AMENDMENT NO. 1 TO
PROXY STATEMENT PURSUANT TO
SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EDUVERSE.COM
-------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:________.
(2) Aggregate number of securities to which transaction applies:________.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):_______.
(4) Proposed maximum aggregate value of transaction:_____.
(5) Total fee paid:_____.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously.
Identify the previous filing by registration statement number or the Form
or Schedule and the date of its filing.
(1) Amount previously paid:______
(2) Form, Schedule or Registration Statement No.:______.
(3) Filing Party:
(4) Date Filed:
EDUVERSE.COM
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 2001
Notice is hereby given that a Special Meeting of the Shareholders (the
"Meeting") of Eduverse.Com, a Nevada corporation (the "Company") will be held at
2:00 p.m. on June 1, 2001, at 435 Martin Street, Suite 2000, Blaine, Washington
98320, and any adjournments or postponements thereof (the "Special Meeting") for
the following purposes:
1. To approve the sale of substantially all of the assets, which would
include approval of a share purchase agreement dated March 2, 2001
between the Company and Syncro-Data Systems, Ltd. ("Syncro-Data")
dated March 2, 2001 (the "Share Purchase Agreement"). The Share
Purchase Agreement provides for the sale by the Company to Syncro-Data
of all of the issued and outstanding shares of common stock of
Eduverse Dot Com, Inc., the Company's wholly-owned subsidiary
("Eduverse") held by the Company.
2. To authorize the Board of Directors to effect a reverse stock split of
fifty-for-one (the "Reverse Stock Split") of the Company's outstanding
Common Stock, depending upon a determination by the Board of Directors
that a Reverse Stock Split is in the best interests of the Company and
its Shareholders with such post-split shares of Common Stock being
referred to herein as the "New Common Stock";
3. To adopt an amendment (the "Amendment") to the Company's Articles of
Incorporation, as amended (the "Articles"), which would effect the
Reverse Stock Split, without having any effect upon the authorized and
unissued shares of Common Stock;
4. To elect the following two (2) persons to serve as directors of the
Company until their successor shall have been elected and qualified:
Grant Atkins and Herb Ackerman;
5. To ratify the selection of LaBonte & Co. as the independent public
accountants of the Company for the fiscal year ending December 31,
2001; and
6. To consider and act upon such other business as may properly come
before the Meeting or any adjournment thereof.
Only Shareholders of record at the close of business on April 16, 2001
shall be entitled to notice of and to vote at the Meeting or any adjournments
thereof. All Shareholders are cordially invited to attend the Meeting in person.
By Order of the Board of Directors
Grant Atkins, President
April 26, 2001
Blaine, Washington
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES OF COMMON
STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE ENCLOSED
PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR THAT PURPOSE.
EDUVERSE.COM
435 Martin Street, Suite 2000
Blaine, Washington 98320
PROXY STATEMENT
Dated
April 26, 2001
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 2001
GENERAL
This Proxy Statement is being furnished to the Shareholders of
Eduverse.Com, a Nevada corporation (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors") from holders (the "Shareholders") of outstanding shares of common
stock, $0.001 par value, of the Company (the "Common Stock"), for use at the
Special Meeting of the Shareholders to be held at 2:00 P.M. on June 1, 2001, at
435 Martin Street, Suite 2000, Blaine, Washington 98320, and any adjournments or
postponements thereof (the "Special Meeting"). This Proxy Statement, Notice of
Special Meeting of Shareholders and the accompanying Proxy Card are first being
mailed to shareholders on or about May 10, 2001.
VOTING SECURITIES AND VOTE REQUIRED
Only Shareholders of record at the close of business on April 16, 2001,
(the "Record Date") are entitled to notice of and to vote the shares of Common
Stock, $0.001 par value, of the Company held by them on such date at the Meeting
or any and all adjournments thereof. As of the Record Date, 37,505,434 shares of
Common Stock were outstanding. There was no other class of voting securities
outstanding at that date.
Each share of Common Stock held by a Shareholder entitles such Shareholder
to one vote on each matter that is voted upon at the Meeting or any adjournments
thereof.
The presence, in person or by proxy, of the holders of fifty-two percent
(52%) of the outstanding shares of Common Stock is necessary to constitute a
quorum at the Meeting. Assuming that a quorum is present, (i) the affirmative
vote of the holders of a majority of the shares of Common Stock outstanding will
be required to approve the Share Purchase Agreement; (ii) the affirmative vote
of the holders of a majority of the shares of Common Stock outstanding will be
required to authorize the Board of Directors to effect the Reverse Stock Split;
(iii) the affirmative vote of the holders of a majority of the shares of Common
Stock outstanding will be required to approve the amendment to the Company's
Articles of Incorporation to effect the Reverse Stock Split; (iv) the
affirmative vote of the holders of a majority of the shares of Common Stock
outstanding will be required to approve the election of Grant Atkins and Herb
Ackerman as the directors of the Company; and (v) the affirmative vote of the
holders of a majority of the shares of Common Stock outstanding will be required
to ratify the selection of LaBonte & Co. as the independent public accountants
of the Company for the fiscal year ending December 31, 2001.
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business; however, abstentions will
have the effect of a negative vote on the proposals being submitted. Abstentions
may be specified on all proposals. A broker "non-vote" will have no effect on
the outcome of any of the proposals.
If the accompanying proxy is properly signed and returned to the Company
and not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying Proxy will vote "FOR" the approval of the Share
Purchase Agreement, "FOR" approval of the Reverse Stock Split, "FOR" approval of
the amendment to the Articles of Incorporation, "FOR" approval of the nominated
individuals to the board of directors, and "FOR" approval of ratification of
LaBonte & Co. as the independent public accountants of the Company, and as
recommended by the Board of Directors with regard to any other matters or if no
such recommendation is given, in their own discretion. Each Proxy granted by a
Shareholder may be revoked by such Shareholder at any time thereafter by writing
to the Secretary of the Company prior to the Meeting, or by execution and
delivery of a subsequent Proxy or by attendance and voting in person at the
Meeting, except as to any matter or matters upon which, prior to such
revocation, a vote shall be been cast pursuant to the authority conferred by
such Proxy.
The cost of soliciting these Proxies, consisting of the printing, handling,
and mailing of the Proxy and related material, and the actual expense incurred
by brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
materials to the beneficial owners of the shares of Common Stock, will be paid
by the Company.
In order to assure that there is a quorum, it may be necessary for certain
officers, directors, regular employees and other representatives of the Company
to solicit Proxies by telephone or telegraph or in person. These persons will
receive no extra compensation for their services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date
concerning: (i) each person who is known by the Company to own beneficially more
than 5% of the Company's outstanding Common Stock; (ii) each of the Company's
executive officers, directors and key employees; and (iii) all executive
officers and directors as a group. Common Stock not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire shares
within 60 days is treated as outstanding only when determining the amount and
percentage of Common Stock owned by such individual. Except as noted, each
person or entity has sole voting and sole investment power with respect to the
shares shown.
SHARES BENEFICIALLY OWNED
NAME POSITION AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP OWNERSHIP
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(1)(2)
Investor Communications Shareholder 15,230,000 40.61%
International, Inc.
435 Martin Street
Suite 2000
Blaine, Washington 98230
(1)(3)
Marc Crimeni Shareholder 5,190,864 13.85%
1235 West Pender Street
Vancouver, British Columbia
Canada V6E 2V1
(1)(4)(5)
Vaughn Barbon Shareholder 1,638,953 4.37%
1235 West Pender Street
Vancouver, British Columbia
Canada V6E 2V1
(1)
Mark E. Bruk Shareholder 3,583,186 9.55%
1235 West Pender Street
Vancouver, British Columbia
Canada V6E 2V1
(1)
Syncro-Data Systems, Ltd. Shareholder 2,000,000 5.33%
2621 Uplands Court
Coquitlam, British Columbia
Canada V3E 2N9
All current officers and directors 0 0%
as a group (2 persons)
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(1)
These are restricted shares of Common Stock.
(2)
The Company and Investor Communications International, Inc. ("ICI") entered
into a consulting services and management agreement dated October 9, 2000 (the
"Consulting Agreement") whereby ICI will perform a wide range of management,
administrative, financial, marketing and public company services including, but
not limited to, the following: (i) international business relations and strategy
development, (ii) investor relations and shareholder liaison, (iii) corporate
public relations, press release and public information distribution, (iv)
property exploration management, including administration of metallurgical
development, metallurgical liaison, BLM liaison, engineering company liaison,
drilling administration, geologist liaison, mapping, survey and catalogue,
geostatistical liaison, environmental research, geological reports compilation
and due diligence efforts, (v) administration, including auditor and legal
liaison, media liaison, corporate minutebook maintenance and record keeping,
corporate secretarial services, printing and production, office and general
duties, and (vi) financial and business planning services, including capital and
operating budgeting, banking, bookkeeping, documentation, database records,
preparation of financial statements and creation of annual reports.
