consolidated financial statements
F-4
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
SALES $ 508,713 $2,011,110
COST OF SALES 379,806 468,353
------- -------
GROSS PROFIT 128,907 1,542,757
SALES, ADMINISTRATIVE AND GENERAL EXPENSES 1,244,144 237,016
--------- -------
INCOME (LOSS) FROM OPERATIONS (1,115,237) 1,305,741
OTHER INCOME (EXPENSES)
Interest income 21,309 --
Dividend income 35,673 --
Interest expense (109,519) (75,272)
Investment activity loss -- 93,142
Gain (loss) foreign translation (51,860) (6,203)
------- ------
Total (104,397) (174,617)
-------- --------
INCOME (LOSS) FROM OPERATIONS BEFORE TAXES (1,219,634) 1,131,124
INCOME TAX (EXPENSE) BENEFIT -- (440,309)
------ --------
NET INCOME (LOSS) $(1,219,634) $ 690,815
=========== ==========
NET EARNINGS (LOSS) PER SHARE ON A FULLY
DILUTED BASIS $ (.09) $ .36
=========== ==========
NET EARNINGS (LOSS) PER SHARE $ (.09) $ .36
=========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 13,349,000 1,899,000
========== =========
See accompanying notes to consolidated financial statements
F-5
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
ADDITIONAL
COMMON PAID IN TREASURY RETAINED
SHARES STOCK STOCK STOCK EARNINGS TOTAL
------ ----- ----- ----- -------- -----
Balance - 12/31/94
as previously reported 1,134,000 $745 $ 94,680 $(1,425) $(152,738) $ (58,738)
Sale of stock 200 99,800 -- -- 100,000
50 : 1 reverse stock
split 8,500,000
Net income 690,815 690,815
Less minority interest (79,596) (79,536)
--------- --- ------- ------ ------- -------
Balance - 12/31/95 9,634,000 945 194,480 (1,425) 458,541 652,541
Contribution of
consolidated
minority interest 79,536 79,536
Sale of stock 4,000,000 40 2,686,725 2,686,765
Warrants exercised 100,000 100,000
Stock options issued 164,063 164,063
Net income (loss) (1,219,634) (1,219,634)
---------- ---- ---------- ------- --------- ----------
Balance - 12/31/96 13,634,000 $985 $3,145,268 $(1,425) $(681,557) $ 2,463,271
========== ==== ========== ======= ========= ===========
See accompanying notes to consolidated financial statements
F-6
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,219,634) $ 690,815
Adjustments to reconcile net income
to net cash provided by operating
activities:
depreciation and amortization 86,383 48,802
Changes in operating assets and
liabilities:
(Increase) Decrease In:
Accounts receivable - trade (283,024) 929,570
Accounts receivable - other (26,998) (899,680)
(Decrease) Increase In:
Accounts payable - trade 13,912 1,524
Accounts payable - other 3,938 414,498
Deposits -- (1,234,516)
--------- ----------
Net cash (used) by
operating activities (1,425,423) (48,987)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (113,634) (51,685)
Purchase of patent -- (500,000)
Purchase of investments (173,596) --
Payment for start-up costs (51,512) --
Payment for product development (943,164) --
Payment of security deposit (10,200) --
------- -------
Net cash used in investing
activities (1,292,106) (551,685)
See accompanying notes to consolidated financial statements
F-7
CASDIM INTERNATIONAL SYSTEMS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
CASH FLOWS FROM FINANCING ACTIVITIES 1996 1995
---- ----
Proceeds from notes payable 669,714 487,790
Severance pay 12,488 3,420
Proceeds from issuance of stock 2,950,828 100,000
--------- -------
Net cash provided by
financing activities 3,633,030 591,210
--------- -------
INCREASE (DECREASE) IN CASH 915,501 (9,462)
CASH
Beginning of year 26 9,488
---- -----
End of year $ 915,527 $ 26
========== =======
Interest paid $109,519
========
Income Taxes Paid --
========
See accompanying notes to consolidated financial statements
F-8
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General
The Company designs and develops interactive kiosks and performs network
integration.
