As filed with the Securities and Exchange Commission on June 27, 2000
Registration No. 333-30474
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
Amendment No. 2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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GSI TECHNOLOGIES USA INC.
(Name of issuer in its charter)
Delaware 7319
(State or other jurisdiction (Primary Standard Industrial
of incorporation or organization) Classification Code)
65-0902449
(I.R.S. Employer
Identification Number)
2001 McGill College Avenue Irving Rothstein, Esq.
Suite 1310 Heller, Horowitz & Feit, P.C.
Montreal H3A 1G1 Quebec 292 Madison Avenue
(514) 940-5262 CANADA New York, New York 10017
(Address and telephone number (212) 685-7600
of registrant's principal executive (Name, address and telephone
offices and principal place of business) number of agent for service)
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Copies to:
Irving Rothstein, Esq.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, New York 10017
Telephone: (212) 685-7600
Approximate date of commencement of proposed sale to public: At the discretion
of the selling stockholders.
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]
CALCULATION OF REGISTRATION FEE
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per aggregate offering registration fee
security(2) price(2)
Common stock class B, par value 4,703,206 $1.00(3) $4,703,206 $1,425.22
$0.001
Common stock class B, par value 3,674,000(1) $1.10(4) $4,041,400 $1,224.67
$0.001
Total 8,377,206(1) $8,377,206 $2649.89
(1) Includes 3,674,000 shares of common stock issuable upon exercise of
currently exercisable warrants. Pursuant to Rule 416, this Registration
Statement also covers any additional shares of common stock which may
be issuable by virtue of the anti-dilution provisions in the warrants.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Based upon the price of a recent private offering.
(4) Exercise price.
The registrant hereby amends the 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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION DATED, June 27, 2000
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GSI TECHNOLOGIES USA INC.
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8,377,206 shares of common stock
This prospectus covers 8,377,206 shares of the common stock, par
value $.001 per share, of GSI Technologies USA Inc. This figure includes
3,674,000 shares of common stock that we may issue in the future if currently
outstanding warrants are exercised. The common stock offered here will be sold
solely by the selling stockholders.
The securities offered hereby involve a high degree of risk. Please read the
"Risk factors" beginning on page 2.
There is presently no public market for our securities. We intend
to apply for a listing on the OTC:BB.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Our principal executive offices are located at 2001 McGill College
Avenue, Suite 1310, Montreal Quebec H3A 1G1 CANADA. Our telephone number is
(514) 940-5262.
The date of the prospectus is ________, 2000.
Risk factors
You should carefully consider the following facts and other
information in this prospectus before deciding to invest in the shares.
Risks relating to our viability
Since we have only a limited operating history, it is difficult for you to
evaluate if we are a good investment
We were incorporated in July 1998. We introduced our first
products in January 2000. Accordingly, we have only a very limited operating
history, and we face all of the risks and uncertainties encountered by
early-stage companies. Thus, our prospects must be considered in light of the
risks, expenses and difficulties associated with a new and rapidly evolving
market for multimedia entertainment and Internet technology. In sum, because of
our limited history and the youth and inherent risks of our industry,
predictions of our future performance are very difficult.
Our independent auditor has expressed concern over our ability to remain in
business and if we go out of business your investment will be lost
In his report on our audited financial statements, our auditor has
stated that there is a substantial doubt as to whether we will be able to remain
in business for even the next twelve months. His concern is based upon our
growing losses and no specific plan to have the funds necessary to implement our
business plan. If his concerns are proven accurate, any investment in our
securities will likely be lost.
We have incurred substantial losses and anticipate even more losses in the
future which may cause us to become insolvent
From our inception in July 1998 through April 30, 2000, we
incurred an accumulated deficit of $673,670. We anticipate continuing to incur
significant losses until, at the earliest, we generate sufficient revenues to
offset the substantial up-front expenditures and operating costs associated with
developing and commercializing products utilizing our technology. There can be
no assurance that we will ever operate profitably.
We need substantial additional financing or we may have to curtail operations
Our capital requirements relating to the commercialization of our
technology have been, and will continue to be, significant. We are dependent on
the proceeds of future financing in order to continue in business and to develop
and commercialize additional proposed products. We anticipate requiring at least
$800,000 in additional financing. There can be no assurance that we will be able
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to raise the substantial additional capital resources necessary to permit us to
pursue our business plan. We have no current arrangements with respect to, or
sources of, additional financing and there can be no assurance that any such
financing will be available to us on commercially reasonable terms, or at all.
Any inability to obtain additional financing will have a material adverse effect
on us, such as requiring us to significantly curtail or cease operations.
Risks relating to technology
We have not completed testing all the components of our technology and if it
does not work we will have no business
Although considerable time and financial resources were expended
in the development of our licensed technology, there can be absolutely no
assurance that problems will not develop which would have a material adverse
effect on our business. Since we have conducted only limited tests of our
hardware and software, we are uncertain if it will perform all of the functions
for which it has been designed or prove to be sufficiently reliable in
widespread commercial use. While we have performed alpha tests in a controlled
environment, we have not completed a thorough beta testing regime covering all
the interior and particularly the exterior environmental factors we will face.
The CEMU or computerized environmental management unit, which is described
below, will have to be successfully tested under real conditions to ensure that
our exterior display products function properly in our target markets.
Our infrastructure may not be reliable because it may not be large enough to
accommodate growth and because of third party disruptions and if it fails we
will lose customers
Our operations will depend upon the capacity, reliability and
security of our system infrastructure. Managing the broadcast center will
present the biggest challenge in terms of the personnel resources required to
create and maintain the display and information flow according to the
anticipated volume. We currently have only limited system capacity and will be
required to continually expand our system infrastructure to accommodate
significant numbers of remote locations. Development and/or expansion of our
system infrastructure will require substantial financial, operational and
managerial resources. There can be no assurance that we will be able to expand
our system infrastructure to meet potential demand on a timely basis or at a
commercially reasonable cost. Our failure to develop and/or expand our system
infrastructure on a timely basis would have a material adverse effect on us.
Our system infrastructure will also be vulnerable to computer
viruses, break-ins and similar disruptions from unauthorized tampering with our
computer systems. Computer viruses or problems caused by third parties could
lead to material interruptions, delays or cessation in service to our customers.
Hackers breaking into targeted sites such as ours could have a direct negative
impact on the stability of the network and the broadcasting capabilities of our
servers. Security and privacy concerns of end-users may limit our ability to
develop our network of users.
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Risks relating to our business plan
Our business plan involves the new concept of electronic automated street level
advertising and if our marketing strategy is unsuccessful and the market does
not embrace our products we will go out of business
Our planned broadcasting solutions for reaching great numbers of
"viewers per day" represents a new business concept. As is typical in the case
of a new business concept, demand and market acceptance for a newly introduced
product is subject to a high level of uncertainty. Achieving market acceptance
for our new concept will require us to expend significant efforts and
expenditures to create awareness and demand by advertising agencies, multimedia
groups, municipalities and large retailers. Our marketing strategy depends on
the attraction of existing media operators who have, to date, been reluctant to
enter into formal contracts until the technology has been proven out. There can
be no assurance that our marketing strategy will result in successful product
commercialization or that our efforts will result in initial or continued market
acceptance for our proposed services.
If we are unable to meet end-user demands for customized content we will lose
customers and our business will not survive and our attempt to correct such
problems could delay our plans and cause substantial additional costs
As each advertiser will want to customize their advertisements or
messages, providing customized content on schedule, regularly updating their
requirements, and coping with increasing volume will take time and cost money
and create overload. Addressing this could delay our plans and cause us to incur
substantial additional costs. In addition, customized content could be
transmitted late or not at all, constituting a violation of contractual
obligations. If these problems occur, we will likely lose customers and if we
lose too many customers our business will not survive.
We may face liability because of the proprietary nature of certain of the
content transmitted over our systems which could cause us significant expenses
The law relating to the liability of businesses such as ours for
content carried on or disseminated through their system is currently unsettled.
We could become involved in litigation regarding the content transmitted over
our system which could create adverse publicity, significant defense costs and
substantial damage awards. In addition, because music content materials can be
downloaded and may be subsequently distributed to others, there is a potential
that claims will be made against us for defamation, negligence, copyright or
trademark infringement or other theories based on the nature and content of such
materials. The liability we may face as a result of content disseminated through
our system could have a negative impact on our financial condition.
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Special note regarding forward-looking statements
Some of the statements under "Risk factors," "Plan of Operations," "Business"
and elsewhere in this prospectus are forward-looking statements that involve
risks and uncertainties. These forward-looking statements include statements
about our plans, objectives, expectations, intentions and assumptions and other
statements contained in this prospectus that are not statements of historical
fact. You can identify these statements by words such as "may," "will,"
"should," "estimates," "plans," "expects," "believes," "intends" and similar
expressions. We cannot guarantee future results, levels of activity, performance
or achievements. Our actual results and the timing of certain events may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a discrepancy include those discussed in "Risk
factors" and elsewhere in this prospectus. You are cautioned not to place undue
reliance on any forward-looking statements.
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Summary historical financial information
The following selected financial data for the year ended
October 31, 1999 and for the period from inception on July 6, 1998 through
October 31, 1999 and through April 30, 2000 is derived from our audited
financial statements included in this prospectus.
The following data should be read in conjunction with our
financial statements and those of our predecessor.
Statement of operations data
- ---------------------------------------- --------------------------------------- ------------------------ -----------------------
For the Year From 7/6/98 From 7/6/98
Ended 10/31/99 (Inception) (Inception)
to 10/31/99 to 4/30/00
- ---------------------------------------- --------------------------------------- ------------------------ -----------------------
Net Revenues $ -0- $ -0- $ -0-
- ----------------------------------------- --------------------------------------- ------------------- -------------------
- ----------------------------------------- --------------------------------------- ------------------- -------------------
Operating Loss $ 258,639 $ 258,639 $ 673,670
- ----------------------------------------- --------------------------------------- ------------------- -------------------
- ----------------------------------------- --------------------------------------- ------------------- -------------------
Income Taxes $ -0- $ -0- $ -0-
- ----------------------------------------- --------------------------------------- ------------------- -------------------
- ----------------------------------------- --------------------------------------- ------------------- -------------------
Net Loss $ 258,639 $ 258,639 $ 673,670
- ----------------------------------------- --------------------------------------- ------------------- -------------------
- ----------------------------------------- --------------------------------------- ------------------- -------------------
Loss Per Share $ (.042) $ (.042) $ (.036)
(Basic and Diluted)
- ----------------------------------------- --------------------------------------- ------------------- -------------------
Balance sheet data
October 31, 1999 April 30, 2000
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Working Capital $ (15,853).... $ 193,695
Total Assets $ 914,482..... $ 658,682
Total Liabilities $ 456,857..... $ 38,987
Stockholders' Deficit $ (258,639).... $(673,670)
Plan of operations
The following discussion should be read in conjunction with
the financial statements and related notes which are included elsewhere in this
prospectus.
GSI was initially formed in July 1998 and we are currently
still in the development phase. The current emphasis is now on launching
commercial operations and successfully marketing our products and services.
Under the master license acquired in October 1999 from our
Canadian affiliate, GSI Technologies (3529363 Canada Inc), we now have access to
some of the most advanced technology currently available in the field of
electronic advertising and interactive information display. The term of the
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master license is 5 years to October 26, 2004 and is renewable for another 5
years. The cost was $800,000, $200,000 paid in cash in November 1999; the
balance in 600,000 of GSI's common shares. In granting sub-licenses to other
parties we are obliged to pay GSI Canada 60% of the price, failing which the
master license agreement could be revoked.
In addition to production capacity, through this continuing
association with GSI Canada, which, as reflected below, is controlled by the
same principal shareholders, we also benefit from their ongoing research and
development and the opportunity to broaden and enhance our product lines. All
research and development is conducted by GSI Canada. We do not have any direct
expenditures for research and development.
After four years of design and development, the full array of
operating software and systems were made available to us by GSI Canada in
January. The most important technical success factors were in assuring reliable
online broadcasting from central locations to remote locations and the design of
the display units -- including the encasements for the computer hardware
components and glass protectors for the screens that are impervious to various
climatic conditions and vandalism.
We now offer a range of products designed around the concept
of providing useful information and services in an attractive, convenient format
to people in their everyday environments. These products include the various
street-level display units--the interior or Citycolumn display units, the
exterior or Novacolumn display units often referred to as "urban furniture" or
"street furniture" in the language of the major North American and European
advertisers; and the transit shelter or Servicolumn units. Following the
assembly of four prototype units and the completion of the alpha version of the
software and related systems on January 15, 2000, we began a successful period
of beta testing in an interior environment with a Citycolumn unit.
In addition to the software and technical operating systems,
the main direct cost elements are the screen, the projector, the casing
structure, the computer, the CEMU or computerized environmental management unit
comprising cooling, heating, and ventilating units, and the shatter-proof glass
windows. On a cost-indicated basis, product pricing has been formulated to
enhance market penetration. The basic models will likely have a target price in
the range of $17,000-$18,000 per unit. More advanced models with additional
features such as internet access, transactional capabilities, and wireless phone
systems will probably sell for approximately $23-$24,000 per unit. The high-end
Citycolumn unit comes with two or three screens and, accordingly, the price will
likely be set at $35,000 per unit.
A standard Novacolumn model is currently projected to be
priced at $28,000. The additional features that are available on the Citycolumn
are also available on the Novacolumn. Pricing for the initial Servicolumn unit
has not yet been set owing to the high level of customization likely to be
required for the product.
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According to this potential pricing, we anticipate generating
an average gross margin of approximately 35%. In addition to revenue from
product sales, we anticipate that this should be augmented by revenue from our
other products and services, consulting, and from the sale of sub-licenses.
A Novacolumn and Servicolumn prototype were on display at the
Convention of Municipalities held at the Convention Center in Quebec City on
April 27-28, 2000. We are awaiting approval from the Port authorities for the
installation of the Novacolumn in the Old Port of Montreal.
The business model we continue to favor is marketing and
selling our products to the existing media companies rather than interfacing
directly with retailers and other potential end users. We believe this provides
the best route to rapid deployment of our products and services over the long
term. While our principal market in the area of advertising is mature and
dominated by a relatively small number of large, well-developed media operator
companies such as Pattison, JC Decaux, Outdoor Systems and Adshel Eller Media,
we believe that the opportunity exists to both supplant old, static forms of
advertising signage and to increase exposure in terms of "viewers per day" at
the street level. Should we be unable to complete formal contracts with at least
one of the major media operators, our short term plan is to market directly to
end users, initially via our affiliates and subsidiaries.
The marketing plan for our first year of operations calls for
us to concentrate on the North American market and to focus, particularly during
the first half of the year, on significant opportunities identified in Canada,
beginning in the Montreal metropolitan area and Quebec City. On January 6, 2000,
Pattison Outdoor Group, a division of Jim Pattison Industries Ltd, signed a
letter of intent with GSI Canada to obtain the exclusive right to purchase and
market the Novacolumn and Parkcom products and to jointly develop the entire
Canadian outdoor market for these kinds of display products. Pattison Outdoor
Group also obtained a right of first refusal on GSI's other products. Pattison
subsequently did not exercise its right to market the Citycolumn, contracts and
arrangements were entered into with other parties, and the formal contract for
the outdoor products is still pending.
