1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: June 30, 2001
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
--------------------------- -----------------
Commission file number: 000-27407
JAWZ Inc.
-------------------------------------
(Exact name of registrant as specified in charter)
Delaware 98-167013
--------------------------------------------- -------------------
(State of Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
12 Concorde Gate, Suite 900, Toronto, Ontario, Canada M3C 3N6
-------------------------------------------------------------
(Address of principal executive offices)
1-403-508-5055
---------------------------------
(Registrant's telephone number, including area code)
JAWS Technologies, Inc.
------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No [ ]
The number of shares of the Registrant's common stock par value $0.001 per
share (the "Common Stock"), outstanding as of July 20, 2001 was 11,254,850
shares (post reverse split).
2
PART I - FINANCIAL INFORMATION
EXPLANATORY NOTE
THIS FORM 10-Q CONTAINS PREDICTIONS, PROJECTIONS AND OTHER STATEMENTS ABOUT
THE FUTURE THAT ARE INTENDED TO BE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(COLLECTIVELY, "FORWARD-LOOKING STATEMENTS"). FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES. A NUMBER OF IMPORTANT FACTORS COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE THE INABILITY TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE
PRODUCTS, THE COMPANY'S LIMITED OPERATING HISTORY AND CONTINUING OPERATING
LOSSES, RECENT AND POTENTIAL DEVELOPMENT STRATEGIC ALLIANCES, THE OUTCOME OF
PENDING LITIGATION, THE IMPACT OF ACQUISITIONS, ESTABLISHING AND MAINTAINING
EFFECTIVE DISTRIBUTION CHANNELS, IMPACT AND TIMING OF LARGE ORDERS, PRICING
PRESSURES IN THE MARKET, THE COMPANY'S LIQUIDITY AND CAPITAL RESOURCES, SYSTEMS
FAILURES, TECHNOLOGICAL CHANGES, VOLATILITY OF SECURITIES MARKETS, GOVERNMENT
REGULATIONS, AND ECONOMIC CONDITIONS AND COMPETITION IN THE GEOGRAPHIC AND THE
BUSINESS AREAS WHERE WE CONDUCT OUR OPERATIONS. IN ASSESSING FORWARD-LOOKING
STATEMENTS CONTAINED IN THIS INTERIM REPORT ON FORM 10-Q, READERS ARE URGED TO
READ CAREFULLY ALL CAUTIONARY STATEMENTS - INCLUDING THOSE CONTAINED IN OTHER
SECTIONS OF THIS FORM 10-Q AND THE COMPANY'S FORM 10KA FILED ON APRIL 30, 2001.
ITEM 1. FINANCIAL STATEMENTS
(see next page)
3
Consolidated Financial Statements
JAWZ INC.
As at June 30, 2001 (Unaudited), December 31, 2000,
and for the three months and six months ended June 30, 2001 and 2000
(Unaudited).
4
JAWZ INC.
CONSOLIDATED BALANCE SHEETS
(All amounts are expressed in U.S. dollars)
(See Note 1 - Basis of presentation)
AS OF AS OF
JUNE 30, DECEMBER 31,
2001 2000
$ $
(Unaudited)
---------- ------------
ASSETS (NOTE 7)
CURRENT
Cash and cash equivalents 22,105 335,901
Accounts receivable (Note 3) 738,227 3,193,198
Prepaid expenses and deposits 1,114,803 277,934
Deferred charges 117,264 177,230
Due from related parties (Note 9) 15,710 499,569
----------- -----------
Total Current Assets 2,008,109 4,483,832
Equipment and leasehold improvements, net 2,479,121 3,685,308
Intangible assets (Note 6) 156,765 3,417,672
Long term investments (Note 5) 3,026,614 4,107,096
----------- -----------
Total Assets 7,670,609 15,693,908
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT
Accounts payable and accrued liabilities 5,310,237 5,033,400
Current portion of capital lease obligations payable 96,695 97,972
Deferred revenues 341,355 326,738
Due to related parties (Note 9) 67,679 176,405
Lease inducement 213,368 240,480
Promissory notes (Note 8) -- 2,790,030
Secured Loans (Note 7) 3,395,000 --
Loans from related parties (Note 7) 350,000 --
----------- -----------
Total Current Liabilities 9,774,334 8,665,025
----------- -----------
Capital lease obligations payable 238,681 286,983
----------- -----------
Total Liabilities 10,013,015 8,952,008
----------- -----------
Commitments & Contingencies (Notes 1 and 13)
STOCKHOLDERS' EQUITY (DEFICIENCY)
Authorized
95,000,000 common shares at $0.001 par value
5,000,000 preferred shares at $0.001 par value
OUTSTANDING:
11,528,487 common shares issued and fully paid
(December 31, 2000 - 4,185,299 adjusted for share
consolidation)
Common stock issued and paid-up 66,840 41,853
Additional paid in capital (Note 8) 74,103,739 63,535,271
Cumulative translation adjustment (499,073) (548,003)
Deficit (76,013,912) (56,287,221)
----------- -----------
(2,342,406) 6,741,900
----------- -----------
7,670,609 15,693,908
=========== ===========
The accompanying notes are an integral part of these financial statements
5
JAWZ INC.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT AND COMPREHENSIVE LOSS
(all amounts are expressed in U.S. dollars)
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- --------------------------
JUNE 30, June 30, JUNE 30, June 30,
2001 2000 2001 2000
$ $ $ $
(UNAUDITED) (Unaudited) (UNAUDITED) (Unaudited)
----------- ----------- ----------- -----------
REVENUE (NOTE 9)
Consulting revenue 740,552 2,125,613 2,121,610 2,670,815
Product Revenue 353,208 95,797 1,131,836 97,280
Other 2,999 -- 42,315 --
----------- ----------- ----------- -----------
Total Revenue 1,096,759 2,221,410 3,295,761 2,768,095
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of sales 891,193 701,970 2,947,292 880,111
Advertising and promotion 9,509 616,546 204,485 1,091,712
Bad Debts 117,277 -- 261,036 --
Selling, General and administration (Note 9) 6,044,814 5,971,605 12,494,676 9,089,266
Loss on sale of assets (Note 4) 2,211,140 -- 2,211,140 --
----------- ----------- ----------- -----------
Total Operating expenses 9,273,933 7,290,121 18,118,629 11,061,089
Operating loss before depreciation and amortization (8,207,174) (5,068,711) (14,822,868) (8,292,994)
Depreciation 159,429 147,003 439,367 208,828
Amortization (Note 6) 1,567,587 1,742,643 1,919,358 2,744,083
----------- ----------- ----------- -----------
OPERATING LOSS (9,904,190) (6,958,357) (17,181,593) (11,245,905)
----------- ----------- ----------- -----------
Interest income (6,300) (70,951) (6,300) (176,248)
Interest expense, financing fees and debt discount 207,100 1,424 331,834 14,789
Foreign exchange loss/(gain) (1,123,039) 105,947 174,778 (69,618)
Loss on impairment of investments (Note 5) 608,997 -- 1,596,286 --
----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (9,590,948) (6,994,777) (19,278,191) (11,014,828)
Extraordinary item (note 14):
Loss on extinguishment of debt 448,500 -- 448,500 --
----------- ----------- ----------- -----------
NET LOSS FOR THE PERIOD (10,039,448) (6,994,777) (19,726,691) (11,014,828)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment (937,003) 88,542 48,930 (82,657)
COMPREHENSIVE LOSS (10,976,451) (6,906,235) (19,677,761) (11,097,485)
----------- ----------- ----------- -----------
DEFICIT, BEGINNING OF PERIOD (65,974,464) (14,400,968) (56,287,221) (10,380,917)
NET LOSS FOR THE PERIOD (10,039,448) (6,994,777) (19,726,691) (11,014,828)
----------- ----------- ----------- -----------
DEFICIT, END OF PERIOD (76,013,912) (21,395,745) (76,013,912) (21,395,745)
----------- ----------- ----------- -----------
LOSS PER COMMON SHARE BEFORE EXTRAORDINARY ITEM (NOTE 10) (1.02) (2.18) (2.59) (3.54)
Extraordinary item (Note 10) (0.05) -- (0.06) --
----------- ----------- ----------- -----------
NET LOSS PER COMMON SHARE (NOTE 10) (1.07) (2.18) (2.65) (3.54)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
6
JAWZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all amounts are expressed in U.S. dollars)
SIX MONTHS ENDED
-------------------------
JUNE 30, JUNE 30,
2001 2000
$ $
(UNAUDITED) (UNAUDITED)
----------- -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES (5,656,990) (7,933,746)
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of equipment and leasehold improvements (403,730) (1,378,690)
Cash acquired on purchases of subsidiaries -- (1,042,469)
Acquisitions of long term investments -- (20,000)
---------- ----------
(403,730) (2,441,159)
---------- ----------
CASH FLOWS GENERATED BY FINANCING ACTIVITIES
Proceeds from the issuance of common stock, net of
issue costs 1,674,407 7,597,544
Proceeds from the sale of assets and operations 272,532 --
Secured loan received 3,099,985 --
Related party loans received 700,000 --
---------- ----------
5,746,924 7,597,544
---------- ----------
DECREASE IN CASH (313,796) (2,777,361)
Cash and cash equivalents, beginning of period 335,901 8,430,701
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD 22,105 5,653,340
========== ==========
The accompanying notes are an integral part of these financial statements.
7
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
As of June 30, 2001 (Unaudited), December 31, 2000 and
for the three months and six months ended June 30, 2001 and 2000 (unaudited).
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
JAWZ Inc., (the "Company" or "Jawz") was incorporated on January 27, 1997 under
the laws of the State of Nevada. During 2000, it changed its name to JAWZ Inc.
(formerly JAWS Technologies, Inc.) and migrated to the State of Delaware where
it is now subject to corporate laws of Delaware.
The Company provides e-security services. The Company assists in removing the
burden of information risk management for its customers by providing products
and services that cover the entire e-security market (from assessment to
implementation to monitoring) with a focus on Security Products, Professional
Security Services and Managed Security Services. The Company targets six key
market verticals: governments, cyber crime and forensics, healthcare, financial
services, e-commerce, and the telecom markets. The Company's international
headquarters is located in Toronto, Canada with offices in Calgary and Ottawa,
Canada, New Jersey , Florida and Chicago, USA.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries.
