-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJCUVsG89pU+n+65MtE9eUSlAGxEayDIrc20GVjuGcKoXj+PY6qNYiIA63q6UJIF 6htHme1TuUxBPo3zsEZkKw== 0000950147-98-000482.txt : 19980622 0000950147-98-000482.hdr.sgml : 19980622 ACCESSION NUMBER: 0000950147-98-000482 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980619 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES AIRCRAFT CORP CENTRAL INDEX KEY: 0000350129 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 953518487 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09974 FILM NUMBER: 98651385 BUSINESS ADDRESS: STREET 1: 3121 E. GREENWAY RD STE201 CITY: PHOENIX STATE: AZ ZIP: 85032 BUSINESS PHONE: 6027871351 MAIL ADDRESS: STREET 1: 3121 E. GREENWAY RD #201 CITY: PHOENIX STATE: AZ ZIP: 85032 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- QUARTERLY REPORT UNDER SECTION 13 OF 15(d) of the Securities Exchange Act of 1934 ----------------------------- For quarter ended December 31, 1997 Commission file number 0-9974 ----------------- UNITED STATES AIRCRAFT CORPORATION ---------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-3518487 - ------------------------------- ----------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. NUMBER) INCORPORATION OR ORGANIZATION) 3121 E. Greenway Rd., Phoenix, Arizona 85032 - ---------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (602) 787-1351 - ------------------------------------------------- (REGISTRANT'S TELEPHONE NO., INCLUDING AREA CODE) 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 ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of December 31, 1997. NUMBER OF SHARES CLASS ---------------- ----- 7,652,504 Class A 4,962,801 Class B UNITED STATES AIRCRAFT CORPORATION COMMISSION FILE NUMBER 0-9974 FORM 10-Q INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Consolidated Balance Sheets December 31, 1997 (Unaudited) and September 30, 1997 3 Consolidated Statements of Operations (Unaudited) for the Three Months ended December 31, 1997 and 1996 4 Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended December 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS of Financial Condition and Results of Operations 7 Item 3. DEFAULTS UPON SENIOR SECURITIES 9 Item 5. OTHER INFORMATION 9 PART II - OTHER INFORMATION 10 SIGNATURES 10 United States Aircraft Corporation and Subsidiaries Consolidated Balance Sheets December 31, 1997 and September 30, 1997
December 31, 1997 September 30, 1997 Assets (Unaudited) ------ ----------------- ------------------ Current Assets Cash $ 19,195 $ 20,427 Accounts receivable 64,514 69,311 Notes receivable 7,000 8,000 Prepaid expenses 19,701 21,800 ----------- ----------- Total current assets 110,410 119,538 Advance to officer 15,552 27,769 Note receivable, net of current portion 46,544 52,044 Land held for development 587,567 577,327 Property & equipment, net of accumulated depreciation 54,909 57,154 Agency acquisitions, net of amortization 99,260 104,774 Goodwill, net 86,478 87,308 Course materials 15,227 15,718 Other 5,902 24,527 ----------- ----------- 1,021,849 1,066,159 ----------- ----------- Liabilities & Stockholder's Equity ---------------------------------- Current Liabilities Current portion of long-term debt 36,275 37,775 Convertible debentures & related accrued interest 84,714 82,938 Accounts payable 81,131 86,159 Accrued expenses 56,664 68,263 Unearned tuition 44,310 45,290 ----------- ----------- 303,094 320,425 Long term debt, net of current portion 17,370 19,979 Trust deed notes payable 601,000 601,000 Stockholders' Equity Capital stock Class A: $.50 par value, 10,000,000 shares authorized, 7,652,504 issued 3,826,252 3,826,252 Class B: $.001 par value, 5,000,000 shares authorized, 4,962,801 issued 4,963 4,963 Paid in capital (751,827) (751,827) Retained earnings (deficit) (2,979,003) (2,954,633) 100,385 124,755 ----------- ----------- $ 1,021,849 $ 1,066,159 ----------- -----------
The accompanying notes are an integral part of these financial statements. United States Aircraft Corporation and Subsidiaries Consolidated Statements of Operations For the Three Months Ended December 31, 1997 and 1996 (Unaudited) 1997 1996 ------------ ------------ Revenue Real estate education $ 95,352 $ 84,372 Travel agency 415,278 Other 1,010 ------------ ------------ Total revenue 511,640 84,372 Expenses Cost of sales-travel agency 371,389 Personnel expenses 102,466 61,065 Facility cost 12,249 5,053 Other operating cost 16,872 15,109 General and administration 19,897 9,896 ------------ ------------ 522,873 91,123 Income (loss) before interest expense, depreciation and amortization (11,233) (6,751) Interest expense 3,503 3,547 Depreciation and amortization 9,634 4,172 ------------ ------------ Income (loss) from continuing operations (24,370) (14,470) Income (loss) from discontinued operations 190 ------------ ------------ Net income (loss) $ (24,370) $ (14,280) ------------ ------------ Net income (loss) per share $ (.002) $ (.001) ------------ ------------ Weighted number of shares outstanding 11,245,305 9,870,305 ------------ ------------ The accompanying notes