(3)
Includes the assumption of the exercise of options pursuant to the terms of
the 1998 Plan to purchase an aggregate of 100,000 shares of restricted Common
Stock at $0.51 per share.
(4)
Includes the assumption of the exercise of options pursuant to the terms of
the 1998 Plan to purchase an aggregate of 620,000 shares of restricted Common
Stock as follows: (a) 120,000 options at $0.51 per share, and (b) 500,000
options at $0.30 per share.
(5)
On approximately April 26, 2001, pursuant to a private transaction not
involving a public sale, Vaughn Barbon sold 2,000,000 shares of restricted
Common Stock to Syncro-Data Systems, Ltd. at a price of $0.01 per share for an
aggregate consideration of approximately $20,000. On April 26, 2001, Mr. Barbon
held of record 3,638,953 shares of restricted Common Stock. The 2,000,000 shares
of Common Stock acquired by Syncro-Data are restricted securities. Syncro-Data
executed a document in which Syncro-Data acknowledged that the securities had
not been registered under the Securities Act of 1933, as amended, that it
understood the economic risk of an investment in the securities, and that it had
the opportunity to ask questions of and receive answers from the Company's
management concerning any and all matters related to the acquisition of
securities. No underwriter was involved in the transaction, and no commissions
or other remuneration were paid in connection with the sale and purchase of the
securities.
EXECUTIVE COMPENSATION
During fiscal year 1999, Mark Bruk entered into an employment agreement.
The employment agreement entered into with Mark Bruk provided for an annual
salary of $60,000. During fiscal year 2000, the Company accrued $54,400 in
salary and paid $54,400 to Mark Bruk as compensation pursuant to the employment
agreement. As of October 5, 2000, the employment agreement with Mark Bruk was
terminated in accordance with its provisions. See "Summary Compensation Table"
below.
On April 3, 1999, Marc Crimeni, Robert Harris, Jeffrey Mah and Lorne
Reicher, respectively, entered into employment agreements. The respective
employment agreements entered into with Messrs. Crimeni, Harris, Mah and Reicher
provided for annual salaries of $60,000, $32,000, $72,000 and $60,000,
respectively, for each individual. During fiscal year 2000, the Company accrued
an aggregate of $224,000 in salaries and paid an aggregate of $152,000 to the
individuals named above as compensation pursuant to the respective employment
agreements. As of the date of this Statement, all of the employment agreements
with the respective individuals have been terminated in accordance with their
provisions due to the proposed sale of Eduverse. See "Summary Compensation
Table" below.
On October 9, 2000, the Company entered into a management service agreement
with ICI. The management service agreement provides that the Company will make
monthly payments to ICI in the amount of $75,000 for services rendered. ICI
provides a wide range of management, financial and administrative services to
the Company. Grant Atkins may derive remuneration from the Company indirectly
through ICI. As of fiscal year ended December 31, 2000, the Company accrued
approximately $235,000 and paid approximately $-0- to ICI for services rendered.
On March 14, 2001, the Company entered into a settlement agreement with ICI
pursuant to which ICI agreed to settle the aggregate debt of $456,896.55 due and
owing by the Company and accept the issuance of 15,230,000 shares of restricted
Common Stock at $0.03 per share.
As of the date of this Statement, all executive officers and directors of
the Company are reimbursed for any out-of-pocket expenses incurred by them on
behalf of the Company. Any executive compensation is subject to change
concurrent with the Company requirements.
Summary Compensation Table. The following table sets forth the annual and
long-term compensation for services in all capacities to the Company in the
three fiscal years ended December 31st, of the Company's prior directors and
officers and the Company's current directors and officers.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
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Other Securities
Name and Fiscal Annual Underlying
Principal Position Year Salary Bonus Compensation Options
- --------------------------------------------------------------------------------
(1)
Mark E. Bruk 1998 $40,000 0 0 0
Pres./Treasurer 1999 65,000 0 0 0
and Director 2000 54,400 0 0 0
(1) (3)
Marc Crimeni 1998 $37,000 0 0 100,000
President/Treasurer 1999 60,000 0 0 0
and Director 2000 60,770 0 0 0
(1) (3)
Robert Harris 1998 $12,000 0 0 75,000
Secretary and Director 1999 24,000 0 0 0
2000 28,700 0 0 0
(3)
Peter O'Donnell 1998 0 0 0 25,000
Director 1999 0 0 0 0
2000 0 0 0 0
(1) (3)
Jeffrey Mah 1998 $25,000 0 0 175,000
Chief Tech. Officer 1999 72,000 0 0 0
2000 69,885 0 0 0
(1) (3)
Lorne Reicher 1998 0 0 0 100,000
V.President Operations 1999 $40,000 0 0 0
2000 41,300 0 0 0
Gary Powers 2000 0 0 0 0
Director
(2)
Grant Atkins 2000 0 0 0 0
President, Secretary,
Treasurer and Director
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(1)
Received pursuant to contractual provisions of respective employment
agreements.
(2)
Grant Atkins may indirectly receive compensation from the Company through the
contractual relationship between the Company and ICI.
(3)
Represents stock options to purchase an aggregate of 100,000 shares, 75,000
shares, 25,000 shares, 175,000 shares and 100,000 shares, respectively, at an
exercise price of $0.51 per share. As of the date of this Statement, none of the
options have been exercised by Messrs. Crimeni, Harris, O'Donnell, Mah or
Reicher. See "Compensation Pursuant to Plans".
COMPENSATION PURSUANT TO PLANS
During fiscal years ended 1999 and 2000, the Board of Directors of IGCO
authorized the grant of stock options to certain officers, directors and
significant consultants as reflected below in the "Aggregated Options/SAR
Exercises and Fiscal Year-End Options/SAR Value Table". As of the date of this
Statement, all stock option plans have been cancelled in accordance with their
respective terms and provisions.
1998 Stock Option Plan. During 1998, the Board of Directors and
shareholders of the Company adopted the 1998 Stock Option Plan (the "1998 Plan")
pursuant to which the Company reserved 1,500,000 shares of Common Stock. On June
30, 1999, the Board of Directors amended the 1998 Plan to increase the maximum
number of shares of Common Stock reserved for issuance from 1,500,000 to
2,500,000. The 1998 Plan is administered by the Board of Directors or by a
committee thereof (the "Plan Administrator") and provides that options may be
granted to employees and officers of the Company or any of its subsidiaries and
to directors of the Company who are employees of the Company or any of its
subsidiaries, based on the eligibility criteria set out in the 1998 Plan. The
1998 Plan authorizes the grant of "incentive stock options" as defined in
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), and
"non-qualified" stock options. The options issued under the Stock Option Plan
are exercisable at a price fixed by the Plan Administrator, in its sole
discretion, subject to specific requirements relating to incentive stock options
under the Code. Non-qualified and incentive stock options generally expire ten
years from the grant date, except non-qualified and incentive stock options
which are granted to a person owning more than 10% of the combined voting power
of all classes of stock of the Company or any parent or subsidiary of the
Company expire after five years from the grant date. Except as noted below,
options granted generally vest in equal amounts at 2% per month.
As of the date of this Statement, the 1998 Plan has been terminated in
accordance with its provisions.
1998 Directors' Stock Option Plan. During 1998, the Board of Directors and
stockholders of the Company adopted the 1998 Directors' Stock Option Plan (the
"1998 Directors Plan"). The maximum number of shares reserved for issuance under
the 1998 Directors Plan are 150,000 shares. The 1998 Directors Plan is
administered by the Board of Directors or by a committee thereof (the "Plan
Administrator") and provides that options may be granted to Directors of the
Company who are not employees of the Company. Under the 1998 Directors Plan,
options may be exercised at a price not less than the fair market value of the
Company's common stock on the date of grant, which is deemed to be the closing
price of the Company's shares on NASD Over-The-Counter Bulletin Board Market on
the date of grant. Options are granted under the 1998 Directors Plan to eligible
Directors in accordance with the following formula:
1. Upon initial election or appointment to the Board of Directors each
director is entitled to receive an option to purchase up to 25,000
share of the Company's common stock.
2. Upon re-election to the Board of Directors each director is entitled
to receive and option to purchase up to 8,000 shares of the Company's
common stock.