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the discharge of
liabilities in the normal course of business for the foreseeable future. The
Company has experienced significant losses and negative cash flows from
operations since inception and, as of June 30, 2001, has an accumulated deficit
of $76,013,912 and a working capital deficiency of $7,766,225. The Company's
continuation as a going concern is dependent on its ability to generate positive
cash flow from operations, to meet its obligations on a timely basis, obtain
additional financing, and ultimately to attain successful operations. However,
no assurance can be given at this time as to whether the Company will achieve
any of these conditions. These factors, among others, raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments to the carrying values and
classifications of recorded asset or liability amounts that might be necessary
should the Company be unable to continue as a going concern.
Additional funding will be required to maintain continuing operations.
Management intends to seek additional financing through future private or public
offerings of stock, or other instruments (such as debt) as required, or from the
sale of certain assets or operations of the Company. Management is concurrently
pursuing a plan to generate positive cash flow from operations that includes
(but is not limited to) eliminating unprofitable business lines, reducing
overhead costs, closing unprofitable office locations, flattening its
organizational structure, and downsizing its work force to better match short
term revenue opportunities and industry standards. Some additional financing has
been arranged subsequent to the end of the quarter. (see note 15).
8
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three- and six-month periods ended June
30, 2001 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2001
The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company and Subsidiaries' annual
report on Form 10-K as amended for the year ended December 31, 2000.
3. ACCOUNTS RECEIVABLE
Accounts Receivable are recorded net of an allowance for doubtful accounts of
$1,803,751 (Dec. 31, 2000 $1,608,621) and net of an allowance for purchase price
adjustment on receivables relating to the sale of the Secure Network Storage
division of $69,330. (Dec. 31, 2000 Nil) See Note 4.
4. SALE OF OPERATIONS
Effective May 1, 2001 the Company sold the e-business solutions group in Calgary
to Centient Solutions Inc. ("Centient"). The consideration received was two
promissory notes for a total of $315,285 payable to Jawz Canada Inc. Additional
consideration was received through the forgiveness of $15,000 owed by Jawz to a
Co-chairman and director of Centient. The promissory notes are payable in a
series of monthly payments commencing September 1, 2001 with the final payment
due December 1, 2002. Overdue payments bear interest at the rate of 8% per
annum. Centient is a corporation that is controlled by a former director of Jawz
who resigned as a director prior to the agreement to sell the e-business
solutions group. The promissory notes are guaranteed by Rubicon Investments
Group Inc., a company also controlled by the former director of Jawz. Subsequent
to June 30, 2001 the promissory notes were sold at a discount; the June 30
statements reflect the realisable value of $168,481 based on the subsequent
sale.
Effective June 1, 2001 the Company sold the Secure Network Storage operations to
GT Group Telecom Services Corp. The consideration received was $264,114 in cash
on closing of the deal, with an additional $198,085 payable on a monthly basis
from October 1, 2001 to June 1, 2002 without interest, less a purchase price
adjustment to be determined based on a formula dependent on ongoing revenue. An
allowance of $69,330 has been recorded at June 30, 2001 for the estimated
purchase price adjustment.
5. INVESTMENTS
Investments consist of the following:
9
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
JUNE 30, DECEMBER 31,
2001 2000
(UNAUDITED)
$ $
----------- ------------
(a) e-Financial Depot Inc. (common shares) 763,162 1,266,848
(b) CTI Diversified Holdings Inc. (common shares) 20,000 20,000
(c) Iconix Canada Inc. (common shares) - 1,062,600
(d) CU Connection Ltd. (convertible debenture) 2,209,404 1,757,648
(e) Javien Inc. (convertible debenture) 34,048 -
--------- ---------
3,026,614 4,107,096
========= =========
(a) On December 12, 2000 the Company received 2,384,880 shares of common stock
of e-Financial Depot Inc. in settlement of an account receivable of
$2,146,392. e-Financial Depot Inc. is a publicly traded entity in which a
director is also a director and former officer of the Company. At December
31, 2000 the investment was assessed as permanently impaired and was
written down by $879,544 to its estimated fair market value of $1,266,848.
At June 30, 2001 the investment was again assessed as permanently impaired
and has been written down to its estimated fair market value of $763,162.
(b) On January 6, 2000, the Company exercised its option to purchase 2,000,000
(25%) of Cobratech Industries Inc common shares for $20,000. Following an
acquisition of Cobratech by CTI Diversified Holdings Inc ("CTI") the
Company now holds 1,051,368 common shares of CTI which is less than 20% of
all the outstanding common shares. The Company granted CTI the exclusive
right to market and sell the Company's products in Asia for a four year
period commencing on October 19, 1999. The Company will receive a 25%
royalty on all products sold by CTI. No royalties have been received to
date. The investment has been recorded at cost which approximates fair
value.
(c) On December 29, 2000, the Company acquired 130,762 common shares of Iconix
Canada Inc. ("Iconix") together with an option to purchase 51,000
additional shares, in exchange for 2,000,000 common shares of the Company
valued at $1,062,600. Iconix is an entity whose major shareholder is also a
major shareholder of the Company. As at June 30, 2001 a director of the
Company is the sole director of Iconix. At June 30, 2001 the investment was
assessed as impaired and has been written off in its entirety. Iconix has
ceased operations and the Company has assessed that the investment no
longer has any value.
(d) The convertible debenture in the amount of $2,311,000 was issued by CU
Connection Ltd., a private Ontario Corporation ("CU Connect") as payment
for services and fees provided by the Company. For additional consideration
of $379,891, the Company may elect to convert the debenture into 51% of the
outstanding common shares of CU Connect. The 10% debenture bears interest
commencing immediately after the last day of the conversion period of a
project the Company is delivering to CU Connect and is due on September 10,
2010. To date $2,209,404 has been drawn on the debenture. This debenture is
classified as being held to maturity and is recorded at cost.
(e) The convertible debenture in the amount of $64,048 was issued by Javien
Inc., a private Corporation as payment for rent as part of a sublease
agreement with the Company. The debenture bears interest at the simple rate
of 8% per annum and has a maturity date of December 31, 2002. The Company
may elect to convert the debenture into common shares of Javien Inc. at a
per share value of the lower of $0.75 or the lowest effective price per
share of any private placement or public financing completed by Javien
during the period that the debenture is outstanding. Subsequent to the
quarter end this debenture was sold, and the June 30, 2001 statements
reflect the realisable value based on the subsequent sale. See note 15
10
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
6. INTANGIBLE ASSETS
Intangible assets includes the cost of software licenses and goodwill and
employee and consultants base acquired from acquisitions.
JUNE 30, 2001 (UNAUDITED)
----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
---------- ------------ ----------
Employee and consultants base 13,337,831 13,181,066 156,765
========== ========== =========
DECEMBER 31, 2000
----------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
---------- ------------ ----------
Employee and consultants base 13,736,598 10,411,798 3,324,800
Goodwill 13,736,598 13,736,598 --
Software licenses 100,182 7,310 92,872
---------- ---------- ---------
27,573,378 24,155,706 3,417,672
========== ========== =========
At December 31, 2000, it was determined that the goodwill acquired had no future
value to the company and it was written off in its entirety, in the amount of
$10,218,683. It was also determined that there was an impairment in the value of
the employee and consultants base acquired, and it was written down to its
estimated fair value of $3,324,800, resulting in a writedown of $6,893,884. The
writedowns were included in amortization in 2000.
At June 30, 2001 the carrying value of the employee and consultants base
relating to the acquisitions of Pace, Betach and GNS was written off as there
was no value remaining, due to the sale of the former Betach operations and the
resignation or termination of other employees.
At June 30, 2001 the carrying value of the employee and consultants base
relating to the acquisition of 4-Comm was written off in full as the operations
related to this acquisition have ceased.
The Software licenses were disposed of during the quarter ended June 30, 2001 as
part of the sale of the Secure Network Storage operations.
The writedowns in 2001 for Betach and 4-Comm totalling $1,638,209 were included
in loss on sale of assets. All other writedowns were included in amortization.
7. LOANS
The secured loans of $3,395,000 bears interest at 8% per annum and was payable
on July 27, 2001. The Company is currently negotiating terms to convert the debt
to equity however terms have not yet been agreed. A first charge over all of the
assets of the Company has been pledged as collateral for the loan.
During the six months ended June 30, 2001, Jawz received loans from related
parties totalling $700,000, of which $350,000 was repaid through the issuance of
common shares (see note 8).
11
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
The balance outstanding at June 30, 2001 in the amount of $350,000 is
non-interest bearing and has no set terms of repayment. The loan is owed to a
company controlled by a former officer of Jawz who is currently a consultant to
Jawz.
12
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
8. SHARE CAPITAL
AUTHORIZED
95,000,000 common shares at $0.001 par value, including exchangeable shares
5,000,000 preferred shares at $0.001 par value
COMMON STOCK ISSUED
SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED) YEAR ENDED DECEMBER 31, 2000
--------------------------------------- --------------------------------------
NUMBER PAR ADDITIONAL NUMBER PAR ADDITIONAL
OF VALUE PAID IN OF VALUE PAID IN
SHARES $ CAPITAL $ SHARES $ CAPITAL $
---------- ------ ---------- --------- ------ ----------
Balance, January 1 4,185,299 41,853 63,535,271 2,504,019 25,040 21,823,490
Issued for cash (see a
below) 1,899,733 3,698 1,545,302 545,491 5,455 14,500,797
Issued for services
(see b below) 2,032,565 2,962 3,660,760 29,401 294 1,118,166
Obligation to issue
common stock for -- -- 1,355,434 -- -- 281,116
services (see c below)
Stock options exercised
for cash 288,000 306 174,054 66,197 663 332,971
Stock options exercised
for no consideration -- -- -- 59,048 590 (590)
Warrants exercised for
cash -- -- -- 268,544 2,685 1,506,335
Cashless exercise of
warrants 966,708 9,667 (9,667) -- -- --
Issued on acquisition
of subsidiaries (see 346,182 604 592,787 712,600 7,126 24,090,563
d below)
Obligation to issue
common stock on -- -- (151,952) -- -- 151,952
acquisition of
subsidiaries
Issuance of common
stock for acquisition 200,000 2,000 1,060,600 -- -- --
of investment
Shares to be issued for
acquisition of -- -- (1,062,600) -- -- 1,062,600
investment
Shares issued to
replace promissory 1,610,000 5,750 3,592,750 -- -- --
note & debt (see e
below)
Share issue costs
-- -- (189,000) -- -- (1,332,129)
---------- ------ ----------- --------- ------ ----------
BALANCE AT END OF PERIOD 11,528,487 66,840 74,103,739 4,185,299 41,853 63,535,271
---------- ------ ----------- --------- ------ ----------
Issued Shares 11,528,487 66,840 72,356,768
Obligation to issue 1,746,971
shares as at June 30,
2001 (see c below)
---------- ------ -----------
Total shares as per 74,103,739
financial statements
The number of shares for all periods presented in the financial statements has
been adjusted in all periods to reflect the 1 for 10 common share consolidation
that took place on March 30, 2001. This consolidation reduced the outstanding
shares to 10% of their previous number.
a) Common shares issued for cash: On January 16, 2001 the company received
$749,000 for a private placement of 199,733 shares at $3.75. On May 14,
2001 the Company received $200,000 for a private placement of 500,000
common shares at $0.40 per share. On May 17, 2001 the Company received
$400,000 from three private placements totalling 1,000,000 shares at $0.40
per share. On June 1, 2001 the Company received $200,000 from a private
placement of 200,000 shares at $1.00 per share.
b) During the six month period ended June 30, 2001 2,032,565 common shares
valued at $3,663,722 were issued in payment of services related to the
Company. The shares were valued at the closing market price on the date of
issue. Share issuances were as follows:
13
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
$1,050,000 (500,000 common shares, issued May 1, 2001) issued to an officer
and a former officer of the Company under a consulting agreement dated
January 1, 2001, for executive services.