A memorandum of understanding was also signed on January
between GSI Canada and Parksmart, a subsidiary of Mississauga, Ontario-based
Coin-o-matic, to jointly explore the development of the parking market in
Canada. The term of this agreement is 6 months to June 19, 2000. The agreement
also includes the identification of a participating media operator.
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Meanwhile, our initial focus continues to be on the interior
market, but delays in concluding at least one agreement with a media operator,
combined with modifications and enhancements in design to the Citycolumn have
caused delays in the original production schedule. We have, therefore, had to
revise the plan of operations for the year ending October 31, 2000. The assembly
of the first production model Citycolumn began in April, following a revision to
the original Citycolumn prototypes. This Citycolumn unit was successfully
installed in June in the Carrefour Trois-Rivieres, a shopping centre in
Trois-Rivieres, a municipality midway between Montreal and Quebec City. If
successful during the test period, which is estimated at three weeks, GSI Canada
will likely obtain the right to install another 50 units on properties managed
by SITQ, one of the largest property managers in the Province of Quebec and
wholly owned by the Caisse de Depot, the provincial pension fund.
On January 17, GSI Canada also obtained a contract with Ivanhoe, a
leader in the Canadian real estate industry, focusing on prime shopping centres
located in urban areas. www.ivanhoe.ca With headquarters in Montreal, Ivanhoe
owns or shares in partnership approximately 24 million square feet of retail
space in 51 malls located in Quebec, Ontario and the U.S. It is also the
majority shareholder in Cambridge Shopping Centres. The initial contract called
for the installation of an indoor display product in a single location as a
pilot project. Two original Citycolumn prototypes are now in operation in the
Champlain Mall in Brossard, a suburb of Montreal. Due to the success of this
pilot project, the agreement with Ivanhoe was revised, now giving GSI Canada the
right to install and operate another 35 units. Following negotiations in April,
a formal contract was executed between GSI Canada and Ivanhoe on May 5. As part
of the contract, installation sites were designated in 20 shopping malls
primarily in the Province of Quebec, including Place Montreal Trust, one of the
largest buildings in downtown Montreal. The installations must be completed by
August 25, 2000.
In anticipation of the signing of this formal agreement
between GSI Canada and Ivanhoe, a comprehensive sub-license was granted to GSI
Canada on May 4, 2000 to distribute GSI's products nationwide in Canada. The
price for the sub-license was $250,000, payable in ten annual instalments of
$25,000 each.
We are currently negotiating with GSI Canada for an initial
order of 35 Citycolumn units. The total value of the order is $595,000, payable
30% on receipt of the purchase order, 60% on delivery, and 10% 30 days following
each installation. This initial sale will constitute a fully functioning model
network, a showcase for our technology, and a new testing environment for both
the broadcasting to the Citycolumn units and the maintenance of the units. Other
major shopping center owners and property managers such as Cadillac Fairview and
Oxford are also being approached by GSI Canada. Pending an agreement with a
media operator, GSI Canada will continue to seek opportunities to make
installations in Canada in the indoor market and to seek separate funding for
these installations.
With the opening of a sales office in Paris, France in April,
we intend to aggressively pursue opportunities in the European market. Pending
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more formal arrangements, we have been given space there by Groupe Solcom
International France SAS, in which GSI Canada is the majority shareholder at
75%.
The operating plan for the year-ending October 31, 2000
originally called for the sale and installation of a total of 280 display units;
consisting of 250 Citycolumn units and 30 Novacolumn units. This has been
revised to a total of 165 units consisting of 135 Citycolumns and 30
Novacolumns. Following the installation of the 35 units on the Ivanhoe sites in
Canada by the end of August and hopefully the 50 units on the sites operated by
SITQ by the end of September, we intend to continue installing Citycolunns at a
rate of 50 units a month in October. Subject to successful negotiations with
potential host municipalities, the revised plan still calls for the first 15
Novacolumns to be installed in September 2000 and another 15 in October 2000.
Building on the extensive network of affiliations and
strategic alliances of our affiliated company in Canada, we are now in a
position to completely outsource the integration and production of the required
units. Orders will be placed with a prime contractor, HiTech Neon, currently the
largest and longest operating division of GSI Canada. This affiliated supplier
will also be responsible for the production of the encasement modules either
directly or via sub-contracting.
Subject to a competitive ordering process, computer hardware
components will, at least initially, be supplied from the Lexton Group and
networking and cabling services from ITS Service Interteck, both of which are
operating divisions of GSI Canada. Although we will outsource the advertising
services, GSI Canada's New Media Division will provide the content.
While all key suppliers have the required capacity to complete
the planned production schedule, the greatest challenge will be for HiTech Neon
to meet the production schedule. Additional manpower and space, as well as the
availability of sub-contractors, would be required to gear up. Labor relations
at the HiTech Neon plant in Montreal are considered excellent.
Following the successful private equity offering in October
1999 in the amount of $1 million, and on receipt of the order for 35 units from
GSI Canada in June, we will have sufficient funds until August 2000. To continue
operating at the planned pace for the balance of the year, a total of at least
$800,000 in further funding will be required beginning in August. Delays in
funding would mean we would have to further delay implementation of the
installation schedule and curtail spending generally while continuing to seek
funding either through an infusion from current shareholders, through another
private placement, or through longer term borrowings. Establishing operating
lines of credit with commercial banks will depend on a successful launch of
commercial operations.
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As part of our strategy to grow and expand in the information
technology and multimedia industries, we intend to pursue an aggressive mergers
and acquisitions program. The program is designed to help us reach a critical
mass of activity, to achieve substantial vertical integration and control over
the production processes; as well as to create a strong financial underpinning
for the continued development of our core business. While several synergistic
opportunities have been identified, it is far too premature to make a
determination of the likelihood of the success of any potential transaction.
Given our current financial constraints, additional funding would be required in
order to help finance acquisitions and capitalize on emerging opportunities.
Further strengthening the senior management team, a
vice-president of business development and a corporate controller were appointed
in January. A vice-president of operations for the US market was hired in May.
He is based in Orlando, Florida. A vice-president of communications was also
engaged in May. She is based in Montreal. Other required resources to
effectively sustain operations are available from GSI Canada, and, in order to
maintain flexibility and minimize overhead, outsourcing to consultants and other
professionals will be made as required.
Since early February 2000, we have been based in our new
principal business office in Place Mercantile in the center of Montreal. We have
a five year lease which is secured by a letter of credit from the Canadian
Imperial Bank of Commerce or CIBC, GSI Canada's principal bank. Office equipment
is leased from GSI Capital, a division of GSI Canada. The initial monthly cost,
effective April 1, is $1,173. The capitalized value is $42,000.
With the signing of a lease at the Sun City Trust building for
about 2,231 square feet at a monthly rent of $4,648, we anticipate transferring
our head office to Orlando, Florida in June. Initial office equipment costs are
estimated at $20,000. Depending on the availability of capital, a sales office
may also be opened in New York City later in the year as we pursue opportunities
in the American market. We estimate the monthly rental there at $10,000 plus
approximately $50,000 in equipment costs. Major urban centers and commercial
shopping malls, theme parks, and airports will be targeted.
As reflected in the financial statements as of April 30, the
accumulated deficit to date during the development phase is $673,670. This
results mainly from salaries and related costs of $241,061, rent of $36,560,
financing expenses of 128,790, professional fees of $97,287, travel of $17,909,
and $48,779 in amortisation expenses relating to the master license.
We anticipate incurring a further loss during the third quarter of
2000 of about $300,000 as our expenses are currently running at $100,000 a
month, including the monthly rent for the office space in Montreal and Orlando
which totals $10,650 a month. The remaining obligation under consulting
agreements is $25,000 to BBT Consulting Group and will be discharged from
available cash resources.
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We have not entered into any agreements to utilize our technology
with any advertisers or retailers. We do not believe that we will generate
significant revenues in the immediate future. We will not generate any
meaningful revenues unless we obtain contracts with a significant number of
municipalities and major media groups. There can be no assurance that we will
ever be able to obtain contracts with a significant number of customers to
generate meaningful revenues or achieve profitable operations.
Effect of recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires companies to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 is effective
for fiscal years beginning after June 15, 1999. GSI does not presently enter
into any transactions involving derivative financial instruments and,
accordingly, does not anticipate the new standard will have any effect on its
financial statements.
Year 2000 disclosure
We are Year 2000 compliant and we do not anticipate any
internal problems. In the event any internal problems should arise, we have many
expert computer technicians on our payroll and we believe that we will be able
to satisfactorily address any such problems. However, we are dependent on the
integrity of the internet being maintained to derive income from the sale of
advertising spots at remote locations via the internet and if the internet
should fail or if our hosts or internet service providers should fail, we could
be adversely impacted. Given the currently available information this does not
appear to be a likely scenario and, accordingly, we do not believe that our
potential for profitability or operations will be materially affected by the
Year 2000 problem.
Use of proceeds
We will not receive any proceeds from the sale of the shares
of common stock by the selling stockholders. However, we will receive the
exercise price of the warrants if they are exercised.
The net proceeds to us from the exercise of all warrants for
which the underlying common stock is registered herewith, would be approximately
$4,000,000. There can be no assurance that we will receive any proceeds from the
exercise of the warrants as not all, or any, warrants may be exercised. This
could result in our receiving none or only minimal proceeds from this offering.
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Any proceed received from the exercise of the warrants will be
added to working capital. We have no definite plans for the use of any proceeds
from this offering and we have made no specific allocation as to the use of such
proceeds. The proceeds could be used for current administrative, marketing and
other expenses, the acquisition of business or repayment of debt. Any such
application of the proceeds of this offering will be at the discretion of our
board of directors.
Business
GSI is a Delaware corporation, originally established in July
1998 as I.B.C. Corporation. Following a change of control to the current
principal shareholders and the creation of a new business plan, we acquired an
exclusive worldwide license from GSI Canada relating to a unique technology in
the field of electronic commercial advertising. The license includes proprietary
software, hardware, and broadcasting systems enabling users to transmit and
receive full-motion video, graphics, along with compressed or uncompressed audio
on any kind of display units, whether mobile or static, indoor or outdoor. The
technology offers users remote control through telephone lines, LANs, the
internet, wireless systems, cell phones, global systems for mobile
telecommunications, or GSMs, fibre optics and short waves. GSI also acquired
broadcasting server technology from GSI Canada.
GSI participates in the information technology industry,
specializing in broadcasting solutions principally for media operators,
advertisers and others seeking to reach the greatest number of "viewers per day"
at the street level. Street level advertising is the strategic placement of
signage so they are readily visible to pedestrians and motorists. In addition to
addressing potential consumers in busy urban and suburban settings, public
service messages can also be conveyed using our technology.
Based upon our knowledge of the industry, we believe the
potential market for which GSI intends to sell its products is large with
opportunities for growth. The advertising industry, for example, is always
looking for new ways to reach consumers. Having acquired our license from GSI
Canada, we believe we are now able to respond to their needs as well as those of
other industries. Whereas traditional media groups such as television, radio,
and newspapers used to specialize in their respective activities, as reflected
below our research shows that there is a clear pattern of them utilizing newly
developed electronic media in order to maintain and extend their reaching power.
Historical background
Since 1995, Mr. J. Michel de Montigny, currently our
president, has been dedicated to fulfilling his vision of bringing television
and advertising to the street level. Working together with an accredited
computer graphics artist, a large number of potential applications became
increasingly apparent. Originally serving the casino and stadium industries, he
13
soon identified many diverse locations across North America in which to
successfully install, and, after appropriate Beta testing, to manage by remote
control the automated network systems. From 1996 through September 1998, he
controlled large electronic automated signs in Vancouver, Edmonton, Toronto,
Montreal, Las Vegas, and Biloxi, Mississippi.
With the rapid evolution of electronic sign capabilities via
full video broadcast signals, companies began to seek new ways of transferring
images and information from remote stations to signs in a compressed and secure
environment. Effective use of the Internet was the logical solution. In order to
respond expeditiously to market trends and to concentrate all its resources in
the completion of a fully integrated hardware-software package, GSI Canada
applied for the most innovative and advantageous Canadian governmental grants
available in the area of multimedia R&D.
In September 1998, GSI Canada was incorporated in order to
qualify for and receive a CDTI Cite Multimedia research license. Cite Multimedia
is a major government-sponsored project in Montreal designed to bring together,
in the same location, companies working in the information and communications
technology field. The grant is an exclusive twelve-year program of incentives
which includes: 40% of salaries, 40% of the capital cost for specialized
equipment, as well as other Federal tax credits and exemptions.
GSI will benefit directly from this association with GSI
Canada by effectively outsourcing its R & D which will facilitate the continuing
development of leading-edge broadcasting systems and related products in the
field of multimedia. A total of $116,000 has been received to date by GSI Canada
with a projected 12 month total of $350,000.
In January 1999, Mr. Yves LeBel, an experienced entrepreneur
and business consultant, joined the GSI Canada team as executive vice-president
and chief financial officer. A series of acquisitions have since been completed
in Canada, first to achieve a degree of vertical integration as well as to
continue the process of horizontal expansion and growth.
These include the acquisition in August of Lexton Group which
assembles and markets computer products, the acquisition in September of of
HiTech Neon which produces and markets electronic signs, and the acquisition in
October of ITS Service Inter Teck which provides computer networking products
and services.
Further strengthening the senior management team of GSI
Canada, in June 1999 Michel Laplante joined as vice president research and
development and chief information officer.
In June 1999, Mr. de Montigny and a group of founding
shareholders, mainly investors in GSI Canada, acquired control of I.B.C.
Corporation, by then a dormant company originally incorporated in Delaware on
July 6, 1998. In October 1999 the name was changed to GSI Technologies USA Inc.
While our principal business office is in Montreal the head office continues to
be in Ft. Lauderdale, Florida, providing a base for pursuing significant market
opportunities in the region.
14
By August 1999, GSI Canada had finished preliminary testing of
the basic server system and software package required to reliably operate and
broadcast. In October 1999 the rights to the technology were acquired by GSI.
The technology
The basic technological advance achieved by GSI Canada and
available to us by way of the master licensing agreement is the successful
integration of various hardware components and specialty software for the
transmission of broadcast signals in real time. Using our Multimedia Pack
Technology which is described below, we have the unique capability to broadcast
from a central server to full video screens in remote locations anywhere in the
world. The system is capable of updating pinpoint information minute by minute
by way of video compressing systems and other fully automated software systems.
By utilizing our products and services, media and advertisers
will have an improved way of reaching consumers right in their daily
environment, outside their homes, and especially in the downtown cores where
thousands of people circulate daily as pedestrians, by car or as they use public
transportation going to and from work or to shop.
Hardware
To achieve its sales goals, GSI is commercializing products such
as Citycolumn, Novacolumn, Parcom, Servicolumn and Skycolumn. The latter is
still in the design phase. In addition to two Citycolumn prototypes, a
Novacolumn and a Parcom prototype have been built and a Servicolumn prototype
will be completed by the end of April, 2000. Still to be successfully integrated
into these outdoor prototypes are the environmental control features. Besides
overcoming extreme climatic conditions, the greatest technical challenges in the
exterior environment are the access rights, and wireless transmission when
normal telephone cabling is unavailable. The latest Citycolumn model prototype
was installed at a local mall on the South Shore of Montreal in late 1999 and is
ready for the application of the remote broadcasting feature.