2. Summary of Significant Accounting Policies:
This summary of significant accounting policies of CASDIM INTERNATIONAL
SYSTEMS, INC., (the Company) and its subsidiaries, CASDIM INTERACTIVE
SYSTEMS USA, INC. and CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL), is
presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity.
a. Principles of consolidation - In 1995, CASDIM INTERNATIONAL SYSTEMS,
INC. issued 8,500,000 shares of stock after a 50:1 reverse stock split
to acquire 100% of CASDIM INTERACTIVE SYSTEMS USA, INC., which owns
100% of CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL) ("CISL"). The
business combination has been accounted for using the pooling method
of accounting. The consolidated financial statements include the
accounts of the Company and its subsidiaries.
b. Foreign operations - CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL)
maintains its accounts in nominal New Israeli Shekels ("NIS"). Certain
of the dollar amounts in the financial statements may represent the
dollar equivalent of other currencies, including the New Israeli
Shekel ("NIS"), which may not be exchangeable for dollars.
Transactions and balances denominated in dollars are presented at
their dollar amounts. Non-dollar transactions and balances are
remeasured into dollars in accordance with the principles set forth in
the Statement of Financial Accounting Standards ("FAS") No. 52,
"Foreign Currency Translation," of the Financial Accounting Standards
Board of the United States.
F-9
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accordingly, items have been remeasured as follows:
Monetary items-at the current exchange rate at each balance sheet
date;
Nonmonetary items-at historical exchange rates;
Income and expense items-at exchange rates current as of the date of
recognition of those items (excluding depreciation and other items
deriving from nonmonetary items);
Exchange gains and losses from aforementioned remeasurement (which are
immaterial for each year) are reflected in the statements of income.
Linkage Basis - Balances which are linked to the Israeli Consumer
Price Index (the "CPI") are presented on the basis of the index at the
balance sheet date, which index is published subsequently. Balances
denominated in, or linked to, currencies other than the dollar are
presented according to the exchange rates prevailing at the balance
sheet date.
The Israeli CPI increase by 10.6% for the year ending December 31,
1996 and 8.15% in the year ending December 31, 1995.
The effects of the inflationary erosion of monetary items and interest
is included in financial income or expenses, as appropriate.
c. Fixed Assets - Fixed assets are stated at cost. Depreciation has been
calculated by the straight-line method over the estimated useful lives
of the assets.
Years
-----
Leasehold improvements 10
Motor vehicles 7
Office furniture and equipment 5-20
(mainly computers and peripheral
equipment)
Leasehold improvements are depreciated using the straightline method
over the period of each lease, not to exceed the estimated useful life
of the improvements.
F-10
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d. Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers cash and cash equivalents to consist of
all cash, either on hand or in banks including time deposits, and any
highly liquid debt instruments purchased with a maturity of three
months or less.
e. Bad Debts - Uncollectible accounts receivables are charged directly
against earnings when they are determined to be uncollectible. Use of
this method does not result in a material difference from the
valuation method required by generally accepted accounting principles.
f. Comparative Statements - The comparative statements for 1995 have been
restated as if the individual companies had been combined during the
entire periods.
g. 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.
h. Recognition of Income - Income deriving from long term contracts are
recognized upon percentage completion basis. At December 31, 1996 the
Company completed 83% of its $2,074,029 (NIS 6,502,080) contract with
Kupat Holim Leumit. Estimated costs and earnings in excess of billings
at December 31, 1996 amounted to $259,533 (NIS 843,743).
i. Deferred income taxes - Deferred income taxes are provided for
temporary differences between the assets and liabilities, as measured
in the financial statements, and for tax purposes at the tax rate
expected to be in force when these differences reverse, in accordance
with Statement No. 109 of the Financial Accounting Standards Board
("FASB") (Accounting for Income Taxes). Deferred income taxes are not
material to the financial statements.
j. Net Income per Share - Net income per share is computed on the
weighted shares adjusted for the issuance of shares and consolidation.
