As filed with the Securities and Exchange Commission on July __, 2002
Registration Statement No. 333-90272
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMPUPRINT, INC.
(Name of small business issuer in its charter)
North Carolina 3577 56-1940918
(State of incorporation or (Primary Standard Industrial (I.R.S. Employer
jurisdiction of organization) Classification Code Number) Identification No.)
2457 Industrial Park Road
Lincolnton, North Carolina 28092
(704) 732-4554
(Address and telephone number of principal executive offices)
David R. Allison
President and Chief Executive Officer
CompuPrint, Inc.
2457 Industrial Park Road
Lincolnton, North Carolina 28092
(704) 732-4554
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent to
the agent for service, should be sent to:
Adam S. Gottbetter, Esq.
Kevin F. Barrett, Esq.
Kaplan Gottbetter & Levenson, LLP
630 Third Avenue
New York, New York 10017
(212) 983_6900
(212) 983-9210 (fax)
Approximate date of proposed sale to the public: From time to time after
the effective date of the registration statement until such time that all of the
shares of common stock registered hereunder have been sold.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check and following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=============================================================================================================
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS AMOUNT BEING OFFERING MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES BEING REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Shares of Common Stock...... 892,277 $1.00 $892,277 $300
- -------------------------------------------------------------------------------------------------------------
Total....................... $892,277 $300
- -------------------------------------------------------------------------------------------------------------
Amount Due.................. $300
=============================================================================================================
- ----------
(1) Estimated for purposes of computing the registration fee pursuant to
Rule 457.
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL, NOR DOES IT SEEK AN OFFER TO BUY, THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED __________, 2002.
PROSPECTUS
COMPUPRINT, INC.
892,277 SHARES OF COMMON STOCK
This prospectus relates to the resale by the selling stockholders of
892,277 shares of our common stock. The selling stockholders will sell the
shares from time to time at a price of $1.00 per share until our shares are
quoted on the Over the Counter Bulletin Board ("OTCBB") and thereafter at
prevailing market prices or privately negotiated prices. There is no assurance
that our common stock will be included in the OTCBB. See "Plan of Distribution"
beginning on page 20.
No public market currently exists for the shares of common stock.
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders.
AS YOU REVIEW THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS
DESCRIBED IN "RISK FACTORS" BEGINNING ON PAGE 2.
We are located at 2457 Industrial Park Road, Lincolnton, North Carolina
28092. Our phone number is (704) 732-4554.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is __________, 2002
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.............................................................1
The Offering...................................................................1
Summary Historical Financial Data .............................................1
Risk Factors...................................................................2
Cautionary Note Regarding Forward-Looking Statements...........................5
Use of Proceeds................................................................5
Capitalization.................................................................6
Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................6
Dividend Policy................................................................7
Description of Business........................................................7
Management....................................................................10
Security Ownership of Certain Beneficial Owners and Management................12
Certain Relationships and Related Transactions................................13
Description of Securities.....................................................15
Selling Stockholders .........................................................16
Plan of Distribution..........................................................20
Market for Common Equity......................................................20
Legal Proceedings.............................................................21
Legal Matters.................................................................21
Experts.......................................................................22
Where You Can Find More Information...........................................22
Index to Financial Statements.................................................23
Financial Statements.........................................................F-1
Dealer Prospectus Delivery Obligation
Until ____, 2002 (90 days from the date of this prospectus), all dealers that
effect transactions in these securities, whether or not participants in this
offering, may be required to deliver a prospectus.
-i-
PROSPECTUS SUMMARY
CompuPrint, Inc. ("CompuPrint" or "the Company") was incorporated under the laws
of North Carolina on September 15, 1995. CompuPrint is a remanufacturer and
distributor of laser and ink jet printer cartridges. CompuPrint also engages in
the recycling of printer cartridges. CompuPrint has not been profitable since
1997.
THE OFFERING
Shares offered by the selling
stockholders.......................... 892,277
Common stock outstanding.............. 892,277
Use of proceeds....................... The selling stockholders will receive
the net proceeds from the sale of
shares. We will receive none of the
proceeds from the sale of shares
offered by this prospectus.
SUMMARY OF HISTORICAL FINANCIAL DATA
In the table below, we provide you with summary historical financial information
of CompuPrint, Inc. The following statement of operations data for the years
ended December 31, 2001 and 2000 and the balance sheet data as of December 31,
2001 is derived from the audited financial statements of CompuPrint, Inc.
included elsewhere in this prospectus. The following statement of operations
data for the three-months ended March 31, 2002 and 2001 and the balance sheet
data as of March 31, 2002 have been derived from the unaudited financial
statements of CompuPrint, Inc. which, in the opinion of management, have been
prepared on the same basis as the audited financial statements and reflect all
adjustments, consisting only of normal recurring adjustments, necessary for fair
presentation. Results for the three-month period ended March 31, 2002 are not
necessarily indicative of results that may be expected for the entire year.
The following financial data should be read in conjunction with, and is
qualified by reference to, "Selected Historical Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
financial statements of CompuPrint, Inc. including the notes to these financial
statements, included elsewhere in this registration statement/prospectus.
COMPUPRINT, INC.
SELECTED HISTORICAL FINANCIAL DATA
THREE-MONTH PERIOD YEARS ENDED
ENDED MARCH 31, DECEMBER 31,
2002 2001 2001 2000 1999 1998 1997
--------- --------- --------- --------- --------- --------- ---------
Statement of Income Data: (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 53,128 $ 78,088 $ 289,147 $ 434,904 $ 515,581 $ 401,929 $ 501,986
Cost of Goods Sold 39,676 37,310 219,007 122,090 231,707 210,495 137,253
--------- --------- --------- --------- --------- --------- ---------
Gross Profit 13,452 40,778 70,140 312,814 283,874 191,434 364,733
Selling, General & Administrative Expenses 131,888 123,806 544,418 523,416 359,542 411,804 464,262
Depreciation & Amortization 2,996 11,402 45,456 52,190 29,047 33,014 11,001
--------- --------- --------- --------- --------- --------- ---------
Total Operating Costs and Expenses 134,884 135,208 589,874 575,606 388,589 444,818 475,263
--------- --------- --------- --------- --------- --------- ---------
Income from Operations (121,432) (94,430) (519,734) (262,792) (104,715) (253,384) (110,530)
Interest Income 0 0 0 0 1,875 0 0
Interest Expense (16,758) (4,123) (15,525) (6,400) (13,973) (47,523) (36,098)
--------- --------- --------- --------- --------- --------- ---------
NET INCOME (LOSS) ($138,190) ($ 98,553) ($535,259) ($269,192) ($116,813) ($300,907) ($146,628)
========= ========= ========= ========= ========= ========= =========
MARCH 31, DECEMBER 31,
2002 2001 2001 2000 1999 1998 1997
--------- --------- --------- --------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total Current Assets $ 120,779 $ 161,264 $ 128,263 $ 181,209 $ 245,508 $ 151,861 $ 251,925
Total Other Assets 10,241 36,860 13,237 160,790 173,530 144,068 151,012
--------- --------- --------- --------- --------- --------- ---------
TOTAL ASSETS 131,020 198,124 141,500 341,999 419,038 295,929 402,937
========= ========= ========= ========= ========= ========= =========
Total Current Liabilities 180,134 131,663 80,503 235,385 74,472 71,361 92,034
Long-Term Debt, Net of Current Portion 300,100 332,287 308,664 0 6,174 468,915 357,554
--------- --------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES 480,234 463,950 389,167 235,385 80,646 540,276 449,588
Total Stockholders' Equity (Deficit) (349,214) (265,826) (247,667) $ 106,614 338,392 (244,347) (46,651)
--------- --------- --------- --------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 131,020 $ 198,124 $ 141,500 $ 341,999 $ 419,038 $ 295,929 $ 402,937
========= ========= ========= ========= ========= ========= =========
1
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the risks and uncertainties described below before you
purchase any of our common stock.
If any of these risks or uncertainties actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
this event you could lose all or part of your investment.
RISKS CONCERNING OUR BUSINESS
LACK OF PROFIT FROM OPERATIONS.
CompuPrint is not currently profitable. It has not been profitable since 1997.
The current revenues have yet to reach the levels necessary to meet all
operating expenses. In the year 2000 revenues from customer Lanier Worldwide
represented approximately 51% of our total revenues. We began to lose the
Lanier business starting in September 2000. The Lanier business phased out
completely by June 2001. Additional losses occurred in 2001 due to an aborted
purchase order from a Nigerian company that was to purchase significant
quantities of our products. CompuPrint may incur additional losses while it
implements its current sales growth plan. CompuPrint may never become
profitable.
WE ARE DEPENDENT UPON DAVID R. ALLISON, ANY REDUCTION IN HIS ROLE IN COMPUPRINT
WOULD HAVE A MATERIAL ADVERSE EFFECT.
The success of CompuPrint is dependent on the vision, knowledge, business
relationships and abilities of CompuPrint's president, CFO and Chairman of the
Board of Directors, David R. Allison. Any reduction of Mr. Allison's role in the
business would have a material adverse effect on CompuPrint. CompuPrint does not
have an employment contract with Mr. Allison, nor a key man life insurance
policy.
WE HAVE A LARGE DEBT THAT WE MAY NOT BE ABLE TO SERVICE AND THEREFORE IT MAY BE
DIFFICULT FOR US TO CONTINUE OUR OPERATIONS, WHICH MAY RESULT IN A COMPLETE LOSS
OF YOUR INVESTMENT.
As of March 31, 2002, CompuPrint has promissory notes payable of $366,465 due
March 31, 2003, payable in one lump sum. Certain notes totaling $170,000 contain
a provision requiring a payment of the face amount of the note minus interest
due, in the event that CompuPrint undergoes a change of control. The notes
containing this provision therefore contain an additional liability of $162,000.
We may be unable to service this debt and therefore it may be difficult for us
to continue our operations, which may result in a complete loss of your
investment. Certain promissory notes were issued to officers and directors, or
entities in which they are beneficiaries, these promissory notes total
$330,022.38. Most of these promissory notes were replacing promissory notes that
were in default. [See CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, and see
FOOTNOTES TO FINANCIAL STATEMENTS.]
WE HAVE BEEN DEPENDENT UPON PRIVATE PLACEMENTS AND AFFILIATE/INTERESTED PARTY
TRANSACTIONS FOR WORKING CAPITAL AND WE MAY HAVE DIFFICULTY IN OBTAINING
ADDITIONAL FUNDING, IF REQUIRED, AND THEREFORE IT MAY BE DIFFICULT FOR US TO
CONTINUE OUR OPERATIONS, WHICH MAY RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT.
We have been dependent upon proceeds from private offerings of our stock and
from debt offerings to our officers and directors. If additional funds are
needed, we may have difficulty obtaining them, and we may have to accept terms
that would adversely affect our shareholders. For example, the terms of any
future financings may impose restrictions on our right to declare dividends or
on the manner in which we conduct our business. Also, lending institutions or
private investors may impose restrictions on future decisions by us to make
capital expenditures, acquisitions or asset sales. Therefore it may be difficult
for us to continue our operations, which may result in a complete loss of your
investment.
2
We may not be able to locate additional funding sources at all or on acceptable
terms. If we cannot raise funds on acceptable terms, if and when needed, we may
not be able to grow our business or respond to competitive pressures or
unanticipated requirements, which could seriously harm our business.