Citycolumn is an interior display unit or kiosk consisting of
three screens 36" wide. Full-size video, 3D animations and stereo sound can be
broadcast on these units and they can be remotely controlled and reprogrammed
via GSI's software from anywhere in the world. Adding a remote control unit can
also extend Citycolumn's capabilities by providing advertisers with
interactivity. The combination of video and computer digital displays makes
changing commercials almost instantaneous, allowing for short advertising
campaigns, special promotions, and the latest news headlines. In addition to the
animated display there are two backlit display panels 28" wide and 40" high.
15
Other features of the interactive kiosk include a tactile menu on a 15" tactile
screen, promotional windows for advertisers and as well as directories and
location maps. The production lead time from the ordering of components to
assembly and integration is six weeks. Once an order is received, the
installation of cabling can commence in parallel.
In the category of what major advertisers call "urban
furniture" or "street furniture," Novacolumn, is designed for outdoor displays
and meeting the requirements of traditional advertisers. Via a single projector
and providing a field of view of from 5 to 300 feet, the main display side
features a large screen 36" wide by 42" high, the dimensions of a regular
advertising poster. The other two sides include space for static backlit
posters. This kiosk can be remotely controlled and reprogrammed via GSI's
software from anywhere in the world.
As with Citycolumn, the combination of video and computer
digital display makes changing commercials almost instantaneous, allowing for
short advertising campaigns, special promotions, and the latest headlines.
Adding a remote control unit can also extend Novacolumn's capabilities,
providing advertisers with interactive applications. For instance, the
Novacolumn can be made to control another one of GSI's product offerings, the
interactive parking meter.
Novacolumn's specifications include sturdy, composite
materials and each unit is molded in sections. Providing climate control for
installations in environments that will periodically experience extreme weather
conditions, including hot and/or cold, Novacolumn is equipped with a CEMU or
computerized environmental management unit. The production lead time from the
ordering of components to assembly and integration is currently estimated at ten
weeks.
A smaller unit with the same dimensions as the standard
installations found in most cities, Parcom is an interactive parking meter. An
outdoors application, the same basic specifications apply for Parcom as for
Novacolumn. The production lead time from the ordering of components to assembly
and integration is currently estimated at ten weeks.
Servicolumn is a customized, outdoor, self-contained unit that
is being designed to be incorporated in the display portion of transit shelters.
Our aim for this unit is to replace the static back-lit display in the offerings
of other manufacturers. 24" in depth, on one side will be a 36" X 48" display of
animated content and on the other side pedestrians and public transportation
users will have access to a 14" touch-screen, a smart card reader, and a
wireless phone providing informational content, transactional functions and
access to emergency or information phone numbers. A prototype will be completed
and ready for display by the end of April.
Skycolumn is conceptually a giant outdoor screen (16,7 million
color), capable of transmitting video images from a server located anywhere in
the world. Potential installation sites include airports, sport stadiums, and
large expressways.
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These products can all be marketed directly by GSI or via
sub-licensing agreements with media operators.
GSI's objective is to offer the possibility of what we call a
Total Vision Network, linking large numbers of installations of our products in
various locations. Animated advertising displays and information of public
interest can be efficiently and economically managed from strategically placed
central locations. The content broadcast on the network will be continuously
updated. For optimal exposure, the content will consist of a three minute loop
divided into eighteen segments of ten seconds each. Besides advertising, these
segments will include messages of public interest issued by our newsroom,
drawing on the technical support of our control room. For example, six of the
segments can be dedicated to local advertising while the other twelve are made
available for regional or national advertising and the messages of public
interest. The involvement of the radio and television networks is being sought
for this part of the network's offering.
Software
A key feature of GSI's offerings is the software, marketed as the GSI Multimedia
Pack, and which provides what we consider to be innovative broadcasting
capabilities in the field of street-level advertising. Provided under license,
this pack enables users to access multimedia databases and make their selection.
It consists of three sub-packs, each with its own applications, enabling users
to schedule and send content to all display units and then to play it. All
together, the GSI Multimedia Pack consists of five applications and three
sub-packs:
Applications
o Database Graphical User Interface (GUI)
o Schedule Manager
o Billing Manager
o File Transfer Manager
o Multimedia Player
Sub-Packs
o Master Pack
o Universal Pack
o Terminal Pack
The workstations using the Master Pack and the Universal Pack
are either connected to the Internet through telephone lines, wireless systems,
or ISDN. Workstations using the Terminal Pack are connected to the workstations
using Universal Pack via a LAN.
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Master Pack
The broadcasting server located at GSI Canada's Operating
Centre uses this pack and most of the operations take place in it. The database
of the GSI Multimedia Pack is kept on the broadcasting server. The pack consists
of four applications:
o Database Graphical User Interface
o Schedule Manager
o Billing Manager
o File Transfer Manager
Universal pack
This pack is the transition zone between the Master and
Terminal Packs. Mid-level software, it allows the transmission and retrieval of
information without an operator as required in a multi-server environment. This
pack consists of two applications:
o File Transfer Manager
o Multimedia Player
Terminal Pack
Workstations using this pack are connected via a LAN to the
workstations using the Universal Pack. It receives all animations and schedule
files and reports to the workstation which is directly connected to it. It
consists of two applications:
o File Transfer Manager
o Multimedia Player
The GSI Multimedia Pack manages the system.
Database Graphical User Interface (GUI)
The database GUI manages all information in the database such
as kiosk identification, terminals, clients, animations, etc. This application
makes it possible to add, change or delete any field in the database in a
user-friendly interface.
Schedule Manager
In a user-friendly manner, this application enable users to
create specific broadcast schedules.
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Billing Manager
Available on demand, this application can be connected to
invoicing software and various databases such as Oracle's.
File Transfer Manager
FTM is a multilevel application which enables users to select
and send the content to the specified site. Consisting of two sub-applications,
File Sender and Remote Receiver, FTM also confirms to the Multimedia Player
being monitored by the GSI control room dministrator that animations are in fact
being played at the remote locations.
Multimedia Player
Multimedia Player runs the animation files according to a time
schedule generated by Schedule Manager. Our proprietary media player plays
compressed or uncompressed multimedia files in all the animation formats that
Windows Media Player is capable of playing, including .avi, .mpg, etc.
Other enhancements are under development including a module to
enable advertisers to get information on the products and services broadcast on
the Total Vision Network; to reserve time slots on specific columns that will
put their commercials to best use; and to help advertisers in selecting the
number of columns to be reserved along with specific site information. GSI will
offer access to the Total Vision Network on the Internet through GSITV.COM.
Multimedia interactive screen savers containing advertisements are also
available and can be updated through channels or active server pages.
Service
On site service and maintenance is available for all
installations worldwide. We will offer our customers continuous 24 hour
broadcasting; customized advertising and multimedia content; "state-of-the-art"
software packages; network management and maintenance service with 24 hour
monitoring and technical support.
While our customers are primarily responsible for the content
of what is broadcast, as an internal policy we will attempt to monitor the
content and only broadcast information and graphic images that are in accordance
with locally accepted standards.
Our products are susceptible to defacement at installation
sites, but are designed to be relatively impervious to other forms of vandalism
and to most weather conditions as well.
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Competition
The markets that we are entering are intensely competitive. We
expect additional competition to come from the increasing number of new market
entrants who have developed or are developing potentially competitive products.
We will face competition from large media groups which may develop and market
their own competitive products and services. The existing media operators
typically have the advantage of long term, exclusive contracts with many of the
larger property owners and we could be effectively blocked from entry to prime,
high volume locations. Similar animated display technologies could emerge and be
more economical to operate. Pending the attraction of at least one major media
operator, specific market niches will have to be identified in sufficient
quantity during the first year to ensure a viable plan of operations beyond.
Some of our competitors have certain advantages including,
substantially greater financial, technical and marketing resources; greater name
recognition; and more established relationships in the industry and may utilize
these advantages to expand their product offerings more quickly, adapt to new or
emerging technologies and changes in customer requirements more quickly, and
devote greater resources to the marketing and sale of their products
The markets for our proposed products are characterized by rapidly
changing technology and evolving industry standards. Accordingly, our ability to
compete will depend upon our ability to continually enhance and improve our
software and our display products. There can be no assurance that we will be
able to compete successfully, that competitors will not develop technologies or
products that render our products obsolete or less marketable or that we will be
able to successfully enhance its products or develop new products.
We are currently taking action to obtain copyright protection
for our software.
The advertising market
GSI participates in the information technology industry,
specializing in broadcasting solutions principally for advertisers and others
seeking to reach the greatest number of "viewers per day" as well as to achieve
other commercial and public service objectives.
We have identified the potential market for our products in
terms of territory and the principal media groups. Globalization is the dominant
trend. Once branded in their domestic markets, companies are seeking
opportunities to penetrate elsewhere, particularly in non-traditional,
non-exploited markets such as Russia, Eastern Europe, Africa, and South America.
But the viability of our business depends on our assessment of current trends in
traditional markets. In our view and discussed below, expansion in the
traditional North American and European sites that typically attract a high
volume of "viewers per day" will occur by way of replacing older, static
billboard poster facilities with animated multimedia products broadcast by way
of advanced telecommunications systems and over the Internet.
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The major media companies are Clear Channel Communications, JC
Decaux, TDI, and Outdoor Systems. Doing business on five continents, the largest
is Clear Channel. Our information about them and the overall market has been
obtained mainly from their publications and websites, as well as from industry
publications such as Advertising Age.
A diversified media company with two business segments,
broadcasting and out-of-home advertising, Clear Channel (www.clearchannel.com)
currently operates in 32 countries. It has 830 radio and 19 television stations
in the United States and has equity interests in over 240 radio stations
internationally. It also operates over 550,000 display faces. With consolidated
sales approaching $3 billion in 1999, their subsidiaries include Adshel, a
leading world brand in street furniture, More Group, a leading outdoor
advertising company in Europe and Asia, and the Eller Media Company which is
based in San Antonio, Texas and is the oldest outdoor advertising company in the
world. They recently acquired Universal Outdoor in Chicago.
Operating in 23 countries and over 1200 cities, JC Decaux
(www.jcdecaux.com) is the largest marketer of street furniture in the world,
including bus shelters, newsstands, and public information panels. Their most
recent acquisition was Avenir Publicite Group, a $2 billion transaction in July
1999. Their inventory of installations includes over 160,000 backlit advertising
panels, and over 205,000 pieces of street furniture installed, 67,000 bus
shelters, 4,000 automatic public toilets, 53,000 columns and free standing
panels.
Based in Phoenix, Outdoor Systems, Inc.
(www.outdoorsytems.com) is the largest out-of-home media company in North
America with approximately 112,500 bulletin, poster, mall and transit
advertising display faces in 90 metropolitan markets in the United States, 13
metropolitan markets in Canada, and 44 metropolitan markets in Mexico and
approximately 125,000 subway advertising display faces in New York City.
One of the largest media firms in the world, TDI (www.tdi.com)
considers itself the most diversified out-of-home advertising provider. They
provide a variety of media forms including bus and rail displays, phone kiosks,
and large posters. They operate 100 franchises in 26 U.S. cities as well as
operating throughout the U.K. and Holland.
The Out-Of-Home Media Group, Canada's largest outdoor
advertising company currently claiming a 45% market share and the Jim Pattison
Sign Group, the world's largest custom electric sign company are parts of the
Pattison Group, (www.pattison.com) one of Canada's largest diversified
companies.
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GSI has been exploring opportunities to sell its products and
services to and possibly form strategic alliances with JC Decaux, Adshel
(www.adshel.com). Outdoor Systems, and Pattison. While no contracts have been
signed to date, discussions are continuing. It is the premature to speculate on
the outcome of these discussions, or even if ultimately successful, the
structure or format of any relationship that might ensue.
According to a Government of Canada (www.infoexport.gc.ca)
research document of 1997 entitled "The Advertising Services Market in the
United States" the American advertising industry accounts for over 40% of global
advertising expenditures. As reflected in another Advertising Age Dataplace
table of September 27, 1999 shown at www.adage.com, although outdoor advertising
represented only 2% of the total national advertising spending of $201.6 million
by media during 1998, there was a 38% increase in spending on that form by the
top 100 global marketers over the prior year. This was the second largest
spending increase after the 45.4% increase in the Internet by the top 100
marketers in 1998.
While television's relative position has been maintained,
advances in technology now enable the consumer to select from more than 500
television channels at home. Many of these are specialized channels and pay
television that do not broadcast advertising. As a result, TV broadcasters
cannot pretend to reach the same number of in-home "viewers per day" as they
used to. Since in-home advertising does not offer the same "viewers per day"
reach, it has become strategically imperative for the advertisers and
advertising agencies to seek other out-of-home possibilities. Mainly through
mergers and acquisitions, media groups are now increasingly able to offer the
advertisers a variety of multimedia-based approaches.
Examples abound in North America. In the US Market, Clear
Channel Communications is the second largest radio broadcasting group following
the acquisition of Jacor. In Canada, Radio-Mutuel, the broadcasting company, was
strictly involved in radio as late as 7 years ago. Since then it has acquired
Omni outdoor advertising, Much Music Broadcast, CKMF, CKVL, and other stations.
Another media company based in Canada and now a major multinational, Quebecor,
was once only in newspaper publishing and printing. During its rapid growth it
has acquired TQS, a broadcasting firm, Archambault a music and multimedia
products distributor, and Quebec-Livre a book distributor. Videotron, another
major example in Canada, which initially offered only cable television is now
operating TVA, a large broadcasting network and with whom they have become
associated in order to create an Internet service.
Outdoor advertising
Innovations in outdoor advertising have led to increased
spending. Total spending in 1997 was just under $1.5 billion. Spending in 1998
would increase to approximately $1.6 billion. While this market is mature and
dominated by the relatively small number of large, well-developed companies
identified above, the opportunities to both supplant old, static forms of
advertising signage and to increase exposure in terms of viewers per day at the
street level are substantial.
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According to an article in Agency Magazine (www.aaaa.org) entitled
"The Great Outdoors" by Andrea MacDonald, the point is made that after spending
so many years as the last line on the media plan, out-of-home is hot and it's
getting hotter thanks largely to the surge in dot-com advertising. Another point
is made that the out-of-home media category itself has also expanded beyond
billboards and transit to include everything from cinema ads, to postcards in
bars and nightclubs, to stencils and laser light logos on the sidewalk. Besides
overcoming extreme climatic conditions, the greatest technical challenges in the
exterior environment are the access rights, and wireless transmission when
normal telephone cabling is unavailable.
A recent article by Joan Voight in Adweek Online and entitled "Media
Outlook - Outdoor: Spectacular Results" (http://www.adweek.com/mediaoutlook)
provides other pertinent information. In the field of outdoor advertising, 1999
saw a tendency towards bigger and bigger billboards as well as towards the
formation of bigger companies. Consolidation among outdoor media operators and
an increase in oversized outdoor boards called "spectaculars" attracted more
advertising dollars from a variety of major national clients, including Ford.,
Apple, and Levi's jeans. At the same time, more industries such as the
technology, telecommunications, entertainment, media and healthcare industries
joined the many apparel, auto, travel and leisure companies that traditionally
use out-of-home advertising. These changes were expected to trigger a 6.5 %
increase in advertising revenue in 1999, according to Zenith Media, bringing the
total expenditures for 1999 to just over $2 billion.