F-11
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. Other Receivables and Prepaid Expenses
1996 1995
---- ----
Prepaid expenses $ 148,323 $ 52,103
Related parties 1,088,344 1,150,402
--------- ---------
$1,236,667 $1,202,505
========== ==========
4. Fixed Assets
Cost 1996 1995
---- ----
Leasehold improvement $ 10,168 $ 2,428
Furniture & equipment 182,719 89,325
Motor vehicles 32,474 19,974
------ ------
225,361 111,727
Accumulated depreciation 36,435 20,919
------ ------
Total $188,926 $ 90,808
========== ========
5. Patent
In January 1995, the Company acquired a pending patent No. 108935 from
CASDIM SOFTWARE SYSTEMS, LTD. for the sum of $500,000. The patent is being
depreciated using the straight-line method over the period of ten years.
6. Product Development Costs
Based on the Company's product development process, technological
feasibility is established upon completion of a working model. Costs
incurred by the Company between completion of the working model and the
point at which the product is ready for general release have been
capitalized. Total costs incurred to December 31, 1996 were $943,164.
Capitalized software costs are amortized by the greater of: (I) ratio of
current gross revenues from sales of the software to the total of current
and anticipated future gross revenues from sales of that software or (ii)
the straight-line method over the remaining estimated useful life of the
product (not greater than three years). The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the asset over its remaining life can be recovered through
undiscounted future operating cash flows from the specific product.
F-12
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Accrued Severance Pay
The liability of the Company for severance pay for the employees of its
Israeli subsidiary is calculated on the basis of the latest salary paid to
its employees and the length of time they have worked for the Company.
Pursuant to Israeli law, the liability is covered by a provision in the
Company's balance sheet and amounts deposited with the severance pay funds
and insurance policies. The insurance policies are owned by CISL and have
been entered into by CISL on behalf of its individual employees. The
amounts accumulated with the insurance company are not under CISL's control
or management and are therefore not reflected in the Company's balance
sheet.
8. Capital Stock
On May 3, 1996, the Company completed a private placement of its securities
in which 4,000,000 shares of common stock were issued for $3,000,000,
before expenses of $313,210.
9. Other Payable and Accrued Liabilities
1996 1995
---- ----
Provision for taxes, net $ -- $364,520
Payroll and related amounts 49,751 17,191
Accrued expenses 12,662 8,953
Government authorities 406,942 74,753
------- ------
$469,355 $465,417
======== ========
10. Current Maturities of Debt
1996 1995
---- ----
Note payable bank, due March 31, 1997,
plus accrued interest at 17.5%
collateralized by fixed assets,
securities, notes and negotiable documents $1,344,416 $180,806
Bank overdraft, due December 31, 1996,
plus accrued interest at 20.5% -- 493,896
--------- -------
TOTAL $1,344,416 $674,702
========== ========
F-13
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Stock Warrants and Stock Options
Stock Compensation Plan
Under the Company's 1996 Stock Option Plan (the "Plan"), the Company may
grant options for up to 500,000 shares of its common stock to its
employees, directors and consultants. No options have been granted to date.
Under the Plan, the exercise price of incentive stock options ("ISOs")may
not be less than 100% (or 110%, if at the time of grant the optionee owns
more than 10% of the voting stock of the Company) of the fair market value
of the shares of common stock at the date of grant. The purchase price of
each share subject to an option, or any portion thereof, which is not
designated as an IS, may not be less than 75% of the fair market of such
shares on the date of grant. The term of each option under the Plan may be
for a period of up to ten years (five years if the recipient is a 10% or
more shareholder).
Under a public relations retainer agreement (the "Agreement") with Sunrise
Financial Group Inc. ("Sunrise"), the Company agreed to issue Sunrise
options to purchase up to 700,000 shares of its common stock as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares
of common stock vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. Options to purchase 540,000
shares of common stock had vested as of December 31, 1996. Under the
Agreement, the purchase price of each share subject to an option is $1.00.
The term of these options will expire on April 2001. The Company has
accounted for the fair value of the grant of options to Sunrise in
accordance with FASB Statement 123. The compensation cost that has been
charged against income for the options granted to Sunrise was $164,063.
Under a consulting agreement with WEDA Corporation, N.V. ("WEDA"), the
Company agreed to issue WEDA options to purchase up to 100,000 shares of
common stock at $2.25 per share as partial consideration for its consulting
services. Such options vest monthly over a two-year period and will expire
in June 2001.