In the event a director serves only a partial term before re-election, the
number of options to purchase shares granted upon their re-election is prorated
to reflect the amount of time served as a director. Options typically vest 2%
each month and expire 10 years from the date of grant.
As of the date of this Statement, the 1998 Directors Plan has been
terminated in accordance with its provisions.
During fiscal years 1998, 1999 and 2000, under both the 1998 Plan and the
1998 Directors' Plan, the granting of an aggregate of 2,650,000 options at an
exercise price ranging from $0.38 to $0.67 per share had been authorized by the
Board of Directors. On approximately August 6, 2000, the Board of Directors
authorized the re-pricing of certain options at an exercise price of $0.51 per
share. As of the date of this Statement, no options have been exercised and a
total of 2,650,000 options remain issued and outstanding.
1998 Employee Stock Purchase Plan. During 1998, the Company also
established a share compensation arrangement for its employees known as the 1998
Employee Stock Purchase Plan (the "1998 Employee Purchase Plan"). The 1998
Employee Purchase Plan became effective as of June 3, 1998 and will terminate on
the earlier of June 3, 2008, the date on which all authorized shares under the
1998 Employee Purchase Plan are distributed or on a date determined by the Board
of Directors. The 1998 Employee Purchase Plan is administered by the Board of
Directors or committee thereof (the "Plan Administrator"). Under the terms of
the 1998 Employee Purchase Plan, the aggregate number of shares that may be
issued pursuant to the plan is 500,000.
The 1998 Employee Purchase Plan provides that each full-time employee
(subject to certain limited exceptions) of the Company may purchase shares of
the Company's common stock by payroll deduction up to an amount equal to the
lesser of (1) the maximum number of shares set by the Plan Administrator, or (2)
200% of the number of shares determined by dividing the dollar amount in such
employee's payroll deduction account by 85% of the closing bid price on the NASD
OTC Bulletin Board on the day previous to the purchase. The number of shares
which an employee may purchase during any given offering period is determined by
dividing the amount accumulated in such employee's payroll deduction account
during the offering period by the lower of (1) eighty-five percent of the fair
market value of a share of the Company's common stock on the first day of the
offering period, or (2) eighty-five percent of the fair market value of the
Company's common stock on the purchase date.
During fiscal year 2000, the Company granted an aggregate of 122,500 stock
options to employees/consultants below the market price of the underlying stock
on the date of grant. Of these stock options granted, 75,000 are subject to
vesting at 10% per month commencing June 1, 2000. As of the date of this Annual
Report, no options have been exercised and a total of 122,500 options remain
issued and outstanding. Compensation expense in the amount of $35,420 relating
to the options vested during fiscal year 1999 in connection with these grants
has been recorded at $6,120. As of the date of this Statement, the 1998 Purchase
Plan has been terminated in accordance with its provisions.
Aggregated Options/SAR Exercises and Fiscal Year-End Options/SAR Value Table for
the 1998 Stock Option Plan and the 1998 Directors' Stock Option Plan.
- --------------------------------------------------------------------------------
Name Number of Shares Granted Date of Grant Exercise Price Date of
Under 1998 Plan or 1998 Expiration
Directors' Plan
- --------------------------------------------------------------------------------
Robert Harris 75,000 12/09/98 $0.51 02/09/03
Mark Crimeni 100,000 06/03/98 $0.51 08/03/02
Jeffrey Mah 175,000 07/31/98 $0.51 09/30/02
Lorne Reicher 100,000 12/09/98 $0.51 02/09/03
Peter O'Donnell 25,000 12/09/98 $0.51 02/09/03
- -------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
As of the date of this Statement, the Company has not entered into any
contractual arrangements with related parties other than those transactions
relating to the contractual arrangements with ICI and those resulting primarily
from advances made by related parties to the Company and subsequent issuance of
notes. Mr. Atkins is a director and the president of the Company, and is a
member of the management team provided by ICI.
There were no other transactions or series of transactions for the fiscal
year ended December 31, 2001 nor are there any currently proposed transactions,
or series of the same to which the Company is a party, in which the amount
involved exceeds $60,000 and in which, to the knowledge of the Company, any
director, executive officer, nominee, five percent shareholder or any member of
the immediate family of the foregoing persons, have or will have a direct or
indirect material interest.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and the persons who beneficially own more than ten percent of the
common stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Rule 16a-3
promulgated under the Exchange Act. Based solely on the reports received by the
Company and on the representations of the reporting persons, the Company
believes that these persons have complied with all applicable filing
requirements during the fiscal year ended December 31, 2000.
AUDIT COMMITTEE
As of the date of this Statement, the Company has not appointed members to
an audit committee and, therefore, the respective role of an audit committee has
been conducted by the board of directors of the Company. When established, the
audit committee's primary function will be to provide advice with respect to the
Company's financial matters and to assist the board of directors in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be
to: (i) serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (ii) review and
appraise the audit efforts of the Company's independent accountants; (iii)
evaluate the Company's quarterly financial performance as well as its compliance
with laws and regulations; (iv) oversee management's establishment and
enforcement of financial policies and business practices; and (v) provide an
open avenue of communication among the independent accountants, management and
the board of directors.
The board of directors has considered whether the regulatory provision of
non-audit services is compatible with maintaining the principal independent
accountant's independence.
Audit Fees. As of the date of this Statement, the Company has incurred
approximately $15,000 as fees billed by its principal independent accountant for
professional services rendered in connection with preparation of the Company's
audited financial statements for fiscal year ended December 31, 2000. For fiscal
year ended December 31, 2000, the Company incurred approximately $4,800 as fees
billed by its principal independent accountant for all other non-audit services
(including reviews of the Company's quarterly financial statements).
PROPOSAL 1
APPROVAL OF THE SHARE
PURCHASE AGREEMENT
Shareholders will be asked to approve the sale of substantially all of the
assets of the Company through the sale of the business and certain assets of the
Company's wholly-owned subsidiary, Eduverse Dot Com, Inc. ("Eduverse") pursuant
to the terms and conditions of the share purchase agreement dated March 2, 2001
(the "Share Purchase Agreement") between the Company and Syncro-Data Systems,
Ltd. ("Syncro-Data"), a corporation organized under the laws of British Columbia
(the "Proposed Transaction"), a copy of which is attached as Exhibit A.
The Proposed Transaction. The Proposed Transaction pursuant to the Share
Purchase Agreement provides for the sale by the Company to Syncro-Data of all of
the issued and outstanding shares of common stock of Eduverse held by the
Company. The Share Purchase Agreement further provides that (i) Syncro-Data has
paid the ongoing expenses of Eduverse to date in the approximate amount of
$50,000; (ii) Syncro-Data has agreed to recognize certain liabilities of
Eduverse, including an account payable to Ernst & Young in the amount of
approximately $74,000; and (iii) Eduverse will retain all of its right, title
and interest in and to certain intellectual property rights and other property,
including accounts receivable, contract revenue and outstanding cash in the
approximate amount of $900.00. The intellectual property rights retained by
Eduverse generally means any and all proprietary rights used or owned by
Eduverse regarding its software, whether registered or not, provided under (i)
patent law, (ii) copyright law, (iii) trademark and tradename law, (iv) design
patent, distinguishing guises or industrial design law, and (v) semi-conductor
chip or mask work law.
The Share Purchase Agreement contains various customary representations and
warranties made by the Company and Syncro-Data. These include, among other
things, representations and warranties relating to (i) the execution and
enforceability of the Share Purchase Agreement, (ii) the financial statements
and other financial and related information, (iii) the absence of certain
undisclosed liabilities, (iv) the absence of undisclosed material changes
relating to Eduverse, (v) matters regarding intellectual property rights, and
(vi) title to and absence of liens on certain assets.
The Company and Syncro-Data have agreed to close the Proposed Transaction
at the earlier of June 30, 2001 or after the special meeting of shareholders
where such approval is required to authorize and complete the Proposed
Transaction.
Effect of Sale of Assets on the Company. Following the consummation of the
Proposed Transaction, the Company expects to have no substantial assets, after
taking into account its fixed assets and accounts receivable. There can be no
assurance that any further assets will be realized. Following the consummation
of the Proposed Transaction, the Company expects to have approximately $200,000
in liabilities, after taking into account its accounts payable and accrued
liabilities.
The Company has not yet decided its future direction, which would depend
upon the success of its research and identification of prospective new business
endeavors and opportunities. This research may result in the Company entering
into business operations that are not in the educational software industry.
During fiscal year 2000, Messrs. Bruk, Crimeni, Harris, O'Donnell, Mah and
Reicher resigned their respective positions as officers and/or directors of the
Company. The employment agreements entered into with the respective officer were
all terminated in accordance with their respective provisions. Messrs. Powers
and Atkins have acted as directors and officers of the Company and believe that
they will be able to devote sufficient time to meet the Company's needs in the
foreseeable future.