Demand from the entertainment and amusements industries are
driving prices up, according to Craig Alexander, Managing Director of Outdoor
Services in San Francisco, a buying service. In 1997 that category accounted for
15.7% of his company's business, followed by business consumer services at
12.2%, which included computer advertising.
The restrictions on outdoor ads for cigarettes has turned out
to be a boon for the industry, according to Alexander. The tobacco ads often had
premium locations, but due to 10 to 20-year contracts they were paying discount
rates for the space. The major outdoor companies are quickly reselling the newly
available space for "50 to 100 percent more than the tobacco advertisers were
paying."
Other points are made in the article explaining trends in the
outdoor advertising market. High-tech companies are looking at outdoor as a way
to sell product as well as attract talented employees, according to Ted Block,
media director at the advertising agency Foote, Cone & Belding in San Francisco.
"Advertisers and agencies see public spaces as a [cost-effective] way to make a
bold and clever statement." Apple, one of the world's largest computer
manufacturers, has been a leader in technology outdoor ads, using billboards,
spectaculars, walls, large buildings and bus wraps for its national "Think
Different" campaign created by TBWA Chiat/Day of Venice, California and
featuring portraits of Picasso, Einstein, Maria Callas, and others.
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The market for our exterior animated display products entails
specific risks depending as it does to a large extent on the approval of
municipal authorities for the use of public sites. Without the involvement of
the traditional operators who have already succeeded to a great extent in
garnering this market for static advertising purposes, it would be very
difficult to penetrate on our own.
Since the interior environment is inherently more hospitable, we
will concentrate on it first during Phase 1 of installations. A key challenge
will be connecting each individual installation with the central server in order
to ensure reliable transmission and functioning. Representing the greatest risk
and the essential element of the software, is the scheduling element. There will
still be a need for continued system refinement, enhancement and development
efforts which are subject to all of the risks inherent in the development of new
products and technologies, including unanticipated delays, expenses, technical
problems or difficulties.
Indoor advertising
We have observed that the major media companies in the field
of outdoor advertising are now seeking opportunities to penetrate the indoor
advertising, commercial, and information display market which is largely
untapped and still in an embryonic stage of development.
Shopping centers offer excellent opportunities. A source of
information about the shopping center industry was Scope 1999 from the website
www.icsc.org of the ICSC. According to the National Research Bureau, there were
a total of 43,600 shopping centers in the United States in 1998, an increase of
1.7% from 1997. Revenue potential from advertising is large. Retail sales in
shopping centers increased by 5.0% to 1,044.6 billion, representing 51% of total
retail sales in the country, excluding sales of automotive dealers. In a typical
month, 189 million adults shop at shopping centers. 94% of the population over
18 years of age.
Reflecting the relationship in population of about 10% between
Canada and the United States, there were 4,298 shopping centers in Canada by the
end of 1998, generating $94.2 billion in retail sales.
Interactive television
The convergence of television, telecommunications, and
computers presents the advantages of interactivity including choice of content
and the ability to order on demand. New products being developed such as set-top
boxes incorporate Internet, audio and video, as well as informational databases.
GSI Canada is currently developing a similar product which will be marketed by
GSI. This product allows easy and cost-effective hook-ups to the Internet and
access of home viewers to GSI.COM and the Total Vision Network,
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Key success factors
Experience
GSI has an available pool of knowledge and experience
regarding the rapidly evolving market. Our associated companies, the GSI Canada
family of companies, have been controlling signs from remote locations since
1994 and selling advertising on electronic screens since 1995; as well as using
and selling internet and other software since 1992. Extensive experience has
been gained in dealing with various electronic signs manufacturers and companies
involved in controlling interactivity such as Dacktronics, Saco, Smartvision,
Adtronics, A.D.E.
Intellectual property
We have acquired an exclusive worldwide license from GSI
Canada, which has proprietary rights on the software required to operate the
system. These rights are governed and protected by applicable commercial law. We
intend to take all reasonable and practicable steps to obtain patent and
trademark protection, when available, to protect our rights to the licensed
technology.
On-going research and development
GSI Canada qualifies for a 12-year program of grants and
governmental support which will facilitate the continuing development of
leading-edge broadcasting systems and related products in the field of
multimedia. GSI expects to derive economic benefits directly from this
association in terms of lower product cost and the ability to obtain cutting
edge technology.
Effective marketing
Our expertise is in the creation of three minutes loops, based
on advertising "spots" of 10 seconds each and, through GSI Canada, in the
assembly and the integration of various hardware products. The content of the
broadcast information has been developed after considerable market research and
target customers have been identified and are being approached by our
representatives. We believe we can effectively respond to our customers' needs
by pinpointing specific services and information sponsored by the advertisers.
A strategic licensing plan has been developed for the
worldwide deployment of our products and services. Outside the North American
market our approach would be to identify potential partners in selected
locations. Interested companies would be offered a license to market GSI's
25
products and have access to GSI's technology for a certain territory. While
possibilities are being explored in parallel with the start up of operations in
North America, operations under sub-license would commence at a later period.
Sales and marketing strategy
Our products are designed to provide a highly reliable,
efficient means of broadcasting information that addresses the needs of people
in fast-paced environments and brings the advantages of interactive multimedia
to the street level. Our main targets are:
o media owners
o municipalities
o consumers
The urban pedestrian, motorist and consumer will have the
benefit of daily pinpoint area information, i.e., "news you can use", and
interactive capabilities such as:
o weather reports
o traffic conditions reports
o news updates
o sports results
o local community messages
o emergency alerts
o postings of local events
The advertiser will have the opportunity to reach many more
consumers per day, and to increase brand recognition by providing better
information content.
Municipal governments will be able to reach their citizens on
a daily basis and to better measure the impact of their community programs and
services. They will also be able to share in revenues derived from renting city
space for the installation of the networks and to communicate information about
local events or emergencies instantly with a simple phone call, fax, or e-mail.
The media industry will benefit from GSI's Total Vision
Network. Linking installations and various locations, they will be able to
broadcast information in specific locations by remote access and reach millions
of "viewers per day". Advertising can be sold at very high quality standards and
at very affordable prices giving local businesses the same opportunities to this
point enjoyed by large companies.
The infrastructure created by the installation of our products
and services may also generate other beneficial associations; for example, in
the area of video-conferencing; with electronic smart card distributors; with
municipal parking meter authorities; and with ticket distributors for
entertainment and sporting events.
26
We will provide back-up for the installed networks at GSI
Canada's Research Center located in Montreal, Canada. We are currently working
on creating our own server system to minimize dependence upon other hosts and
internet service providers.
As a way of demonstrating the public service power of the
product, we plan to associate ourselves with child finding organizations
worldwide. Using its pinpoint and instant remote broadcasting capability,
pictures of missing children can be shown in a specific area on short notice,
thereby increasing the chances of a successful recovery. Our first association
was established in Montreal in 1999 with an organization called The Missing
Children's Network Canada.
Employees
We currently have nine full time employees of which three are
executives, three are engaged in financial activities and three are engaged in
sales and marketing activities. In addition, we share three administration
personnel with GSI Canada at the main office in Montreal. Additional financing
permitting, we intend to hire up to five additional employees. None of our
employees are represented by a labor union. We believe that relations with our
employees are good.
Our success depends upon the personal efforts of J. Michel de
Montigny and Michael Laplante, and other key personnel. Our success is also
dependent upon our ability to hire and retain additional qualified management,
marketing, technical, financial, and other personnel. Competition for qualified
personnel is intense and in our current financial condition it is even more
difficult to hire or retain additional qualified personnel. If we do not attract
and retain qualified management and other personnel we will be unable to
successfully implement our business plan. At present, affordable "key person"
insurance is unavailable.
Properties
Our facilities are located in approximately 6,000 square feet
of leased office space in Montreal shared with GSI Canada and we share some
office space in Ft. Lauderdale. The lease in Montreal expires on December 31,
2004 and provides for an annual rental of approximately $75,000 and in Ft.
Lauderdale the lease expires on December 1, 2001 and provides for an annual
rental of approximately $3,800. We have only negligible costs relating to
environmental compliance laws.
Legal proceedings
We are not involved in any material legal proceedings.
Management
Officers and directors
Our officers and directors are as follows:
27
Name Age Position
J. Michel de Montigny 41 president, chief executive officer
and chairman
James A. Hone 55 senior vice president
administration, chief financial
officer, secretary and director
Michel Laplante 42 senior vice president sales and
marketing and director
J. Michel de Montigny founded the Company in 1998 and has been
its president, CEO and chairman since such time. Mr. de Montigny has over twenty
years of hands-on and management experience in the multimedia/advertising
industry. In 1995 he founded Solcom Group. From 1990 to 1992, he was president
of Groupe Actuel Design, crafting the design concepts behind the Bell Canada
Boutiques, the Yves Rocher boutiques and the Societe des Alcools du Quebec
Stores. From 1988 to 1990 he was president of College Inter-Dec, a technical
college in Montreal. Prior thereto, he was director of operations and director
of marketing in a variety of companies. As an advertising and marketing
consultant, he was the driving force behind some of Montreal's most innovative
advertising campaigns of the 1990's. A consultant to companies such as Labatt,
Budweiser, and Michelin, he was also involved in projects creating an
interactive bus shelter for Budweiser, special effects for the film Mortal
Kombat (Alliance Films), and the inauguration campaign for a new Air Canada
aircraft. Mr. de Montigny received an MBA from the University of Quebec.
James A. Hone joined the Company in June 1999 as its chief
financial officer. A graduate of McGill University and York University in
Commerce and Business Administration in 1966 and 1969, respectively, Mr. Hone
has extensive financial management and administrative experience with five major
multinational companies in the automotive, aerospace, building systems, forest
products, and telecommunications industries. After 10 years with Ford Motor
Company, both in Toronto and Detroit, where he achieved the position of manager,
collection he became treasurer of Pratt & Whitney Canada in Montreal until 1982.
He then served as assistant treasurer-international-finance of United
Technologies Corporation in Hartford, Connecticut until 1988; as vice
president-treasurer of Abitibi-Price in Toronto and as vice-president finance of
the Commercial Paper Group based in Quebec City and New York City until 1994;
and, most recently, as vice president-finance and Administration of TMI
Communications, a subsidiary of BCE Inc. in Ottawa.
Michel Laplante joined the Company in June 1999 and became its
senior vice president sales and marketing in December 1999. Mr. Laplante has
been involved in the multimedia industry for the past 20 years. He has acquired
extensive experience in the field of television broadcasting and recording and
expertise in the area of training in high-tech environments. From 1985 to 1991
he served as an account manager for Yamaha. From 1991 to 1992 he was a
consultant for various firms such as Commodore Business Machines and Kawai. In
1992 he became national sales manager for MDL Technologies, a desktop video
equipment distributor and integrator based in Montreal, serving clients such as
Department of National Defense and top Fortune 500 companies. Before joining GSI
Canada in June 1999 as vice-president of research and development and chief
information officer, Mr. Laplante owned a consulting firm specializing in audio
and video computer applications, IT, networking, video compression and
broadcasting. He has also served as a Multimedia consultant to the multimedia
division of CESAM, a large consortium with representation from, among others,
Bell Canada, CAE Electronics, Quebecor Multimedia, Teleglobe, and the four
universities in Montreal.
28
Indemnification of directors and officers
Neither our certificate of incorporation nor our by-laws
currently provide indemnification to our officers or directors. In an effort to
continue to attract and retain qualified individuals to serve as our directors
and officers, we intend to adopt provisions providing for the maximum
indemnification permitted by Delaware law.
Compensation of directors
Directors do not receive any compensation for their service as
members of the board of directors.
Security ownership of certain
beneficial owners and management
The following table sets forth, as of December 31, 1999,
information regarding the beneficial ownership of our common stock based upon
the most recent information available to us for
o each person known by us to own beneficially more than
five (5%) percent of our outstanding common stock,
o each of our officers and directors and
o all of our officers and directors as a group.
Each stockholder's address is c/o GSI Technologies USA Inc.,
2001 McGill College Avenue, Suite 1310, Montreal, Quebec, CANADA, H3A 1G1.
Number of
Shares Owned
Name Beneficially % of Total
3633730 Canada Inc. (1)(2) 8,037,128 39.9%
3633632 Canada Inc. (1)(3) 1,397,938 6.8%
Totalcom Inc. (1)(4) 1,546,794 7.6%
J. Michel de Montigny(5) 500,000 2.4%
Michel Laplante (6) 20,000 *
James A. Hone (7) 90,000 *
All Officers and Directors
as a Group(3 persons)(8) 11,591,860 54.2%
- -----------------
* less than 1%
29
(1) Owned by J. Michel de Montigny, our president, CEO and chairman.
(2) Includes 260,954 shares underlying currently exercisable warrants.
(3) Includes 347,938 shares underlying currently exercisable warrants.
(4) Includes 34,794 shares underlying currently exercisable warrants.
(5) Consists of currently exercisable warrants. president, CEO and chairman.
(6) Vice president sales and marketing and a director.
(7) Includes 50,000 shares underlying currently exercisable warrants.
(8) Includes the shares owned indirectly by Mr. de Montigny through wholly owned
entities and an aggregate of 1,193,686 shares underlying currently exercisable
warrants.
Executive compensation
From inception through the fiscal year ended October 31, 1999,
no compensation was paid to any of our executive officers.
Employment agreements
On October 29, 1999, Mr. de Montigny entered into a three year
employment agreement commencing January 1, 2000. The agreement provides for an
annual salary of $100,000 and warrants to purchase 500,000 shares at an exercise
price of $1.10 per share. Mr. de Montigny may also receive bonuses as determined
by the board of directors.
On October 29, 1999, Mr. Hone entered into a one year
employment agreement commencing January 1, 2000. The agreement provides for an
annual salary of $60,000, warrants to purchase 50,000 shares at an exercise
price of $1.10 per share and 50,000 shares vesting equally over five months. Mr.
Hone may also receive bonuses as determined by the board of directors.
On January 1, 2000, Mr. Laplante entered into a two year
employment agreement. He will receive an annual salary of $72,800 for 2000. In
addition, he will receive bonuses based on the achievement of quarterly sales
targets. He will also be eligible to receive additional shares and warrants
during the course of his contract.
Certain relationships and related transactions
We delivered a note payable dated October 31, 1999 in the
amount of $279,667 to GSI Canada, one of our stockholders, for payment of
license fees of $200,000 and reimbursement of expenditures in the amount of
$79,667 paid by GSI Canada on our behalf during the fiscal year ended October
31, 1999. The note is unsecured and bears interest of prime plus two percent and
matures on October 31, 2000. We also issued GSI Canada 600,000 shares of common
stock as payment for the license, valued at $1.00 per share.
30
On October 31, 1999, we accrued financing expenses in the amount of
$10,000 due to Totalcom Inc., one of our stockholders, for finder fees
associated with our October 1999 private offering. Mr. J. Michel de Montigny,
our president, CEO and chairman, owns Totalcom Inc.
On October 31, 1999, we accrued financing expenses in the amount of
$15,000 due to 3633730 Canada Inc., one of our stockholders, for finder fees
associated with our October 1999 private offering. Mr. J. Michel de Montigny,
our president, CEO and chairman, is now a 100 percent shareholder of 3633730
Canada Inc.