RISKS CONCERNING OUR OFFERING
UNLESS A PUBLIC MARKET DEVELOPS FOR OUR COMMON STOCK, YOU MAY NOT BE ABLE TO
SELL YOUR SHARES, THEREFORE YOUR INVESTMENT WOULD BE A COMPLETE LOSS.
There has been no public market for our common stock. An active trading market
may never develop or, if developed, it may not be maintained. Failure to develop
or maintain an active trading market could negatively affect the price of our
securities, and you may be unable to sell your shares, and therefore your
investment would be a complete loss.
WE MAY NOT QUALIFY FOR OVER-THE-COUNTER ELECTRONIC BULLETIN BOARD INCLUSION, AND
THEREFORE YOU MAY BE UNABLE TO SELL YOUR SHARES.
Upon completion of this offering, we will attempt to have our common stock
eligible for quotation on the Over-the-Counter Electronic Bulletin Board
("OTCBB" or "Bulletin Board"). OTCBB eligible securities includes securities not
listed on NASDAQ or a registered national securities in the U.S. and that are
also required to file reports pursuant to Section 13 or 15(d) of the Securities
Act of 1933, and the company is current in its periodic securities reporting
obligations. CompuPrint has engaged a broker/dealer who has filed a Form 211
with the National Association of Securities Dealers ("NASD") in order to allow
the quote of Inventory's common stock on the OTCBB. The market maker has
committed to make a market in our securities once the Form 211 clears with the
NASD. For more information on the OTCBB see its website at www.otcbb.com. If for
any reason, however, any of our securities are not eligible for continued
quotation on the Bulletin Board or a public trading market does not develop,
purchasers of the shares may have difficulty selling their securities should
they desire to do so. If we are unable to satisfy the requirements for quotation
on the Bulletin Board, any trading in our common stock would be conducted in the
over-the-counter market in what are commonly referred to as the "pink sheets".
As a result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, the securities offered hereby. The
above-described rules may materially adversely affect the liquidity of the
market for our securities. (See PLAN OF DISTRIBUTION.)
THERE ARE A LARGE NUMBER OF SHARES THAT MAY BE ISSUED UPON THE EXERCISE OF
OUTSTANDING WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE, AND THE SALE OF
THESE SHARES WILL DILUTE YOUR OWNERSHIP AND MAY DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK.
As of June 11, 2002, we had 892,277 shares of common stock issued and
outstanding and warrants to purchase 300,100 shares of common stock at a price
of one cent ($0.1) per share. The sale of these shares issued upon the exercise
of outstanding warrants would dilute your ownership in the Company by
approximately one third and could adversely affect the market price of our
common stock.
IF OUR STOCK DOES BECOME PUBLICLY TRADED, WE WILL LIKELY BE SUBJECT TO THE PENNY
STOCK RULES, THEREFORE YOU MAY FIND IT MORE DIFFICULT TO SELL YOUR SECURITIES.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain rules adopted by the Securities and Exchange Commission.
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the NASDAQ Stock Market provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The rules require that a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, deliver a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in connection with the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the rules generally
require that prior to a transaction in a penny stock, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These disclosure requirements may have the effect of reducing
the liquidity of penny stocks. If our securities become subject to the penny
stock rules, investors in the offering may find it difficult to sell their
securities. (See PLAN OF DISTRIBUTION.)
3
OUR DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN APPROXIMATELY 43% OF OUR
STOCK AND WARRANTS THAT MAY BE EXERCISED INTO AN ADDITIONAL 260,023 SHARES OF
OUR STOCK; THEIR INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES OF STOCK
HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON OUR STOCK PRICE; SHAREHOLDERS MAY
BE UNABLE TO EXERCISE CONTROL.
As of June 11, 2002, our executive officers and directors were the beneficial
owners of approximately 43% of our common stock and warrants that may be
exercised into an additional 260,023 shares of our common stock. If our
executive officers and directors were to exercise their warrants to purchase the
additional 260,023 shares of our common stock they would then beneficially own
approximately 56% of our common stock. As a result, our executive officers and
directors will have significant ability to:
-- elect or defeat the election of our directors;
-- amend or prevent amendment of our articles of incorporation or bylaws;
-- effect or prevent a merger, sale of assets or other corporate
transaction; and
-- control the outcome of any other matter submitted to the shareholders
for vote.
As a result of their ownership and positions, our directors and executive
officers, collectively, are able to significantly influence all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. In addition, sales of significant amounts
of shares held by our directors and executive officers, or the prospect of these
sales, could adversely affect the market price of our common stock. Management's
stock ownership may discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our shareholders from realizing a premium over our stock
price. (See SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.)
ALL OF THE SHARES OF OUR COMMON STOCK OWNED BY OUR OFFICERS AND DIRECTORS ARE
BEING REGISTERED IN THIS OFFERING AND MAY BE SOLD, WHICH MAY HAVE A NEGATIVE
IMPACT ON OUR OFFICERS AND DIRECTORS' INTEREST IN OUR COMPANY'S FUTURE.
We are registering all of the shares of our outstanding common stock, including
all of the shares held by our officers and directors. This will allow our
officers and directors to more easily sell all of their stock in our Company,
which may have a negative impact on their interest in our Company's future
success.
RESALES OF STOCK BY SELLING SHAREHOLDERS MAY HAVE A NEGATIVE IMPACT ON ANY
MARKET THAT MAY DEVELOP.
The resales of stock by CompuPrint's selling shareholders may have a negative
impact on any market that may develop, thereby reducing the market value of your
stock.
4
WE DO NOT EXPECT TO PAY DIVIDENDS, THEREFORE YOU MAY NOT RELY ON YOUR INVESTMENT
TO BE A SOURCE OF INCOME.
We do not anticipate paying cash dividends in the foreseeable future. Therefore
you may not rely on your investment in our stock as a source of income.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain financial information and statements regarding
our operations and financial prospects of a forward-looking nature. Although
these statements accurately reflect management's current understanding and
beliefs, we caution you that certain important factors may affect our actual
results and could cause such results to differ materially from any
forward-looking statements which may be deemed to be made in this Prospectus.
For this purpose, any statements contained in this Prospectus which are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as, "may", "will",
"intend", "expect", "believe", "anticipate", "could", "estimate", "plan" or
"continue" or the negative variations of those words or comparable terminology
are intended to identify forward-looking statements. There can be no assurance
of any kind that such forward-looking information and statements will be
reflective in any way of our actual future operations and/or financial results,
and any of such information and statements should not be relied upon either in
whole or in part in connection with any decision to invest in the shares.
DETERMINATION OF OFFERING PRICE
There is no established public market for the common stock being registered. The
Company arbitrarily determined the proposed offering price per share.
USE OF PROCEEDS
CompuPrint will not receive any proceeds from the sale of the stockholder's
shares offered by this prospectus. All proceeds from the sale of the
stockholders' shares will be for the account of the selling shareholders. The
estimated expense of the offering is $105,400. The Company will bear the
expenses in connection with this offering.
5
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2002.
Total Liabilities................................................. $ 480,234
Stockholders' equity:
Common stock, $.0001 par value; authorized 9,000,000 shares,
issued and outstanding 892,277 shares ........................ 89
Preferred stock, $.0001 par value; authorized 1,000,000 shares,
issued and outstanding -0- ................................... 0
Additional paid-in capital ..................................... 1,163,568
Deficit ........................................................ (1,498,014)
Total shareholders' equity (deficit).............................. (334,357)
Total capitalization.............................................. 145,877
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
CompuPrint, Inc. was incorporated under the laws of North Carolina on September
15, 1995. CompuPrint is a remanufacturer and distributor of laser and ink jet
printer cartridges. The Company also engages in the recycling of printer
cartridges.
Over the past fiscal year we have experienced a decrease in revenues and an
increase in costs and an increase in losses.
The total revenues for the last fiscal year ended December 31, 2001 were
$289,147, compared to $434,904 for the year before. Total revenues for the three
months ended March 31, 2002, were $53,128, compared with the three months ended
March 31, 2001, which were $78,088. This decrease in revenues was due largely to
the loss of business from Lanier Worldwide. Lanier Worldwide was a major
customer of our replacement printer cartridges until it was acquired by Richoh.
When Richoh acquired Lanier Worldwide it then used its own replacement printer
cartridges and discontinued using purchasing from CompuPrint. This loss began in
December 2000.
The total selling, general and administrative expenses for the last fiscal year
ended December 31, 2002 were $544,418, compared to $523,416 for the year before.
The total selling, general and administrative expenses for the three months
ended March 31, 2002, were $106,888, compared with the three months ended March
31, 2001, which were $123,806. This continued level of expenses from 2000 to
2001 was due to a delay in cutting back expenses after the loss of the Lanier
Worldwide business.
The total operating expenses for the last fiscal year ended December 31, 2001
were $605,399, compared to $582,006 for the year before. The total expenses for
the three months ended March 31, 2002, were $126,642, compared with the three
months ended March 31, 2001, which were $139,331. This continued level of
expenses from 2000 to 2001 was due to a delay in cutting back expenses after the
loss of the Lanier Worldwide business. This reduction in expenses did begin in
February, 2002. Net losses for the last fiscal year ended December 31, 2001 were
6
$535,399, compared to a net loss of $269,192 for the year before. This increase
in losses was largely due to the loss of the Lanier Worldwide business.
The depreciation expense for the Quarter Ended March 31, 2002 is significantly
lower than the expense for the Quarter Ended March 31, 2001 because the majority
of fixed assets reached the end of their depreciable lives in 2001.
CompuPrint enjoyed large gross margins on the cartridges built for Lanier.
CompuPrint's 1999 cost of goods sold was approximately 46%, which reflected
Lanier's percentage of sales in excess of 50%. Through efficiencies and an
increase in Lanier business as a percent of sales, the cost of goods sold
decreased to 28% in 2000. With the loss of the Lanier account, the cost of goods
sold increased to approximately 74% in 2001. This difference reflected both the
loss of the Lanier business and the large inventory of our standard products
that were built in place of Lanier products. Much of this inventory was built up
in anticipation of business from Nigeria that was not obtained.
It took CompuPrint over one year to adequately cut back on expenses after the
loss of the Lanier business. Many events during that period buoyed our
expectations for immediate replacement of the business loss. The Lanier business
was phased out over a period of approximately one year. In September of 2000
Lanier stopped purchasing our Hewlett Packard compatible cartridges and began
purchasing cartridges directly from Hewlett Packard. In December of 2000 Lanier
was acquired by Ricoh and the initial expression from high level Lanier
management was that they would continue to purchase new Lanier specific product
line from the Company. This position was reinforced until May 2001 at which time
all sales to Lanier ceased. Additionally, in 2001 we had a purchase order
agreement with a Nigerian company for exporting large quantities of our
products. We built the inventory for the 1st order (approx. $60,000) over a 3
month period, with a $20,000.00 down payment, but the balance was not received
and the relationship was terminated. Further, management had identified other
new and sizable opportunities that appeared imminent based on the judgment of
management that would require the current skilled workforce, which however did
not result in new business. The largest component of the costs was labor and
salaries. The level of these expenses was gradually reduced through attrition.
The management of the Company has made many adjustments in 2002 to improve
operations. Although we continue to aggressively pursue sales of new laser and
ink jet cartridges, the focus has been on expanding our empty cartridge
collection program. This is the most profitable and promising segment, enjoying
margins of 60-70%. This empty cartridge collection program is just beginning to
be established in many areas. As the implementation continues we expect our
revenues and profits to increase.