$470,400 (420,000 common shares issued May 1, 2001) issued to a consultant
under a consulting agreement dated April 25, 2001.
$1,050,000 (500,000 common shares issued May 17, 2001) issued to a former
director of the Company in relation to the closing of the sale of the
e-Business Solutions group, under a consulting agreement dated April 1,
2001.
$395,267 (286,486 common shares issued June 27, 2001) issued to an
executive of the Company for a bonus under an employment contract.
$310,621 (222,768 common shares issued May 17, 2001) issued to various
employees, consultants and landlords for services provided.
$387,434 (103,316 common shares issued January 17, 2001) issued to a
supplier in settlement of an account payable from 2000.
c) As at June 30, 2001 there was an obligation to issue common shares in
payment of various services in the amount of $1,746,971. (December 31, 2001
$1,606,089.). The obligations are as follows:
Directors fees (for the years 1999 to the present), of $340,000 payable
through the issue of shares.
$1,110,000 (500,000 common shares) payable to a former officer of the
Company in relation to the closing of the sale of the Secure Network
Storage Division, under a consulting agreement dated April 1, 2001.
$222,500 (150,000 common shares) payable to a former officer of the Company
for monthly consulting fees for the period April 1, 2001 to June 30, 2001,
under a consulting agreement dated April 1, 2001.
$68,666 payable to employees in fulfillment of employment contracts.
$5,805 (4500 common shares) payable to a significant shareholder for
services rendered under a consulting agreement.
All of these obligations have been recorded as Additional Paid in Capital.
The shares will be issued in 2001.
d) The issuance of common shares on acquisition of subsidiaries consists of
28,600 shares issued ($151,952) relating to an amendment of the purchase
price for the Nucleus Consulting Inc. acquisition, and 317,582 shares
issued ($441,439) in final settlement of contingent consideration on
acquisitions of Betach, 4-Comm, Dr. Village and SDTC.
e) The issuance of 1,610,000 common shares in repayment of $3,150,000 of debt,
consisting of the principal amount of $2,800,000 of promissory notes and
$350,000 of related party loans.
9. RELATED PARTY TRANSACTIONS
14
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
Related party transactions have been recognized at their exchange amounts.
Amounts due to/from related parties consist of the following amounts:
JUNE 30, DECEMBER 31,
2001 2000
(UNAUDITED) (UNAUDITED)
$ $
----------- -----------
DUE FROM RELATED PARTIES
Oxford Capital Corp. 15,710 57,866
Iconix Canada Inc. -- 147,707
Bankton Financial Corp. -- 9,048
e-Financial Depot Inc. -- 284,948
------- -------
15,710 499,569
======= =======
DUE TO RELATED PARTIES
Net Communications LLC 39,769 45,000
e-Supplies.com 13,249 131,405
Corporation controlled by a former Director 4,316 --
Corporation controlled by a Director of the Company 6,261 --
Former director of the Company 4,174 --
------- -------
67,679 176,405
======= =======
Oxford Capital Corp. is an entity whose shareholders are also shareholders of
the Company. The balance of $15,710 receivable at June 30, 2001 is for
administrative costs incurred by the Company on behalf of Oxford, which are
reimbursed to the Company on a periodic basis.
Revenue for the six months ended June 30, 2001 includes $84,833 in respect of
Iconix Canada Inc., an entity whose major shareholder is also a major
shareholder of the Company. As at June 30, 2001 a director of the Company is
also the sole director of Iconix. A full allowance for doubtful accounts has
been made for the amount of $204,743 due from Iconix as at June 30, 2001.
A full allowance for doubtful accounts has been made for the amount of $281,994
as at June 30, 2001, due from e-Financial Depot Inc. an entity in which certain
directors were also directors and officers of the Company.
Net Communications LLC, an entity in which a director is also a director of the
Company, provided $39,769 of consulting services to the Company during the year
ended December 31, 2000.
General and administration expenses for the six months ended June 30, 2001,
includes $1,333 (six months ended June 30, 2000 - $27,163) paid to
eSupplies.com, an entity of which certain directors are also directors and
officers of the Company.
General and administrative expenses for the six months ended June 30, 2001
include $2,827,869 (year ended December 31, 2000 - Nil; six months ended June
30, 2000 - Nil) of consulting services provided by a former director of the
Company and shareholder of the company. This is inclusive of $2,802,500 paid or
payable in shares (see note 8).
General and administrative expenses for the six months ended June 30, 2001
include $76,262 (year ended December 31, 2000 - $52,276; six months ended June
30, 2000 - $47,012) of
15
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
consulting services provided by a Corporation controlled by a director of the
Company for services under a consulting agreement dated January 1, 2001.
The Company entered into agreements to lease premises for various terms from a
stockholder who is also a former officer and a director of the Company. The net
rent expense, included in general and administrative expenses for the six months
ended June 30, 2001 was $ 175,479 (year ended December 31, 2000 - $299,805; six
months ended June 30, 2000 - $70,588).
During the quarter ended June 30, 2001 the Company entered into four
transactions to sell and assign certain accounts receivable with a total
carrying value of $1,182,267 for total cash consideration of $1,072,596. All of
these transactions were entered into with corporations controlled by a former
officer of the Company who is also a shareholder of the Company.
16
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
10. LOSS PER SHARE
Net loss per common share is net loss for the period divided by the weighted
average number of common shares outstanding. The effect on loss per common share
of the exercise of options and warrants, and the conversion of the convertible
debentures is anti-dilutive.
The following table sets forth the computation of loss per common share:
3 MONTHS 3 MONTHS 6 MONTHS 6 MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
$ $ $ $
----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (9,590,948) (6,994,777) (19,278,191) (11,014,828)
EXTRAORDINARY ITEM (448,500) -- (448,500) --
----------- ----------- ----------- -----------
NET LOSS FOR THE PERIOD (10,039,448) (6,994,777) (19,726,691) (11,014,828)
----------- ----------- ----------- -----------
BASIC AND DILUTED LOSS PER COMMON SHARE:
Weighted average number of common shares
outstanding 9,399,560 3,204,981 7,457,543 3,107,794
----------- ----------- ----------- -----------
LOSS PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM (1.02) (2.18) (2.59) (3.54)
----------- ----------- ----------- -----------
EXTRAORDINARY ITEM (0.05) -- (0.06) --
----------- ----------- ----------- -----------
NET LOSS PER COMMON SHARE - BASIC AND
DILUTED (1.07) (2.18) (2.65) (3.54)
=========== ========== =========== ===========
17
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
11. SEGMENTED INFORMATION
The Company's activities include professional security consulting services,
integration and installation of secure information systems, and remote data
storage and recovery services. The activities are conducted in one operating
segment and are carried out in two geographic segments as follows:
6 MONTHS ENDED JUNE 30, 2001 (UNAUDITED)
-----------------------------------------
CANADA U.S. TOTAL
$ $ $
----------- ----------- -----------
LOSS INFORMATION
Revenue 2,845,024 450,736 3,295,760
Cost of sales 2,673,270 274,022 2,947,292
Expenses 11,477,348 3,012,698 14,490,046
Extraordinary item -- 448,500 448,500
----------- ----------- -----------
(11,305,594) (3,284,484) (14,590,078)
Corporate overheads & investments (5,136,613)
-----------
Net loss (19,726,691)
-----------
SELECTED BALANCE SHEET INFORMATION
Equipment and leasehold improvements 2,127,655 351,465 2,479,121
Intangible Assets -- 156,765 156,765
=========== ========== ===========
6 MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
-----------------------------------------
CANADA U.S. TOTAL
$ $ $
----------- ----------- -----------
LOSS INFORMATION
Revenue 2,231,090 713,253 2,944,343
Cost of sales 559,522 320,589 880,111
Expenses 9,968,827 1,337,849 11,306,676
----------- ----------- -----------
(8,297,259) (945,185) (9,242,444)
Corporate overheads (1,772,384)
-----------
Net loss (11,014,828)
===========
18
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
3 MONTHS ENDED JUNE 30, 2001 (UNAUDITED)
-----------------------------------------
CANADA U.S. TOTAL
$ $ $
----------- ----------- -----------
LOSS INFORMATION
Revenue 877,289 219,470 1,096,759
Cost of sales 769,435 121,758 891,193
Expenses 5,730,227 1,249,742 6,979,969
Extraordinary item -- 448,500 448,500
----------- ----------- -----------
(5,622,373) (1,600,530) (7,222,903)
Corporate overheads & investments (2,816,545)
-----------
Net loss (10,039,448)
===========
3 MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
-----------------------------------------
CANADA U.S. TOTAL
$ $ $
----------- ----------- -----------
LOSS INFORMATION
Revenue 1,757,839 534,522 2,292,361
Cost of sales 381,381 320,589 701,970
Expenses 7,534,543 902,988 7,658,032
----------- ----------- -----------
(6,158,085) (689,055) (6,067,641)
Corporate overheads (927,136)
-----------
Net loss (6,994,777)
===========
12. COMPARATIVE FIGURES
Certain comparative figures have been reclassified to conform with the current
period's presentation.
13. CONTINGENCIES
On August 10, 2000, Bristol Asset Management, LLC ("Bristol") filed a complaint
against the Company and its Chairman alleging, among other things, breach of
contract, fraud in the inducement, breach of fiduciary duty and unfair
competition and requesting, among other things, specific performance, statutory
penalties and injunctive relief and damages in excess of $10 million. The
complaint relates to a warrant issued by the Company to Bristol to purchase
1,000,000 shares of the Company's common stock, and Bristol's rights relating to
the exercise of the Warrant and the registration of shares underlying the
Warrant. The Company filed an answer to the complaint on October 3, 2000 denying
the allegations raised. The matter is currently proceeding in the normal course
with exchanges of documents and depositions. No adjustment has been reflected in
these consolidated financial statements for this potential liability, as the
outcome of this litigation and possible resulting damages is not determinable at
this time.