On August 17, 1999, we entered into an agreement with Maxima Capital
Inc., one of our stockholders, for services related to obtaining a OTC:BB
listing. The fee for such services totaled $12,000 of which $7,500 has been
accrued in the financial statements. On October 31, 1999, on the basis of time
spent, we accrued expenses in the amount of $86,500 due to Maxima Capital Inc
.for finder fees associated with our October 1999 private offering as well as
for other services. Maxima Capital is our principal financial advisor and has
acted as placement agent and trustee. Mr. Pierre Saint-Aubin is the Director of
Maxima Capital Inc. and one of our stockholders. Maxima Capital is a licensed
brokerage firm in Canada and the offering was only made to Canadians.
On May 4, 2000, we entered into a sub-licensing agreement with
GSI Canada for them to distribute all of our products in Canada. The fee for the
license is $250,000 payable in 10 equal annual installments.
Our policy is to obtain all supplies and services on a normal
competitive basis, but that, all things being equal, to purchase from affiliated
or related entities. All related party transactions must be reviewed by the
board of directors to assure that we are not paying higher than fair market
arms-length prices.
Disclosure of commission position on
indemnification for securities act liabilities
Neither our by-laws nor our certificate of incorporation
currently provide indemnification to our officers or directors. In an effort to
continue to attract and retain qualified individuals to serve as our directors
and officers, we intend to adopt provisions providing for the maximum
indemnification permitted by Delaware law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons, pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore unenforceable.
Description of securities
Authorized and outstanding stock
31
Our authorized capital stock consists of 55,000,000 shares of
Class B common stock, $.001 par value, and 5,000,000 shares of Class A common
stock, $1.00 par value. As of December 31, 1999, there were 20,185,472 shares
of Class B common stock outstanding, which were held by approximately 252
stockholders of record and no shares of Class A common stock were outstanding.
Common stock
Subject to legal and contractual restrictions on payment of
dividends, the holders of common stock are entitled to receive such lawful
dividends as may be declared by the board of directors. In the event of our
liquidation, dissolution or winding up, the holders of shares of common stock
are entitled to receive all of our remaining assets available for distribution
to stockholders after satisfaction of all liabilities and preferences. Holders
of our common stock do not have any preemptive, conversion or redemption rights
and there are no sinking fund provisions applicable to our common stock. Record
holders of our common stock are entitled to vote at all meetings of
stockholders and at those meetings are entitled to cast one vote for each share
of record that they own on all matters on which stockholders may vote.
Stockholders do not have cumulative voting rights in the election of our
directors. As a result, the holders of a plurality of the outstanding shares
can elect all of our directors, and the holders of the remaining shares are not
able to elect any of our directors. All outstanding shares of common stock are
fully paid and non-assessable, and all shares of common stock to be offered and
sold in this offering will be fully paid and non-assessable.
Warrants
We currently have 3,674,000 warrants outstanding, each of
which entitles the registered holder thereof to purchase, at any time until the
close of business on January 31, 2002, one share of Class B common stock at a
price of $1.10. All of the warrants contain provisions which protect the
holders thereof against dilution by adjustment of the exercise price and number
of warrants, in certain events, such as stock dividends, stock splits, mergers,
sale of substantially all of our assets, and for other extraordinary events.
Transfer agent and registrar
The stock transfer agent and registrar for our common stock is
Intercontinental Registry and Stock Transfer, located at 900 Buchanan blvd # 1,
Boulder City, Nevada 89005-2100.
Dividend policy
Under applicable law, dividends may only be paid out of
legally available funds as proscribed by a statute, subject to the discretion of
the board of directors. In addition, it is currently our policy to retain
internally generated funds to support future expansion of our business.
Accordingly, even if we do generate earnings, and even if we are not prohibited
from paying dividends, we do not currently intend to declare or pay cash
dividends on our common stock for the foreseeable future.
Shares available for future sale
32
On the date of this prospectus, all 4,703,206 shares included
in this prospectus will generally be freely tradable without restriction imposed
by, or further registration under, the Securities Act. An additional 12,452,266
shares of our common stock may be deemed "restricted securities," as that term
is defined under Rule 144 promulgated under the Securities Act. Such shares may
be sold to the public, subject to volume restrictions, as described below.
Commencing at various dates, these shares may be sold to the public without any
volume limitations.
In general, under Rule 144 as currently in effect, subject to
the satisfaction of certain other conditions, a person, including one of our
affiliates, or persons whose shares are aggregated with affiliates, who has
owned restricted shares of common stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that does
not exceed 1% of the total number of outstanding shares of the same class. In
the event our shares are sold on an exchange or are reported on the automated
quotation system of a registered securities association, you could sell during
any three-month period the greater of such 1% amount or the average weekly
trading volume as reported for the four calendar weeks preceding the date on
which notice of your sale is filed with the SEC. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about us. A person who has not been
one of our affiliates for at least the three months immediately preceding the
sale and who has beneficially owned shares of common stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the limitations described above.
You should note that we anticipate that our shares of common
stock will initially be included for quotation on the OTC Bulletin Board.
Pursuant to SEC regulations, the OTC Bulletin Board is not considered an
"automated quotation system of a registered securities association" and Rule 144
will only permit sales of up to 1% of the outstanding shares during any three
month period.
Plan of distribution
The sale of the shares of common stock by the selling
stockholders may be effected by them from time to time in the over the counter
market or in such other public forum where our shares are publicly traded or
listed for quotation. These sales may be made in negotiated transactions through
the timing of options on the shares, or through a combination of such methods of
sale, at fixed prices, which may be charged at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The selling stockholders may effect such transactions by
selling the shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of the shares for which such
broker-dealer may act as agent or to whom they sell as principal, or both. The
compensation as to a particular broker-dealer may be in excess of customary
compensation.
The selling stockholders and any broker-dealers who act in
connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit on any sale of the shares as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act.
33
Selling stockholders
We are registering
o Shares of common stock purchased by investors in our 1999 private
placement offerings,
o a portion of the shares of common stock owned by our founders,
o a portion of the shares of common stock received as a distribution
from GSI Canada; and
o 3,674,000 shares of common stock underlying currently outstanding
warrants.
Other than the costs of preparing this prospectus and a
registration fee to the SEC, we are not paying any costs relating to the sales
by the selling stockholders. Each of the selling stockholders, or their
transferees, and intermediaries to whom such securities may be sold may be
deemed to be an "underwriter" of the common stock offered in this prospectus, as
that term is defined under the Securities Act. Each of the selling stockholders,
or their transferees, may sell these shares from time to time for his own
account in the open market at the prevailing prices, or in individually
negotiated transactions at such prices as may be agreed upon. The net proceeds
from the sale of these shares by the selling stockholders will inure entirely to
their benefit and not to ours.
Except as indicated below, none of the selling stockholders
has held any position or office, or had any material relationship with us or any
of our predecessors or affiliates within the last three years, and after
completion of this offering will own the amount of our outstanding common stock
listed opposite their name. The shares reflected by each selling stockholder is
based upon information provided to us by our transfer agent and from other
available sources in December 1999.
These shares may be offered for sale from time to time in regular
brokerage transactions in the over-the-counter market, or, either directly or
through brokers or to dealers, or in private sales or negotiated transactions,
or otherwise, at prices related to the then prevailing market prices. Thus, they
may be required to deliver a current prospectus in connection with the offer or
sale of their shares. In the absence of a current prospectus, if required, these
shares may not be sold publicly without restriction unless held by a
non-affiliate for two years, or after one year subject to volume limitations and
satisfaction of other conditions. The selling stockholders are hereby advised
that Regulation M of the General Rules and Regulations promulgated under the
Securities Exchange Act of 1934 will be applicable to their sales of these
shares. These rules contain various prohibitions against trading by persons
interested in a distribution and against so-called "stabilization" activities.
The selling stockholders, or their transferees, might be
deemed to be "underwriters" within the meaning of Section 2(11) of the Act and
any profit on the resale of these shares as principal might be deemed to be
underwriting discounts and commissions under the Act. Any sale of these shares
by selling shareholders, or their transferees, through broker-dealers may cause
the broker-dealers to be considered as participating in a distribution and
subject to Regulation M promulgated under the Securities Exchange Act of 1934,
34
as amended. If any such transaction were a "distribution" for purposes of
Regulation M, then such broker-dealers might be required to cease making a
market in our equity securities for either two or nine trading days prior to,
and until the completion of, such activity.
35
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
3633730 Canada inc. (1) 7,776,174 288,000 7,488,174
Tim McLean 209,888 69,000 140,888
3633632 Canada inc. (1) 1,050,000 38,000 1,012,000
Totalcom inc. (1) 1,512,000 56,000 1,456,000
9035-2899 Quebec inc 70,000 23,000 47,000
Denis Renaud 70,000 23,000 47,000
Interlink Investment And Holding 258,982 85,000 173,982
Chambers Investment And Holding 258,982 85,000 173,982
Paul A. Cyr 100,000 33,000 67,000
Michel Laplante (2) 20,000 7,000 13,000
Knick-knack Investment And Holding 147,000 49,000 98,000
Illaria Investment And Holding 154,162 51,000 103,162
Pierre Addison 5,000 2,000 3,000
Tony Della Cioppa 7,500 2,000 5,500
Mario Iannicello 7,500 2,000 5,500
Israel Martineau 50,000 17,000 33,000
Anthony Santucci 2,284 1,000 1,284
George Zervakos 10,000 3,000 7,000
Melanie Lacombe 1,000 -- 1,000
W.A.F.A. Corporation 662,500 219,000 443,500
O.S.F.A. Corporation 175,000 58,000 117,000
Paul Roy 175,000 58,000 117,000
9064-6167 Quebec inc 175,000 58,000 117,000
Maxima Capital Inc (3) 281,250 93,000 188,250
Pierre Saint-Aubin (3) 281,250 93,000 188,250
Lipalsc 700,000 231,000 469,000
Majella Boucher 87,500 29,000 58,500
Renee Sylvestre 87,500 29,000 58,500
Daniel Riopel 87,500 29,000 58,500
Steve Larochelle 87,500 29,000 58,500
Gerald Deslandes 87,500 29,000 58,500
Jocelyne Langelier 87,500 29,000 58,500
Alain Chicoine 87,500 29,000 58,500
Gilles Leduc 87,500 29,000 58,500
Monique Petit 87,500 29,000 58,500
Jean-Guy Petit 87,500 29,000 58,500
Patrick Petit 87,500 29,000 58,500
Marcel Hebert 87,500 29,000 58,500
Serge Paquin 52,500 17,000 35,500
Suzie Beauchemin 35,000 12,000 23,000
Ginette Barnabe 87,500 29,000 58,500
Robert Bazinet 87,500 29,000 58,500
36
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
Pierre Champagne 87,500 29,000 58,500
Serge Cote 87,500 29,000 58,500
Yves Tremblay 87,500 29,000 58,500
Gilles Villemaire 87,500 29,000 58,500
Michel Lefebvre 87,500 29,000 58,500
Monique Lussier 87,500 29,000 58,500
Gestion Jacques Plantes inc 262,500 87,000 175,500
Denis Adam 87,500 29,000 58,500
Francine Goyette 87,500 29,000 58,500
Isabel Marques 87,500 29,000 58,500
Yvan Dery 87,500 29,000 58,500
Danielle Dubuc 175,000 58,000 117,000
Renald Racine 87,500 29,000 58,500
D. et M. Gariepy 87,500 29,000 58,500
Louise Beauvolsk 87,500 29,000 58,500
Sebastien Leduc 87,500 29,000 58,500
Louise Nadeau 87,500 29,000 58,500
Juliette A. Bourque 87,500 29,000 58,500
Richard Bourque 87,500 29,000 58,500
Jean-Jacques Lajoie 175,000 58,000 117,000
Paul-Andre Lepage 87,500 29,000 58,500
Simon Francoeur 87,500 29,000 58,500
Bruno Girouard 87,500 29,000 58,500
Investissement Dumont 87,500 29,000 58,500
Paul Nolin Auto 87,500 29,000 58,500
Power Group 50,000 17,000 33,000
Andre Desjardins 25,000 8,000 17,000
BBT Consulting Group 500,000 158,206 341,794
3529363 Canada inc 600,000 600,000 0
Addison, Pierre 1,000 1,000 0
Akhavan, Hooman 2,000 2,000 0
Anagnostaras, Con 5,000 5,000 0
Anderson, Vivian 1,000 1,000 0