Warrants
The Company issued warrants exercisable into 1,150,000 shares of common
stock in connection with its May 1996 private placement. The warrants,
which are exercisable at $1.00 per share, have been included in the
computation of fully diluted earnings per share.
F-14
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Taxes on Income
CISL is subject to the income tax law (inflationary adjustments) pursuant
to which its results of operations for tax purposes are measured in real
terms in accordance with the Israeli CPI. Under the Income Tax Law
(Adjustments for Inflation) 1985, income for tax purposes is measured in
terms of earnings in NIS and adjusted for changes in the CPI. The
theoretical tax expense, assuming all income was taxed at the regular rate
applicable to an Israeli corporation and the actual tax expense is
virtually identical. Any differences are immaterial to the financial
statements taken as a whole.
CASDIM INTERNATIONAL SYSTEMS, INC. has a net operating loss carryforward in
the amount of $616,312 which will begin to expire in the year 2002.
13. Related Party Transactions
In October, 1995, the Company transferred $1,000,000 (NIS 3,000,000) to
CASDIM SOFTWARE SYSTEMS, LTD., of which US $700,000 served as advance
payment on account of the purchase and adaptation of related software
products for the "MEDICAL MULTIMEDIA KIOSK" which is expected to be sold by
December 31, 1998 to Kupat Holim Klalit, the largest H.M.O. in Israel and
US $300,000 was a short-term loan. The principal amount of the loan is
linked to the Israeli CPI. The Company also acquired a patent from the
related party. See details at Note 5.
14. Commitments and Contingent Liabilities
Lease commitment: The Company's Israeli subsidiary leases its premises
under a rental agreement which expires on December 31, 1997. The annual
rental under the lease is Adjusted NIS 225,720 (US $72,000). The rent is
linked to the US dollar.
15. Subsequent Events
In March 1997, the public relations retainer agreement with Sunrise was
terminated (see note 11). Sunrise will retain the option to purchase up to
300,000 shares of the Company's common stock. The Company has entered into
negotiations with Pelican Investments Ltd. for a similar public relations
agreement, agreeing to issue Pelican Investments Ltd. options to purchase
up to 400,000 shares of the Company's common stock.
F-15
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In March 1997, CISL was informed by Kupat Holim Leumit, of its continued
postponement of payment of a trade account receivable owed to the Company
in the amount of approximately $300,000. The Company is currently
researching all possible remedies to correct the situation.
In March 1997, CISL entered into an agreement with Bank Hapoalim to convert
approximately $1,000,000 of short-term debt into long-term debt.
F-16
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1997 1996
(Unaudited) (Audited)
----------- ---------
ASSETS
CURRENT ASSETS
Cash .................................................... $ 932,020 $ 915,527
Accounts receivable
Trade - Note 8.................................... 426,062 438,807
Other............................................. 1,087,238 1,236,667
Investments.............................................. - 173,596
--------- ----------
$2,445,320 $2,764,597
PROPERTY AND EQUIPMENT
Property and equipment................................... 259,820 225,361
Less accumulated depreciation............................ (56,943) (36,435)
----------- ----------
202,877 118,926
OTHER ASSETS
Deposits................................................. 55,893 10,200
Start-up and organization costs.......................... 46,700 48,304
Patent, net - Note 3..................................... 387,500 400,000
Product development costs - Note 4....................... 1,206,056 943,164
---------- ----------
Total............................................. $4,344,346 $4,355,191
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Trade............................................. $ 329,709 $ 52,675
Other............................................. 232,975 469,355
Current maturities of debt............................... 241,987 1,344,416
---------- ----------
804,671 1,866,446
LONG-TERM DEBT
Accrued severance pay - Note 5........................... 25,357 25,474
Long term bank debt - Note 9............................. 1,000,000 -
STOCKHOLDERS' EQUITY - Notes
Common stock, $.01 par value, 500,000,000
shares authorized 14, 134,001 shares issued
and outstanding, 285,000 shares held as
treasury stock...................................... 985 985
Additional paid in capital............................... 3,545,268 3,145,268
Less treasury stock (cost)............................... (1,425) (1,425)
Retained earnings (deficit).............................. (1,030,510) (681,557)
----------- ---------
Total shareholders' equity....................... 2,514,318 2,463,271
----------- -----------
Total liabilities and shareholders' equity.. $ 4,344,346 $ 4,355,191
=========== ===========
See accompanying notes to the consolidated financial statements.