19
JAWZ INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(all amounts are expressed in U.S. dollars)
14. EXTRAORDINARY ITEM
The extraordinary item represents the excess of the fair value of common shares
issued during the period to retire debt over the carrying value of debt.
15. SUBSEQUENT EVENTS
On July 16 the Company was advanced $200,000 by a related party, in exchange for
the assignment of receivables with a book value of $315,285 and assignment of a
convertible debenture receivable with a face value of $64,048. Based on this
subsequent assignment, the values of these assets were written down to their
realisable value at June 30, 2001 and this value is reflected in these
statements.
On July 15, 2001 the Company received $100,000 for a private placement of
200,000 shares at $0.50 per share.
On July 26, 2001 the Company issued 210,000 shares to Rubin Investment Group
Inc. in relation to an agreement under which Rubin Investment Group Inc will
serve as the provider of investor relations services to the Company for one
year.
On July 26, 2001 the Company issued 666,165 shares to a former director and
officer of the Company under a consulting agreement dated April 1, 2001.
On August 1, 2001 the Company received $150,000 from Thomson Kernaghan & Co.
Limited for which the Company issued a promissory note which bears interest at
an annual rate of 8% and us due on demand.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The purpose of this section is to discuss and analyze JAWZ' results of
operations. In addition, some analysis and information regarding JAWZ' financial
condition and liquidity and capital resources is provided. This analysis should
be read jointly with the financial statements, related notes, and the cautionary
statement regarding forward-looking statements, which appear elsewhere in this
filing.
OVERVIEW
GENERAL
JAWZ Inc. and its subsidiaries (collectively "JAWZ" or the "Company")
provide information security and secure e-business solutions (collectively
"e-security solutions"). The Company assists in removing the burden of
information risk management for its customers by providing products and services
that cover the entire e-security market (from assessment to implementation to
monitoring). JAWZ develops, sells, installs and supports its own and third party
information security products. JAWZ products are based on proprietary encryption
technology.
INDUSTRY BACKGROUND
E-security solutions historically have been deployed primarily to protect
corporate networks from erroneous and possibly malicious intrusion, and to
preserve the integrity of data as it passed over insecure networks. It was
typically the focus of businesses in security conscious or dependent industries
such as banking, telecommunications, aerospace and defense. However, today
e-security has become a fundamental requirement for conducting all forms of
business, including but not limited to commerce and communications conducted
through corporate intranets, extranets and other Internet based applications.
Many organizations, in a wide range of industries, are conducting e-business as
a means of reducing costs, competing more aggressively and more efficiently
meeting increased business demands for speed, accuracy and delivery of
information.
With the rise in computer connectivity and the push to electronic commerce,
organizations are becoming increasingly more exposed to the outside world via
electronic means. Often these organizations lack the skills and time
requirements needed to protect and secure their information assets. Periodicals
and reference material such as Maximum Security, 2nd ed., have indicated that
servers are often set up by non-technical individuals who inadvertently create
numerous viable targets for hackers. As the number of servers supporting
websites increases on a daily basis the security risks increase as well.
E-business requires e-security to create and ensure the same trust
relationships that currently exist on paper in the brick-and-mortar world, so
organizations can conduct e-business with the same confidence with which they
currently conduct traditional commerce. There are several essential requirements
for e-security: (a) user identification and authentication; (b) access control
and privilege management; (c) data privacy, integrity and authentication; and
(d) security administration and audit. JAWZ delivers products and services that
fulfill these essential requirements.
COMPANY STRUCTURE
JAWZ was incorporated on January 27, 1997 under the laws of the State of
Nevada as "E-Biz" Solutions, Inc. On March 27, 1998, "E-Biz" Solutions, Inc.
changed its name to JAWS Technologies, Inc. and on September 29, 2000 JAWS
Technologies, Inc. changed its name to JAWZ Inc. Effective July 7, 2000, JAWZ
Inc. migrated its incorporation to the State of Delaware. The Company's
international headquarters are located in Toronto, Ontario, Canada. The Company
also has offices in Calgary, Alberta and Ottawa, Ontario in Canada. In the
United States the Company has offices in Fairfield, New Jersey, Chicago,
Illinois. Until February 2001 JAWZ had additional North American offices in
Pasadena, California, Edmonton, Alberta and Vancouver, British Columbia.
21
The Company's wholly owned subsidiaries are:
o JAWZ Canada Inc., formerly JAWS Technologies, Inc., an Alberta
corporation ("JAWZ Canada"). Effective July 1, 2000, JAWS Technologies
(Ontario) Inc., Pace Systems Group Inc. ("Pace") and Offsite Data
Services Ltd. ("Offsite") were amalgamated with JAWZ Canada. JAWZ
Canada provides high-end information security, providing consulting
services and software solutions to minimize the threats to clients'
information and communications. At its offices in Calgary, Alberta,
JAWZ developed proprietary encryption software using the L5 encryption
algorithm to secure binary data in various forms, including
streamlining or blocking data.
o JAWZ USA Inc. ("JAWZ USA"), formerly JAWS Technologies (Delaware),
Inc., provides the same products and services as JAWZ Canada.
o JAWZ Illinois Inc., formerly Nucleus Consulting, Inc. ("Nucleus"). The
Company intends to amalgamate JAWZ USA Inc. and JAWZ Illinois Inc.
o JAWZ Acquisition Corp. ("JAC") was established primarily for tax
purposes and has been used solely for the acquisition of Offsite; and
o JAWZ Acquisition Canada Corp. ("JACC") was established for the purpose
of completing certain acquisitions and tax purposes. JACC has four
wholly owned subsidiaries, General Network Services (GNS) Inc. ("GNS"),
Betach Advanced Solutions Inc., Betach Systems, Inc. (collectively the
"Betach companies") and 4COMM.com Inc. ("4COMM"). The Company intends
to dissolve the Betach companies and 4COMM as the assets and operations
of these companies have been incorporated into JAWZ Canada.
BUSINESS STRATEGY
JAWZ' objective is to continue to be a leading provider of e-security
solutions with a focus on the financial services, health care,
telecommunications and government sectors. JAWZ has sought to achieve this
objective by consolidating the highly fragmented information security industry
and by achieving increasing economies of scale through the acquisition of
growing organizations and through the integration of such operating entities
through centralized administration and planning.
The Company completed seven material acquisitions since November 1999. The
integration of these acquired businesses into the Company's information security
business has expanded the products and services that the Company offers to its
customers. Pace has been amalgamated into JAWZ Canada and forms part of the
Professional Security Services group. Secure Data has been incorporated into the
Professional Security Services group. Offsite has been amalgamated into JAWZ
Canada and forms part of the Managed Services group. Nucleus has been
amalgamated into JAWZ USA. Doctorvillage forms part of the Professional Security
Services group, in particular the HIPAA project. 4COMM has been integrated as
part of the Security Products group. GNS forms part of the Professional Security
Services and Managed Security Services groups. Betach forms part of the
Professional Security Services and Security Products groups. Through industry
and management expertise, JAWZ attempts to ensure that acquired companies'
receive the capital and corporate planning necessary to successfully compete in
their respective markets.
Telecommunications includes key telecommunication company partners Verizon
Communications Inc. ("Verizon"), also a partner in financial services and health
care, Intermedia Communications Inc. ("Intermedia"), Telus Corporation ("Telus")
and GT Group Telecom Inc. ("Group Telecom"). The Company continues to win
business with its telecommunication partners from e-security to e-business
engagements.
In health care, JAWZ has developed a comprehensive Health Insurance
Portability and Accountability Act ("HIPAA") compliance program and website.
HIPAA legislation requires health care provides to implement security and
privacy safeguards by 2003. The Company's HIPAA compliance program is generating
significant interest in the health care community. The U.S. and American College
of Physician Executives (ACPE) has selected JAWZ as their security partner of
choice.
In the government sector, Industry Canada has chose the Company as their
only third party security manager of secure information technology. The Company
managed the security and Public Key Infrastructure ("PKI") for the spectrum
auctions of 2000 and 2001. The Company has also provided technical expertise to
facilitate the electronic signing of a joint statement on Global Electronic
Commerce and E-Government between Canada and the United Kingdom to establish an
agenda for bilateral and multilateral cooperation on e-Commerce. The signatures
of the Canadian ministers are routed through Industry Canada's Certificate
Authority, managed by the Company. The Company ensured that the PKI keys and
proper software were
22
functional on both ends of the international event. The Company is also working
with various state governments in the United States on various PKI and security
projects.
In an attempt to create and maintain a competitive advantage in the
information security industry, JAWZ strives to continually differentiate itself
from other industry players and works towards establishing strong brand loyalty
for its products and services through multiple channels of distribution. The
distribution strategy used by JAWZ addresses the requirements of small
organizations to large enterprises and matches the appropriate sales and
distribution channels to the software and services offered.
The key elements of the Company's strategy to be a leading provider of
e-security include:
o Deliver e-Security Solutions. The Company believes e-security is driven
by the proliferation of Internet based applications, whether for
internal network security, for e-business applications deployed to
customers, suppliers or employees, or for e-commerce Internet sites.
Further, the Company believes that traditional, fear based security is
being augmented and in many cases replaced by e-security as an enabling
technology that opens up new markets and channels for communications
and commerce. The Company intends to defend and grow its position in
providing information security and secure e-business solutions.
o Expand Market Opportunities. The Company intends to expand its market
opportunities through strategic alliances and partnerships and has
expanded through a series of acquisitions. Strategic alliances such as
Verizon and Telus, its government partners such as the Government of
Canada and the U.S. and American College of Physician Executives in
health care are examples of this. The Company plans to continue to
foster and leverage these partnerships and enter into additional
relationships with companies that can provide a strategic advantage.
The Company has discontinued certain alliances and partnerships
previously announced that were found not to be effective. The Company
has also expanded market opportunities through a series of acquisitions
which the Company believes will contribute to market expansion.
o Expand Indirect Sales and Support Channel. The Company currently sells
its products and services through a direct sales force and through
relationships with a significant number of OEM's and value-added
resellers. The Company believes that an expanded indirect sales and
support channel enables it to enter new markets and gain access to a
larger installed base of potential customers in a cost effective
manner.
o Maintain Technological Leadership. The Company plans to continue to add
new capabilities and features to its e-security products and services
to meet its customers evolving needs.