We have made significant reductions in our cost structure to more closely align
our costs with the revenues and corresponding gross profit. The empty collection
program has a low cost demand in terms of personnel, fixed assets, and supplies.
Management projects that CompuPrint will require an additional $30,000 in
funding for working capital over a 90 day period beginning August 1, 2002 to
sustain its operations. Thereafter management believes that CompuPrint's
revenues will sustain its operations.
Additionally, as of March 31, 2002 CompuPrint has notes payable of $403,009 that
includes $366,465 principle and accrued interest of $36,554. These notes come
due on March 31, 2003.
CompuPrint's five directors have committed to loan CompuPrint up to $180,000 for
operating expenses over the next twelve months if necessary. The loans are not
to exceed $15,000 per month and will be similar to the promissory notes
previously executed between the directors and the Company, one year term, 10%
interest rate, and may include warrants.
EMPLOYEES
As of July 19, 2002 we had 6 employees, including in management and
administration, hourly production and full time sales representatives. There are
no collective bargaining agreements in effect. We believe the relations with our
employees are good.
INTELLECTUAL PROPERTY
We have no trademark, copyright or patent protection at this time.
REGULATION
Our operations are not currently subject to direct regulation by governmental
agencies other than regulations applicable to businesses generally.
PROPERTY AND EQUIPMENT
We currently lease an 8,000 square foot building in Lincolnton, North Carolina,
which contains our operations. We sublease this building from Ted Polk, and Tom
Fox, our operations manager and sales manager respectively. Our monthly lease is
$1,300. We are guarantors on the master lease Mr. Polk and Mr. Fox have with the
property owner FVF Development Company, Inc., thereby guaranteeing the lease
payments and the purchase of the property for $140,000 on or before February 28,
2003, should Mr. Polk and Mr. Fox fail to do either. We believe that our
property is adequate and suitable for its intended purposes.
The prior lease of the facility with FVF Development Company, Inc., was a 5 year
lease commencing March 20, 1997 expiring on March 20, 2002. The Company had an
option to purchase the building and property at the end of this lease term, but
chose to let the option expire, and the lease agreement has been terminated.
A lease purchase agreement was subsequently entered into between Ted Polk and
Tom Fox and FVF Development Company, Inc. on March 20, 2002. The company pays
the $1,300.00 per month lease payment to FVF Development under this new
agreement. If Mr. Polk and Mr. Fox exercise their purchase option on or before
February 28, 2003, the Company will continue to operate in the same facility
with a separate lease agreement with the new owners.
Although most of CompuPrint's assets are at the end of their depreciable lives,
management believes that the assets are not at the end of their useful lives,
thus replacement is not yet required or under consideration. Also, the leasehold
improvements have been fully amortized since the lease expired in early 2002.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
anticipate that any earnings will be retained for development and expansion of
our business and we do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors has sole discretion to pay cash
dividends based on our financial condition, results of operations, capital
requirements, contractual obligations and other relevant factors.
7
DESCRIPTION OF BUSINESS
The Company
CompuPrint is a remanufacturer and distributor of laser and ink jet printer
cartridges. Additionally, the Company private labels laser cartridges for other
distributors, repairs and markets laser printers, and collects empty laser and
ink jet cartridges for reuse. The company's headquarters, manufacturing and
distribution facilities are located in Lincolnton, North Carolina, approximately
35 miles from Charlotte, North Carolina.
The Products and Services
CompuPrint has segmented its market into 4 separate product and service
categories. First are laser printer cartridges. These are further segmented into
EOM cartridges (Exceeding Original Manufacturer), representing the Company's
highest quality line of laser products. In order to meet the competitive demands
of the traditional remanufactured market, the Company has developed a
corresponding line of compatible laser cartridges. CompuPrint believes that
these compatible cartridges are priced approximately 20-25% below the highest
quality EOM cartridges.
The second product category is ink jet cartridges. The Company is a distributor
of its own CompuPrint brand of ink jet cartridges.
The third profit category are empty laser and ink jet cartridges. Empty printer
cartridges have a value due to the necessity of recapturing these cartridges for
the remanufacturing process. There exists a ready market for virtually any
number of empty cartridges collected and available for resale.
Finally, the servicing of laser printers is a revenue and profit segment.
The Market
The worldwide printer, print cartridge, repair and consumable market is in
excess of $35 billion in sales in 2000 (according to EDM, a market research
group). CompuPrint believes that 350 to 400 million printer cartridges are sold
each year.
The largest industry users of these products and services are hospitals/medical,
banking/mortgage processing, legal and accounting.
Competition
The major equipment manufacturers produce and sell OEM (original equipment
manufacturer) cartridges for their printers and provide maintenance and service.
Major companies in this category include Hewlett Packard, Canon and Lexmark
(formerly IBM), as well as other major office product company's. Their
competitors are made up of a large number of mostly small to medium-sized
independent remanufacturers and refillers of laser and ink jet cartridges, many
of whom also engage in various maintenance and service activities. These
cartridge suppliers are in two general groups: (1) remanufacturers of the laser
print cartridges which include CompuPrint and (2) cartridge refillers, lower
8
quality providers and sales companies such as broker operations. The lower
quality offerings from the second category provide both an obstacle and an
opportunity for the Company. CompuPrint believes that there exists a reluctance
by those that have experienced poor performance from the products of this second
category, to consider utilizing remanufactured cartridges. With the general
downturn in the economic climate today, many companies are demanding cost
reductions. CompuPrint believes that with its high end products, its customers
can receive cost savings without sacrificing performance.
CompuPrint does not have reliable data on its competitors' market share position
or on our relative position by product segment. Again, management believes that
the worldwide sales of printer cartridges are approximately 350 to 400 million
units annually, and therefore, CompuPrint's sales of 3,500 to 4,000 units
annually are an insignificant percentage of the entire market.
Competitive Advantages
CompuPrint believes that it enjoys competitive advantages in comparison to OEM
products in 3 areas, quality, yield and price. CompuPrint believes that against
other remanufacturers these advantages are even greater in the areas of quality
and yield. The Company's EOM ("Exceeds Original Manufacturer") cartridges
utilize high quality aftermarket components. CompuPrint believes that the
quality of print form the EOM cartridges are high in terms of the density of the
black print and clarity of images. Cartridge yield is the number of printed
pages per cartridge.
Another important competitive advantage is the cartridge recycling program. By
collecting empty laser cartridges at a low cost, the Company is able to acquire
costly raw material components at less than the alternative of purchasing empty
cartridges on the open market.
The sources of after-market supplies for remanufacturing print cartridges
include hundreds of suppliers, and CompuPrint believes that these sources are
readily available. CompuPrint's primary raw material suppliers for major
components are: Static Control, Stanford, NC; Future Graphics, Chatsworth, CA;
Graphic Technologies, Camarillo, CA; Oasis, Nashua, NH; AQC, Pompano, FL; and
Sino, Muscle Shoals, AL.
Business Strategy
In 1997 the Company acquired an account relationship with Lanier Worldwide, and
began manufacturing laser cartridges for Lanier brand products. The strength of
that relationship allowed CompuPrint to grow significantly through 2000.
However, in December of 2000 Lanier announced it was being acquired by Ricoh and
Ricoh instructed Lanier to cease development of new private branded products
from its outside supplier; namely CompuPrint. This loss of business has been
significant. The challenge going forward is to replace the sales lost with
Lanier. The following are some of the programs that CompuPrint has implemented
to achieve this goal.
1. South Carolina Lions Clubs - The Executive Director of the S.C. Lions clubs
has initiated a fund raising program in conjunction with CompuPrint, utilizing
empty laser and ink jet cartridges, called "RECYCLE FOR SIGHT". The S.C. Lions
will receive a contribution from CompuPrint for every empty cartridge collected.
In addition, they will receive a percentage of sales of all new cartridges
purchased by members and affiliated organizations.
2. North Carolina Lions Club - The N.C. Lions have a similar program in place as
South Carolina Lions. Their goals are to grow the collection of empty cartridges
to at least 200,000 annually. CompuPrint is working with both Lion organizations
to support the achievement of their respective goals, including development of
program specific literature, unique collection boxes, personal sales and support
and participation.
3. Mecklenburg County Schools (North Carolina) - The Charlotte Chamber of
Commerce is supporting an aggressive fund raising initiative with a goal of
raising enough money to put computers in all Mecklenburg County schools.
CompuPrint has partnered with the Chamber with a cartridge recycling program
9
similar to the program described for the Lions. The Chamber has stated their
goal is to be able to raise a minimum of $1 million annually with this program.
It is now being pilot tested with about a dozen major Charlotte businesses
including Duke Energy, Belks, and Bank of America.
4. Wake Educational Partnership- The Partnership is an independent subsidiary
unit of the Wake County School System (North Carolina). Their mission is to
introduce and implement new and unique educational programs to designated county
schools. They must also fund those programs and the funding comes primarily
through donations from area businesses. CompuPrint's cartridge recycling program
fit well with their fund raising requirements. The Partnership in closely allied
with all 10 Wake County, North Carolina independent Chambers of Commerce as well
as all county schools, administrators, teachers and PTO's. The Program was
initiated the beginning of January 2002.
5. NCARF- The North Carolina Association of Rehabilitation Facilities (NCARF) is
the association for the states independent training facilities for people with
disabilities. They have 65 members throughout North Carolina. The CompuPrint
sales team will be working to support its recycling collection program as well
as the sale of new cartridge products to those members and their support
organizations. The Executive Director of NCARF strongly supports this Program.
Our products are distributed by several methods. Transit methods include common
carrier and UPS. Shipments are to either our distributors' warehouse facilities
or direct shipped to end users with our invoice going to the appropriate
distributor. Other intermediaries for our products are independent sales
representatives. Distribution under this arrangement is direct shipment to and
invoicing to the end user, with a commission payment to the independent sales
representative.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following are CompuPrint's directors and executive officers. The terms of
all directors expire at the next annual meeting of shareholders and upon
election of their successors. The terms of all officers expire at the next
annual meeting of the board of directors and upon the election of the successors
of such officers.
Name Age Position
- ---- --- --------
David R. Allison 54 President, CFO and Chairman of the Board
Jennifer C. Shults 31 Secretary
Henry H. Scherich, Ph.D. 63 Director
Joseph Isaac "Ike" Lewis 61 Director
Peter L. Coker, Sr. 59 Director
Andrew S. Holt, III 71 Director
DAVID R. ALLISON, President, CFO and Chairman of the Board of Directors since
August, 2000. From September, 1999 to July 2000 he was vice president of sales
for CompuPrint. From 1993 to August 1999 he was vice president of Custom Craft
Packaging, Inc. From 1985 to 1993 he was the founder and president of Com-Tech
Packaging, Inc. Mr. Allison graduated from the University of Denver with a B.S
degree in Business Administration in 1971.
10
JENNIFER C. SHULTS, Secretary. Ms. Shults has been the secretary, and manager of
quality, training and R&D, since 1999. From 1997 to 1999 Ms. Shults was a press
operator at Steel Rubber Products, Inc. From 1994 to 1997 Ms. Shults was an
inspection supervisor at Natural Knit Fabrics, Inc.
ANDREW S. HOLT, III, Director. Mr. Holt has been a director since 1996. 1n 1999
Mr. Holt retired from a career in the insurance brokerage business. From 1994 to
1999 he was a broker with World Marketing Alliance, Inc. Mr. Holt graduated from
the University of North Carolina at Chapel Hill with a B.S. in Business
Administration in 1954.