As the Proposed Transaction involves the sale of assets of the Company for
cash, the shareholders of the Company will retain their equity interests in the
Company following the consummation of the Proposed Transaction.
Background of Sale of Assets; Fairness of Transaction; Recommendation of
Board of Directors. The Board of Directors agreed to enter into the Share
Purchase Agreement principally because of its belief that the Company's
financial condition was declining as a result of past marketing decisions and
lack of revenues to be generated from advertising fees, and the Proposed
Transaction offered the best alternative for the Company. In reaching its
determination, the Board of Directors reviewed the terms of the Share Purchase
Agreement and related agreements, as well as the possible future direction of
the Company. The principal factor considered by the Board of Directors was the
belief that the Company's financial condition was declining as a result of past
marketing decisions and lack of generation of revenues from advertising fees,
and the inability of the Company to borrow funds that would be required for its
working capital and capital expenditures at its planned level of sales for the
remainder of 2001.
The Board of Directors also took into account, among other factors, the
various other possible sale or merger transactions, and the following additional
factors:
1. The terms of the Share Purchase Agreement, including (a) that
Syncro-Data agreed to recognize certain obligations and liabilities of Eduverse,
and (b) the payment of Eduverse's ongoing expenses by Syncro-Data in the
approximate amount of $50,000.
2. The financial risks of the Proposed Transaction not taking place because
of the necessity for a significant reduction in employees and the need to work
out contractual arrangements, and the risk that there would be no opportunity to
successfully raise additional capital either through private sales or from
advances.
3. An analysis of the financial effects on the Company of the Proposed
Transaction being completed. In this regard, the Board of Directors took into
account the Consolidated Financial Statements, included as exhibit C in this
Proxy Statement, which showed that for the fiscal year ended December 31, 2000,
the effect of the Proposed Transaction may reduce the net loss of the Company.
4. The recent market prices for the Common Stock of the Company.
5. The ongoing operating losses of the Company and the substantial legal,
accounting and other costs that would be incurred if the Company were to
continue its business operations.
Based on the foregoing, the Board of Directors believed that the sale of
assets through the Share Purchase Agreement at this time pursuant to the
Proposed Transaction would be fair to and in the best interests of the Company
and its shareholders. In view of the wide variety of factors considered in
connection with its evaluation of the Share Purchase Agreement, the Board of
Directors sis not find it practicable to, and did not, quantify or otherwise
attempt to assign relative weights to the specific factors considered in
reaching its determination.
The Board of Directors of the Company unanimously recommends that
shareholders vote FOR approval of the Share Purchase Agreement.
Conditions to Closing of Proposed Transaction. The obligations of the
Company to consummate the Proposed Transaction pursuant to the Share Purchase
Agreement are subject to certain conditions, which conditions include, among
other things, approval by the Company's shareholders.
Termination. The Share Purchase Agreement may be terminated and the
Proposed Transaction may be abandoned (i) by either party by notice if the
closing date shall not have occurred on or before June 30, 2001, or (ii) by the
Company if its Board of Directors withdraws its recommendation of the Proposed
Transaction in the event the shareholders of the Company do not approve the
Share Purchase Agreement.
No Dissenting Shareholder Rights. There are no dissenting shareholder
rights provided either pursuant to statutory provisions or pursuant to the
Company's Articles of Incorporation or Bylaws.
Federal Income Tax Consequence of the Proposed Transaction. The Proposed
Transaction will be a taxable transaction to the Company resulting in a net loss
for tax purposes measured by the difference between the amount realized on the
sale of the assets and the Company's tax basis in the assets. Shareholders of
the Company will experience no direct federal income tax consequences as a
result of the Proposed Transaction.
The foregoing constitutes only a general description of the federal income
tax consequences.
Board Recommendation
- --------------------
The Board recommends a vote FOR the approval of the sale of substantially
all of the assets of the Company pursuant to the Share Purchase Agrement,
attached hereto as Exhibit A.
PROPOSAL 2
PROPOSED REVERSE STOCK SPLIT
The Board of Directors has authorized, subject to Shareholder approval, a
Reverse Stock Split of one-for-fifty of the Company's outstanding Common Stock
that may be effected by the Board depending on market conditions. The intent of
the Reverse Stock Split is to increase the marketability and liquidity of the
Common Stock.
If the Reverse Stock Split is approved by the Shareholders at the Special
Meeting, it will be effected only upon a determination by the Board of Directors
that the Reverse Stock Split is in the best interests of the Company and the
Shareholders. In the Board's judgment, the Reverse Stock Split would result in
the greatest marketability and liquidity of the Common Stock, based upon
prevailing market conditions, the proposed public offering described below, on
the likely effect on the market price of the Common Stock and other relevant
factors.
If approved by the Shareholders, the Reverse Stock Split will become
effective on any date (the "Effective Date") selected by the Board of Directors
on or prior to June 30, 2001, upon filing the appropriate amendment to the
Company's Articles of Incorporation with the Nevada Secretary of State. If no
Reverse Stock Split is effected by such date, the Board of Directors will take
action to abandon the Reverse Stock Split without further Shareholder action.
The procedures for consummation of the Reverse Stock Split are attached hereto
as Exhibit B.
Purposes And Effects Of The Reverse Stock Split
- -----------------------------------------------
The Common Stock is listed for trading on the OTC Bulletin Board under the
symbol EDUV. On the Record Date, the reported closing price of the Common Stock
on the OTC Bulletin Board was $0.02 per share. The Company intends to use its
best efforts in the future to cause its shares of Common Stock to be approved
for trading on the Nasdaq SmallCap Market (the "SmallCap Market"). The Company
currently does not qualify for admission to the SmallCap Market because its
per-share price of $0.02 (as of the close of trading on April 16, 2001) is below
the $3.00 level required for admission to the SmallCap Market. Further, the
Company's net tangible assets and shareholders' equity are below the minimum
requirements of $4,000,000 and $2,000,000, respectively, for inclusion on the
SmallCap Market. Management believes that, based on possible future generation
of revenues and offerings of Common Stock, the Company may eventually meet the
net tangible assets requirement imposed by the SmallCap Market and the
shareholder equity requirement imposed by the SmallCap Market. Management
intends to effect a Reverse Stock Split at a level of fifty-to-one which it
believes is sufficient to enable the Company in the future to meet such
requirements for admission into the SmallCap Market. The Board of Directors
believes that a Reverse Stock Split will result in attaining both of its goals
of achieving a per-share price in excess of $3.00 and increasing the
marketability and liquidity of the Company's Common Stock.
Additionally, the Board believes that the current per-share price of the
Common Stock has limited the effective marketability of the Common Stock because
of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their own
portfolios. Certain policies and practices of the securities industry may tend
to discourage individual brokers within those firms from dealing in lower-priced
stocks. Some of those policies and practices involve time-consuming procedures
that make the handling of lower priced stocks economically unattractive. The
brokerage commission on a sale of lower-priced stock may also represent a higher
percentage of the sale price than the brokerage commission on a higher priced
issue. Any reduction in brokerage commissions resulting from the Reverse Stock
Split may be offset, however, in whole or in part, by increased brokerage
commissions required to be paid by stockholders selling "odd lots" created by
such Reverse Stock Split.
On the Record Date the number of record holders of the Common Stock was 214
and the number of beneficial holders of Common Stock was estimated to be
approximately 897. The Company does not anticipate that any Reverse Stock Split
will result in a significant reduction in the number of such holders, and does
not currently intend to effect any Reverse Stock Split that would result in a
reduction in the number of holders large enough to jeopardize listing of the
Common Stock on the SmallCap Market or the Company's being subject to the
periodic reporting requirements of the Securities and Exchange Commission.
The Reverse Stock Split would have the following effects upon the number of
shares of Common Stock outstanding (37,505,434 shares as of the Record Date)
assuming that no additional shares of Common Stock are issued by the Company
after the Record Date and that the Reverse Stock Split is effected and without
taking into account any increase in the number of outstanding shares resulting
from the exercise of outstanding options. The Common Stock will continue to be
$0.001 par value common stock following any Reverse Stock Split, and the number
of shares of Common Stock outstanding will be reduced. The following example is
intended for illustrative purposes.
Reverse Stock Common Stock
Split Outstanding
1 for 50 750,108
At the Effective Date, each share of the Common Stock issued and
outstanding immediately prior thereto (the "Old Common Stock"), will be
reclassified as and changed into the appropriate fraction of a share of the
Company's Common Stock, $0.001 par value per share (the "New Common Stock"),
subject to the treatment of fractional share interests as described below.