F-17
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---- ----
Sales........................................................ $ 6,985 $ 253,007
Cost of sales................................................ - 31,785
--------- --------
Gross profit................................................. 6,985 221,222
Selling, general and administrative expenses................. 485,492 113,989
--------- ---------
Income (loss) from operations................................ (478,507) 107,233
Other income (expense)
Interest income.......................................... 5,828 -
Interest expense......................................... (21,676) (18,710)
Gain (loss) from foreign currency translation........... - (18,134)
Gain from sale of investments............................ 145,402 -
--------- -------
Total............................................. 129,554 (36,844)
Income (loss) from operations before taxes................... (348,943) 70,389
Income tax (expense)......................................... - (33,185)
---------- --------
Net income (loss)............................................ $(348,943) $ 37,204
========== =========
Earnings (loss) per share on common and
common stock equivalents................................. $(.0247) $.01
======= ====
Earnings (loss) per share on a fully diluted basis........... $(.0247) $.01
======= ====
Total average number of shares outstanding................... 14,134,001 9,634,000
========== =========
See accompanying notes to consolidated financial statements.
F-18
CASDIM INTERNATIONAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED, MARCH 31, 1997 AND 1996
1997 1996
---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $(348,953) $ 37,204
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 34,612 28,947
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable - trade....................... 12,745 (208,148)
Accounts receivable - other....................... 149,429 220,744
(Decrease) increase in:
Accounts payable - trade.......................... 277,034 18,900
Accounts payable - other.......................... (236,380) (14,668)
--------- ---------
Net cash provided (used) by
operating activities....................... (111,513) 82,979
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for product development costs.................... (262,892) -
Purchase of property and equipment....................... (34,459) (2,301)
Sale of investments...................................... 173,596 -
Payment of security deposit.............................. (45,693) -
--------- ---------
Net cash used in investing activities...... (169,448) (2,301)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on short term debt............................... (102,429) (78,536)
Severance pay............................................ (117) 2,875
Proceeds from stock warrants exercised................... 400,000 -
-------- --------
Net cash provided (used) by
financing activities....................... 297,454 (75,661)
-------- ---------
INCREASE IN CASH............................................ 16,493 5,017
CASH:
Beginning of period...................................... 915,527 26
-------- ---------
End of period............................................ $932,020 $ 5,043
======== =========
Interest paid......................... $21,676
=======
Income taxes paid..................... $ -
====
See accompanying notes to consolidated financial statements.
F-19
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial information is unaudited, but, in the opinion of
management, reflects all adjustments (which include only normally recurring
adjustments) necessary to present fairly the Company's financial position,
operating results and cash flows for the periods presented. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial
information should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 1996 included
in the Company's Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The results of operations for the three-month period
ended March 31, 1997 are not necessarily indicative of the results to be
expected for the full year.
2. Summary of Significant Accounting Policies:
This summary of significant accounting policies of CASDIM INTERNATIONAL
SYSTEMS, INC., (the "Company") and its subsidiaries, CASDIM INTERACTIVE
SYSTEMS USA, INC. and CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL), is
presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity.
a. Principles of consolidation - In 1995, CASDIM INTERNATIONAL SYSTEMS,
INC. issued 8,500,000 shares of stock after a 50:1 reverse stock split
to acquire 100% of the voting and equity shares of CASDIM INTERACTIVE
SYSTEMS USA, INC., which owns 100% of the voting and equity shares of
CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL). The business combination
has been accounted for using the pooling method of accounting. The
consolidated financial statements include the accounts of the Company
and its subsidiaries.
b. Foreign operations - CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL)
maintains its accounts in nominal New Israeli Shekels ("NIS"). Certain
of the dollar amounts in the financial statements may represent the
dollar equivalent of other currencies, including the New Israeli
Shekel ("NIS"), which may not be exchangeable for dollars.