HENRY H. SCHERICH, PH.D., Director. Dr. Scherich has been a director since 2000.
Since 1981 Dr. Scherich has been the President and CEO of Measurement
Incorporated. Measurement Incorporated is an employee-owned corporation which
contracts with state and local departments of education, other educational
agencies, and private businesses to develop and score educational tests. Dr.
Scherich is a member of the following boards: Downtown Durham, Inc. Board of
Directors, 1994-present; Duke University Eye Center Board of Advisors,
1999-present; Durham Chamber of Commerce; Board of Directors, 1999-present; The
Carolina Theatre of Durham Board of Trustees, 1996-present; and Hayti Heritage
Center Board of Directors. Dr. Scherich earned his BA from Ottawa University,
his MA from University of Illinois, Champaign - Urbana, Illinois, and his Ph.D.
from Southern Illinois University, Carbondale, Illinois.
PETER L. COKER, SR., Director. Mr. Coker has been a director since 2000. Mr.
Coker has been a Partner and Senior Managing Director of Capital Investment
Partners, LLC, an investment banking firm in Raleigh, NC since 1996. He is
currently Managing Director of Tryon Capital, LLC. Mr. Coker founded American
Asset Management Company, Inc. (New York) in 1978. As President, he built the
investment advisory firm to $500 million under management which included equity
and debt management as well as hedging currency risks for foreign clients. Mr.
Coker is a partner and one third owner of BIP Partnership, an investment
partnership. From 1968 to 1977, Mr. Coker was Assistant Vice
President/Investment Officer of Bethlehem Steel Corporation with investment
responsibilities for their self-managed one billion dollar pension fund. From
1977 to 1978, Mr. Coker was a Senior Investment Officer at McGlinn Investment
Services, Reading, Pennsylvania.
Mr. Coker currently sits on the boards of directors of RemoteLight, Inc.,
e-trials, Inc., and The North Carolina State University Investment Fund, and
Equitel, Inc. (formerly Wolfpack Corporation). He is also a member of the New
York Society of Security Analysts. He graduated from North Carolina State
University in 1966 with a B.A. degree in Economics, and in 1968 with a M.A.
degree in Economics.
JOSEPH ISAAC "IKE" LEWIS, Director. Mr. Lewis has been a director since 1996.
Mr. Lewis has been the secretary and treasurer of IKEX, Inc. since 1993. IKEX is
in the business of agricultural seeds and fertilizers. Mr. Lewis is the
president and a director of UBA Enterprises, Inc. an investment company. Mr.
Lewis is a partner and one third owner of BIP Partnership, an investment
partnership. From 1961 to 1993, Mr. Lewis was president and CEO of Southern
Seeds, Inc., which is in the business of agricultural seeds and fertilizers. Mr.
Lewis is the chairman of the board of directors of Community Resources Exchange
and also serves on the board and MayCraft, Inc. Mr. Lewis earned a B.S. Degree
in Forest Management from North Carolina State University in 1963.
11
EXECUTIVE COMPENSATION
Fiscal year ended 2001 we paid our president and CFO David R. Allison $39,900.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our common stock as of June 11, 2002 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group:
AMOUNT OF COMMON PERCENT OF CLASS
NAME AND ADDRESS OF EXECUTIVE OFFICE HELD STOCK BENEFICIALLY OF COMMON
BENEFICIAL OWNER (1) (IF ANY) OWNED (2) STOCK (3)
- -------------------- -------- --------- ---------
David R. Allison President, CEO and Director 98,268 (4) 11%
Peter L. Coker, Sr. Director 487,413 (5) 44%
Joseph Isaac "Ike" Lewis Director 47,193 (6) 5%
Henry H. Scherich Director 11,705 (7) 1%
Andrew S. Holt, III Director 3,062 (8) <1%
Eugene V. Grace Shareholder 95,972 10%
911 Broad Street
Durham, NC 27705
Judith C. Vinyard Shareholder 50,000 6%
611 Patio Drive
Columbia, SC 29212
All Executive Officers and Directors
as a Group (4 persons) 647,641 (9) 56%
(1) Unless otherwise indicated, the address of each principal shareholder is
c/o CompuPrint, Inc., 2457 Industrial Park Road, Lincolnton, North Carolina
28092.
(2) Beneficial Ownership is determined in accordance with Rule 13d-3 of the
1934 Exchange Act and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options or
warrants currently exercisable or convertible, or exercisable or
convertible within 60 days of June 11, 2002 are deemed outstanding for
computing the percentage of the person holding such option or warrant but
are not deemed outstanding for computing the percentage of any other
person. To the best knowledge of CompuPrint, each of the beneficial owners
listed herein has direct ownership of and sole voting power and investment
power with respect to the shares of our common stock, except as set forth
herein.
(3) Percentages are based on a total of 892,277 shares of common stock
outstanding on June 11, 2002, and the shares issuable upon exercise of
warrants within 60 days of June 11, 2002, as described below.
(4) Includes 15,398 shares subject to warrants exercisable within 60 days.
Also, includes 8,500 shares subject to warrants exercisable within 60 days
held by the Elizabeth H. Allison 1995 Education Trust of which Mr. Allison
and members of Mr. Allison's family are beneficiaries.
12
(5) Includes 210,165 shares subject to warrants exercisable within 60 days.
Includes 87,848 shares held by the Three Oaks Trust of which Mr. Seaford is
the trustee and beneficial owner; however, pursuant to the Voting Trust
Agreement, dated September 30, 2000, all voting rights are held by Peter L.
Coker, Sr. Further, Mr. Seaford and Mr. Coker have entered into an
agreement whereby Mr. Coker has the right to purchase these 87,848 shares.
This Voting Trust Agreement will terminate either upon mutual agreement of
the parties or when Mr. Coker purchases from Mr. Seaford all of the shares
that are subject to the Voting Trust Agreement. Neither of these events has
occurred.
(6) Includes 5,651 shares subject to warrants exercisable within 60 days.
Includes 10,000 shares held by IKEX Profit Sharing. Mr. Lewis is the
secretary and treasurer of IKEX, Inc., which controls IKEX Profit Sharing.
Mr. Lewis' son, Exum Lewis is the majority shareholder of IKEX, Inc. Also
includes 20,000 shares held by UBA Enterprises, Inc., and includes 11,542
shares subject to warrants held by UBA Enterprises, Inc. exercisable within
60 days. Mr. Lewis is the president, director and a minority shareholder of
UBA Enterprises, Inc.
(7) Includes 5,705 shares subject to warrants exercisable within 60 days.
(8) Includes 3,062 shares subject to warrants exercisable within 60 days.
(9) Includes 260,023 shares subject to warrants exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is a Voting Trust Agreement dated September 30, 2000, among David T.
Seaford, CompuPrint and Peter L. Coker, whereby Peter L. Coker is the trustee of
David T. Seaford's 87,848 shares of common stock of CompuPrint, and as such
Peter L. Coker has the voting rights to those shares.
In January 2001, CompuPrint's founder and former president David T. Seaford sold
to David R. Allison 10,000 shares of Mr. Seaford's CompuPrint common stock in
exchange for $900 and 2,040 shares of Wolfpack Corporation (now Equitel, Inc.)
common stock which was owned by David R. Allison. The Wolfpack stock was valued
at $2.50 per share and the value placed on the 10,000 shares of the registrant's
common stock was $.60 per share. The total purchase price was $6,000. The market
price of the Wolfpack stock in January, 2001 was $.66 per share. The valuation
of the Wolfpack stock and CompuPrint stock was a negotiated price that the
parties mutually agreed upon on October 1, 2000 when the purchase agreement was
entered into.
Pursuant to the Stock Purchase and General Release Agreement, between David T.
Seaford, Peter L. Coker, David R. Allison and CompuPrint, signed October 1,
2000, CompuPrint purchased 27,000 shares of it's common stock at $.30 per share
from David T. Seaford as follows: on January 19, 2001, 9,000 shares; on July 2,
2001, 9,000 shares; and on August 15, 2001, 9,000 shares.
In April 2001, CompuPrint's founder and former president David T. Seaford sold
to David R. Allison 15,000 shares of Mr. Seaford's CompuPrint common stock in
exchange for $1,687.50 and 3,825 shares of Wolfpack Corporation common stock
which was owned by David R. Allison. The Wolfpack stock was valued at $2.50 per
share and the value placed on the 15,000 shares of the registrant's common stock
was $.75 per share. The total purchase price was $11,250. The market price of
the Wolfpack stock in April, 2001 was $.63 per share. The valuation of the
Wolfpack stock and CompuPrint stock was a negotiated price that the parties
mutually agreed upon on October 1, 2000 when the purchase agreement was entered
into.
In July 2001, CompuPrint's founder and former president David T. Seaford sold to
David R. Allison, CompuPrint's president, CEO and Chairman of the Board of
Directors, 20,000 shares of CompuPrint's common stock in exchange for $2,700 and
6,120 shares of Wolfpack Corporation common stock which was owned by David R.
Allison. The Wolfpack stock was valued at $2.50 per share and the value placed
on the 20,000 shares of CompuPrint's common stock was $.90 per share. The total
purchase price was $18,000. The market price of the Wolfpack stock in July, 2001
was $.55 per share. The valuation of the Wolfpack stock and CompuPrint stock was
a negotiated price that the parties mutually agreed upon on October 1, 2000 when
the purchase agreement was entered into.
13
In October 2001, CompuPrint's founder and former president David T. Seaford sold
to David R. Allison 25,000 shares of CompuPrint's common stock in exchange for
$3,937.50 and 8,925 shares of Wolfpack Corporation common stock which was owned
by David R. Allison. The Wolfpack stock was valued at $2.50 per share and the
value placed on the 25,000 shares of the registrant's common stock was $1.05 per
share. Total purchase price $26,250. The market price of the Wolfpack stock in
October, 2001 was $1.90 per share. The valuation of the Wolfpack stock and
CompuPrint stock was a negotiated price that the parties mutually agreed upon on
October 1, 2000 when the purchase agreement was entered into.
In January 2002, CompuPrint issued 25,000 shares of its common stock to KGL
Investments, Ltd., the beneficial owner of which is Kaplan Gottbetter &
Levenson, LLP, counsel to the Company. The shares were issued in exchange for
$25,000 worth of legal services rendered. The shares were valued at $1.00 per
share.
In March, 2002, for loans received CompuPrint issued a promissory note dated
March 11, 2002 (and amendments thereto), in the amount of $50,000 at 12%, to BIP
Partners. The principal and interest are due in one payment on March 11, 2003.
This note also requires that in the event of a change in control of CompuPrint
that additional compensation will be due in the amount of the note minus
interest due. BIP Partners are Peter L. Coker, Sr., Joseph Isaac "Ike" Lewis and
Bobby Stanley.
In March, 2002, for loans received CompuPrint issued a promissory note dated
March 11, 2002 (and amendments thereto), in the amount of $20,000 at 12%, to
Peter L. Coker, Sr. The principal and interest due are in one payment on March
11, 2003.
In March 2002, for loans received CompuPrint issued a replacement promissory
note to David R. Allison. The promissory note is dated March 31, 2002 for
$15,398.35 at 10%, which includes a warrant to purchase 15,398 shares of
CompuPrint's common stock at $.01 per share. The principal and interest are due
in one payment on March 11, 2003. The warrant is dated March 31, 2002 and
expires March 31, 2007. CompuPrint is not registering the issuance or resale of
the warrant shares accompanying the promissory note.