Shortly after the Effective Date, the Company will send transmittal forms to the
holders of the Old Common Stock to be used in forwarding their certificates
formerly representing shares of Old Common Stock for surrender and exchange for
certificates representing whole shares of New Common Stock. No certificates or
scrip representing fractional share interests in the New Common Stock will be
issued, and no such fractional share interest will entitle the holder thereof to
vote, or to any rights of a shareholder of the Company. In lieu of any such
fractional share interest, each holder of Old Common Stock who would otherwise
be entitled to receive a fractional share of New Common Stock will in lieu
receive one full share upon surrender of certificates formerly representing Old
Common Stock held by such holder.
Federal Income Tax Consequences of the Reverse Stock Split
- ----------------------------------------------------------
The following is a summary of the material federal income tax consequences
of the proposed Reverse Stock Split. This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers and tax-exempt entities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
and proposed regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service ("IRS"), all of which are subject
to change, possibly with retroactive effect, and assumes that the New Common
Stock will be held as a "capital asset" (generally, property held for
investment) as defined in the Code. Holders of Old Common Stock are advised to
consult their own tax advisers regarding the federal income tax consequences of
the proposed Reverse Stock Split in light of their personal circumstances and
the consequences under state, local and foreign tax laws.
1. The reverse split will qualify as a recapitalization described in
Section 368(a)(1)(E) of the Code.
2. No gain or loss will be recognized by the Company in connection with
the Reverse Stock Split.
3. No gain or loss will be recognized by a shareholder who exchanges all
of his shares of Old Common Stock solely for shares of New Common
Stock.
4. The aggregate basis of the shares of New Common Stock to be received
in the Reverse Stock Split (including any whole shares received in
lieu of fractional shares) will be the same as the aggregate basis of
the shares of Old Common Stock surrendered in exchange therefore.
5. The holding period of the shares of New Common Stock to be received in
the Reverse Stock Split (including any whole shares received in lieu
of fractional shares) will include the holding period of the shares of
Old Common Stock surrendered in exchange therefor.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY,
EACH HOLDER OF COMMON STOCK OF THE COMPANY IS URGED TO CONSULT WITH HIS OWN TAX
ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, MUNICIPAL,
FOREIGN OR OTHER TAXING JURISDICTION.
Board Recommendation
- --------------------
The Board recommends a vote FOR the adoption of the Reverse Stock Split and
each of the resolutions with respect thereto set forth in Exhibit B hereto.
PROPOSAL 3
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT
The Board of Directors has approved a resolution, subject to Shareholder
approval, to amend the Company's Articles of Incorporation to effect the Reverse
Stock Split. The form of amendment (the "Amendment") to the Articles of
Incorporation is attached as Exhibit B, and reference is made to the Amendment
for the complete terms thereof.
The Company's Articles of Incorporation currently authorize the issuance of
55,000,000 shares. Fifty million (50,000,000) are designated "Common Stock" and
have a par value of $0.001. Five million (5,000,000) are designated "Preferred
Stock" and have a par value of $0.001. As of April 16, 2001, 37,505,434 shares
of Common Stock were issued and outstanding. The Amendment will not affect the
total number of shares of Common Stock authorized for issuance by the Company
but will effect the Reverse Stock Split.
Fifty-two percent (52%) of the issued and outstanding shares of Common
Stock are required to be present in person or in proxy at the Special Meeting.
Approval of the Amendment subsequently requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present to vote
either in person or in proxy at the Special Meeting. If the Reverse Stock Split
and the Amendment are approved by the Shareholders, it will become effective as
of the date and time it is filed with the office of the Secretary of State of
Nevada. The filing will be made as soon as practicable following the approval of
the Reverse Stock Split and the Amendment by the Shareholders.
Board Recommendation
- --------------------
The Board recommends a vote FOR the adoption of the Amendment to the
Company's Articles of Incorporation to effect the Reverse Stock Split, and each
of the Resolutions with respect thereto set forth in Exhibit B hereto.
PROPOSAL 4
ELECTION OF TWO (2) PERSONS
TO SERVE AS DIRECTORS OF THE COMPANY
The Company's directors are elected annually to serve until the next Annual
Meeting of Shareholders or until their successors shall have been elected and
qualified. The number of directors presently authorized by the Bylaws of the
Company shall be no less than two (2) nor more than five (5).
Unless otherwise directed by shareholders, the proxy holders will vote all
shares represented by proxies held by them for the election of the following
nominees, all of who are now members and constitute the Company's Board of
Directors. The Company is advised that all nominees have indicated their
availability and willingness to serve if elected. In the event that any nominee
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxy holder will vote for a substitute nominee in the exercise of
his best judgment.
Information Concerning Nominees
- -------------------------------
GRANT ATKINS has been the President, Secretary and Treasurer and a Director
of the Company since March 1, 2001. For the past six years, Mr. Atkins has been
self-employed as a financial and project coordination consultant to clients in
government and private industry. He has extensive multi-industry experience in
the fields of finance, administration and business development. For the past
four years, Mr. Atkins has been a director and the secretary for Intergold
Corporation, an OTC Bulletin Board company, for which he has provided
organization and controller duties since its formation. Mr. Atkins is also the
director and president for Vega-Atlantic Corporation, an OTC Bulletin Board
public company engaged in the exploration and development of gold and other
minerals within the United States and internationally, and Hadro Resources,
Inc., an OTC Bulletin Board public company engaged in oil and natural gas
exploration and development within the United States and internationally.
HERB ACKERMAN has been a self-employed businessman from April 1995 to
September 1997 who consulted with various enterprises primarily in the mineral
resources exploration fields on fundraising. From September 1997 to the present,
Mr. Ackerman acts as the President of Montoro Resources Inc. listed on the
Canadian Venture Exchange (CDNX), a company involved in exploration of gold,
zinc and copper. In his capacity as President of Montoro Resources Inc., Mr.
Ackerman administers the day-to-day operations, provides investor relations
duties, arranges various financings, and seeks and evaluates general business
prospects of interest. Mr. Ackerman has also been the secretary/treasurer of
Vega-Atlantic Corporation, an OTC Bulletin Board public company engaged in oil
and natural gas exploration and development within the United States and
internationally.
Board Recommendation
- --------------------
The Board recommends a vote FOR the election of each of the two nominees
for directors of the Company.
PROPOSAL 5
RATIFICATION OF SELECTION OF
LABONTE & CO. AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY
The Board of Directors has selected LaBonte & Co. as independent public
accountants of the Company for the fiscal year ended December 31, 2001, and has
further directed that the Company submit the selection of independent public
accounts for ratification by shareholders at the Special Meeting of
Shareholders.
Board Recommendation
- --------------------
The Board recommends a vote FOR the ratification of the selection of
LaBonte & Co. as independent public accountants of the Company for the fiscal
year ended December 31, 2001.
GENERAL
Other Matters
- -------------
The Board of Directors does not know of any matters that are to be
presented at the Meeting of the Shareholders other than those stated in the
Notice of Special Meeting and referred to in this Proxy Statement. If any other
matters should properly come before the Meeting, it is intended that the proxies
in the accompanying form will be voted as the persons named therein may
determine in their discretion.
Shareholder Proposals
- ---------------------
If any shareholder of the Company intends to present a proposal for
consideration at the Special Meeting of Shareholders and desires to have such
proposal included in the proxy statement and forms of proxy distributed by the
Board of Directors with respect to such meeting, such proposal must be received
at the Company's offices, 435 Martin Street, Suite 2000, Blaine, Washington
98320, Attention: Secretary, no later than May 22, 2001.
By Order of the Board of Directors
Grant Atkins
EXHIBIT A
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT made the 2nd day of March, 2001.
BETWEEN:
SYNCRO-DATA SYSTEMS, LTD., a British Columbia incorporated company,
Incorporation No. 0353219, with a registered and records office located at
2621 Uplands Court, Coquitlam, British Columbia, V3E 2N9
(the "Buyer")
AND:
EDUVERSE.COM, a Nevada incorporated company with a business office located
at 70 East 2nd Avenue, 2nd Floor, Vancouver, British Columbia V5T 1B1
(the "Seller")
WHEREAS:
A. The Seller is indebted to the Buyer for advances made by the Buyer to
Eduverse Dot Com Inc. ("Eduverse"), in the approximate amount of $50,000.00
USD.
B. Eduverse is indebted to the Seller for ongoing operating expenses of
approximately $2.4 million CDN Funds (the "Indebtedness").