Transactions and balances denominated in dollars are presented at
their dollar amounts. Non-dollar transactions and balances are
remeasured into dollars in accordance with the principles set forth in
the Statement of Financial Accounting
F-20
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Standards ("FAS") No. 52, "Foreign Currency Translation," of the
Financial Accounting Standards Board of the United States.
Accordingly, certain items relating to the Company's Israel subsidiary
have been remeasured as follows:
Monetary items-at the current exchange rate at each balance sheet
date;
Nonmonetary items-at historical exchange rates;
Income and expense items-at exchange rates current as of the date
of recognition of those items (excluding depreciation and other
items deriving from nonmonetary items);
Exchange gains and losses from aforementioned remeasurement
(which are immaterial for each year) are reflected in the
statements of income.
Linkage Basis - Balances which are linked to the Israeli Consumer
Price Index (the "CPI") are presented on the basis of the index
at the balance sheet date, which index is published subsequently.
Balances denominated in, or linked to, currencies other than the
dollar are presented according to the exchange rates prevailing
at the balance sheet date.
The effects of the inflationary erosion of monetary items and
interest is included in financial income or expenses, as
appropriate.
c. Fixed Assets - Fixed assets are stated at cost. Depreciation has been
calculated by the straight-line method over the estimated useful lives
of the assets.
Years
-----
Leasehold improvements 10
Motor vehicles 7
Office furniture and
equipment (mainly computers
and peripheral equipment) 5-20
Leasehold improvements are depreciated using the straight-line method
over the period of each lease, not to exceed the estimated useful life
of the improvements.
d. Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers cash and cash equivalents to consist of
all cash, either on hand
F-21
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
or in banks including time deposits, and any highly liquid debt
instruments purchased with a maturity of three months or less.
e. Bad Debts - Uncollectible accounts receivables are charged directly
against earnings when they are determined to be uncollectible. Use of
this method does not result in a material difference from the
valuation method required by generally accepted accounting principles.
f. 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.
3. Patent
In January 1995, the Company acquired a pending patent No. 108935 from
CASDIM SOFTWARE SYSTEMS, LTD. for the sum of $500,000. The patent is being
depreciated using the straight-line method over the period of ten years.
4. Product Development Costs
Based on the Company's product development process, technological
feasibility is established upon completion of a working model. Costs
incurred by the Company between completion of the working model and the
point at which model the product is ready for general release have been
capitalized. Total costs incurred to March 31, 1997 were $1,206,056.
Capitalized software costs are amortized by the greater of: (i) ratio of
current gross revenues from sales of the software to the total of current
anticipated future gross revenue from sales of that software or (ii) the
straight-line method over the remaining estimated useful life of the
product (not greater than three years). The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the asset over its remaining life can be recovered through
undiscounted future operating cash flows from the specific product.
5. Accrued Severance Pay
The liability of the Company for severance pay for the employees of its
Israeli subsidiary is calculated on the basis of the latest salary paid
to its employees and the length of time they have worked for the
Company. Pursuant to Israeli law, the liability is covered by a
provision in the Company's balance sheet and amounts deposited with the
severance pay funds and
F-22
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
insurance policies. The insurance policies are owned by CISL and have been
entered into by CISL on behalf of its individual employees. The amounts
accumulated with the insurance company are not under CISL's control or
management and are therefore not reflected in the Company's balance sheet.
6. Capital Stock
On May 3, 1996 the Company completed a private placement of its securities
in which 4,000,000 shares of common stock were issued for $3,000,000,
before expenses of $313,210.
7. Stock Warrants and Stock Options
Stock Compensation Plans
Under the Company's 1996 Stock Option Plan (the "Plan"), the Company may
grant options for up to 500,000 shares of its common stock to its
employees, directors and consultants. No options have been granted to date.
Under the Plan, the exercise price of incentive stock options ("ISOs") may
not be less than 100% (or 110%, if at the time of grant the optionee owns
more than 10% of the voting stock of the Company) of the fair market value
of the shares of common stock at the date of grant. The purchase price of
each share subject to an option, or any portion thereof, which is not
designated as an ISO, may not be less than 75% of the fair market of such
shares on the date of grant. The term of each option under the Plan may be
for a period of up to ten years (five years if the recipient is a 10% or
more shareholder).