In March, 2002, for loans received, CompuPrint issued a promissory note to the
Elizabeth H. Allison 1995 Education Trust. David R. Allison is among the
beneficiaries to the Elizabeth H. Allison 1995 Education Trust. The promissory
note is dated March 31, 2002, for $8,500 at 10%, which includes a warrant to
purchase 8,500 shares of CompuPrint's common stock at $.01 per share. The
principal and interest are due in one payment on March 31, 2003. The warrant is
dated March 31, 2002 and expires March 31, 2007. CompuPrint is not registering
the issuance or resale of the warrant shares accompanying the promissory note.
In March 2002, for loans received, CompuPrint issued a replacement consolidated
promissory note to Peter L. Coker, Sr. The promissory note is dated March 31,
2002, for $210,164.83 at 10%, which includes a warrant to purchase 210,165
shares of CompuPrint's common stock at $.01 per share. The principal and
interest are due in one payment on March 31, 2003. The warrant is dated March
31, 2002 and expires March 31, 2007. CompuPrint is not registering the issuance
or resale of the warrant shares accompanying the promissory note. This
promissory note replaces and consolidates 14 promissory notes issued to Mr.
Coker from March 2000 to November 2001.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to director Henry H. Scherich. The promissory note is dated March 31, 2002
for $5,705.03 at 10%, which includes a warrant to purchase 5,705 shares of
CompuPrint's common stock at $.01 per share. The principal and interest are due
in one payment on March 31, 2003. The warrant is dated March 31, 2002 and
expires March 31, 2007. CompuPrint is not registering the issuance or resale of
the warrant shares accompanying the promissory note.
In March 2002, for loans received, CompuPrint issued a promissory note to
director Andrew S. Holt, III. The promissory note is dated March 31, 2002 for
$3,061.89 at 10%, which includes a warrant to purchase 3,062 shares of
CompuPrint's common stock at $.01 per share. The principal and interest are due
in one payment on March 31, 2003. The warrant is dated March 31, 2002 and
expires March 31, 2007. CompuPrint is not registering the issuance or resale of
the warrant shares accompanying the promissory note.
14
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to director Joseph Isaac "Ike" Lewis. The promissory note is dated March
31, 2002 for $5,650.57 at 10%, which includes a warrant to purchase 5,651 shares
of CompuPrint's common stock at $.01 per share. The principal and interest are
due in one payment on March 31, 2003. The warrant is dated March 31, 2002 and
expires March 31, 2007. CompuPrint is not registering the issuance or resale of
the warrant shares accompanying the promissory note.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to UBA Enterprises, Inc. The promissory note is dated March 31, 2002 for
$11,541.71 at 10%, which includes a warrant to purchase 11,542 shares of
CompuPrint's common stock at $.01 per share. The principal and interest are due
in one payment on March 31, 2003. The warrant is dated March 31, 2002 and
expires March 31, 2007. CompuPrint is not registering the issuance or resale of
the warrant shares accompanying the promissory note. CompuPrint's director
Joseph Isaac "Ike" Lewis is also a director of UBA Enterprises, Inc.
The directors of CompuPrint have agreed that they will personally provide, or
obtain from other sources, further funding to CompuPrint in the amount of up to
$180,000 during the next 12 months, not to exceed $15,000 per month, if
necessary for operations of CompuPrint.
We believe that the terms of the above transactions are commercially reasonable
and no less favorable to us than we could have obtained from an unaffiliated
third party on an arm's length basis. To the extent we may enter into any
agreements with related parties in the future, the board of directors has
determined that such agreements must be on similar terms.
DESCRIPTION OF SECURITIES
Our authorized capital stock currently consists of 9,000,000 shares of Common
Stock, par value $.0001 per share, of which 892,277 shares are issued and
outstanding as of the date of the prospectus, and 1,000,000 shares of preferred
stock, par value $.0001 per share, of which no shares are issued and
outstanding, the rights and preferences of which may be established from time to
time by our Board of Directors.
The following description of our securities contains all material information.
However, the description of our securities contained herein is a summary only
and may be exclusive of certain information that may be important to you. For
more complete information, you should read our Certificate of Incorporation
together with our corporate bylaws.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do have cumulative voting
rights. Subject to preferences that may be applicable to any shares of preferred
stock outstanding at the time, holders of our common stock are entitled to
receive dividends ratably, if any, as may be declared from time to time by our
board of directors out of funds legally available therefor.
Upon our liquidation, dissolution or winding up, the holders of our common stock
are entitled to receive ratably, our net assets available after the payment of:
15
a. all secured liabilities, including any then outstanding secured debt
securities which we may have issued as of such time;
b. all unsecured liabilities, including any then unsecured outstanding
secured debt securities which we may have issued as of such time; and
c. all liquidation preferences on any then outstanding preferred stock.
Holders of our common stock have no preemptive, subscription, redemption or
conversion rights, and there are no redemption or sinking fund provisions
applicable to the common stock. The rights, preferences and privileges of
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock which we may
designate and issue in the future.
PREFERRED STOCK
Our board of directors is authorized, without further stockholder approval, to
issue up to 1,000,000 shares of preferred stock in one or more series and to fix
the rights, preferences, privileges and restrictions of these shares, including
dividend rights, conversion rights, voting rights, terms of redemption and
liquidation preferences, and to fix the number of shares constituting any series
and the designations of these series. These shares may have rights senior to our
common stock. The issuance of preferred stock may have the effect of delaying or
preventing a change in control of us. The issuance of preferred stock could
decrease the amount of earnings and assets available for distribution to the
holders of common stock or could adversely affect the rights and powers,
including voting rights, of the holders of our common stock. At present, we have
no plans to issue any shares of our preferred stock.
REPORTS TO STOCKHOLDERS
We intend to furnish our stockholders with annual reports containing audited
financial statements as soon as practical after the end of each fiscal year. Our
fiscal year ends December 31.
TRANSFER AGENT
We have appointed Continental Stock Transfer & Trust Company, 2 Broadway, New
York, New York 10004 as transfer agent for our common stock.
SELLING STOCKHOLDERS
The table below sets forth information concerning the resale of the shares of
common stock by the selling shareholders. We will not receive any proceeds from
the resale of the common stock by the selling shareholders; nor will we receive
proceeds from the notes, other than relief of indebtedness.
16
The following table also sets forth the name of each person who is offering the
resale of shares of common stock by this prospectus, the number of shares of
common stock beneficially owned by each person, the number of shares of common
stock that may be sold in this offering and the number of shares of common stock
each person will own after the offering, assuming they sell all of the shares
offered.
SHARES OF SHARES OF PERCENTAGE OF
COMMON STOCK BENEFICIAL COMMON BENEFICIAL COMMON
ISSUABLE UPON OWNERSHIP STOCK OWNERSHIP STOCK OWNED
EXERCISE OF BEFORE THE INCLUDED IN AFTER THE AFTER OFFERING
NAME WARRANTS OFFERING (1) PROSPECTUS OFFERING (1)(2) (1)(2)
---- -------- ------------ ---------- --------------- ------
D. Chad Allison 1,370 1,370 0 0
David R. Allison 23,898 98,268 74,370 0 3%
Robert D. Aramony 18,803 28,803 10,000 18,803 2%
BC&W Partners 5,205 5,205 0 0
James L. & Elizabeth L. Beckham 10,000 10,000 0 0
F.K. Borden 6,000 6,000 0 0
John W. Canzano 13,699 13,699 0 0
Peter L. Coker, Jr. 13,700 13,700 0 0
Peter L. Coker, Sr. 210,165 487,413 (3) 277,248 (4) 210,165 24%
Gordon Crowther 2,740 2,740 0 0
Leith Crowther 1,370 1,370 0 0
Joseph DeFelice 2,740 2,740 0 0
Jane Dickerson-Friar 5,480 5,480 0 0
Douglas R. Doering 1,370 1,370 0 0
Mikel Blair Eddins 10,000 10,000 0 0
Anthony Fazio 4,110 4,110 0 0
Neil Ferguson 14,000 14,000 0 0
William E. Fox 10,000 10,000 0 0
Lisa Marie Gould 5,000 5,000 0 0
17
SHARES OF SHARES OF PERCENTAGE OF
COMMON STOCK BENEFICIAL COMMON BENEFICIAL COMMON
ISSUABLE UPON OWNERSHIP STOCK OWNERSHIP STOCK OWNED
EXERCISE OF BEFORE THE INCLUDED IN AFTER THE AFTER OFFERING
NAME WARRANTS OFFERING (1) PROSPECTUS OFFERING (1)(2) (1)(2)
---- -------- ------------ ---------- --------------- ------
Eugene V. Grace 95,972 95,972 0 0
Rondell L. Gregory 8,347 8,347 0 0
John Hanges 1,370 1,370 0 0
Paul Hoyle 10,000 10,000 0 0
Ira A. Hunt, Jr. 2,128 2,128 0 0
Joseph E. Hutchins 30,960 30,960 0 0
IKEX Profit Sharing 10,000 10,000 0 0
Iva Dean Winkler Living Trust 2,740 2,740 0 0
KGL Investments, Ltd. (5) 25,000 25,000 0 0
William F. Lane and
Barbara D. Lane 9,663 9,663 0 0
Samuel Lee/Glenn D. Lee 1,370 1,370 0 0
Edward W. Lenz 1,370 1,370 0 0
Lawrence Lundy 5,798 5,798 0 0
J. Douglas McCullough 1,370 1,370 0 0
Ancrum R. Newman 1,950 1,950 0 0
Harold H. Reddick, Jr. 1,897 1,897 0 0
Darren Ricchi 1,500 1,500 0 0
James David Risk 5,957 5,957 0 0
Les Robinson 2,074 2,074 0 0
Angela C. Sabella 13,699 13,699 0 0
Henry H. Scherich 5,705 11,705 6,000 5,705 <1%
James S. Smitherman, Jr. 10,206 25,686 15,480 10,206 1%
Susan D. Smitherman 10,000 10,000 0 0
18
SHARES OF SHARES OF PERCENTAGE OF
COMMON STOCK BENEFICIAL COMMON BENEFICIAL COMMON
ISSUABLE UPON OWNERSHIP STOCK OWNERSHIP STOCK OWNED
EXERCISE OF BEFORE THE INCLUDED IN AFTER THE AFTER OFFERING
NAME WARRANTS OFFERING (1) PROSPECTUS OFFERING (1)(2) (1)(2)
---- -------- ------------ ---------- --------------- ------
Corroll Snugs 10,000 10,000 0 0
Solid Rock Trust 2,740 2,740 0 0
Bobby H. Stanley 10,000 10,000 0 0
Stallings Brothers, Inc. 20,000 20,000 0 0
Anthony Tang 13,699 13,699 0 0
TelAmeriCard Corporation 10,461 10,461 0 0
George Timmerman 10,000 10,000 0 0
Mark Trivette 1,370 1,370 0 0
UBA Enterprises, Inc. 11,542 31,542 20,000 11,542 1
Jim Vancina/Joyce Vancina 6,850 6,850 0 0
Judith C. Vinyard 50,000 50,000 0 0
William H. Wade, Jr. 1,370 1,370 0 0
Larry D. Wren 2,740 2,740 0 0
Total 280,319 892,277 0
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership fan other
purpose. Under such rule, beneficial ownership includes any shares as to
which the selling shareholder has sole or shared voting power or investment
power and also any shares the selling shareholder has the right to acquire
within 60 days.
(2) Assumes that all securities offered hereby will be sold.