C. The Seller has agreed to assign to the Buyer the Indebtedness as partial
consideration for the within transaction.
D. The Seller is the legal and beneficial owner of 1 one common share without
par value in the capital of Eduverse, such shares being all of the issued
and outstanding shares in the capital of the company. Eduverse is a British
Columbia company, incorporated under number 0567998, which has a business
office located at 70 East 2nd Avenue, 2nd Floor, Vancouver, British
Columbia V5T 1B1. The total issued shares of Eduverse consist of the 1 one
common share owned by the Seller.
E. The Seller has agreed to sell to the Buyer and the Buyer has agreed to buy
from the Seller of all of the Seller's respective legal and beneficial
interest in the shares in the capital of Eduverse on the terms and
conditions as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
promises and mutual agreements and covenants herein contained (the receipt and
adequacy of such considerations hereby mutually admitted by each party), the
parties hereby covenant and agree as follows:
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
- --------------------------------------------------
The Seller represents and warrants to the Buyer as representations and
warranties which are true and correct as of the date hereof that:
1.1 The Seller is a company incorporated under the laws of the State of Nevada,
is a reporting company, is valid and subsisting, is in good standing, and
has the necessary powers to carry on the business carried on by it.
1.2 The Seller wholly owns Eduverse, a private subsidiary of the Seller.
Eduverse is not a reporting company, is valid and subsisting, is in good
standing and has the necessary powers to carry on the business carried on
by it.
1.3 Eduverse has only issued one 1 share and that share is validly issued and
outstanding as fully paid and non-assessable. This share represents all of
the issued and outstanding shares in Eduverse. It is contemplated that upon
completion of this transaction, the Buyer will be the sole shareholder of
all Eduverse stock issued.
1.4 The Seller and Eduverse carry on business in Canada, the United States, and
internationally and hold all permits, licenses and consent issued by any
Federal, Provincial, State, Regional or Municipal Government or Agency
thereof which are necessary or desirable in connection with the operations
of the Seller and Eduverse and the ownership of their respective assets.
1.5 The Seller has due and sufficient right and authority to enter into this
Agreement on the terms and conditions set out herein and to transfer legal
and beneficial title and ownership of the shares to the Buyer.
1.6 No person, firm or corporation has any agreement or right capable of
becoming an agreement for the purchase, subscription or issuance of any of
the unissued shares in the capital of Eduverse.
1.7 The Seller covenants that Eduverse will not create any options, warrants or
rights for any person to subscribe for any unissued shares in the capital
stock of Eduverse.
1.8 The Directors and Officers of the Seller as at the date of this agreement
are as follows:
Name Position
---- --------
Grant Atkins President, CEO, Board Chairman, Director
Gary Powers Director
1.9 The Directors and Officers of Eduverse are as follows:
Name Position
---- --------
Marc Crimeni President, Secretary, Director
1.10 The unaudited consolidated financial statements of the Seller and Eduverse
as at December 31, 2000, which are attached hereto as Schedule "A" are true
and correct in every material respect and present fairly the consolidated
financial position of the Seller as of December 31, 2000 and the results of
its operations for the period then ended. The statements have been prepared
by management in accordance with generally accepted accounting principles
and there have been no material adverse changes in the financial position
or condition of the Seller or its wholly owned subsidiary, Eduverse, or
loss materially affecting the business or assets of the Seller or Eduverse.
1.11 There are no liabilities, contingent or otherwise, of the Seller or
Eduverse other than those set out in Schedule "A" and except for normal
accounts payable not exceeding a total of $1,000.00. The Seller or Eduverse
has not guaranteed or agreed to guarantee, any debt, liability or other
obligations of any person, firm or organization.
1.12 The Seller and Eduverse are not indebted to the Buyer or any affiliate, or
to any director or officer of the Seller or Eduverse other than as set out
in Schedule "A" hereto.
1.13 No dividends or other distribution on any shares in the capital of the
Seller or Eduverse have been made, declared or authorized.
1.14 No payments of any kind have been made or authorized since December 31,
2000 to or on behalf of the Buyer or to or on behalf of officers,
directors, and shareholders of the Seller or Eduverse except in the normal
course of operations to regular employees or to employees under management
agreements with the Seller.
1.15 The Memorandum and Articles of the Seller have not been altered since
incorporation of the Seller.
1.16 The Memorandum and Articles of Eduverse have not been altered since
incorporation of Eduverse.
1.17 All contracts, accounts receivable, accounts payable, Internet domain
names, and other material operational documentation relating to Eduverse
that are in the name of the Seller shall be assigned or transferred to
Eduverse pursuant to Schedules "D" and "E" attached.
1.18 Eduverse does not have any contracts, agreements, pension plans, profit
sharing plans, bonus plans, undertakings, or arrangements whether oral,
written, or implied with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors, or
lawyers.
1.19 As at the date of this agreement the Seller is aware of no actions, suits,
judgments, investigations or proceedings outstanding or pending or to the
knowledge of the Seller or Eduverse threatened against or affected by any
federal, provincial, state, municipal or other governmental department,
commission, board, bureau or agency or any other entity.
1.20 The Seller is a resident of Nevada for matters relating to jurisdiction of
taxation.
1.21 As at the date of this agreement the Seller and Eduverse are not in breach
of any laws, ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them.
1.22 As at the date of closing, neither the Seller nor any of its officers,
directors or shareholders is now indebted or under obligation to the Seller
on any account whatsoever except as set out in Schedule "A" hereto.
1.23 All material transactions of the Seller and Eduverse have been promptly and
properly recorded or filed in or with its respective books and records. The
minute books of the Seller and Eduverse contain all records of the meetings
and proceedings of shareholders and directors thereof.
1.24 The performance of this agreement will not be in violation of the
Memorandum or Articles of the Seller or of the Memorandum or Articles of
Eduverse or any agreement to which the Seller or Eduverse are a party and
will not give any person or company any right to terminate or cancel any
agreement or any right enjoyed by the Seller or Eduverse and will not
result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party upon or
against the assets of the Seller or Eduverse.
1.25 The Seller does not own, directly of indirectly, any shares or interests in
any other company or firm other than the following:
(a) M & M Marketing Systems Inc., a Nevada private Corporation wholly
owned by the Seller.
1.26 The business of the Seller now and until the Closing Date will be conducted
and maintained in the manner which is normal to that business.
1.27 The representations, warranties, covenants and agreements of the Seller in
this agreement or any certificates or documents delivered pursuant to the
provisions hereof or in connection with the transaction contemplated hereby
shall be true at and as of the time of closing as though such
representations and warranties were made at and as of such time.
Notwithstanding any investigations or enquiries made by the Buyer prior to
the closing or the waiver of any condition by the Buyer, the
representations, warranties, covenants and agreements of the Seller shall
survive the Closing Date and notwithstanding the closing of the purchase
and sale herein provided for, shall continue in full force and effect.
1.28 For the purposes of this part, Intellectual Property Rights means any and
all proprietary rights used or owned by Eduverse, whether registered or not
provided under (i) patent law, (ii) copyright law, (iii) trade mark and
trade name law, (iv) design patent, distinguishing guises or industrial
design law, (v) semi-conductor chip or mask work law, or (vii) any other
statutory provision or common law principle which may provide a right in
either (a) ideas, formulae, algorithms, concepts, inventions or know how
generally, including trade secret law, or (b) the expression or use of such
ideas, formulae, algorithms, concepts, inventions or know-how; or goodwill
and (c) any and all applications, registrations, licenses, sub-licenses,
franchises, agreements or any other evidence of a right in any of the
foregoing.
1.29 To the best of the Seller's knowledge, the Intellectual Property Rights are
valid and enforceable.
1.30 There are no legal actions pending by any third party, including any
governmental agency, relating to the Intellectual Property Rights or other
property of Eduverse. The Seller is not aware of any adverse claim that has
ever been, or is currently being, threatened against the Intellectual
Property Rights or other property of Eduverse. The Seller is not aware of
any claim by any Person that any of the Intellectual Property Rights are or
may be invalid or unenforceable or non-distinctive of the Seller.
1.31 Eduverse is the owner of each of the Intellectual Property Rights and other
property of Eduverse, and has full and exclusive right, title, and interest
in each of the Intellectual Property Rights and other property of Eduverse.
There are no registered or pending Intellectual Property Rights.
1.32 Eduverse has kept in strict confidence all confidential information
pertaining to the Intellectual Property Rights, it has obtained written
agreements from persons that it has disclosed the Intellectual Property
Rights to obligating them to keep the information secret, and it has taken
reasonable steps to keep all confidential information from losing its
confidentiality in such a way as to bar the right to obtain registered
rights in the Intellectual Property. The confidential information is not
generally known.