EMPLOYEES
As of June 30, 2001, JAWZ employed approximately 116 full time staff.
During 2000, the number of employees grew from 58 at the beginning of the year
to 275 by year end. However, in an effort to reduce costs, the Company
implemented a work force reduction in January 2001, eliminated 31 full time
positions from across the Company. A second work force reduction was implemented
in February 2001, eliminating an additional 64 full time positions from all
areas of the Company, including the closure of the California, British Columbia
and Edmonton, Alberta offices. In July of 2001, JAWZ implemented another
workforce reduction and eliminated an additional 29 employees and hired 10. None
of JAWZ employees are represented by any type of labor organization and JAWZ is
not aware of any activity by employees seeking organization. JAWZ considers its
relationships with it employees to be satisfactory. JAWZ has, in its early
stages, developed strong human resources practices with the belief that the
growth of JAWZ is heavily reliant on its human resources.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2001 compared with the Three Months ended June 30,
2000
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, after elimination of intercompany accounts and
transactions. All amounts are expressed in United States dollars.
REVENUE. Revenues include the sale of proprietary and third party security
products, professional security consulting services, integration and
installation of secure information systems, remote data storage and recovery
systems. These different segments have been segregated into consulting revenue,
product revenue and other income.
23
Total revenues for the three month period ended June 30, 2001 decreased 51%
to $1,096,759 from $2,221,410 for the same period in 2000. The decrease in 2001
revenues is primarily attributable to the overall reduction in the purchase of
technology products and services and subsequently information security spending
by all corporations across all industries in response to an overall weakening
economic climate and the technology stock market collapse. As a determined and
focused step to reach profitabilty, JAWZ has worked to eliminate low margin and
unprofitable business which has hurt top line revenue. This revenue base was
spread evenly among many customers with no single customer accounting for more
than 10% of JAWZ revenue for the quarter.
Consulting revenue for the three month period ended June 30, 2001 decreased
65% to $740,552 from $2,125,613 for the same period in 2000. Product revenue for
the three month period ended June 30, 2001 increased 269% to $353,208 from
$95,797 for the same period in 2000. Other income (excluding interest income)
for the three month period ended June 30, 2001 increased to $2,999 from $0 for
the same period in 2000.
COST OF SALES. Cost of sales were 81% of total revenues in for the three
month period ended June 30, 2001 versus 32% for the same period in 2000. The
increase in cost of sales is the result of charges to cost of sales for
unrecoverable work in process and due to the absence of high margin fixed fee
business as more customers choose a time and materials billing. The Company
continues to implement new recording mechanisms to better track cost of sales
and gross profits.
Advertising and Promotion. Advertising and promotion expenses were
historically primarily related to a branding initiative, company name change,
marketing and print media and collateral sales materials. Advertising and
promotion expenses for the three month period ended June 30, 2001 decreased 98%
to $9,509 from $616,546 for the same period in 2000. The Company has recently
significantly reduced advertising and promotion expenses as part of a general
effort to reduce costs and as part of a new sales strategy which focuses on
leverages existing customers and relationships.
Bad Debts. The Company recorded a bad debt provision of $117,277 for the
three month period ended June 30, 2001 versus a $0 provision for the same period
in 2000.
Selling, General and Administration. Selling, general and administration
expenses consist primarily of compensation of sales, marketing and
administrative personnel, preparation of sales and marketing documents,
corporate overhead, directors fees, consulting services, management fees and
facilities expenses. Selling, general and administrative expenses increased 1%
to $6,045,723 for the three month period ended June 30, 2001 from $5,971,605 for
the same period ended in 2000.
Loss on Sale of Assets. During the quarter ended June 30, 2001, JAWZ
disposed of various assets related to its secure network storage operations and
the former e-business solutions group. The excess of the carrying value of these
assets over the proceeds received has been included in loss on sale of assets.
At June 30, 2001 the carrying value of the employee and consultants base
relating to the acquisitions of Pace, Betach and GNS was written off as there
was no value remaining, due to the sale of the former Betach operations and the
resignation or termination of other employees. At June 30, 2001 the carrying
value of the employee and consultants base relating to the acquisition of 4-Comm
was written off in full as the operations related to this acquisition have
ceased.
The writedowns in 2001 for Betach and 4-Comm totalling $1,638,209 were
included in loss on sale of assets. All other writedowns were included in
amortization. Additionally, the Software licenses acquired from Offsite Data
were disposed of during the quarter ended June 30, 2001 as part of the sale of
the Secure Network Storage operations.
Depreciation. Depreciation expense increased by 8% to $159,429 for the
three month period ended June 30, 2001 from $147,003 for the same period ended
in 2000. This increase was primarily due to the continued depreciation of fixed
assets purchased in 2000 consistent with the expansion of operations (more
offices and equipment).
Amortization. Amortization expense decreased by 11% to $1,567,587 for the
three month period ended June 30, 2001 from $1,567,587 for the same period ended
in 2000. The decreased amortization expense relates to the reduced carrying
value and subseqeunt amortization as a result of the one time write off of
goodwill associated with the acquisitions undertaken by the Company in 2000 and
employee and consultants base associated with these acquisitions, that was done
in 2000 due to an assessment of permanent impairment.
Interest Income. Interest income accounted for $6,300 for the three month
period ended June 30, 2001 versus $70,951 for the same period in 2000. For the
period ended June 30, 2000 the company had cash balances from financing
activities that it invested to zero risk interest securities. For the same
period in 2001, the company was not in the same cash situation to allow it
generate interest income.
Interest Expense. Interest expense, which includes financing fees and
amortization of deferred financing fees/debt discount, increased for the three
month period ended June 30, 2001 to $207,100 versus $1,424 for the same period
in 2000. The increase was due to the fees associated late payments and with the
funds raised in the three months ended June 30, under what was originally a
promissary note agreement that was subsequently converted into a secured loan
agreement for additional consideration.
Foreign Exchange. The Company incurred a foreign exchange gain for the
three month period ended June 30, 2001 of $1,123,039 as compared to foreign
exchange loss of $105,947 for the same period in 2000. Transactions denominated
in foreign currencies are translated at the exchange rate on the transaction
date. Foreign currency denominated monetary assets and liabilities are converted
at exchange rates in effect at the balance sheet date.
24
Loss on Impairment of Investment. The Company recorded a $578,997 for the
three month period ended June 30, 2001 relating to an investment in eFinancial
Depot.com and Iconix. On December 12, 2000, the Company received 2,384,000
shares of common stock of eFinancial in settlement of work performed by the
Company in the amount of $2,112,946. eFinancial is a publicly traded company. An
advisor to eFinancial is also a director and officer of JAWZ. At December 31,
2000, on March 31, 2001, and again on June 30, 2001, the investment was assessed
as permanently impaired given the eFinancial stock price and a write down was
taken to value the investment at estimated fair market value. In 2000, JAWZ
exercised an option to purchase a 20% interest in Iconix for 2,000,000 shares of
JAWZ common stock. The sole director of Iconix is also an officer and director
of JAWZ. Iconix has subsequently closed down operations and laid off all
employees. An advisor to eFinancial is also a director and officer of JAWZ. At
June 30, 2001 the investment was assessed as permanently impaired given the
events described above and a write down was taken to value the investment at
estimated fair market value of zero.
Six Months Ended June 30, 2001 compared with the Six Months ended June 30, 2000
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, after elimination of intercompany accounts and
transactions. All amounts are expressed in United States dollars.
REVENUE. Revenues include the sale of proprietary and third party security
products, professional security consulting services, integration and
installation of secure information systems, remote data storage and recovery
systems. These different segments have been segregated into consulting revenue,
product revenue and other income.
Total revenues for the six month period ended June 30, 2001 increased 19%
to $3,295,761 from $2,768,095 for the same period in 2000. This increase is
primarily due to the performance of the company during Q1 2001 versus Q1 2000,
which reflected the impact of the acquisitions prior to JAWZ reorganizing
itself. This revenue base was spread evenly among many customers with no single
customer accounting for more than 10% of JAWZ revenue for the quarter.
Consulting revenue for the six month period ended June 30, 2001 decreased
21% to $2,121,609 from $2,670,815 for the same period in 2000. Product revenue
for the six month period ended June 30, 2001 increased 1,057% to $1,131,836 from
$97,280 for the same period in 2000. Other income (excluding interest income)
for the six month period ended June 30, 2001 increased to $42,315 from $0 for
the same period in 2000.
The Company's geographical sales are divided between Canada and the United
States. For the six month period ended June 30, 2001, 86% of revenues or
$2,845,024 were generated in Canada and 14% or $450,736 in the United States.
For the same period in 2000, 76% of revenues or $2,231,090 were generated in
Canada and 24% or $713,253 in the United States. All of the Company's revenues
to date have been generated in either Canada or the United States.
COST OF SALES. Cost of sales were 89% of total revenues for the six month
period ended June 30, 2001 versus 32% for the same period in 2000. The increase
in cost of sales is the result of charges to cost of sales for unrecoverable
work in process and due to the absence of high margin fixed fee business as more
customers choose a time and materials billing. The increase in the cost of sales
line also reflects increased revenues and the direct and identifiable costs
associated with generating these revenues. The Company continues to implement
new recording mechanisms to better track cost of sales and gross profits.
Advertising and Promotion. Advertising and promotion expenses historically
primarily related to a branding initiative, company name change, marketing and
print media and collateral sales materials. Advertising and promotion expenses
for the six month period ended June 30, 2001 decreased 81% to $204,485 from
$1,091,712 for the same period in 2000. The Company has recently significantly
reduced advertising and promotion expenses as part of a general effort to reduce
costs.
Bad Debts. The Company recorded a bad debt provision of $261,036 for the
six month period ended June 30, 2001 versus a $0 provision for the same period
in 2000.
Selling, General and Administration. Selling, general and administration
expenses consist primarily of compensation of sales, marketing and
administrative personnel, preparation of sales and marketing documents,
corporate overhead, directors fees, consulting services, management fees and
facilities expenses. Selling, general and administrative expenses increased 37%
to $12,494,676 for the six month period ended June 30, 2001 from $9,089,266 for
the same period ended in 2000. The significant increase in 2000 was primarily
due to the growth of operations (as compared to the same period in 2000) and
$1,050,000 non cash expense as the required accounting treatment with respect to
share issuance for exectuive non cash
25
compensation in the second quarter of 2001. The Company has recently taken steps
to significantly reduce selling, general and administration expenses through
general cost reductions and two reductions in workforce (total reduction in
headcount of 95 people or approximately one third of its workforce).