Angers, Dyan 1,000 1,000 0
Angers, Jocelyne 1,000 1,000 0
Angers, Sylvain 2,000 2,000 0
Anthabian, Tigran 1,500 1,500 0
Antun, Emilio 2,000 2,000 0
Araujo, Jose 15,000 15,000 0
Araujo, Jose 5,000 5,000 0
Arvanitakis, Irene 1,500 1,500 0
Arvanitakis, Maria 2,000 2,000 0
Audate, Martine 1,847 1,847 0
37
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
Bachellerie, Yan 1,000 1,000 0
Batchelder, Todd 1,000 1,000 0
Bao, Nick 2,000 2,000 0
Bazinet, Marie-France 10,000 10,000 0
Bazzarelli, Ernest 1,000 1,000 0
Beheshti-Zavareth, Hossein 728 728 0
Beaudin, Bert 2,000 2,000 0
Beaulieu, Pauline 1,981 1,981 0
Beauregard, Micheline 3,855 3,855 0
Beauregard, Sonia 1,313 1,313 0
Benoit, Gaetan 5,000 5,000 0
Berger, Louise 3,000 3,000 0
Blais, Francine 1,981 1,981 0
Blais, Sylvain 930 930 0
Boivert, Jacques 2,000 2,000 0
Bouchard D'amico, Louise 5,000 5,000 0
Boucher, Yan 1,981 1,981 0
Brouillard, M 3,220 3,220 0
Bussiere, Robert 2,300 2,300 0
Cardinal, Frederic 1,998 1,998 0
Cardinal, Raymond 1,146 1,146 0
Cardinal, Carole 1,153 1,153 0
Calisto, Mike 2,000 2,000 0
Campagnale, Vince 2,000 2,000 0
Cannuli, Diane 1,000 1,000 0
Carnevale, Benny 1,500 1,500 0
Carruthers, William 33,000 33,000 0
Chiminian, Hagop 1,000 1,000 0
Christofaro, Joseph 2,650 2,650 0
Chu, Kun Chu 30,000 30,000 0
Coiteux, F 3,250 3,250 0
Collins, Ginette 2,000 2,000 0
Cote, Michel 6,661 6,661 0
Cote, Pierre-Paul 2,740 2,740 0
Courchesne, Lyne 1,000 1,000 0
Cunningham, Diane 1,000 1,000 0
Daigle, Claude 5,000 5,000 0
D'Amico, Carlo 1,500 1,500 0
Dansereau, J. F 1,417 1,417 0
Daviau, Louise 9,800 9,800 0
De Nardis, Luigi 10,000 10,000 0
De Nardis, Mena 1,000 1,000 0
Deruyter, Ellen 2,670 2,670 0
38
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
Desjardins, G 20,000 20,000 0
Disalvo, Joseph 5,000 5,000 0
Dore, Michelle 5,274 5,274 0
Dolar, Jirayr 10,000 10,000 0
Dulude, Valerie 4,000 4,000 0
Dugas, Yves 975 975 0
Ediflex inc 3,318 3,318 0
Edition Louis Martin 3,318 3,318 0
Eliopoulos, Georges 2,000 2,000 0
Fafard, Andree 14,400 14,400 0
Favas, Emanuel 11,936 11,936 0
Felsher, Melvyn 10,000 10,000 0
Ferner, Susan 2,000 2,000 0
First-Guardian International Corporation 10,000 10,000 0
Fontaine, Bernard 1,600 1,600 0
Ford, Marjorie 20,000 20,000 0
Fortier, Denis 4,000 4,000 0
Foster, Linda J 2,000 2,000 0
Furman, Mitchel 2,000 2,000 0
Giannini, Giuseppe 3,000 3,000 0
Goldfinch, Stephanie 1,000 1,000 0
Gravas, Spiros et Arvanitakis, Panayiota 2,000 2,000 0
Guerin, Carl 2,665 2,665 0
Guerin, Gilles 3,961 3,961 0
Guerin, Jean-Francois 1,336 1,336 0
Guernon, Jean 3,278 3,278 0
Hancock, Richard 10,000 10,000 0
Hancock, Richard 4,989 4,989 0
Harel, Hubert 10,000 10,000 0
Hartvigsen, Kris 1,200 1,200 0
Hebert, Fernande 10,000 10,000 0
Hebert, Jean 23,300 23,300 0
Hebert, Jean 23,396 23,396 0
Hoyt, Randy 1,000 1,000 0
Jamalouden, Nazmoon 15,000 15,000 0
Kaklamanos, Leonidas 3,000 3,000 0
Kalafatidis, James 3,400 3,400 0
Kastelorizios, Maria 8,000 8,000 0
Karteris, Maria 13,422 13,422 0
Karteris, John 16,680 16,680 0
Karteris, John 16,780 16,780 0
Kirakossian, Garabet 11,000 11,000 0
Kirakossian, Hourie 2,500 2,500 0
39
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
Kirakossian, Vartivar 6,000 6,000 0
Lachapelle, Sylvain 5,200 5,200 0
Lacroce, Vincenzo 3,000 3,000 0
Lalande, Sophie 3,000 3,000 0
Lamorgese, Caroline 1,000 1,000 0
Lamorgese, Tony 2,000 2,000 0
Lanoie, Pierre 2,130 2,130 0
Laverdiere, Chantal 1,000 1,000 0
Lebel, Yannick 1,000 1,000 0
Leroux, Guylaine 8,000 8,000 0
L.I.B. Invest. Club 2,000 2,000 0
Lintzeris, Peter 2,000 2,000 0
Luniewski, Renee 2,000 2,000 0
Mady, Chady 3,014 3,014 0
Malenfant, Robert 20,700 20,700 0
Malenfant, Veronique 7,950 7,950 0
Marcos, Marcel 1,000 1,000 0
Markov, Nikolaos 1,500 1,500 0
Martin, Jacques 50,000 50,000 0
Martin, Philippe 2,000 2,000 0
Martinez, Alvaro 2,000 2,000 0
Mathieu, Josee 4,916 4,916 0
Mineo, Serge 1,000 1,000 0
Morazain, Luc 2,000 2,000 0
Morel, Remy 600 600 0
Morin, Pierre 9,460 9,460 0
Morissette, Solange 900 900 0
Morgia, Anne-Marie 1,000 1,000 0
Muller, Peter 1,000 1,000 0
Natale R. Gennaro 8,000 8,000 0
Pacheco John et Pacheco Joe 1,313 1,313 0
Panaccione, Fabio 10,000 10,000 0
Papadakos, Georgia 15,000 15,000 0
Pappappicco, Mariella 5,000 5,000 0
Pare, Richard 3,341 3,341 0
Perreault, Daniel 1,600 1,600 0
Petit, Patrice 3,137 3,137 0
Pires, Joa 20,000 20,000 0
Poulin, Christian 1,336 1,336 0
Poulopoulos, N 5,000 5,000 0
Purcell, Anita 1,000 1,000 0
Rea, Karen 3,000 3,000 0
Renaud, Denis 3,318 3,318 0
40
SHARES BENEFICIALLY OWNED
Before After
NAME OF SELLING SECURITY HOLDER Offering Offering Offering
Richard, Martin 1,500 1,500 0
Riopel, Nicole 1,400 1,400 0
Rioux, Pierre Sam 2,015 2,015 0
Roque, Christina 1,000 1,000 0
Salas Fernandez, Carlos Luis 1,982 1,982 0
Santucci, Anthony 1,000 1,000 0
Santucci, Gianni 10,000 10,000 0
Santucci, Mario 1,000 1,000 0
Santucci, Mario 16,500 16,500 0
Sauve, Diane 2,000 2,000 0
Shou, Judy 1,000 1,000 0
Sistatsis, Georges 1,000 1,000 0
Stefaros, Bill 12,000 12,000 0
Stinziani, Giovanni 8,000 8,000 0
Stockden, Gary 2,000 2,000 0
Taddeo, Anthony 1,000 1,000 0
Tartaglia, Nick 5,929 5,929 0
Tassone, Vittoria 5,000 5,000 0
Tolias, Maria 4,000 4,000 0
Therrien, Eric 2,500 2,500 0
Therrien, Ghislaine 2,500 2,500 0
Tremblay, Marc 16,700 16,700 0
Trudeau, Wayne 3,000 3,000 0
Vaccarella, Vincent 14,000 14,000 0
Vassiliou, Joanne 1,000 1,000 0
Vassiliou, Vicky 3,400 3,400 0
Veilleux, Vincent 6,661 6,661 0
Virgilio, Giuseppe 6,500 6,500 0
Ward, Lance 1,660 1,660 0
Woods, James 5,000 5,000 0
Winikoff, Mark 1,000 1,000 0
Zervakos, Georges 29,000 29,000 0
Zervakos, Georges 4,989 4,989 0
Zervakos, Kostantinos 2,000 2,000 0
Zervakos, Melinda 2,000 2,000 0
Zervakou, Rosa 1,000 1,000 0
3101-5464 Quebec inc 35,000 35,000 0
9008-5085 Quebec inc 15,000 15,000 0
(1) Controlled by our President, CEO and Chairman.
(2) Our Senior Vice President Sales and Marketing and a Director.
(3) Mr. Pierre Saint-Aubin is a director of this entity.
41
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
3633730 Canada inc. (1) 260,954 260,954 0
3633632 Canada inc. (1) 347,938 347,938 0
Totalcom inc. (1) 34,794 34,794 0
9035-2899 Quebec inc 34,794 34,794 0
Denis Renaud 26,095 26,095 0
Interlink Investment And Holding 17,397 17,397 0
Chambers Investment And Holding 17,397 17,397 0
W.A.F.A. Corporation 75,000 75,000 0
O.S.F.A. Corporation 75,000 75,000 0
Paul Roy 75,000 75,000 0
9064-6167 Quebec inc 75,000 75,000 0
Maxima Capital Inc. (2) 375,000 375,000 0
Pierre Saint-Aubin (2) 104,381 104,381 0
Lipalsc 100,800 100,800 0
Majella Boucher 12,600 12,600 0
Renee Sylvestre 12,600 12,600 0
Daniel Riopel 12,600 12,600 0
Steve Larochelle 12,600 12,600 0
Gerald Deslandes 12,600 12,600 0
Jocelyne Langelier 12,600 12,600 0
Alain Chicoine 12,600 12,600 0
Gilles Leduc 12,600 12,600 0
Monique Petit 12,600 12,600 0
Jean-Guy Petit 12,600 12,600 0
Patrick Petit 12,600 12,600 0
Marcel Hebert 12,700 12,600 0
Serge Paquin 7,560 7,560 0
Suzie Beauchemin 5,040 5,040 0
Ginette Barnabe 12,600 12,600 0
Robert Bazinet 12,600 12,600 0
Pierre Champagne 12,600 12,600 0
Serge Cote 12,600 12,600 0
Yves Tremblay 12,600 12,600 0
Gilles Villemaire 12,600 12,600 0
Michel Lefebvre 12,600 12,600 0
Monique Lussier 12,600 12,600 0
Gestion Jacques Plantes inc 37,800 37,800 0
Denis Adam 12,600 12,600 0
Francine Goyette 12,600 12,600 0
Isabel Marques 12,600 12,600 0
Yvan Dery 12,600 12,600 0
42
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
Danielle Dubuc 25,225 25,225 0
Renald Racine 12,600 12,600 0
D. et M. Gariepy 12,600 12,600 0
Louise Beauvolsk 12,600 12,600 0
Sebastien Leduc 12,600 12,600 0
Louise Nadeau 12,600 12,600 0
Juliette A. Bourque 12,600 12,600 0
Richard Bourque 12,600 12,600 0
Jean-Jacques Lajoie 25,225 25,225 0
Paul-Andre Lepage 12,600 12,600 0
Simon Francoeur 12,600 12,600 0
Bruno Girouard 12,600 12,600 0
Investissement Dumont 12,600 12,600 0
Paul Nolin Auto 12,600 12,600 0
BBT Consulting Group 500,000 500,000 0
Addison, Pierre 1,000 1,000 0
Akhavan, Hooman 2,000 2,000 0
Anagnostaras, Con 5,000 5,000 0
Anderson, Vivian 1,000 1,000 0
Angers, Dyan 1,000 1,000 0
Angers, Jocelyne 1,000 1,000 0
Angers, Sylvain 2,000 2,000 0
Anthabian, Tigran 1,500 1,500 0
Antun, Emilio 2,000 2,000 0
Araujo, Jose 15,000 15,000 0
Araujo, Jose 5,000 5,000 0
Arvanitakis, Irene 1,500 1,500 0
Arvanitakis, Maria 2,000 2,000 0
Audate, Martine 1,847 1,847 0
Bachellerie, Yan 1,000 1,000 0
Batchelder, Todd 1,000 1,000 0
Bao, Nick 2,000 2,000 0
Bazinet, Marie-France 10,000 10,000 0
Bazzarelli, Ernest 1,000 1,000 0
Beheshti-Zavareth, Hossein 728 728 0
Beaudin, Bert 2,000 2,000 0
Beaulieu, Pauline 1,981 1,981 0
Beauregard, Micheline 3,855 3,855 0
Beauregard, Sonia 1,313 1,313 0
Benoit, Gaetan 5,000 5,000 0
Berger, Louise 3,000 3,000 0
Blais, Francine 1,981 1,981 0
43
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
Blais, Sylvain 930 930 0
Boivert, Jacques 2,000 2,000 0
Bouchard D'amico, Louise 5,000 5,000 0
Boucher, Yan 1,981 1,981 0
Brouillard, M 3,220 3,220 0
Bussiere, Robert 2,300 2,300 0
Cardinal, Frederic 1,998 1,998 0
Cardinal, Raymond 1,146 1,146 0
Cardinal, Carole 1,153 1,153 0
Calisto, Mike 2,000 2,000 0
Campagnale, Vince 2,000 2,000 0
Cannuli, Diane 1,000 1,000 0
Carnevale, Benny 1,500 1,500 0
Carruthers, William 33,000 33,000 0
Chiminian, Hagop 1,000 1,000 0
Christofaro, Joseph 2,650 2,650 0
Chu, Kun Chu 30,000 30,000 0
Coiteux, F 3,250 3,250 0
Collins, Ginette 2,000 2,000 0
Cote, Michel 6,661 6,661 0
Cote, Pierre-Paul 2,740 2,740 0
Courchesne, Lyne 1,000 1,000 0
Cunningham, Diane 1,000 1,000 0
Daigle, Claude 5,000 5,000 0
D'Amico, Carlo 1,500 1,500 0
Dansereau, J. F 1,417 1,417 0
Daviau, Louise 9,800 9,800 0
De Nardis, Luigi 10,000 10,000 0
De Nardis, Mena 1,000 1,000 0
Deruyter, Ellen 2,670 2,670 0
Desjardins, G 20,000 20,000 0
Disalvo, Joseph 5,000 5,000 0
Dore, Michelle 5,274 5,274 0
Dolar, Jirayr 10,000 10,000 0
Dulude, Valerie 4,000 4,000 0
Dugas, Yves 975 975 0
Ediflex inc 3,318 3,318 0
Edition Louis Martin 3,318 3,318 0
Eliopoulos, Georges 2,000 2,000 0
Fafard, Andree 14,400 14,400 0
Favas, Emanuel 11,936 11,936 0
Felsher, Melvyn 10,000 10,000 0
44
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
Ferner, Susan 2,000 2,000 0
First-Guardian International Corporation 10,000 10,000 0
Fontaine, Bernard 1,600 1,600 0
Ford, Marjorie 20,000 20,000 0
Fortier, Denis 4,000 4,000 0
Foster, Linda J 2,000 2,000 0
Furman, Mitchel 2,000 2,000 0
Giannini, Giuseppe 3,000 3,000 0
Goldfinch, Stephanie 1,000 1,000 0
Gravas, Spiros et Arvanitakis, Panayiota 2,000 2,000 0
Guerin, Carl 2,665 2,665 0
Guerin, Gilles 3,961 3,961 0
Guerin, Jean-Francois 1,336 1,336 0
Guernon, Jean 3,278 3,278 0
Hancock, Richard 10,000 10,000 0
Hancock, Richard 4,989 4,989 0
Harel, Hubert 10,000 10,000 0
Hartvigsen, Kris 1,200 1,200 0
Hebert, Fernande 10,000 10,000 0
Hebert, Jean 23,300 23,300 0
Hebert, Jean 23,396 23,396 0
Hoyt, Randy 1,000 1,000 0
Jamalouden, Nazmoon 15,000 15,000 0
Kaklamanos, Leonidas 3,000 3,000 0
Kalafatidis, James 3,400 3,400 0
Kastelorizios, Maria 8,000 8,000 0
Karteris, Maria 13,422 13,422 0
Karteris, John 16,680 16,680 0
Karteris, John 16,780 16,780 0
Kirakossian, Garabet 11,000 11,000 0
Kirakossian, Hourie 2,500 2,500 0
Kirakossian, Vartivar 6,000 6,000 0
Lachapelle, Sylvain 5,200 5,200 0
Lacroce, Vincenzo 3,000 3,000 0
Lalande, Sophie 3,000 3,000 0
Lamorgese, Caroline 1,000 1,000 0
Lamorgese, Tony 2,000 2,000 0
Lanoie, Pierre 230 2,130 0
Laverdiere, Chantal 1,000 1,000 0
Lebel, Yannick 1,000 1,000 0
Leroux, Guylaine 8,000 8,000 0
L.I.B. Invest. Club 2,000 2,000 0
45
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
Lintzeris, Peter 2,000 2,000 0
Luniewski, Renee 2,000 2,000 0
Mady, Chady 3,014 3,014 0
Malenfant, Robert 20,700 20,700 0
Malenfant, Veronique 7,950 7,950 0
Marcos, Marcel 1,000 1,000 0
Markov, Nikolaos 1,500 1,500 0
Martin, Jacques 50,000 50,000 0
Martin, Philippe 2,000 2,000 0
Martinez, Alvaro 2,000 2,000 0
Mathieu, Josee 4,916 4,916 0
Mineo, Serge 1,000 1,000 0
Morazain, Luc 2,000 2,000 0
Morel, Remy 600 600 0
Morin, Pierre 9,460 9,460 0
Morissette, Solange 900 900 0
Morgia, Anne-Marie 1,000 1,000 0
Muller, Peter 1,000 1,000 0
Natale R. Gennaro 8,000 8,000 0
Pacheco John et Pacheco Joe 1,313 1,313 0
Panaccione, Fabio 10,000 10,000 0
Papadakos, Georgia 15,000 15,000 0
Pappappicco, Mariella 5,000 5,000 0
Pare, Richard 3,341 3,341 0
Perreault, Daniel 1,600 1,600 0
Petit, Patrice 3,137 3,137 0
Pires, Joa 20,000 20,000 0
Poulin, Christian 1,336 1,336 0
Poulopoulos, N 5,000 5,000 0
Purcell, Anita 1,000 1,000 0
Rea, Karen 3,000 3,000 0
Renaud, Denis 3,318 3,318 0
Richard, Martin 1,500 1,500 0
Riopel, Nicole 1,400 1,400 0
Rioux, Pierre Sam 2,015 2,015 0
Roque, Christina 1,000 1,000 0
Salas Fernandez, Carlos Luis 1,982 1,982 0
Santucci, Anthony 1,000 1,000 0
Santucci, Gianni 10,000 10,000 0
Santucci, Mario 1,000 1,000 0
Santucci, Mario 16,500 16,500 0
Sauve, Diane 2,000 2,000 0
46
WARRANTS BENEFICIALLY OWNED*
Before After
NAME OF WARRANT HOLDER Offering Offering Offering
Shou, Judy 1,000 1,000 0
Sistatsis, Georges 1,000 1,000 0
Stefaros, Bill 12,000 12,000 0
Stinziani, Giovanni 8,000 8,000 0
Stockden, Gary 2,000 2,000 0
Taddeo, Anthony 1,000 1,000 0
Tartaglia, Nick 5,929 5,929 0
Tassone, Vittoria 5,000 5,000 0
Tolias, Maria 4,000 4,000 0
Therrien, Eric 2,500 2,500 0
Therrien, Ghislaine 2,500 2,500 0
Tremblay, Marc 16,700 16,700 0
Trudeau, Wayne 3,000 3,000 0
Vaccarella, Vincent 14,000 14,000 0
Vassiliou, Joanne 1,000 1,000 0
Vassiliou, Vicky 3,400 3,400 0
Veilleux, Vincent 6,661 6,661 0
Virgilio, Giuseppe 6,500 6,500 0
Ward, Lance 1,660 1,660 0
Woods, James 5,000 5,000 0
Winikoff, Mark 1,000 1,000 0
Zervakos, Georges 29,000 29,000 0
Zervakos, Georges 4,989 4,989 0
Zervakos, Kostantinos 2,000 2,000 0
Zervakos, Melinda 2,000 2,000 0
Zervakou, Rosa 1,000 1,000 0
3101-5464 Quebec inc 35,000 35,000 0
9008-5085 Quebec inc 15,000 15,000 0
-
* We are registering the shares underlying the warrants. References in
the chart to "Warrants" before or after sale are all references to the
underlying shares. The list has been presented in two parts to distinguish
between the actual shares and the shares underlying the warrants. Each warrant
is exercisable into one share of Class B Common Stock at a price of $1.10.