1.33 The software used in Eduverse's business was written by employees of
Eduverse in the course of their employment and is an original work. All
authors have waived their moral rights in any copyrightable Intellectual
Property Rights. No portion of the software uses copies or comprises the
work of any third party including, without limitation, the structure,
sequence or organization of any third party work and no royalty or other
consideration is due to any third party arising out of the creation,
copying or distribution of such software or the Intellectual Property
Rights in the software.
1.34 The Seller has not granted, transferred, licensed or assigned any right or
interest in either the Intellectual Property Rights or other property of
Eduverse to any Person which is or could be in any way inconsistent with
the rights acquired or to be acquired by the Buyer under this agreement.
1.35 The Seller has good and marketable title to, and is owner of all right,
title and interest in, each of other property of Eduverse and the
Intellectual Property Rights, free and clear of all encumbrances (including
any restrictions on the modification or disposition thereof) of any kind
whatsoever.
1.36 The Code and all printed material connected to the Software which have been
or will be provided by the Seller to the Buyer shall be complete and
accurate in all material respects and shall be adequate to enable the Buyer
to make full use of the Software upon being provided with the Source Code.
1.37 No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required or
desirable for the assignment by the Seller of the Intellectual Property
Rights or other property of Eduverse.
1.38 The Seller is not aware of any third party uses of the trademarks and has
not used any other trademarks, common law or otherwise, with respect to the
Intellectual Property Rights other than as described in Schedule "F".
1.39 If the Intellectual Property rights are based in any way on prior works or
inventions, the Seller has the legal right to use such prior works and
inventions and has disclosed such rights to the Buyer.
BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
- -------------------------------------------------
The Buyer represents and warrants to the Seller as representations and
warranties which are true and correct as of the date hereof that:
2.1 The Buyer is a non-reporting company duly incorporated under the laws of
British Columbia, validly existing, and is in good standing to carry on
business in the Province of British Columbia.
2.2 There is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or to the knowledge of
the Buyer threatened against or affecting the Buyer at law or in equity or
before or by any federal, provincial, state, municipal or other
governmental department, commission, board, bureau or agency.
2.3 The Buyer agrees to recognize outstanding accounts payable of Eduverse as
listed at February 12, 2001 and attached hereto as Schedule "C".
2.4 The Buyer agrees to recognize certain accounts payable of the Seller as
listed at February 12, 2001, and attached hereto as Schedule "B" to be
transferred to Eduverse, such payables to be recognized by the Buyer are
listed below:
o ASCD
o Brooks Fiber Communications
o Dunn & Bradstreet
o International Market Access Inc.
o PAC Services
o SINA.com
o WorldCoM
2.5 The representations, warranties, covenants and agreements by the Buyer in
this Agreement or any certificates or documents delivered pursuant to the
provisions hereof or in connection with the transaction contemplated hereby
shall be true at and as of the time of closing as though such
representations and warranties were made at and as of such time.
Notwithstanding any investigations or enquiries made by the Seller prior to
closing or the waiver of any condition by the Seller, the representations,
warranties, covenants and agreements of the Buyer shall survive the Closing
Date and notwithstanding the closing of the purchase and sale herein
provided for, shall continue in full force and effect.
PURCHASE AND SALE
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Pursuant to the terms of this Agreement, the Buyer agrees to buy from the Seller
on the terms set out herein, one share of Eduverse.
3.1 The Seller will assume the Ernst & Young account payable of Eduverse in the
amount of $74,652.60 Canadian.
3.2 The Buyer has paid the ongoing expenses of Eduverse to date in the
approximate amount of FIFTY THOUSAND DOLLARS ($50,000.00) the receipt of
which is hereby acknowledged by the Seller.
3.3 The Buyer shall recognize certain liabilities of Eduverse as part of the
share purchase including the liability of Lingo Media in the amount of
$62,000 (CDN), Revenue Canada in the amount of $95,000 (CDN), and the
accounts payable as per Schedule "C" herein totally $44,464.33 (CDN). The
Seller understands and recognizes that Eduverse shall receive accounts
receivable, contract revenue, outstanding cash in any bank account of at
the date of this Agreement estimated at $900 US funds, loss carryforwards,
and GST receivables.
CONDITIONS PRECEDENT TO THE PERFORMANCE BY
THE BUYER OF ITS OBLIGATIONS UNDER THIS AGREEMENT
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4.1 The Buyer's obligations to carry out the terms of this Agreement and to
complete the purchase referred to in paragraph 3 hereof are subject to the
following conditions:
(a) That on the Closing Date the warranties and representations of the
Seller set forth in paragraph 1 shall be true in every particular as
if such warranties and representations had been made by the Seller on
the Closing Date;
(b) That all agreements to be performed by the Seller hereunder shall have
been fully performed and satisfied;
(c) Closing Documentation - the Buyer shall have received from the Seller
and, where applicable, Eduverse the following closing documentation:
(i) A share certificate representing the share issued in the name of
the respective seller duly endorsed for transfer to the Buyer;
(ii) A certified copy of resolutions of the directors of Eduverse,
authorizing the transfer of the share, the registration of the
share in the name of the Buyer and the issuance of share
certificate representing the share registered in the name of the
Buyer;
(iii) A share certificate registered in the name of the Buyer, signed
by the authorized signatory of the Seller representing the share;
(iv) A certified copy of the Register of Members of Eduverse showing
the Buyer as the registered owner of the shares;
(v) The corporate minute book and all other books of record of
Eduverse and the corporate seal for Eduverse.
4.2 The conditions set forth in paragraph 4.1 are for the exclusive benefit of
the Buyer and may be waived by the Buyer in whole or in part on or before
the Closing Date, but save as so waived, the completion of the purchase and
sale by the Buyer shall not prejudice or affect in any way the rights of
the Buyer in respect of the warranties and representations of the Seller
set forth in paragraph 1 which shall survive the closing and the payment of
the purchase price.
CONDITIONS PRECEDENT TO THE PERFORMANCE OF
THE SELLER OF ITS OBLIGATION UNDER THIS AGREEMENT
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5.1 The Seller's obligation to carry out the terms of this Agreement and to
complete the purchase referred to in paragraph 3 hereof are subject to the
following conditions:
(a) That on the Closing Date the warranties and representations of the
Buyer set forth in paragraph 2 shall be true in every particular as if
such warranties and representations had been made by the Buyer on the
Closing Date;
(b) That all agreements to be performed by the Buyer hereunder shall have
been fully performed and satisfied.
5.2 The conditions set forth in paragraph 5.1, are for the exclusive benefit of
the Seller and may be waived by the Seller in whole or in part on or before
the Closing Date, but save as so waived, the completion of the purchase and
sale by the Seller shall not prejudice or affect in any way the rights of
the Seller in respect of the warranties and representations of the Buyer
set forth in paragraph 2 which shall survive the closing and the payment of
the purchase price.
GENERAL PROVISIONS
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6.1 Time shall be of the essence in this Agreement.
6.2 This Agreement contains the whole agreement between the Seller and the
Buyer in respect of the purchase and sale contemplated hereby and there are
no warranties, representations, terms and conditions or collateral
agreements expressed, implied or statutory, other than as expressly set
forth in this Agreement.
6.3 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
6.4 Any notice to be given under this Agreement shall be duly and properly
given if made in writing and mailed by prepaid registered post in the
United States or Canada and addressed to the addresses as set out on page 1
of this Agreement and any such notice shall be deemed to be received seven
days after the day of mailing except in the case of postal disruption in
which case it will be deemed to be received when delivered or sent via
facsimile, or at such other address as the Buyer or the Seller may, from
time to time, designate by notice to the other.
6.5 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and the parties hereto submit and
are attorn to the jurisdiction of the Court of the Province of British
Columbia.
6.6 All references to sums of money shall be deemed to refer to the legal
tender of the United States of America unless otherwise specified herein.
6.7 This Agreement may be executed in as many counterparts as may be necessary
or by facsimile and each such Agreement or facsimile so executed shall be
deemed to be an original and such counterpart together shall constitute one
and the same instrument.
6.8 If any one or more of the provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality and enforceability of such provision or provisions shall
not in any way be affected or impaired thereby in any other jurisdiction
and the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby,
unless in either case as a result of such determination this Agreement
would fail in its essential purpose.