Loss on Sale of Assets. At December 31, 2000, it was determined that the
goodwill acquired had no future value to the company and it was written off in
its entirety, in the amount of $10,218,683. It was also determined that there
was an impairment in the value of the employee and consultants base acquired and
it was written down to its estimated fair value of $3,324,800, resulting in a
writedown of $6,893,884. The writedowns were included in amortization in 2000.
During the six months ended June 30, 2001, JAWZ disposed of various assets
related to its secure network storage operations and the former e-business
solutions group. The excess of the carrying value of these assets over the
proceeds received has been included in loss on sale of assets. At June 30, 2001
the carrying value of the employee and consultants base relating to the
acquisitions of Pace, Betach and GNS was written off as there was no value
remaining, due to the sale of the former Betach operations and the resignation
or termination of other employees. At June 30, 2001 the carrying value of the
employee and consultants base relating to the acquisition of 4-Comm was written
off in full as the operations related to this acquisition have ceased.
The writedowns in 2001 for Betach and 4-Comm totalling $1,638,209 were
included in loss on sale of assets. Additionally, the Software licenses acquired
from Offsite Data Systems were disposed of during the quarter ended June 30,
2001 as part of the sale of the Secure Network Storage operations. All other
writedowns have been included in amortization in the financial statements.
Depreciation. Depreciation expense increased by 110% to $439,367 for the
six month period ended June 30, 2001 from $208,828 for the same period ended in
2000. This increase was primarily due to the increase in fixed assets consistent
with the expansion of operations (more offices and equipment). This increase was
primarily due to the continued depreciation of fixed assets purchased in 2000
consistent with the expansion of operations (more offices and equipment).
Amortization. Amortization expense decreased by 30% to $1,919,358 for the
six month period ended June 30, 2001 from $2,744,083 for the same period ended
in 2000. The decreased amortization expense relates to the reduced carrying
value and subsequent amortization as a result of the one time write off of
goodwill associated with the acquisitions undertaken by the Company in 2000 and
employee and consultants base associated with these acquisitions, that was done
in 2000 due to an assessment of permanent impairment.
Interest Income. Interest income accounted for $6,300 for the six month
period ended June 30, 2001 versus $176,248 for the same period in 2000. For the
six month period ended June 30, 2000 the company had large cash balances from
financing activities that it invested to zero risk interest securities. For the
same period in 2001, the company was not in the same cash situation to allow it
generate interest income.
Interest Expense. Interest expense, which includes financing fees and
amortization of deferred financing fees/debt discount, increased for the six
month period ended June 30, 2001 to $331,834 versus $14,789 for the same period
in 2000. The increase was due almost entirely to late payment penalties and the
fees associated with the funds raised in the six months ended June 30, 2001,
under what was originally a promissary note agreement that was subsequently
converted into a secured loan agreement for additional consideration.
Foreign Exchange. The Company incurred a foreign exchange loss for the six
month period ended June 30, 2001 of $174,778 as compared to foreign exchange
gain of $69,618 for the same period in 2000. Transactions denominated in foreign
currencies are translated at the exchange rate on the transaction date. Foreign
currency denominated monetary assets and liabilities are converted at exchange
rates in effect at the balance sheet date.
Loss on Impairment of Investment. The Company recorded a $1,596,286 for the
period ended June 30, 2001 relating to an investment in eFinancial Depot.com and
Iconix. On December 12, 2000, the Company received 2,384,000 shares of common
stock of eFinancial in settlement of work performed by the Company in the amount
of $2,112,946. eFinancial is a publicly traded company. An advisor to eFinancial
is also a director and officer of JAWZ. At December 31, 2000, on March 31, 2001,
and again on June 30, 2001, the investment was assessed as permanently impaired
given the eFinancial stock price and a write down was taken to value the
investment at estimated fair market value. In 2000, JAWZ exercised an option to
purchase a 20% interest in Iconix for 2,000,000 shares of JAWZ common stock. The
sole director of Iconix is also an officer and director of JAWZ. Iconix has
subsequently closed down operations and laid off all employees. An advisor to
eFinancial is also a director and officer of JAWZ. At March 31, 2001 the
investment was assessed as permanently impaired given the events described above
and a write down was taken to value the investment at estimated fair market
value of zero.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently not able to pay its obligations as they come due.
The company continues to work with creditors and potential investors to mitigate
this situation.
For the period ended June 30, 2001, net cash used in operations was
$5,656,990 as compared with $7,933,746 for the same period in 2000.
For the period ended June 30, 2001, cash used in investing activities was
$403,730, relating to the purchase of equipment and leasehold improvements. For
the same period in 2000, cash used in investing activities was $2,441,159
primarily related
26
to the purchase of equipment and leasehold improvements, which was partially
offset by cash acquired on purchase of subsidiaries.
For the period ended June 30, 2001, cash provided by financing activities
was $5,746,924, of which $1,674,407 (net of issue costs) was generated from the
issuance of common stock from private placements and the balance from issuance
of $3,099,985 from a secured loan agreement, $700,000 in loans from related
parties and $272,532 from the sale of assets. For the same period in 2000,
$3,684,229 cash was provided by financing activities, completely from the
issuance of common stock.
At June 30, 2001, cash and cash equivalents were $22,105, a decrease from
$5,653,340 at June 30, 2000. This decrease is as a result of the cash losses
that have been incurred. Accounts payable and accrued liabilities have increased
2% to $5,310,237 as at June 30, 2000 as compared to $5,033,400 as at December
31, 2000.
The Company has experienced net losses over the past three years and as of
March 31, 2001 had an accumulated deficit of $76,013,912 and working capital
deficiency of $7,766,225. These losses are attributable to both cash losses and
losses resulting from costs incurred in the development of services and
infrastructure together with non-cash interest and amortization charges. The
Company expects operating losses to continue for the short term but has recently
taken initiatives to reduce expenses and operate on a cash positive basis. There
can be no assurances that the Company will be successful in stemming its losses.
The Company is currently not able to pay its obligations as they come due.
Management intends to seek additional financing through private or public
offerings of stock or other instruments such as debt as required. Management is
concurrently aggressively pursuing a plan to generate positive cash flow from
operations that includes, but is not limited to, eliminating unprofitable
business lines, reducing overhead costs, closing unprofitable office locations,
flattening its organizational structure and downsizing its work force to better
match short term revenue opportunities and industry standards. However, there
can be no assurances that the Company will be able to generate positive cash
flow, control costs effectively, generate sufficient revenues, raise additional
capital to cover cash requirements or establish strategic relationships given
present market conditions and business environment. The Company's auditors,
Ernst & Young, have noted in their Auditor's report that the Company's recurring
losses from operations, working capital deficiency and accumulated deficit raise
substantial doubt about its ability to continue as a going concern. However, the
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
While the Company believes that inflation has not had a material effect on
its results of operations, the can be no assurance that inflation will not have
a material effect on the Company's results of operations in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company has determined its market risk exposures, which arise primarily
from exposures to fluctuation in interest rates and exchange rates, and in
particular the Canadian to US dollar exchange rate, are not material to its
future earnings, fair value, and cash flows.
The Company does not use derivative financial instruments to manage risks
or for speculative or trading purposes.
At June 30, 2001, the company had $3,026,614 in investments. The Company is
exposed to changes in stock prices as a result of its holdings in publicly
traded securities. Changes in stock prices can be expected to vary as a result
of general market conditions, technological changes, specific industry changes
and other factors.
27
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On August 10, 2000, Bristol Asset Management, LLC ("Bristol") filed a
complaint in the Superior Court of the State of California (Case No. SC062765)
against JAWZ and its Chairman alleging, amongst other things, breach of
contract, fraud in the inducement, breach of fiduciary duty and unfair
competition and requesting, amongst other things, specific performance,
statutory penalties and injunctive relief and damages in excess of $10 million
(the "Complaint"). The Complaint relates to a warrant (the "Warrant") issued by
JAWZ to Bristol to purchase 1 million shares of JAWZ common stock and Bristol's
rights relating to the exercise of the Warrant and the registration of shares
underlying the Warrant. JAWZ filed an Answer to the Complaint on October 3, 2000
denying the allegations raised. The matter is currently proceeding in the normal
course with exchanges of documents and depositions. The Chairman is indemnified
against certain actions in his capacity as an officer and director of the
Company in accordance with the Company's bylaws and general Delaware corporate
law. The Company recently received an Offer to Compromise which it is
considering.
ITEM 2. CHANGES IN SECURITIES.
See Note 8 in the Financial Statements attached hereto.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 29, 2001, JAWZ stock holders were given notice of the JAWZ 2001
Annual Meeting of Stockholders and asked to consider and vote upon three
proposals to approve:
1. the minutes of the 2000 Annual Meeting of Stockholders;
2. the election of five directors;
3. the selection of the independent auditors.
On June 29, 2001, all matters were approved by the stockholders.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
3.1(1) Articles of Incorporation of "e-biz" solutions, inc. (now JAWZ Inc., a
Nevada corporation), dated January 27, 1997.
3.2(2) Certificate of Amendment of Articles of Incorporation of JAWS
Technologies, Inc., a Nevada corporation (now JAWZ Inc., a Nevada
corporation), dated March 30, 1998, changing the name of E-Biz to JAWS
Technologies, Inc.
3.3(3) Certificate of Amendment of Articles of Incorporation of JAWS
Technologies, Inc., a Nevada corporation, increasing the total number
of common stock which JAWS is allowed to issue from 20,000,000 to
95,000,000.
3.4(4) Bylaws of "e-biz" solutions, inc. (now JAWZ Inc., a Delaware
corporation), dated January 27, 1997.
3.5(5) Certificate of Incorporation of JAWS Technologies, Inc., a Delaware
corporation, dated April 28, 2000.
3.6(6) Certificate of Amendment to Certificate of Incorporation of JAWS
Technologies, Inc., a Delaware corporation, dated September 29, 2000,
changing the name of JAWS Technologies, Inc. to JAWZ Inc.
28
4.1(7) Investment Agreement by and between JAWS Technologies, Inc., a Nevada
corporation, and Bristol Asset Management LLC dated August 27, 1998 and
letter of termination.
4.2(8) Debenture Acquisition Agreement by and between JAWS Technologies, Inc.,
a Nevada corporation, and Thomson Kernaghan & Co. Limited, dated
September 25, 1998.
4.3(9) Amendment No. 1 to Debenture Purchase Agreement by and between JAWS
Technologies, Inc. and Thomson Kernaghan & Co. Limited, dated April 27,
1999.
4.4(10) Warrant to purchase 1,000,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Bristol Asset
Management LLC, dated April 20, 1999.
4.5(11) Form of Warrant to purchase 834,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Glentel Inc., dated
June 21, 1999.