(3) Includes 210,165 shares subject to warrants exercisable within 60 days.
Includes 87,848 shares held by the Three Oaks Trust of which Mr. Seaford is
the trustee and beneficial owner; however, pursuant to the Voting Trust
Agreement, dated September 30, 2000, all voting rights are held by Peter L.
Coker, Sr. Further, Mr. Seaford and Mr. Coker have entered into an
agreement whereby Mr. Coker has the right to purchase these 87,848 shares.
This Voting Trust Agreement will terminate either upon mutual agreement of
the parties or when Mr. Coker purchases from Mr. Seaford all of the shares
that are subject to the Voting Trust Agreement. Neither of these events has
occurred.
(4) Includes 87,848 shares held by the Three Oaks Trust of which Mr. Seaford is
the trustee and beneficial owner. However, pursuant to the Voting Trust
Agreement, dated September 30, 2000, all voting rights are held by Peter L.
Coker, Sr. Further, Mr. Seaford and Mr. Coker have entered into an
agreement whereby Mr. Coker has the right to purchase these 87,848 shares.
This Voting Trust Agreement will terminate either upon mutual agreement of
the parties or when Mr. Coker purchases from Mr. Seaford all of the shares
that are subject to the Voting Trust Agreement. Neither of these events has
occurred.
(5) KGL Investments, Ltd. of which the beneficial owner is Kaplan Gottbetter &
Levenson, LLP counsel to CompuPrint.
19
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock covered by this prospectus on any stock exchange, market or
trading facility on which the shares are then traded or in private transactions
at a price of $1.00 per share until our shares are quoted on the Over the
Counter Bulletin Board ("OTCBB") and thereafter at prevailing market prices or
privately negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
a. ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
b. block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
c. purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
d. privately negotiated transactions; and
e. a combination of any such methods of sale.
In addition, any shares that qualify for sale under Rule 144 may be sold under
Rule 144 rather than through this prospectus.
In offering the shares covered by this prospectus, the selling stockholders and
any broker-dealers who execute sales for the selling stockholders may be deemed
to be an "underwriter" within the meaning of the Securities Act in connection
with such sales. Any profits realized by the selling stockholders and the
compensation of any broker-dealer may be deemed to be underwriting discounts and
commissions. None of the selling shareholders are broker-dealers or affiliates
of broker-dealers. There are no standby agreements or agreements with any
broker-dealers or underwriting firms to resell on behalf of the selling
shareholders.
Selling shareholders may sell their shares in all 50 states in the U.S.
CompuPrint will be profiled in the Standard & Poor's publications or "manuals".
We have advised the selling stockholders that while they are engaged in a
distribution of the shares included in this Prospectus they are required to
comply with Regulation M promulgated under the Securities Exchange Act of 1934,
as amended. With certain exceptions, Regulation M precludes the selling
stockholders, any affiliated purchasers, and any broker-dealer or other person
who participates in the distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the shares offered hereby this
Prospectus.
CompuPrint will keep this Prospectus current with the Securities and Exchange
Commission until the earlier of (i) the date that all shares offered by this
Prospectus have been sold by the selling shareholders or (ii) twenty-four (24)
months from the effective date of the Registration Statement on Form SB-2 that
CompuPrint has filed with the SEC. All costs and expenses of registration shall
be borne by CompuPrint.
MARKET FOR COMMON EQUITY
SHARES ELIGIBLE FOR FUTURE SALE
MARKET INFORMATION
There is no public trading market on which CompuPrint's Common Stock is traded.
CompuPrint has engaged a broker/dealer who has filed a Form 211 with the
National Association of Securities Dealers ("NASD") in order to allow the quote
of CompuPrint's common stock on the Over-the-Counter Bulletin Board (OTCBB).
There is no assurance that our common stock will be included on the OTCBB.
20
There are fifty-five (55) record holders of common equity.
There are warrants outstanding to purchase 300,100 shares of CompuPrint common
stock.
We have outstanding 892,277 shares of our common stock. Of these shares, 892,277
shares, will be freely tradable without restriction under the Securities Act
unless held by our "affiliates" as that term is defined in Rule 144 under the
Securities Act. These shares will be eligible for sale in the public market,
subject to certain volume limitations and the expiration of applicable holding
periods under Rule 144 under the Securities Act. Non-affiliates currently hold
504,659 shares of our common stock fifty-seven percent (57%) of our outstanding
shares. In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year (including the holding period of any prior owner or affiliate)
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of (1)% of the number of shares of common stock then
outstanding or (2) the average weekly trading volume of the common stock during
the four calendar weeks preceding the filing of a From 144 with respect to such
sale. Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of us at any time during the three months preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
We can offer no assurance that an active public market in our shares will
develop. Future sales of substantial amounts of our shares in the public market
could adversely affect market prices prevailing from time to time and could
impair our ability to raise capital through the sale of our equity securities.
LEGAL PROCEEDINGS
We are not a party to, nor are we aware of any existing, pending or threatened
lawsuits or other legal actions.
LEGAL MATTERS
Certain legal matters, including the legality of the issuance of the shares of
common stock offered herein, are being passed upon for us by our counsel, Kaplan
Gottbetter & Levenson, LLP, 630 Third Avenue, New York, New York 10017.
21
EXPERTS
The financial statements of CompuPrint, Inc., as of December 31, 2001 and for
the period from December 31, 2000 through December 31, 2001, have been included
herein and in the registration statement in reliance upon the report of Rogoff &
Company, P.C., independent certified public accountants, appearing elsewhere
herein, and upon the authority of that firm as experts in accountant and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have not previously been required to comply with the reporting requirements
of the Securities Exchange Act. We have filed with the SEC a registration
statement on Form SB-2 to register the securities offered by this prospectus.
The prospectus is part of the registration statement, and, as permitted by the
SEC's rules, does not contain all of the information in the registration s For
future information about us and the securities offered under this prospectus,
you may refer to the registration statement and to the exhibits and schedules
filed as a part of this registration statement. You can review the registration
statement and its exhibits at the public reference facility maintained by the
SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The registration statement is also available
electronically on the World Wide Web at http://www.sec.gov.
22
INDEX TO FINANCIAL STATEMENTS
CompuPrint, Inc
Auditors' Report ............................................................F-1
Balance Sheet of December 31, 2001, and March 31, 2002 (unaudited)...........F-2
Statements of Operations for the years ended December 31, 2001 and 2000,
and three months ended March 31, 2002 and 2001 (unaudited).................F-3
Statements of Cash Flows for the years ended December 31, 2001 and 2000
and three months ended March 31, 2002 and 2001 (unaudited).................F-4
Statement of Changes in Shareholders' Equity for the years ended
December 31, 2001 and 2000, and three months ended March 31, 2002 and
2001 (unaudited)...........................................................F-5
Notes to Financial Statements ...............................................F-6
23
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
CompuPrint, Inc.:
We have audited the accompanying balance sheets of CompuPrint, Inc., as of
December 31, 2001 and the related statements of operations, of cash flows and of
changes in shareholders' equity for the years ended December 31, 2001 and 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 CompuPrint, Inc. at December
31, 2001 and the results of its operations, its cash flows and the changes in
its shareholders' equity for the year ended December 31, 2001 and 2000, in
conformity with accounting principles generally accepted in the United States of
America.
New York, New York
May 28, 2002
F-1
COMPUPRINT, INC.
Balance Sheets
ASSETS
December 31, March 31,2002
2001 (UNAUDITED)
----------- -------------
Current assets:
Cash $ 4,440 $ 440
Accounts receivable 29,179 35,705
Inventory 94,644 74,491
Discount on notes payable -- 10,143
----------- -----------
Total current assets 128,263 120,779
Property & equipment - net of accumulated
depreciation of $192,821 and $195,817 13,237 10,241
----------- -----------
Total assets $ 141,500 $ 131,020
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 80,503 $ 77,225
Current portion of long-term debt -- 102,909
----------- -----------
Total current liabilities 80,503 180,134
Long-term debt, net of current portion 308,664 300,100
----------- -----------
Total liabilities 389,167 480,234
----------- -----------
Shareholders' equity (deficit):
Preferred stock, par value $0.0001 -
1,000,000 shares authorized, 0
shares issued and outstanding -- --
Common stock, par value $0.0001 -
9,000,000 shares authorized; 865,777
and 892,277 shares issued and outstanding 87 89
Additional paid-in capital 1,137,070 1,173,711
Deficit (1,384,824) (1,523,014)
----------- -----------
Total shareholders' equity (deficit) (247,667) (349,214)
----------- -----------
Total liabilities and shareholders' equity (deficit) $ 141,500 $ 131,020
=========== ===========
See accompanying Notes to Financial Statements
F-2
COMPUPRINT, INC.
Statements of Operations
(unaudited)
Year Ended Three Months Ended
December 31, March 31,
2001 2000 2002 2001
--------- --------- --------- ---------
Revenues $ 289,147 $ 434,904 $ 53,128 $ 78,088
Cost of Goods Sold 219,007 122,090 39,676 37,210
--------- --------- --------- ---------
Gross Profit 70,140 312,814 13,452 40,878
Operating Expenses:
Selling, General & Administrative 544,418 523,416 131,888 123,806
Depreciation & Amortization 45,456 52,190 2,996 11,402
Interest Expense 15,525 6,400 16,758 4,123
--------- --------- --------- ---------
Total operating expenses 605,399 582,006 151,642 139,331
--------- --------- --------- ---------
NET (LOSS) $(535,259) $(269,192) $(138,190) $ (98,453)
========= ========= ========= =========
Net Loss Per Share:
Basic $ 0.68 $ 0.42 $ 0.15 $ 0.14
========= ========= ========= =========
Weighted average shares of
common stock used in
calculation of net loss
per share 783,050 643,700 891,688 684,705
========= ========= ========= =========
See accompanying Notes to Financial Statements.
F-3
COMPUPRINT, INC.
Statements of Cash Flows
(unaudited)
Year Ended Three Months Ended
December 31, March 31,
2001 2000 2002 2001
--------- --------- --------- ---------
Cash Flows From Operating Activities:
Net (loss) $(535,259) $(269,192) $(138,190) $ (98,453)
ADJUSTMENTS TO RECONCILE NET LOSS TO
CASH USED BY OPERATING ACTIVITIES:
Depreciation & Amortization 45,609 52,190 2,996 11,402
Stock issued for services -- -- 25,000 --
(Increase) decrease in accounts receivable 11,214 30,310 (6,526) 26,688
(Increase) decrease in inventories 74,186 (10,386) 20,153 6,313
(Increase) decrease in other assets 32,750 (7,500) -- --
Increase (decrease) in accounts payable 57,296 (43,927) (3,278) 51,160
--------- --------- --------- ---------
Cash (used by) operating activities (314,204) (248,505) (99,845) (2,890)
Cash Flows From Investing Activities:
Purchase of equipment (687) -- -- --
Net cash (used in) investing activities (687) -- -- --
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 146,700 161,965 94,345 23,623
Proceeds from common stock sales 201,000 50,000 1,500 --
Redemption of common stock (8,100) -- -- --
Net cash provided by financing activities 339,600 211,965 95,845 23,623
Net Increase (Decrease) in cash 24,709 (36,540) (4,000) 20,733
Cash, beginning of period (20,269) 16,271 4,440 (20,269)
--------- --------- --------- ---------
Cash, end of period $ 4,440 $ (20,269) $ 440 $ 464
========= ========= ========= =========
Interest Paid $ 926 $ 935 $ 268 $ --
========= ========= ========= =========
Non-Cash items:
Stock issued for services $ -- $ -- $ 25,000 $ --
========= ========= ========= =========
See accompanying Notes to Financial Statements.