Under a public relations retainer agreement (the "Agreement") with Sunrise
Financial Group Inc. ("Sunrise"), the Company agreed to issue Sunrise
options to purchase up to 700,000 shares of its common stock as
consideration for its public relations services. Of such options, 460,000
options vested as of April 24, 1996 and options to purchase 10,000 shares
of common stock were to vest monthly for a 24-month period, subject to the
continued provision of services by Sunrise. Options to purchase 540,000
shares of common stock had vested as of December 31, 1996. Under the
Agreement , the purchase price of each share subject to an option is $1.00.
The term of these options will expire on April 2001.
In March 1997, the "Agreement" with Sunrise was terminated. The parties
agreed that Sunrise would retain options to purchase up to 300,000 shares
of the Company's common stock.
In April 1997, the Company entered into an agreement with Pelican
Consultants, Inc. ("Pelican") to provide financial consulting and financial
relations services to the Company. The Company agreed to issue Pelican
options to purchase up to 200,000 shares of the Company's common stock at a
purchase price of $1.00 per share. Of such options, 100,000
F-23
CASDIM INTERNATIONAL SYSTEMS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
options vested as of April 11, 1997 and options to purchase the remaining
shares will vest ratably over the next 12 month period subject to the
continued provision of services by Pelican.
The Company has accounted for the fair value of the grant of options to
Sunrise and Pelican in accordance with FASB Statement 123. The compensation
costs that has been charged against income for the options granted to
Sunrise and to Pelican was $164,063.
Warrants
The Company issued warrants exercisable into 1,150,000 shares of common
stock in connection with its May 1996 private placement. The warrants,
which are exercisable at $1.00 per share, have been included in the
computation of fully diluted earnings per share. As of March 31, 1997,
500,000 warrants have been exercised. There remain 650,000 warrants
available to be exercised.
8. Accounts Receivable
In March 1997, CISL was informed by Kupat Holim Leumit, of its continued
postponement of payment of a trade account receivable owed to the
Company in the amount of approximately $300,000. The Company has also
been informed by Kupat Holim Leumit that a change in senior management
is currently being contemplated.
9. Long Term Debt
On March 3, 1997, CISL converted $1,000,000 of short term debt into long
term debt. The terms of the refinancing call for payments of interest only,
with a balloon payment due in February, 2002.
F-24
============================================= =================================
No dealer, salesperson or other person
has been authorized to give any information
or to make any representation not contained
in this Prospectus in connection with the 2,171,002 Shares
offer made hereby. If given or made, such
information or representation must not be
relied upon as having been authorized by the Common Stock
Company or the Underwriters. This Prospectus
does not constitute an offer to sell or
solicitation of an offer to purchase by any
person in any jurisdiction in which such an
offer would be unlawful. Neither the delivery
of this Prospectus nor any sale made
hereunder shall under any circumstances
create any implication that the information
contained herein is correct as of any time
subsequent to the date hereof.
-------------------------------
TABLE OF CONTENTS
Page CASDIM INTERNATIONAL
Prospectus Summary.........................3 SYSTEMS, INC.
Risk Factors...............................6
Use of Proceeds...........................13
Price Range of Ordinary Shares............13
Dividend Policy...........................14 _______________
Capitalization............................14
Selected Financial Data...................15 PROSPECTUS
Management's Discussion and Analysis
of Financial Condition and Results _______________
of Operations...........................16
Business..................................20
Management................................30
Certain Transactions......................33
Principal Shareholders....................35
Shares Eligible for Future Sale...........36
Description of Capital Stock..............36
Plan of Distribution......................37
Legal Matters.............................37 June___, 1997
Experts...................................38
Available Information.....................38
Financial Statements.....................F-1
============================================= =================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit
Number
- ------
*2 Agreement for the Exchange of Stock and Reorganization.
3.1 Articles of Incorporation (Delaware).
3.2 By-laws.
***4.1 Form of Warrant Agreement.
***4.2 Stock Option Agreement with Sunrise Financial Group Inc.
4.3 Stock Option Agreement between the Company and Pelican Consultants
U.S.A., Inc.
4.4 Warrant Agreement dated May 22, 1997 between the Company and Lydford
Ltd.