4.6(12) Schedule of Warrant holders which received the Form of Warrant set
forth in 4.5 above.
4.7(13) Form of Warrant issued by JAWZ in connection with the Private Placement
Transaction.
4.8(14) Schedule of Warrant holders which received the Form of Warrant set
forth in 4.9 above.
4.9(15) Warrant to purchase 217,642 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Thomson Kernaghan &
Co. Limited, dated December 31, 1999.
4.10(16) Certificate of the Designation, Voting Power, Preference and Relative,
Participating, optional and other Special Rights and Qualifications,
Limitations or Restrictions of the Special Series & Preferred Voting
Stock of JAWS Technologies, Inc., dated November 30, 1999.
4.11(17) Incentive and Non-Qualified Stock Option Plan of JAWS Technologies,
Inc., a Nevada corporation.
4.12(18) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated December
31, 1999.
4.13(19) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated February
15, 2000.
4.14(20) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and SmallCaps Online LLC, dated February 15, 2000.
4.15(21) Form of Subscription Agreement to purchase 235,295 Units of JAWS
Technologies, Inc., a Nevada corporation, by and between JAWS
Technologies, Inc., a Nevada corporation, and BPI Canadian Small
Companies Fund, dated December 20, 1999.
4.16(22) Schedule of Subscribers that purchased subscriptions pursuant to the
Form of Subscription Agreement set forth above in 10.14.
10.1(23) Securities Purchase Agreement, dated as of June 22, 2000, among JAWS
Technologies, Inc. and investors signatory thereto.
10.2(24) Registration Rights Agreement, made and entered into as of June 22,
2000, among JAWS Technologies, Inc. and the investors signatory
thereto.
10.3(25) Share Purchase Agreement, dated August 15, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., 4Comm.com, Inc., and
other signatories thereto.
10.4(26) Share Purchase Agreement, dated August 15, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., General Network
Services - GNS Inc., and other signatories thereto.
10.5(27) Registration Right Agreement, dated August 15, 2000, between JAWS
Technologies, Inc. and the Vendors signatories thereto.
10.6(28) Support Agreement, dated August 1, 2000 between JAWS Technologies, Inc.
and JAWS Acquisition Canada Corp.
29
10.7(29) Voting and Exchange Trust Agreement, dated August 1, 2000, among JAWS
Technologies, inc. and JAWS Acquisition Canada Corp. and Montreal
Trust Company of Canada.
10.8(30) Share Purchase Agreement, dated August 22, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., the shareholders of
Betach Systems Inc., and the shareholders of Betach Advanced Solutions
Inc.
10.9(31) Form of Warrant Certificate made by JAWS Technologies, Inc. in favor
of the shareholders of Betach Systems Inc. and the shareholders of
Betach Advanced Solutions Inc.
10.10(32) List of warrant holders with respect to whom JAWZ issued warrants
pursuant to the Form of Warrant Certificate set forth in Exhibit 4.1:
Randy Walinga, Stephanie Muzyka, Lawrence Gordey and Soon Chong.
10.11(33) Second Amendment to Stock Purchase Agreement, dated as of December 26,
2000, among JAWZ Inc., a Delaware corporation, (formerly Jaws
Technologies, Inc., a Nevada corporation) and Charles A. Ehredt.
10.12(34) Securities Purchase Agreement Amendment No. 1, dated January 23, 2001
to be effective as of November 1, 2000, by and between JAWZ Inc., a
Delaware corporation (formerly JAWS Technologies, Inc.) and CALP II
Limited Partnership.
10.13(35) Registration Rights Amendment No. 1., dated January 23, 2001 to be
effective as of November 1, 2000, by and between JAWZ Inc., a Delaware
corporation (formerly JAWS Technologies, Inc.) and CALP II Limited
Partnership.
10.14(36) Warrant No. CW-3B1, a warrant for 233,000 shares of common stock,
issued by JAWS Technologies Inc., a Delaware corporation on November
1, 2000, to CALP II Limited Partnership.
10.15(37) Warrant No. CW-3B2, a warrant for 67,000 shares of common stock,
issued by JAWS Technologies Inc., a Delaware corporation on November
1, 2000, to CALP II Limited Partnership.
10.16(38) Warrant No. AW3-B, an adjustable warrant issued by JAWS Technologies
Inc.to CALP II Limited Partnership on November 1, 2000, for shares of
common stock to be calculated in accordance with the terms of the
adjustable warrant and as determined by market prices of JAWS
Technologies Inc., shares of common stock on the NASDAQ National
Market.
10.17(39) Letter Agreement dated March 29, 2001, by and between JAWZ Inc, a
Delaware corporation, and CALP II Limited Partnership.
10.18(40) $1,000,000 JAWZ Inc. promissory note, dated December 13, 2000, granted
to Thomson & Kernaghan & Co. Limited.
10.19(41) $1,000,000 JAWZ Inc. promissory note, dated January 26, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.20(42) $400,000 JAWZ Inc. promissory note, dated February 14, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.21(43) $945,000 JAWZ Inc. promissory note, dated February 27, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.22(44) $850,000 JAWZ Inc. promissory note, dated March 15, 2001, granted to
Thomson & Kernaghan & Co. Limited.
10.23(45) Loan Agreement between JAWZ Inc., and Thomson & Kernaghan & Co.
Limited, dated March 29, 2001.
10.24(46) Security Agreement between JAWZ Inc., and Thomson & Kernaghan & Co.
Limited, dated March 29, 2001.
10.25(47) Consulting Agreement between JAWZ Inc., and Philip W. Johnston dated
April 25, 2001.
10.26(48) Consulting Agreement between JAWZ Inc., and Robert J. Kubbernus dated
January 1, 2001.
30
10.27(49) Consulting Agreement between JAWZ Inc., and Riaz Mamdani dated April
25, 2001.
10.28(50) Consulting Agreement between JAWZ Inc., and Thomas Welch dated April
19, 2001.
10.29(51) Consulting Agreement between JAWZ Inc., and Strategic Equity Corp.,
dated April 1, 2001.
- ------------
(1) Incorporated by reference to Exhibit 3.1 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(2) Incorporated by reference to Exhibit 3.2 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(3) Incorporated by reference to Exhibit 3.3 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(4) Incorporated by reference to Exhibit 3.4 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(5) Incorporated by reference to Exhibit 3.4 of the Company's Form S-1/A (File
No. 333-38088), filed with the SEC on July 13, 2000.
(6) Incorporated by reference to Exhibit 3.6 of the Company's Quarterly Report
on Form 10-Q, filed with the SEC on November 14, 2000.
(7) Incorporated by reference to Exhibit 4.1 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(8) Incorporated by reference to Exhibit 4.2 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(9) Incorporated by reference to Exhibit 4.3 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(10) Incorporated by reference to Exhibit 4.4 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(11) Incorporated by reference to Exhibit 4.5 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(12) Incorporated by reference to Exhibit 4.6 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(13) Incorporated by reference to Exhibit 4.7 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(14) Incorporated by reference to Exhibit 4.8 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(15) Incorporated by reference to Exhibit 4.9 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(16) Incorporated by reference to Exhibit 4.10 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(17) Incorporated by reference to Exhibit 4.11 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(18) Incorporated by reference to Exhibit 10.13 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
31
(19) Incorporated by reference to Exhibit 4.13 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(20) Incorporated by reference to Exhibit 4.14 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(21) Incorporated by reference to Exhibit 10.14 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(22) Incorporated by reference to Exhibit 4.16 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(23) Incorporated by reference to Exhibit 10.19 of the Company's Form S-1/A
(File No. 333-38088), filed with the SEC on July 13, 2000.
(24) Incorporated by reference to Exhibit 10.20 of the Company's Form S-1/A
(File No. 333-38088), filed with the SEC on July 13, 2000.
(25) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(26) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(27) Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(28) Incorporated by reference to Exhibit 2.4 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(29) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(30) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000.
(31) Incorporated by reference to Exhibit 4.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000.
(32) Incorporated by reference to Exhibit 4.2 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000
(33) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K/A-2, filed with the SEC on January 18, 2001.
(34) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(35) Incorporated by reference to Exhibit 2.6 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(36) Incorporated by reference to Exhibit 2.7 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(37) Incorporated by reference to Exhibit 2.8 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(38) Incorporated by reference to Exhibit 2.9 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(39) Incorporated by reference to Exhibit 2.10 of the Company's Current Report
on Form 8-K/A, filed with the SEC on April 12, 2001.
32
(40) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(41) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(42) Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(43) Incorporated by reference to Exhibit 2.4 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(44) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(45) Incorporated by reference to Exhibit 2.6 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(46) Incorporated by reference to Exhibit 2.7 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(47) Incorporated by reference to Exhibit 4.1 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(48) Incorporated by reference to Exhibit 4.2 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(49) Incorporated by reference to Exhibit 4.3 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(50) Incorporated by reference to Exhibit 99.1 of the Company's Form S-8, filed
with the SEC on June 21, 2001.
(51) Incorporated by reference to Exhibit 99.2 of the Company's Form S-8, filed
with the SEC on June 21, 2001.
(b) Reports on Form 8-K
None
33
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JAWZ INC.
Date: June 30, 2001
By: /s/ "Robert J. Kubbernus"
--------------------------------
Name: Robert J. Kubbernus
Title: Chairman of the Board,
President and Chief Executive Officer,
and Acting Chief Financial Officer
(Principal Executive Officer and
Acting Principal Financial and
Accounting Officer)
34
EXHIBIT INDEX
3.1(1) Articles of Incorporation of "e-biz" solutions, inc. (now JAWZ Inc., a
Nevada corporation), dated January 27, 1997.
3.2(2) Certificate of Amendment of Articles of Incorporation of JAWS
Technologies, Inc., a Nevada corporation (now JAWZ Inc., a Nevada
corporation), dated March 30, 1998, changing the name of E-Biz to JAWS
Technologies, Inc.
3.3(3) Certificate of Amendment of Articles of Incorporation of JAWS
Technologies, Inc., a Nevada corporation, increasing the total number
of common stock which JAWS is allowed to issue from 20,000,000 to
95,000,000.
3.4(4) Bylaws of "e-biz" solutions, inc. (now JAWZ Inc., a Delaware
corporation), dated January 27, 1997.
3.5(5) Certificate of Incorporation of JAWS Technologies, Inc., a Delaware
corporation, dated April 28, 2000.
3.6(6) Certificate of Amendment to Certificate of Incorporation of JAWS
Technologies, Inc., a Delaware corporation, dated September 29, 2000,
changing the name of JAWS Technologies, Inc. to JAWZ Inc.