F-4
COMPUPRINT, INC.
Statement of Changes in Shareholders' Equity
For the years ended December 31, 2001 and 2000
And for three months ended March 31, 2002 (unaudited)
ADDITIONAL RETAINED
NUMBER OF COMMON PAID-IN EARNINGS
SHARES STOCK CAPITAL (DEFICIT) TOTAL
----------- ----------- ----------- ----------- -----------
Balance January 1, 2000 641,777 $ 65 $ 894,192 $ (580,373) $ 313,884
Issuance of common stock
at $1.00 per share 50,000 5 49,995 -- 50,000
Net (loss) -- -- -- (269,192) (269,192)
----------- ----------- ----------- ----------- -----------
Balances, December 31, 2000 691,777 70 944,187 (849,565) 94,692
Issuance of common stock
at $1.00 per share 201,000 20 200,980 -- 201,000
Redemption of common stock
at $0.30 per share (27,000) (3) (8,097) -- (8,100)
Net (loss) -- -- -- (535,259) (535,259)
----------- ----------- ----------- ----------- -----------
Balances, December 31, 2001 865,777 87 1,137,070 (1,384,824) (247,667)
Issuance of common stock
for services 25,000 2 24,998 -- 25,000
Issuance of common stock
at $1.00 per share 1,500 -- 1,500 -- 1,500
Issuance of common stock
purchase warrants -- -- 10,143 -- 10,143
Net (loss) (unaudited) -- -- -- (138,190) (138,190)
----------- ----------- ----------- ----------- -----------
Balances, March 31, 2002
(unaudited) 892,277 $ 89 $ 1,173,711 $(1,523,014) $ (349,214)
=========== =========== =========== =========== ===========
See accompanying Notes to Financial Statements.
F-5
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 1: ORGANIZATION AND BUSINESS
CompuPrint, Inc. (the "Company") was incorporated on September 15, 1995,
pursuant to Chapter 55 of the General Statutes of the State of North Carolina,
entitled "THE BUSINESS CORPORATION ACT". The Company remanufactures and markets
laser printer cartridges for a wide variety of laser printer equipment.
Additionally, the Company private labels these products for other retailers. The
Company also sells inkjet systems for existing printers and refurbishes, repairs
and markets laser printers, parts and components and provides various laser
printer maintenance and repair services to its customers worldwide.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents.
ORGANIZATION COSTS
Organization costs incurred in conjunction with the incorporation of the Company
have been expensed to operations.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statements of
Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES, which
requires use of the asset and liability method. Deferred income taxes are
recorded for temporary differences between Financial Statement carrying amounts
and the tax bases of assets and liabilities. Deferred tax assets and liabilities
reflect the tax rates expected to be in effect in the years in which the
differences are expected to reverse. A valuation allowance is provided if it is
more likely than not that some or all of the deferred tax asset will not be
realized.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share has been computed by dividing the net income (loss) by
the weighted average number of common stock outstanding.
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 at the date of the
financial statements and reported amounts of revenues and expenses during the
reporting period. Accordingly, actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues from product sales and repairs are recognized upon shipment to the
customer.
ADVERTISING
Advertising is expensed in the period incurred.
F-6
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories consist primarily of raw materials, finished goods, and supplies and
are valued at the lower of cost or market. Cost is determined on a first-in,
first-out basis. Inventory consisted of:
December 31, March 31, 2002
2001 (UNAUDITED)
------- -------
Raw Materials and supplies $57,811 $46,215
Finished goods 36,833 28,276
------- -------
Total $94,644 $74,491
======= =======
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated depreciation.
Property and equipment are depreciated for financial reporting purposes using
the straight-line method over estimated useful lives of 3 to 5 years.
STOCK-BASED COMPENSATION
The Company accounts for employee stock options in accordance with Accounting
Principle Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB Opinion
No. 25) and has adopted the "disclosure only" alternative described in Statement
of Financial Standards No. 123 ACCOUNTING FOR STOCK - BASED COMPENSATION (FAS
123).
PRODUCT WARRANTIES
The Company provides purchasers of its products with warranties against defects
in materials and workmanship until the cartridge toner is depleted. Warranty
expense has been immaterial for all periods presented.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's cash, accounts receivable, and accounts
payable approximates their fair values. The estimated fair values may not be
representative of actual values of the financial instruments that could have
been realized as of the year end or that will be realized in the future.
INTERIM FINANCIAL DATA
The financial information at March 31, 2002 and for the three months ended March
31, 2001 and 2002 is unaudited but has been prepared on the same basis as the
annual financial statements and, in the opinion of Management, includes all
adjustments, consisting only of normal recurring adjustments, that CompuPrint,
Inc. considers necessary for a fair presentation of the financial position at
these dates and the operating results and cash flows for these periods. Results
of interim periods are not necessarily indicative of the results to be expected
for any subsequent period.
F-7
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 3: STOCKHOLDERS' EQUITY
RECAPITALIZATION
On December 17, 1998, the Company amended its Certificate of Incorporation to
increase the authorized number of Shares of Common Stock from 100,000 Shares no
par value to 9,000,000 Shares $0.0001 par value.
PREFERRED STOCK
On December 17, 1998, the Company amended its Certificate of Incorporation to
authorize the issuance of up to 1,000,000 Shares of its $0.0001 par value
Preferred Stock (the "Preferred Stock"). No shares of Preferred Stock have been
issued or are outstanding.
ISSUANCE OF COMMON STOCK FOR SERVICES
In January 2002, the Company issued 25,000 shares to KGL Investments, Ltd. (the
beneficial owner is Kaplan, Gottbetter & Levenson, LLP) in exchange for legal
services in connection with a planned public offering of stock. The value of the
legal services is $25,000.
NOTE 4: ADDITIONAL SALES OF COMMON STOCK
During the years ended December 31, 2001 and 2000 management of the Company
initiated steps to raise additional capital. This included the sale of 201,000
Shares in 2001 and 50,000 Shares in 2000 of the Company's $0.0001 par value
voting Common Stock (the "Common Stock") at the offering price of $1.00 per
Share. These sales were intended to be qualified for an exemption from
registration pursuant to RULE 504, RULE 505 or RULE 506 of REGULATION D, "RULES
GOVERNING THE LIMITED OFFER AND SALE OF SECURITIES WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 (AS AMENDED)" or RULE 4(2) of THE SECURITIES ACT OF
1933 (AS AMENDED).
NOTE 5: PROPOSED PUBLIC OFFERING
During the year ended December 31, 2001, the Board of Directors of the Company
passed a resolution authorizing the management of the Company to initiate steps
to register the Shares sold in the private placement offering, PURSUANT TO THE
SECURITIES ACT OF 1933 (AS AMENDED). The Company plans to file FORM SB-2 with
the UNITED STATES SECURITIES AND EXCHANGE COMMISSION and, once approved, to
INITIATE QUOTATION on either THE OTC BULLETIN BOARD(R) (the "OTCBB"), a
regulated quotation service that displays real-time quotes, last-sale prices,
and volume information in over-the-counter (OTC) equity securities and is
maintained by the NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (the "NASD"),
the Automated Quotation System Maintained by the National Quotation Bureau, Inc.
(the "Pink Sheets") or any other comparable quotation media.
F-8
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 6: PROPERTY PLANT AND EQUIPMENT
A summary of the components of plant and equipment and the related reserve for
depreciation as follows:
December 31, March 31, 2002
2001 (UNAUDITED)
-------- --------
Cost:
Machinery and equipment $136,964 $136,964
Leasehold improvements 69,094 69,094
-------- --------
Total 206,058 206,058
Less reserve for depreciation 192,821 195,817
-------- --------
Net book value $ 13,237 $ 10,241
======== ========
Depreciation expense for December 31, 2001 and 2000 was $32,539 and $36,970
respectively. Depreciation expense for March 31, 2002 and 2001 (unaudited)
amounted to $2,996 and $8,135, respectively.
NOTE 7: NOTES PAYABLE
The Company has outstanding several promissory notes at December 31, 2001, and
March 31, 2002. These notes have various terms with respect to origination date,
due date, interest rate and terms of repayment. At December 31, 2001 a majority
of the notes were in default because the Company failed to make scheduled
interest payments.
The Company's notes payable of $308,664 at December 31, 2001 includes $288,600
principle and accrued interest of $20,064. The Company's notes payable of
$403,009 at March 31, 2002 includes $366,465 principle and accrued interest of
$36,554. On March 31, 2002 the Company renegotiated the terms of the outstanding
notes payable which were in default.
On March 31, 2002, the Company renegotiated notes payable and accrued interest
of $300,100. Under the terms of the renegotiation, the Company lowered the
interest rate of the debt from 13.85% to 10%. In exchange for the reduction in
interest, the Company issued 300,100 detachable common stock purchase warrants.
The warrants were valued using the present value of the difference in interest
rates of the renegotiated notes. The Company recorded $10,143 as a discount on
issuance of notes payable at March 31, 2002 and additional paid-in capital as a
result of the issuance. The financial statements give effect to the change
agreed to in the renegotiated notes.
Certain of these notes payable contain provisions that call for additional
compensation to be paid in excess of the interest due if the Company has a
change in control during the term of the note. These notes, which total $100,000
(plus accrued interest of $2,909) at March 31, 2002, are due with interest on
July 31, 2002. Management is presently seeking to modify the due date to July
31, 2003.
Under the terms of these notes, the additional compensation is to be not more
than the face amount of the notes less any interest due under the terms of the
notes. The notes containing this provision accrue interest at 12% per annum. The
estimated possible additional liability is $97,091.
F-9
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 8: LEASES
On March 20, 1997 the Company entered into an agreement to lease office and
industrial space to be used as their principal operating facilities and
executive offices. The lease was accounted for as an operating lease. The lease
had an option to purchase the facility for a purchase price of $140,000, with a
portion of the rent being applied to the purchase price. The lease expired on
March 20, 2002. The Company did not exercise the purchase option. The Company
currently leases the same facility on a month-to-month basis and is accounted
for as an operating lease. Rent expense was $60,428 in 2001 and $14,559 in 2000
and $6,806 and $5,972 for the three months ended March 31, 2002 and 2001.
NOTE 9: RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the FINANCIAL ACCOUNTING STANDARDS BOARD issued Statement No. 141,
"BUSINESS COMBINATIONS" and Statement No. 142, "GOODWILL AND OTHER INTANGIBLE
ASSETS". These statements become effective to the Company on July 1, 2001 for
Statement No. 141 and August 1, 2002 for Statement No. 142. The Company has not
completed any business combinations as of December 31, 2001 and management
cannot currently assess what effect the future adoption of these pronouncements
will have on the Company's financial statements.
In June 15, 2001, the FINANCIAL ACCOUNTING STANDARDS BOARD also issued Statement
No. 143 "ACCOUNTING FOR ASSET RETIREMENT Obligations" and in August 15, 2001,
Statement No. 144 "ACCOUNTING FOR IMPAIRMENT AND DISPOSAL OF LONG LIVED ASSETS".
Statement No. 143 will change the accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs in four significant ways. First, Statement 143 requires
that the amount initially recognized for an asset retirement obligation be
measured at fair market value and not under the current practice of using a
cost-accumulation measurement approach. Second, Statement 143 requires that the
retirement obligation liability is discounted and accretion expense is
recognized using the credit-adjusted risk-free interest rate in effect when the
liability was initially recognized.