4.5 Form of Registration Rights Agreement between the Company and Brayford
Ltd., Lydford Ltd. and Stolin Ltd.
5.1 Opinion of Carter, Ledyard & Milburn regarding legality of the
securities being registered.
*10.1 Software Adaptation Services Agreement dated January 10, 1995 between
the Company and CSS Ltd.
10.2 Debt Agreement dated March 3, 1997 between Casdim International
Systems, Ltd. and Bank Hapoalim
*10.3 Patent Assignment Agreement dated January 10, 1995 between the Company
and CSS Ltd.
***10.4 Private Placement Purchase Agreement.
***10.5 Consulting Agreement dated April 24,1996 with Pelican Securities &
Investments Ltd., Softbreeze Ltd., Montaraz Limited, Onvoy Holdings
Ltd. and Wideglobe Ltd.
****21.1 Subsidiaries of the Company.
23.1 Consent of Hocker, Lovelett, Hargens & Yennie, P.C.
23.2 Consent of Carter, Ledyard & Milburn (included in Exhibit 5.1)
****24.1 Powers of Attorney (Contained in the Signature Pages)
- ------------------
* Incorporated by reference to the Company's Report on Form 10-KSB for the
year ended December 31, 1995.
** Incorporated by reference to the Company's Report on Form 10-K for the year
ended December 31, 1994.
*** Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended September 30, 1996.
**** Previously filed.
II-1
(b) Financial Statement Schedules
None.
II-2
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this post-effective
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in New York City, State of New York, on
the 17th day of June, 1997.
Casdim International Systems, Inc.
By: /s/Yehuda Shimshon
----------------------
Yehuda Shimshon,
Chairman of the Board, President
& CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on June 17, 1997
in the capacities indicated:
Name Title
- ---- -----
/s/Yehuda Shimshon
- ------------------
Yehuda Shimshon Chairman of the Board, President and
Chief Executive Officer (Chief
Financial and Accounting Officer)
* Director
- -------------------
Ilan Mintz
* Director
- -------------------
Doron Leave
* Director
- -------------------
Israel Shimshon
* Director
- -------------------
David Tamir
*By: /s/Yehuda Shimshon
- -----------------------
Yehuda Shimshon, Attorney-in-fact
II-3
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------ ----------- --------
*2 Agreement for the Exchange of Stock and Reorganization.
3.1 Articles of Incorporation (Delaware).
3.2 By-laws.
***4.1 Form of Warrant Agreement.
***4.2 Stock Option Agreement with Sunrise Financial Group Inc.
4.3 Stock Option Agreement between the Company and Pelican Consultants
U.S.A., Inc.
4.4 Warrant Agreement dated May 22, 1997 between the Company and Lydford
Ltd.
4.5 Form of Registration Rights Agreement between the Company and Brayford
Ltd., Lydford Ltd. and Stolin Ltd.
5.1 Opinion of Carter, Ledyard & Milburn regarding legality of the
securities being registered.
*10.1 Software Adaptation Services Agreement dated January 10, 1995 between
the Company and CSS Ltd.
10.2 Debt Agreement dated March 3, 1997 between Casdim International
Systems, Ltd. and Bank Hapoalim
*10.3 Patent Assignment Agreement dated January 10, 1995 between the Company
and CSS Ltd.
***10.4 Private Placement Purchase Agreement.
***10.5 Consulting Agreement dated April 24,1996 with Pelican Securities &
Investments Ltd., Softbreeze Ltd., Montaraz Limited, Onvoy Holdings
Ltd. and Wideglobe Ltd.
****21.1 Subsidiaries of the Company.
23.1 Consent of Hocker, Lovelett, Hargens & Yennie, P.C.
23.2 Consent of Carter, Ledyard & Milburn (included in Exhibit 5.1)
****24.1 Powers of Attorney (Contained in the Signature Pages)
- ------------------
* Incorporated by reference to the Company's Report on Form 10-KSB for the
year ended December 31, 1995.
** Incorporated by reference to the Company's Report on Form 10-K for the year
ended December 31, 1994.
*** Incorporated by reference to the Company's Report on Form 10-QSB for the
quarter ended September 30, 1996.
**** Previously filed.