4.1(7) Investment Agreement by and between JAWS Technologies, Inc., a Nevada
corporation, and Bristol Asset Management LLC dated August 27, 1998
and letter of termination.
4.2(8) Debenture Acquisition Agreement by and between JAWS Technologies,
Inc., a Nevada corporation, and Thomson Kernaghan & Co. Limited, dated
September 25, 1998.
4.3(9) Amendment No. 1 to Debenture Purchase Agreement by and between JAWS
Technologies, Inc. and Thomson Kernaghan & Co. Limited, dated April
27, 1999.
4.4(10) Warrant to purchase 1,000,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Bristol Asset
Management LLC, dated April 20, 1999.
4.5(11) Form of Warrant to purchase 834,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Glentel Inc.,
dated June 21, 1999.
4.6(12) Schedule of Warrant holders which received the Form of Warrant set
forth in 4.5 above.
4.7(13) Form of Warrant issued by JAWZ in connection with the Private
Placement Transaction.
4.8(14) Schedule of Warrant holders which received the Form of Warrant set
forth in 4.9 above.
4.9(15) Warrant to purchase 217,642 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Thomson Kernaghan
& Co. Limited, dated December 31, 1999.
4.10(16) Certificate of the Designation, Voting Power, Preference and Relative,
Participating, optional and other Special Rights and Qualifications,
Limitations or Restrictions of the Special Series & Preferred Voting
Stock of JAWS Technologies, Inc., dated November 30, 1999
4.11(17) Incentive and Non-Qualified Stock Option Plan of JAWS Technologies,
Inc., a Nevada corporation.
4.12(18) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated
December 31, 1999.
4.13(19) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated
February 15, 2000.
4.14(20) Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and SmallCaps Online LLC, dated February 15, 2000.
35
4.15(21) Form of Subscription Agreement to purchase 235,295 Units of JAWS
Technologies, Inc., a Nevada corporation, by and between JAWS
Technologies, Inc., a Nevada corporation, and BPI Canadian Small
Companies Fund, dated December 20, 1999.
4.16(22) Schedule of Subscribers that purchased subscriptions pursuant to the
Form of Subscription Agreement set forth above in 10.14.
10.1(23) Securities Purchase Agreement, dated as of June 22, 2000, among JAWS
Technologies, Inc. and investors signatory thereto.
10.2(24) Registration Rights Agreement, made and entered into as of June 22,
2000, among JAWS Technologies, Inc. and the investors signatory
thereto.
10.3(25) Share Purchase Agreement, dated August 15, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., 4Comm.com, Inc.,
and other signatories thereto.
10.4(26) Share Purchase Agreement, dated August 15, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., General Network
Services - GNS Inc., and other signatories thereto.
10.5(27) Registration Right Agreement, dated August 15, 2000, between JAWS
Technologies, Inc. and the Vendors signatories thereto.
10.6(28) Support Agreement, dated August 1, 2000 between JAWS Technologies,
Inc. and JAWS Acquisition Canada Corp.
10.7(29) Voting and Exchange Trust Agreement, dated August 1, 2000, among JAWS
Technologies, inc. and JAWS Acquisition Canada Corp. and Montreal
Trust Company of Canada.
10.8(30) Share Purchase Agreement, dated August 22, 2000, among JAWS
Technologies, Inc., JAWS Acquisition Canada Corp., the shareholders of
Betach Systems Inc., and the shareholders of Betach Advanced Solutions
Inc.
10.9(31) Form of Warrant Certificate made by JAWS Technologies, Inc. in favor
of the shareholders of Betach Systems Inc. and the shareholders of
Betach Advanced Solutions Inc.
10.10(32) List of warrant holders with respect to whom JAWZ issued warrants
pursuant to the Form of Warrant Certificate set forth in Exhibit 4.1:
Randy Walinga, Stephanie Muzyka, Lawrence Gordey and Soon Chong.
10.11(33) Second Amendment to Stock Purchase Agreement, dated as of December 26,
2000, among JAWZ Inc., a Delaware corporation, (formerly Jaws
Technologies, Inc., a Nevada corporation) and Charles A. Ehredt.
10.12(34) Securities Purchase Agreement Amendment No. 1, dated January 23, 2001
to be effective as of November 1, 2000, by and between JAWZ Inc., a
Delaware corporation (formerly JAWS Technologies, Inc.) and CALP II
Limited Partnership.
10.13(35) Registration Rights Amendment No. 1., dated January 23, 2001 to be
effective as of November 1, 2000, by and between JAWZ Inc., a Delaware
corporation (formerly JAWS Technologies, Inc.) and CALP II Limited
Partnership.
10.14(36) Warrant No. CW-3B1, a warrant for 233,000 shares of common stock,
issued by JAWS Technologies Inc., a Delaware corporation on November
1, 2000, to CALP II Limited Partnership.
10.15(37) Warrant No. CW-3B2, a warrant for 67,000 shares of common stock,
issued by JAWS Technologies Inc., a Delaware corporation on November
1, 2000, to CALP II Limited Partnership.
10.16(38) Warrant No. AW3-B, an adjustable warrant issued by JAWS Technologies
Inc.to CALP II Limited Partnership on November 1, 2000, for shares of
common stock to be calculated in accordance with the terms of the
adjustable warrant and as determined by market prices of JAWS
Technologies Inc., shares of common stock on the NASDAQ National
Market.
36
10.17(39) Letter Agreement dated March 29, 2001, by and between JAWZ Inc, a
Delaware corporation, and CALP II Limited Partnership.
10.18(40) $1,000,000 JAWZ Inc. promissory note, dated December 13, 2000, granted
to Thomson & Kernaghan & Co. Limited.
10.19(41) $1,000,000 JAWZ Inc. promissory note, dated January 26, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.20(42) $400,000 JAWZ Inc. promissory note, dated February 14, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.21(43) $945,000 JAWZ Inc. promissory note, dated February 27, 2001, granted
to Thomson & Kernaghan & Co. Limited.
10.22(44) $850,000 JAWZ Inc. promissory note, dated March 15, 2001, granted to
Thomson & Kernaghan & Co. Limited.
10.23(45) Loan Agreement between JAWZ Inc., and Thomson & Kernaghan & Co.
Limited, dated March 29, 2001.
10.24(46) Security Agreement between JAWZ Inc., and Thomson & Kernaghan & Co.
Limited, dated March 29, 2001.
10.25(47) Consulting Agreement between JAWZ Inc., and Philip W. Johnston dated
April 25, 2001.
10.26(48) Consulting Agreement between JAWZ Inc., and Robert J. Kubbernus dated
January 1, 2001.
10.27(49) Consulting Agreement between JAWZ Inc., and Riaz Mamdani dated April
25, 2001.
10.28(50) Consulting Agreement between JAWZ Inc., and Thomas Welch dated April
19, 2001.
10.29(51) Consulting Agreement between JAWZ Inc., and Strategic Equity Corp.,
dated April 1, 2001.
- ------------
(1) Incorporated by reference to Exhibit 3.1 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(2) Incorporated by reference to Exhibit 3.2 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(3) Incorporated by reference to Exhibit 3.3 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(4) Incorporated by reference to Exhibit 3.4 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(5) Incorporated by reference to Exhibit 3.4 of the Company's Form S-1/A (File
No. 333-38088), filed with the SEC on July 13, 2000.
(6) Incorporated by reference to Exhibit 3.6 of the Company's Quarterly Report
on Form 10-Q, filed with the SEC on November 14, 2000.
(7) Incorporated by reference to Exhibit 4.1 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(8) Incorporated by reference to Exhibit 4.2 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(9) Incorporated by reference to Exhibit 4.3 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(10) Incorporated by reference to Exhibit 4.4 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
37
(11) Incorporated by reference to Exhibit 4.5 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(12) Incorporated by reference to Exhibit 4.6 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(13) Incorporated by reference to Exhibit 4.7 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(14) Incorporated by reference to Exhibit 4.8 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(15) Incorporated by reference to Exhibit 4.9 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(16) Incorporated by reference to Exhibit 4.10 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(17) Incorporated by reference to Exhibit 4.11 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(18) Incorporated by reference to Exhibit 10.13 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(19) Incorporated by reference to Exhibit 4.13 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(20) Incorporated by reference to Exhibit 4.14 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(21) Incorporated by reference to Exhibit 10.14 of the Company's Form S-1 (File
No. 333-30406), filed with the SEC on February 14, 2000.
(22) Incorporated by reference to Exhibit 4.16 of the Company's Form 10-K405,
filed with the SEC on March 24, 2000.
(23) Incorporated by reference to Exhibit 10.19 of the Company's Form S-1/A
(File No. 333-38088), filed with the SEC on July 13, 2000.
(24) Incorporated by reference to Exhibit 10.20 of the Company's Form S-1/A
(File No. 333-38088), filed with the SEC on July 13, 2000.
(25) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(26) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(27) Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(28) Incorporated by reference to Exhibit 2.4 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(29) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on September 11, 2000.
(30) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000.
(31) Incorporated by reference to Exhibit 4.1 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000.
38
(32) Incorporated by reference to Exhibit 4.2 of the Company's Current Report on
Form 8-K, filed with the SEC on September 18, 2000.
(33) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K/A-2, filed with the SEC on January 18, 2001.
(34) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(35) Incorporated by reference to Exhibit 2.6 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(36) Incorporated by reference to Exhibit 2.7 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(37) Incorporated by reference to Exhibit 2.8 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(38) Incorporated by reference to Exhibit 2.9 of the Company's Current Report on
Form 8-K, filed with the SEC on January 26, 2001.
(39) Incorporated by reference to Exhibit 2.10 of the Company's Current Report
on Form 8-K/A, filed with the SEC on April 12, 2001.
(40) Incorporated by reference to Exhibit 2.1 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(41) Incorporated by reference to Exhibit 2.2 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(42) Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(43) Incorporated by reference to Exhibit 2.4 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(44) Incorporated by reference to Exhibit 2.5 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(45) Incorporated by reference to Exhibit 2.6 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(46) Incorporated by reference to Exhibit 2.7 of the Company's Current Report on
Form 8-K, filed with the SEC on April 12, 2001.
(47) Incorporated by reference to Exhibit 4.1 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(48) Incorporated by reference to Exhibit 4.2 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(49) Incorporated by reference to Exhibit 4.3 of the Company's Form S-8, filed
with the SEC on April 26, 2001.
(50) Incorporated by reference to Exhibit 99.1 of the Company's Form S-8, filed
with the SEC on June 21, 2001.
(51) Incorporated by reference to Exhibit 99.2 of the Company's Form S-8, filed
with the SEC on June 21, 2001.