(1) Controlled by our President, CEO and Chairman.
(2) Mr. Pierre Saint-Aubin is a director of this entity.
47
Legal matters
Certain legal matters in connection with this offering are
being passed upon by the law firm of Heller, Horowitz & Feit, P.C., New York,
New York.
Experts
Our audited financial statements as of October 31, 1999 and
for the fiscal year then ended are included in this prospectus in reliance upon
the report of Mark Cohen C.P.A., an independent certified public accountant, and
upon the authority of said person as an expert in accounting and auditing.
Available information
Commencing on the date of this prospectus, we will be subject
to the information requirements of the Securities Exchange Act of 1934, as
amended. This Act requires us to file reports, proxy statements and other
information with the Securities and Exchange Commission. Copies of the reports,
proxy statements and other information we file can be inspected at the
Headquarters Office of the Securities and Exchange Commission located at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at certain of its
regional offices at the following addresses:
o 7 World Trade Center, 13th Floor, New York, New York 10048; and
o 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the material we file may be obtained from the Public
Reference Section of the Commission, at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. at prescribed rates. The Public Reference Room can be reached
at (202) 942-8090. The Commission also maintains a web site that contains
reports, proxy and information statements and other information regarding us.
This material can be found at http://www.sec.gov.
48
Mark Cohen C.P.A.
1772 East Trafalgar Circle
Hollywood, Fl 33020
(954) 922 - 6042
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Board of Directors
GSI Technologies USA, Inc.
We have audited the accompanying balance sheet of GSI Technologies USA, Inc. (a
company in the development stage) as of October 31, 1999 and the related
statements of operations, shareholders' equity (deficiency) and cash flows for
the year ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GSI Technologies USA, Inc. at
October 31, 1999, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has experienced an operating loss that raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 4. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/Mark Cohen
Mark Cohen C.P.A.
A Sole Proprietor Firm
Hollywood, Florida
December 23, 1999
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
October 31, 1999 April 30, 2000
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 350,019 $ 36,564
Receivables, net 90,985 196,118
Total current assets 441,004 232,682
Other assets 473,478 426,000
Total assets 914,482 658,682
======= =======
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 119,000 28,789
Note Payable 279,667 -
Other current liabilities 58,190 10,198
Total current liabilities 456,857 38,987
Shareholder's Equity
Common Stock, class A, $1.00 par value;
authorized 5,000,000 shares;
issued and outstanding none in 1999 - -
Common Stock, class B, $.001 par value;
authorized 19,608 20,185
55,000,000 shares; issued and
outstanding - 19,608,372 and
20,185,472 shares respectfully
Paid in Capital 696,656 1,273,179
Deficit accumulated during the
development stage (258,639) (673,670)
Total Shareholder's Equity 457,626 619,695
Total liabilities and shareholder's
equity $ 914,482 $ 658,682
======= =======
Read the accompanying summary of significant accounting policies and notes to
financial statements, both of which are an integral part of this financial
statement.
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF INCOME
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
Period of inception
Year Ended Six months ended July 06, 1998 to
October 31, 1999 April 30, 2000 April 30, 2000
---------------------- ------------------ -------------------
(Unaudited) (Unaudited)
Operating Expenses:
Salaries and related costs - 241,061 241,061
Rent - 36,560 36,560
Financing expense 128,790 - 128,790
Professional fees 78,317 18,970 97,287
Amortization of intangibles 1,301 47,478 48,779
Travel - 17,909 17,909
Other selling, general and administrative 50,231 65,652 115,883
---------------------- ------------------ -------------------
Total operating expenses 258,639 427,630 686,269
Loss before other income (expense) (258,639) (427,630) (686,269)
Other income (expense):
Interest income - 12,599 12,599
---------------------- ------------------ -------------------
Total other income (expense) - 12,599 12,599
---------------------- ------------------ -------------------
Net Loss (258,639) (415,031) (673,670)
====================== ================== ===================
Basic weighted average common shares outstanding 6,185,628 20,070,565 19,252,148
====================== ================== ===================
Basic Loss per common share $ (0.0418) $ (0.0213) $ (0.0356)
====================== ================== ===================
Read the accompanying summary of significant accounting policies and notes to
financial statements, both of which are an integral part of this financial
statement.
Accumulated
Deficit during Total
Common Class A Common Class B Paid in Development Shareholder's Cost per
----------------------------------------- Capital Stage Equity Share
Shares Amount Shares Par Value Amount
---------------------- ----------------- ------ ---------- ------------ ---------
Balance, beginning: - $ - - $ - $ - $ - $ - $ -
June 30, 1999
Proceeds from the sale of Class B 18,085,472 0.001 18,085 - - 18,085 0.001
September 16, 1999
Contract Settlement - BBT Consulting
Group, Inc. - - 500,000 0.001 500 - - 500 0.001
October 22, 1999
Proceeds from the sale of Class B through 384,700 0.001 385 384,315 - 384,700 1.000
circular offering
October 26, 1999
Issuance of stock to GSI Technologies 600,000 0.001 600 599,400 - 600,000 1.000
(3529363 Canada Inc.) for license rights
Dividend to affiliate - GSI Technologies (325,221) (325,221)
(3529363 Canada Inc.) for license rights
October 27, 1999
Proceeds from the sale of Class B through 18,000 0.001 18 17,982 - 18,000 1.000
circular offering
October 29, 1999
Proceeds from the sale of Class B through 20,200 0.001 20 20,180 - 20,200 1.000
circular offering
Net loss year ended October 31, 1999 (258,639) (258,639)
------- -- ---------- -------- ------- -------- ---------- --------- -------
Balance, ending: - - 19,608,372 0.001 19,608 696,656 (258,639) 457,626 0.037
November 30, 1999
Proceeds from the sale of Class B through 417,818 0.001 418 417,400 417,818 1.000
circular offering
December 22, 1999
Proceeds from the sale of Class B through 148,639 0.001 149 148,490 148,639 1.000
circular offering
December 31, 1999
Proceeds from the sale of Class B through 10,643 0.001 11 10,632 10,643 1.000
circular offering
Net loss for the six months ended April 30, 2000 (415,031) (415,031)
Balance, ending - $ - 20,185,472 0.001 $ 20,185 $1,273,179 $(673,670) $ 619,695 $ 0.064
======= == =========== ======= ========= ========= ========= ========== =========
Read the accompanying summary of significant policies and notes to
financial statement, both of which are an integral part of this financial
statement.
Inception
(July 08, 1998)
through
October 31, 1999 April 30, 2000 April 30, 2000
------------------------------------------------------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (258,639) (415,031) $ (673,670)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 1,301 47,478 48,779
Issuance of stock for contract settlement 500 - 500
Changes in Operating assets and liabilities:
Accounts Receivable (90,985) 70,868 (20,117)
Accounts Payable and Accrued Liabilities 177,190 (138,203) 38,987
----------------- -------------- ----------------------
Net cash provided by/(used in) operating activities (170,634) (434,888) (605,521)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by/(used in) investing activities
Loan Receivable, principally related parties - (176,001) (176,001)
Payment for license, pincipally related parties - (200,000) (200,000)
----------------- -------------- ----------------------
Net cash provided by/(used in) investing activities - (376,001) (376,001)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Notes payable, principally related parties 79,667 (79,667) -
Sales of common stock 440,985 577,100 1,018,086
----------------- -------------- ----------------------
Net cash provided by/(used in) financing activities 520,652 497,434 1,018,086
----------------- -------------- ----------------------
Net increase (decrease) in cash and cash equivalents 350,019 (313,455) 36,564
Cash and cash equivalents, beginning of period - 350,019 -
----------------- -------------- ----------------------
Cash and cash equivalents, end of period $ 350,019 $ 36,564 $ 36,564
================= ============== ======================
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FROM
INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
Basis of accounting:
GSI Technologies USA, Inc. prepares its financial statements in accordance
with generally accepted accounting principles. This basis of accounting
involves the application of accrual accounting; consequently, revenues and
gains are recognized when earned, and expenses and losses are recognized
when incurred. Financial statement items are recorded at historical cost and
may not necessarily represent current values.
Management 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,
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. Certain amounts included in the financial statements are
estimated based on currently available information and management's judgment
as to the outcome of future conditions and circumstances. Changes in the
status of certain facts or circumstances could result in material changes to
the estimates used in the preparation of financial statements and actual
results could differ from the estimates and assumptions. Every effort is
made to ensure the integrity of such estimates.
Fair value of financial instruments:
The carrying amounts of cash and equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of the
short duration of these instruments.
Impairment of long-lived assets:
Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or
circumstances indicate the carrying amount of an asset may not be
recoverable. Intangible assets have been written down to their net estimated
realizable value.
Cash and cash equivalents:
The Company considers all highly liquid investments with original maturities
of ninety days or less to be cash and cash equivalents. Such investments are
valued at quoted market prices.
Receivables:
The Company believes that the carrying amount of receivables at April 30,
2000 approximates the fair value at such date.
License rights:
License rights are recorded at cost, less accumulated amortization. Licenses
are amortized to operations using the straight-line method over the
remaining term. The remaining term is 53 months for the current and only
license which the company has rights to.
Per share amounts:
Loss per share is computed by dividing net loss by the weighted average
number of shares outstanding throughout the year.
Recent Accounting Pronouncements:
The Statement of Financial Accounting Standards Board (SFAS) No. 130,
"Reporting Comprehensive Income," was issued by the Financial Accounting
Standards Board (FASB) in June 1997. This Statement establishes standards
for the reporting and display of comprehensive income and its components.
Comprehensive income including, among other things, foreign currency
translation adjustments and unrealized gains and losses on certain
investments in debt and equity securities. Also in June 1997, the FASB
issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information." This Statement establishes standards for reporting information
about operating segments in annual financial statements, and requires that
an enterprise report selected information about operating segments in
interim reports issued to shareholders. Both of these Statements are
effective for fiscal periods beginning after December 15, 1997. The Company
does not expect the adoption of these statements to have a material impact
on its financial condition or results of operations.
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
1. Organization and business
GSI Technologies USA, Inc., formerly I.B.C. Corporation, was
incorporated in the State of Delaware on July 06, 1998. The Company
participates in the Information Technology (IT) industry, specializing
in broadcasting solutions principally for advertisers and others
seeking to reach the greatest number of "viewers per day" as well as to
achieve other commercial and public service objectives. The basic
advanced technology available to the company by way of a Master
Licensing agreement is the successful integration of various hardware
components and specialty software for the transmission of broadcast
signals in real time via the Internet to remote locations. Using its
universal transcoder system, the company has a unique capability in
broadcasting from a central server to full video screens in remote
locations anywhere in the world. The system is capable of updating
pinpoint information minute by minute by way of video compressing
systems and other fully automated software systems.
2. Concentrations of credit risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash, cash
equivalents and accounts receivable. The credit risk associated with
cash and cash equivalents is considered low due to the credit quality of
the financial institutions. The Company maintains, when appropriate, an
allowance for uncollectible receivables. Therefore, no additional credit
risk beyond amounts provided for collection losses is believed inherent
in the Company's receivables and to date have been within management's
expectations.
3. Details of financial statement components
October 31, 1999 April 30, 2000
---------------- --------------
Receivables:
Advances - $ 18,085 $ 177,826
GSI Technologies (3529363 Canada Inc.)
Receivable - Maxima Capital 72,900 0
Due from Tax Authority 0 18,292
$ 90,985 $ 196,118
Other Assets:
License rights $ 474,779 $ 474,779
(Acquired from affiliate and recorded at
predecessor basis with the cost over such
basis recorded as a dividend to affiliate).
Accumulated amortization (1,301) (48,779)
--------- -------
$ 473,478 $ 426,000
Other Current Liabilities:
Due to A. Adouelouafa $ 5,900 $ 0
Accrued Expenses 52,290 10,198
------ ------
$ 58,190 $ 10,198
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
4. Commitments, contingencies and litigation
OTC Bulletin Board Listing:
The company contracted on September 16, 1999 with BBT Consulting
Group Ltd. to assist in obtaining a (NASD) OTC Bulletin Board listing
of its common shares. The agreement states a fee of $50,000 to BBT
Consulting Ltd.. all of which has been reflected in the financial
statements. $25,000 has been paid and the remaining balance of
$25,000 is reflected as an accounts payable.