Prior practice did not require discounting of the retirement obligation
liability and therefore no accretion was recorded in periods subsequent to the
initial recognition period. Third, under prior practice, dismantlement and
restoration costs were taken into account in determining amortization and
depreciation rates and often the recognized asset retirement obligation was
recorded as a contra-asset. Under Statement 143, recognized asset retirement
obligations are recognized as a liability. Fourth, under prior practice, the
asset retirement obligation was recognized over that useful life of the related
asset and under Statement 143 the obligation is recognized over that useful life
of the related asset and under Statement 143 the obligation is recognized when
the liability is incurred. The effective date for Statement No. 143 is for
fiscal years beginning after June 15, 2002.
Statement No. 144, changes the accounting for long lived assets to be held and
used by eliminating the requirement to allocate goodwill to long-lived assets to
be tested for impairment, by providing a probability-weighted cash flow
estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of possible future cash flows and
establishing a "primary-asset" approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for a long-lived asset to be held and used. Statement No. 144 changes
the accounting for long-lived assets to be disposed of other than the sale by
requiring that the depreciable life of a long lived asset to be abandoned, be
revised to reflect a shortened useful life and by requiring that an impairment
loss be recognized at the date a long-lived asset is exchanged for a similar
productive asset or distributed to owners in a spin-off if the carrying amount
of the asset exceeds its fair value. Statement No. 144 changes the accounting
for long lived assets to be disposed of by sale by requiring that discontinued
operations no longer be measured on a net realizable value basis (but at the
lower of carrying amount or fair value less costs to sell), by eliminating the
recognition of future operating losses of discontinued components before they
occur and by broadening the presentation of discontinued operations in the
income statement to include a component of an entity rather than a segment of a
business. A component of an entity comprises operations and cash flows that can
be clearly distinguished, operationally, and for financial reporting purposes,
from the rest of the entity. The effective date for Statement No. 144 is for
fiscal years beginning after December 15, 2001.
F-10
COMPUPRINT, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
(INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2002 IS UNAUDITED)
NOTE 9: RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2002, the FINANCIAL ACCOUNTING STANDARDS BOARD issued Statement No. 145,
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections. Statement No. 145 eliminates Statement 4 (and
Statement 64, as it amends Statement 4, which requires gains and losses from the
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item, net of the related income tax effect. The criteria in APB
Opinion No. 30 will now be used to classify those gains and losses. Statement
No. 145 amends FASB Statement No. 13 to require that certain lease modifications
that have economic effects similar to sale-leaseback transactions be accounted
for in the same manner as sale-leaseback transactions.
The Company expects that the adoption of the new statements will not have a
significant impact on its financial statements. It is not possible to quantify
the impact until the newly issued statements have been studied. The Company is
in the process of analyzing SFAS Statements No. 141 through 145. Management
cannot currently assess what effect the adoption of these pronouncements will
have on our financial position or results of operations.
F-11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Neither the Articles of Incorporation nor Bylaws have provisions concerning
indemnification of officers and directors.
However, pursuant to North Carolina Business Corporation Act ss. 55-8-52.
Mandatory indemnification. "Unless limited by its articles of incorporation, a
corporation shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he was a party because
he is or was a director of the corporation against reasonable expenses incurred
by him in connection with the proceeding."
And pursuant to North Carolina Business Corporation Act ss. 55-8-56.
Indemnification of officers, employees, and agents. "Unless a corporation's
articles of incorporation provide otherwise:
(1) An officer of the corporation is entitled to mandatory indemnification
under G.S. 55-8-52, and is entitled to apply for court-ordered indemnification
under G.S. 55-8-54, in each case to the same extent as a director;
(2) The corporation may indemnify and advance expenses under this Part to
an officer, employee, or agent of the corporation to the same extent as to a
director; and
(3) A corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with public
policy, that may be provided by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract."
ITEM 25. EXPENSES OF ISSUANCE AND DISTRIBUTION.
The other expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered are estimated as follows:
Securities and Exchange Commission Registration Fee $300.00
Legal Fees 75,000.00
Accounting Fees 20,000.00
Printing and Engraving 3,400.00
Miscellaneous 1,700.00
-----------
TOTAL $105,400
II - 1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
From February 1999 to December, 1999, the Registrant sold 127,391 shares of its
common stock at $3.65 per share, to 21 investors pursuant to a private offering,
for a total of $464,964.41.
In August 1999, the Registrant sold 1,370 shares of its common stock to David R.
Allison, our President, CFO and Chairman of the Board of Directors at $3.65 per
share, for a total of $5,000.50.
Pursuant to the Stock Purchase and General Release Agreement, between David T.
Seaford, Peter L. Coker, David R. Allison and CompuPrint, signed October 1,
2000, CompuPrint purchased 27,000 shares of its common stock at $.30 per share
from David T. Seaford as follows: on January 19, 2001, 9,000 shares; on July 2,
2001, 9,000 shares; and on August 15, 2001, 9,000 shares.
From September 2000 to September, 2001, the Registrant sold 201,000 shares of
its common stock, at $1.00 per share, to 18 investors pursuant to a private
offering, for a total of $201,000.
In January, 2002, the Registrant issued 1,500 shares of its common stock, at
$1.00 per share, to an independent contractor for partial compensation for web
site development.
In January, 2002 the Registrant issued 25,000 shares of its common stock to KGL
Investments, Ltd., the beneficial owner of which is Kaplan Gottbetter &
Levenson, LLP, counsel to the Company. The shares were issued in exchange for
$25,000 worth of legal services rendered. The shares were valued at $1.00 per
share.
II - 2
In March 2002, for loans received CompuPrint issued a replacement promissory
note to David R. Allison. The promissory note is dated March 31, 2002 for
$15,398.35 at 10%, which includes a warrant to purchase 15,398 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
In March, 2002, for loans received, CompuPrint issued a promissory note to the
Elizabeth H. Allison 1995 Education Trust. David R. Allison is among the
beneficiaries to the Elizabeth H. Allison 1995 Education Trust. The promissory
note is dated March 31, 2002, for $8,500 at 10%, which includes a warrant to
purchase 8,500 shares of CompuPrint's common stock at $.01 per share. The
warrant expires March 31, 2007.
In March 2002, for loans received, CompuPrint issued a promissory note to
director Peter L. Coker, Sr. The promissory note is dated March 31, 2002, for
$210,164.83 at 10%, which includes a warrant to purchase 210,165 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
This promissory note replaces and consolidates 14 promissory notes issued to Mr.
Coker from March 2000 to November 2001.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to director Henry H. Scherich. The promissory note is dated March 31, 2002
for $5,705.03 at 10%, which includes a warrant to purchase 5,705 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
In March 2002, for services rendered received, CompuPrint issued a promissory
note to director Andrew S. Holt, III. The promissory note is dated March 31,
2002 for $3,061.89 at 10%, which includes a warrant to purchase 3,062 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to director Joseph Isaac "Ike" Lewis. The promissory note is dated March
31, 2002 for $5,650.57 at 10%, which includes a warrant to purchase 5,651 shares
of CompuPrint's common stock at $.01 per share. The warrant expires March 31,
2007.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to UBA Enterprises, Inc. The promissory note is dated March 31, 2002 for
$11,541.71 at 10%, which includes a warrant to purchase 11,542 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
CompuPrint's director Joseph Isaac "Ike" Lewis is also the president, director
and a minority shareholder of UBA Enterprises, Inc.
In March 2002, for loans received, CompuPrint issued a replacement promissory
note to Robert Aramony. The promissory note is dated March 31, 2002 for
$18,803.15 at 10%, which includes a warrant to purchase 18,803 shares of
CompuPrint's common stock at $.01 per share. The warrant expires March 31, 2007.
II - 3
In March 2002, for loans received, CompuPrint issued a promissory note to
William H. Conklin. The promissory note is dated March 31, 2002 for $10,248.14
at 10%, which includes a warrant to purchase 10,248 shares of CompuPrint's
common stock at $.01 per share. The warrant expires March 31, 2007.
In March 2002, for services received, CompuPrint issued a promissory note to
Charles Watson. The promissory note is dated March 31, 2002 for $1,020.63 at
10%, which includes a warrant to purchase 1,021 shares of CompuPrint's common
stock at $.01 per share. The warrant expires March 31, 2007.
In March 2002, for loans received, CompuPrint issued a promissory note to James
S. Smitherman. The promissory note is dated March 31, 2002 for $10,206.36 at
10%, which includes a warrant to purchase 10,206 shares of CompuPrint's common
stock at $.01 per share. The warrant expires March 31, 2007.
The issuances of securities described above were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as transactions by an issuer not involving a public offering. All
recipients either received adequate information about us or had access, through
employment or other relationships, to such information.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 -- Articles of Incorporation
3.2 -- Articles of Amendment of Articles of Incorporation
3.3 -- By-Laws
4.1 -- Specimen Certificate of Common Stock
4.2 -- Specimen Warrant to Purchase Common Stock
5.1 -- Form of Opinion of Counsel
9.1 -- Voting Trust Agreement with David T. Seaford
23.1 -- Accountant's Consent
23.2 -- Counsel's Consent to Use Opinion (included in Exhibit 5.1)
II - 4
ITEM 28. UNDERTAKINGS.
The Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement (the "Registration
Statement"):
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
Effective Date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To 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 this Registration
Statement, including (but not limited to) the addition of an
underwriter.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be treated 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 thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to any provisions contained in its Certificate of Incorporation, or
by-laws, or otherwise, the Registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II - 5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form and authorized this registration statement
to be signed on its behalf by the undersigned, in Lincolnton, North Carolina on
July 19, 2002.
CompuPrint, Inc.
By: /s/ David R. Allison
------------------------------------
David R. Allison
President, CFO, Treasurer and
Chairman of the Board
In accordance with the requirements of the Securities Act of 1933, the
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATED
--------- ----- -----
/s/ David R. Allison President, CFO, July 19, 2002
- ------------------------ Treasurer and Chairman
David R. Allison of the Board
/s/ Jennifer C. Shults Secretary July 19, 2002
- ------------------------
Jennifer C. Shults
/s/ Andrew S. Holt, III Director July 19, 2002
- ------------------------
Andrew S. Holt, III
/s/ Henry H. Scherich Director July 19, 2002
- ------------------------
Henry Scherich
/s/ Peter L. Coker, Sr. Director July 19, 2002
- ------------------------
Peter L. Coker, Sr.
SIGNATURE TITLE DATED
--------- ----- -----
/s/ Ike Lewis Director July 19, 2002
- ------------------------
Joseph Isaac "Ike" Lewis
COMPUPRINT, INC.
EXHIBIT INDEX
EXHIBIT NO. ITEM
- ----------- ----
3.1 Articles of Incorporation*
3.2 Articles of Amendment of Articles of Incorporation*
3.3 By-Laws*
4.1 Specimen Common Stock Certificate*
4.2 Specimen Warrant to Purchase Common Stock
5.1 Opinion and Consent of Counsel
9.1 Voting Trust Agreement*
23.1 Consent of Rogoff & Company, P.C., independent certified public
accountants
23.2 Counsel's Consent to Use Opinion (included in Exhibit 5.1)
- ----------
* Incorporated by reference to Registration Statement on Form SB-2 filed with
the Securities and Exchange Commission, Registration Statement No.
333-90272, on June 11, 2002.