CLOSING DATE
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7.1 The Closing Date is the closing of the purchase and sale contemplated by
this Agreement and will take place at the offices of Eduverse located at 70
East 2nd Avenue, 2nd Floor, in the City of Vancouver, British Columbia on
or before June 30, 2001 at the next Annual Shareholder's meeting of the
Seller where such approval of the majority of shareholders of the Seller is
required to authorize and complete the contemplated purchase and sale as
set out herein.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals and have
caused their corporate seals to be affixed in the presence of their duly
authorized officers the day and year first above written.
The Corporate Seal of EDUVERSE.COM )
was hereunto affixed in the presence of: )
)
) (C/S)
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Authorized Signatory )
The Corporate Seal of SYNCRO-DATA )
SYSTEMS, LTD. was hereunto affixed )
in the presence of: )
)
) (C/S)
- -------------------------------- )
Authorized Signatory )
EXHIBIT B
THE REVERSE STOCK SPLIT AND
AMENDMENT TO THE ARTICLES OF INCORPORATION
RESOLVED, that the Board of Directors be, and it hereby is, authorized to
effect a Reverse Stock Split in accordance with the following Resolutions if the
Board determines in the exercise of their discretion that a Reverse Stock Split
is in the best interests of the Company and the Shareholders and that a Reverse
Stock Split is likely to result in an increase in the marketability and
liquidity of the Common Stock.
FURTHER RESOLVED, that, prior to June 30, 2001, and on the condition that
no other amendment to the Company's Articles of Incorporation shall have been
filed subsequent to April 23, 2001, effecting a reverse stock split of the
Common Stock, Article V of the Company's Articles of Incorporation be amended by
substituting the following provision:
"The aggregate number of shares which the corporation shall have authority
to issue is 50,000,000 shares of common stock at par value of $0.001 per
share and 5,000,000 shares of preferred stock at par value of $0.001 per
share.
Common Stock. There shall be no cumulative voting, and all pre-emptive
rights are denied. Each share of common stock shall entitle the holder
thereof to one vote at all meetings of the stockholders. Stockholders shall
not be liable to the corporation or its creditors for any debts or
obligations of the corporation.
Simultaneously with the effective date of this amendment (the "Effective
Date"), each share of the Company's Common Stock, $0.001 par value, issued
and outstanding immediately prior to the Effective Date (the "Old Common
Stock") shall automatically and without any action on the part of the
holder thereof be reclassified as and changed, pursuant to a reverse stock
split, into any fraction thereof, into 1/50 of a share of the Company's
outstanding Common Stock, $0.001 par value (the "New Common Stock"),
depending upon a determination by the Board that a Reverse Stock Split is
in the best interests of the Company and the Shareholders, subject to the
treatment of fractional share interests as described below. Each holder of
a certificate or certificates which immediately prior to the Effective Date
represented outstanding shares of Old Common Stock (the "Old Certificates,"
whether one or more) shall be entitled to receive upon surrender of such
Old Certificates to the Company's Transfer Agent for cancellation, a
certificate or certificates (the "New Certificates," whether one or more)
representing the number of whole shares of the New Common Stock into which
and for which the shares of the Old Common Stock formerly represented by
such Old Certificates so surrendered, are reclassified under the terms
hereof.
From and after the Effective Date, Old Certificates shall represent only
the right to receive New Certificates pursuant to the provisions hereof. No
certificates or scrip representing fractional share interests in New Common
Stock will be issued, and no such fractional share interest will entitle
the holder thereof to vote, or to any rights of a shareholder of the
Company. Any fraction of a share of New Common Stock to which the holder
would otherwise be entitled will be adjusted upward to the nearest whole
share. If more than one Old Certificate shall be surrendered at one time
for the account of the same Shareholder, the number of full shares of New
Common Stock for which New Certificates shall be issued shall be computed
on the basis of the aggregate number of shares represented by the Old
Certificates so surrendered. In the event that the Company's Transfer Agent
determines that a holder of Old Certificates has not tendered all his
certificates for exchange, the Transfer Agent shall carry forward any
fractional share until all certificates of that holder have been presented
for exchange such that payment for fractional shares to any one person
shall not exceed the value of one share. If any New Certificate is to be
issued in a name other than that in which the Old Certificates surrendered
for exchange are issued, the Old Certificates so surrendered shall be
properly endorsed and otherwise in proper form for transfer. From and after
the Effective Date the amount of capital represented by the shares of the
New Common Stock into which and for which the shares of the Old Common
Stock are reclassified under the terms hereof shall be the same as the
amount of capital represented by the shares of Old Common Stock so
reclassified, until thereafter reduced or increased in accordance with
applicable law.
Preferred Stock. The board of directors of the corporation is authorized to
divide the preferred stock into as many series as the board of directors
from time to time may determine, and to issue the preferred stock in such
series. The board of directors shall determine the number of shares
comprising each series, which number may, unless otherwise provided by the
board of directors in creating such series, be increased or decreased from
time to time by action of the board of directors. Each series shall be so
designated, as to distinguish the shares thereof, from the shares of all
other series. The board of directors shall have the authority to fix and
determine the following relative rights and preferences as of the shares of
any such series of preferred stock: (i) the rate of dividend, if any; (ii)
whether shares can be redeemed, and if so, the redemption price and the
terms and conditions of the redemption; (iii) the amount payable upon
shares in the event of voluntary or involuntary liquidation; (iv) sinking
fund provision, if any, for redemption or purchase of shares; (v) the terms
and conditions, if any, under which shares may be converted to common
stock; and (vi) the voting powers, if any."
FURTHER RESOLVED, that at any time prior to the filing of the foregoing
amendment to the Company's Articles of Incorporation effecting a Reverse Stock
Split, notwithstanding authorization of the proposed amendment by the
Shareholders of the Company, the Board of Directors may abandon such proposed
amendment without further action by the Shareholders.
EXHIBIT 1
EDUVERSE.COM
SPECIAL MEETING OF SHAREHOLDERS
JUNE 1, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Eduverse.Com, a Nevada corporation (the
"Company"), acknowledges receipt of the Notice of Special Meeting of
Shareholders and Proxy Statement, dated April 26, 2001, and hereby appoints
Grant Atkins with the power of substitution, as Attorney and Proxy to represent
and vote all shares of Common Stock of the Company which the undersigned would
be entitled to vote at the Special Meeting of Shareholders, and at any
adjournment or adjournments thereof, hereby revoking any proxy or proxies
heretofore given and ratifying and confirming all that said Attorney and Proxy
may do or cause to be done by virtue thereof with respect to the following
matters:
1. Approval of the Proposal regarding the sale of substantially all of
the assets, which includes approval of a share purchase agreement
dated March 2, 2001 between the Company and Syncro-Data Systems, Ltd.
(the "Share Purchase Agreement"). The Share Purchase Agreement
provides for the sale by the Company to Syncro-Data Systems, Ltd. of
all of the issued and outstanding shares of common stock of Eduverse
Dot. Com, Inc., the Company's wholly-owned subsidiary ("Eduverse")
held by the Company.
FOR /___/ AGAINST /___/ ABSTAIN /___/
2. Approval of the Proposal to authorize the Board of Directors to effect
a Reverse Stock Split of one-for-fifty of the Company's outstanding
Common Stock, depending upon a determination by the Board of Directors
that a Reverse Stock Split is in the best interests of the Company and
its shareholders.
FOR /___/ AGAINST /___/ ABSTAIN /___/
3. Approval of the Proposal to amend (the "Amendment") the Company's
Articles of Incorporation, as amended, which would effect the Reverse
Stock Split, without having any effect upon the authorized, issued and
outstanding shares of Common Stock or upon the par value of the Common
Stock.
FOR /___/ AGAINST /___/ ABSTAIN /___/
4. Election of each of the following two (2) persons to serve as
directors of the Corporation until the next Annual Meeting of
Shareholders or thereafter until their successors shall have been
elected and qualified:
Grant Atkins
FOR /___/ AGAINST /___/ ABSTAIN /___/
Herb Ackerman
FOR /___/ AGAINST /___/ ABSTAIN /___/
5. Ratification of the selection of LaBonte & Co. as the independent
public accountants of the Company for the fiscal year ending December
31, 2001.
FOR /___/ AGAINST /___/ ABSTAIN /___/
6. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR each of the above proposals
and FOR the election of each of the nominees listed above to the Board of
Directors and FOR the proposal to ratify the selection of LaBonte & Co. as the
independent public accountants of the Company for the fiscal year ending
December 31, 2001.
Dated:________________________, 2001 ________________________
Please sign your name exactly as it appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as it appears hereon. When signing as joint tenants, all parties in the
joint tenancy must sign. When a proxy is given by a corporation, it should be
signed by an authorized officer and the corporate seal affixed. No postage is
required if returned in the enclosed envelope and mailed in the United States.
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED ENVELOPE.