Employment Contracts:
On October 29, 1999, the Company executed a three year employment
agreement (which starts on January 01, 2000) with its President,
Mr. J. Michel de Montigny.
On October 29, 1999, the Company executed a one year employment
agreement (which starts on January 01, 2000) with its Vice President
Finance, Mr. James Hone.
On January 01, 2000, the company executed a two year employment
agreement with its Senior Vice President Sales and Marketing, Mr.
Michel Laplante.
Year 2000 compliance:
The year 2000 issue is the result of computer programs being written
using two (2) digits rather than four (4) digits to define the year.
Any of the Company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than
2000. This problem could force computers to either shut down or
provide incorrect data or information. The Company utilizes generic
software programs developed, maintained and upgraded by independent
computer software providers. In response to the year 2000 issue,
management is of the opinion that the providers of these software
programs will resolve the date sensitive issue so that all critical
systems will be in compliance prior to the year 2000. The Company
does not anticipate any material adverse impact on the business.
Going Concern:
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The company reported a net
loss of $415,031 for the six months ended April 30, 2000 and a net
loss of 673,670 since inception. As reported on the statement of cash
flows, the Company incurred negative cash flows from operating
activities of $605,521 from inception. To date, this has been
financed principally through the sale of common stock ($1,018,086).
Management believes the company has sufficient funds available until
June 2000 due to the October 1999 offering. In October 1999, the
Company acquired the licensing rights to market the technology,
processes, methods and techniques to provide electronic advertising
services on a commercial basis The original operating plan for the
year ending October 31, 2000 reflected the sale and installation of a
total of 280 display units, beginning with the first installation of
20 units in April 2000. This has been revised to a total of 165
display units with the first installation of 35 units in August 2000.
These installations will generate revenue and cash flow to the
company. Additional capital and/or borrowings may be necessary in
order for the Company to continue in existence until attaining and
sustaining profitable operations. The company has available the
option to seek additional funds from current shareholders through
borrowings or equity financing. Management has continued to develop a
strategic plan to develop a management team, maintain reporting
compliance and seek new expansive areas in broadcasting solutions.
Management anticipates that an additional investment of several
million dollars will be needed to develop an effective sales and
marketing program and fund purchases of future acquisitions before
the organization will generate sufficient cash flow from operations
to meet current operating expenses and overhead.
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINACIAL STATEMENTS
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
Commitments, contingencies and litigation (continued):
Office rent agreement:
On January 06, 2000 the company entered into an office rent agreement
with 2849-3930 Quebec Inc. for office space in Montreal, Quebec. This
agreement is for a term of 4 year starting January 01, 2000 with a 5
year renewal option The annual rent amount is $142,182 CAD.
Guarantor agreement:
On March 24, 2000, the company agreed to act as a guarantor for GSI
Technologies (3529363 Canada Inc.), a shareholder of the company and
an affiliate in an agreement with Admiralty Leasing Ltd. for office
furniture. The term is for 3 years. The annual amount is $20,400 CAD
plus applicable taxes.
5. Comprehensive income (loss)
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income". SFAS 130
establishes standards for the reporting and display of
comprehensive income (loss) and its components in the financial
statements. The adoption of this statement did not result in a
change in the Company's disclosure.
6. Related Parties
License rights:
On October 26, 1999, the Company entered into a license rights
agreement with GSI Technologies (3529363 Canada Inc.), a shareholder
of the company and an affiliate. The amount of the license agreement
was $800,000. On October 26, 1999, the Company issued 600,000 shares
of common stock, class B, to GSI Technologies (3529363 Canada Inc.),
a shareholder of the company, in settlement of the license rights
agreement in the amount of $600,000 and also issued a note payable
for the balance of $200,000 (refer to note payable to stockholder
below), which was paid in November 1999. The license was capitalized
at predecessor cost for an amount of $474,779 with the difference of
$325,221 treated as a dividend to affiliate. The $325,221 dividend to
affiliate was applied against paid in capital.
Note payable to stockholder:
The company had a note payable dated October, 31, 1999 in the amount
of $279,667 to GSI Technologies (3529363 Canada Inc.), a shareholder
of the company. This note is for settlement of payment for license
rights agreement of $200,000 and reimbursements of expenditures in
the amount of $79,667 paid by GSI Technologies (3529363 Canada Inc.)
during the fiscal year ended October 31, 1999 on behalf of GSI
Technologies USA, Inc. The note is unsecured and bears interest of
prime plus two percent and matures on October 31, 2000. The entire
amount of the note was paid in November 1999.
Advances due from stockholder:
From November 01, 1999 to April 30, 2000, the company advanced
$560,000 to GSI Technologies (3529363 Canada Inc.), a shareholder of
the company and an affiliate. At April 30, 2000, the outstanding
balance due from GSI Technologies (3529363 Canada Inc.) was $177,826
due to offsetting expenses paid by GSI Technologies (3529363 Canada
Inc.) on behalf of the company.
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
Related parties (continued):
Financing expenses:
On October 31, 1999, the Company incurred financing expenses in
the amount of $10,000 due to Totalcom Inc., a shareholder of the
company. This amount is for finder fees associated with the
circular offering. Mr. J. Michel de Montigny is a 49 percent
shareholder of Totalcom Inc. as well.
On October 31, 1999, the Company incurred financing expenses in
the amount of $15,000 due to 3633730 Canada Inc., a shareholder
of the company. This amount is for finder fees associated with
the circular offering. Mr. J. Michel de Montigny is a 100 percent
shareholder of 3633730 Canada Inc. as well.
On October 31, 1999, the Company incurred financing expenses in the
amount of $15,000 due to 9035-2899 Quebec Inc., a shareholder of the
company. This amount is for finder fees associated with the circular
offering.
On October 31, 1999, the Company incurred financing expenses in
the amount of $86,500 due to Maxima Capital Inc., a shareholder of
the company. This amount is for finder fees associated an
agreement entered into on August 17, 1999 with the Company. Mr.
Pierre Saint-Aubin is the Director of Maxima Capital Inc. and a
shareholder of GSI Technologies USA, Inc.
Professional services:
On August 17, 1999, the Company entered into an agreement with
Maxima Capital Inc., a shareholder of the company, for consulting
services related to obtaining an (NASD) OTC Bulletin Board listing.
The fee for such services totaled $12,000 of which $7,500 has
been accrued in the October 31, 1999 financial statements. Mr.
Pierre Saint-Aubin is a Director of Maxima Capital Inc. and a
shareholder of GSI Technologies USA, Inc.
Office rent agreement:
On November 01, 1999, the company entered into an office rent
agreement with Fernand Lamothe Inc. for office space. This
agreement is for a term of 1 year and the annual rental amount is
$3,816. Mr. Fernand Lamothe, the president of Fernand Lamothe
Inc., is also the President of Power Group Consultants, LLC., a
shareholder in GSI Technologies USA, Inc.
Consulting agreement:
On November 04, 1999, the Company entered into a consulting agreement
with Power Group Consultants, LLC., a shareholder of the company. The
fee is $10,000 and relates to preparation of financial statements for
management and assisting management throughout the audit of the
October 31, 1999 financial statements.
7. Income Taxes
The Company did not provide any current or deferred United States
federal, state or foreign income tax provision or benefit for the
period presented because it has experienced operating losses since
inception. The Company has provided a full valuation allowance on the
deferred tax asset, consisting primarily of net operating loss
carryforwards, because of uncertainty regarding its realizability.
GSI TECHNOLOGIES USA, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINACIAL STATEMENTS
FROM INCEPTION (JULY 08, 1998) THROUGH APRIL 30, 2000
8. Common Stock
The company has 5,000,000 shares of class A common stock which to date
have never been issued. Management has no intent of issuing any of
these shares and will be canceling these shares by filing an amendment
to the articles of incorporation with the State of Delaware.
9. Warrants and Options
On June 30, 1999, the Company issued 2,174,000 warrants to founding
shareholders. Each warrant entitles the registered holder thereof to
purchase at any time one share of common stock at a price of $1.10.
On September 16, 1999, the Company issued 500,000 warrants to BBT
Consulting Group, Inc. as part of its contractual agreement to obtain a
(NASD) OTC Bulletin Board listing of its common shares. Each warrant
entitles the registered holder thereof to purchase at any time one
share of common stock at a price of $1.10.
From October 22, 1999 to October 29, 1999, the Company, in accordance
with it offering circular to sell no less than 300,000 and up to
1,000,000 units (each unit consisting of one (1) share of common stock
and (1) warrant), sold 422,900 shares of common stock. Each warrant
entitles the registered holder thereof to purchase at any time from the
date of the offering until the close of business January 31, 2002, one
share of common stock at a price of $1.10.
On October 29, 1999, the Company executed a three year employment
agreement (which starts on January 01, 2000) with its President, Mr. J.
Michel de Montigny, which allows the purchasing of up to 500,000
warrants at $1.10 cents per warrant during his employment.
From November 01, 1999 to November 30, 1999, the Company, in accordance
with it offering circular to sell no less than 300,000 and up to
1,000,000 units (each unit consisting of one (1) share of common stock
and (1) warrant), completed its offering by selling the remaining
577,100 shares of common stock. Each warrant entitles the registered
holder thereof to purchase at any time from the date of the offering
until the close of business January 31, 2002, one share of common stock
at a price of $1.10.
10. Earnings (Loss) per common share
Basic earnings (loss) per share is computed using the weighted-average
number of common shares outstanding during the period.
11. Subsequent Events
Office rent agreement:
On June 02, 2000, the company entered into an office rent agreement
with Suntrust Center L.L.C. for office space in Orlando, Fl.. This
agreement is for a term of 5 year and is effective June 16, 2000. The
first annual rental amount is $55,776 with an increase each year in
the amount of $2,231 for years two through five.
-----------------------------------------
11,407,206 Shares of Common Stock
GSI TECHNOLOGIES USA INC.
PROSPECTUS
_____________ , 2000
-----------------------------------------
You should only rely on the information contained in this document or other
information that we refer you to. We have not authorized anyone to provide you
with any other information that is different . You should note that even though
you received a copy of this Prospectus, there may have been changes in our
affairs since the date of this Prospectus. This Prospectus does not constitute
an offer to sell securities in any jurisdiction in which such offer or
solicitation is not authorized
TABLE OF CONTENTS PAGE
Page
Available Information 2
Risk Factors 3
Special Note Regarding
Forward-Looking Statements 9
Summary Historical Financial
Information 9
Plan of Operations 10
Use of Proceeds 13
Business 14
Management 22
Security Ownership of Certain
Beneficial Owners and Management 24
Executive Compensation 24
Certain Relationships and Related Transactions 25
Disclosure of Commission Position
on Indemnification for Securities
Act Liability 26
Description of Securities 26
Plan of Distribution 28
Selling Stockholders 28
Legal Matters 40
Experts 40
Financial Statements F-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated expenses in
connection with the offering described in the Registration Statement, all of
which will be borne by the Registrant.
Securities and Exchange Commission Fee ....................... $ 3,568
Accountants' Fees ............................................ $15,000
Legal Fees ................................................... $20,000
Company's Administrative Expenses ............................ $30,000
Printing and engraving ....................................... $10,000
Miscellaneous ................................................ $ 1,432
TOTAL ........................................................ $80,000
=======
Item 14. Indemnification of Directors and Officers.
Neither our By-Laws nor our Certificate of Incorporation currently provide
indeminification to our officers and directors. In an effort to continue to
attract and retain qualified individuals to serve as our directors and officers,
we intend to adopt provisions providing for the maximum indemnification
permitted by Delaware law.
Item 15. Recent Sales of Unregistered Securities
In June 1999, Registrant sold an aggregate of 18,085,472
shares at par value and issued an aggregate of 2,174,000 warrants to purchase
one share of Class B Common Stock at $1.10. All of shares were restricted and
were issued pursuant to the exemption from registration contained in Regulation
S.
In September 1999, Registrant issued 500,000 restricted
shares to one consultant as payment for consulting services pursuant to the
exemption from registration contained in Section 4(2). The consultant is
assisting Registrant in obtaining an OTC:BB listing and overseeing SEC
compliance and, accordingly, had complete access to all of Registrant's files
prior to making its investment decision. The shares were valued at $0.001 per
share.
In October 1999, Registrant issued 600,000 restricted shares
to GSI Canada, an affiliated entity, as a licensing fee. This issuance was
pursuant to the exemption from registration contained in Section 4(2). The
affiliate should be deemed to have complete knowledge of Registrant's
activities due to overlapping directorships and the fact that Registrant's
business is predicated on technology licensed from the affiliate.
I-I
In October/November 1999, Registrant sold 1,000,000 units
consisting of one share of Class B Common Stock and one warrant to purchase one
share of Class B Common Stock at a price of $1.10. The Units were sold pursuant
to the exemption from registration contained in Regulation S. All of the
investors were non-U.S. residents and the offering and sale occurred outside
the United States.
Item 16. Exhibits and Financial Statements Schedules.
3.1 Certificate of Incorporation, as amended*
3.2 By-Laws*
4.1 Specimen Common Stock Certificate*
4.2 Specimen Warrant Certificate*
5 Opinion of Heller, Horowitz & Feit, P.C.*
10.1 Master License Agreement between GSI Technologies USA
Inc. and GSI Technologies (3529363 Canada Inc.)*
10.1(a) Leases
- Quebec premises*
- Florida premises
10.1(b) Employment Agreement with Mr. De Montigny*
10.1(c) Employment Agreement with Mr. Hone*
10.1(d) Employment Agreement with Mr. Laplante*
10.1(e) Consulting Agreement with Maxima Capital*
10.1(f) Consulting Agreement with BBT Consulting Group*
10.2 Sub-License Agreement between GSI Technologies USA Inc.
and GSI Technologies (3529363 Canada Inc.)
23.1 Consent of Heller, Horowitz & Feit, P.C.
(included in the Opinion filed as Exhibit 5)
23.2 Consent of Mark Cohen, C.P.A.
27 Financial data schedule, as amended
---------------
* Previously filed
Item 17. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)
(3) of the Securities Act;
II-IV
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(iv) Include any additional or changed material information on the plan
of distribution.
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
II-IV
SIGNATURES
In accordance with the requirements of the Securities Act,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and has authorized this
registration statement or amendment to be signed on its behalf by the
undersigned, in the City of Montreal on the 21st day of June 2000.
GSI TECHNOLOGIES USA INC.
By: /s/J. Michel de Montigny
J. Michel de Montigny, President and CEO
In accordance with the requirements of the Securities Act,
this registration statement or amendment was signed by the following persons in
the capacities and on the dates stated:
Signature Title Date
/s/J. Michel de Montigny
J. Michel de Montigny President, Chief June 21, 2000
Executive Officer
and Chairman
/s/James A. Hone
James A. Hone Senior Vice President June 21, 2000
Administration, Chief
Financial Officer
and Director
/s/Michel Laplante
Michel Laplante Vice President
Sales and Marketing
and Director June 21, 2000