are an integral part of these statements. United States Aircraft Corporation and Subsidiaries Consolidated Statements of Cash Flows For the Three Months Ended December 31, 1997 and 1996 (Unaudited) 1997 1996 -------- -------- Cash Flows From Operating Activities Net income (loss) (24,370) (14,280) Adjustments to reconcile net to cash used by operating activities Depreciation 2,662 2,481 Amortization 6,972 2,089 Net increase (decrease) in current liabilities and (increase) decrease in accounts receivable prepaid expense and other assets 14,277 9,218 -------- -------- Net cash provided by (used by) operating activities (459) (492) Cash flows from investing activities Reduction in advance to officer 12,217 Addition to land (10,240) Disposition (acquisition) of equipment (417) (3,704) -------- -------- Net cash provided by (used by) investing activities 1,560 (3,704) -------- -------- Cash flows from financing activities Decrease in long-term debt (2,333) (2,381) -------- -------- Net cash provided by (used by) financing activities (2,333) (2,381) -------- -------- Net increase (decrease) in cash (1,232) (6,577) Cash, Beginning of Period 20,427 10,137 -------- -------- Cash, End of Period $ 19,195 $ 3,560 -------- -------- The accompanying notes are an integral part of these statements. UNITED STATES AIRCRAFT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (UNAUDITED) AND SEPTEMBER 30, 1997 NOTE 1 - Basis of Presentation --------------------- The accompanying unaudited condensed 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 Rule 10-01 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 considered necessary for a fair presentation have been included. For further information, refer to the audited financial statements and footnotes thereto included in the Company's Form 10-K for the year ended September 30, 1997. NOTE 2 - Summary of Significant Accounting Policies ------------------------------------------ Basis of Consolidation ---------------------- The consolidated financial statements include the accounts of United States Aircraft Corporation and its subsidiaries (hereinafter referred to as "the Company"). All intercompany transactions have been eliminated in consolidation. For further information concerning significant accounting policies, refer to the audited financial statements and footnotes thereto in the Company's Form 10-K for the year ended September 30, 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- Results of Operations --------------------- Comparison 1997 to 1996 The loss before interest, depreciation and amortization expense increased by $4,482. The increased loss consists of the following: Increase in Real Estate Education 1997 operating income over 1996 $ 11,183. Operating loss from travel agency operation during the three months ended December 31, 1997 with no comparable amount for 1996 $ (6,674). Increase in general corporate overhead $ (10,001). Increase in other revenue $ 1,010. The operating income from the adult education division improved by $11,183. The improvement was due to an $10,980 increase in revenues plus a $203 decrease in operating costs. The revenue increase is the result of additional enrollments including those at the new East campus, and due to a $3,272 increase in advertising revenue related to the publication of the Renewal News. The operating cost decrease consists of an $6,994 decrease in personnel expense, $5,419 increase in facility costs and $1,372 increase in other operating costs. The travel services operation was started on July 1, 1997 with the purchase of an existing travel agency and the operating results are included during the three months ended December 31, 1997 with no comparable amounts for the three months ended December 31, 1996 as follows: Amount ------ Sales $ 415,278 Cost of sales $ 371,389 --------- Gross profit 43,889 Operating Costs Personnel expense $ 48,396 Facility cost 1,776 Other operating costs 391 --------- Total operating costs 50,563 --------- Income (loss) before interest depreciation and amortization $ (6,674) --------- Effective January 1, 1998, management reduced its full time travel staff to bring personnel expenses in line with the revenue production. General corporate overhead increased by $10,000 primarily due to management compensation increases. Other revenue consisting primarily of interest on travel agency deposits increased by $1,010. Depreciation and amortization increased by $5,462 primarily due to equipment and business acquisitions. Interest decreased by $44. On September 30, 1997 the company sold its wholly-owned subsidiary Hansen and Associates, Inc. dba Property Masters after determining to discontinue its real estate brokerage and property management line of business. The financial statements have been restated to reflect the operations of the subsidiary as a discontinued operation reflecting a 1996 operating profit of $190 with no comparable amount for 1997. Financial Condition, Liquidity and Capital Resources - ---------------------------------------------------- The working capital deficit decreased $8,203 from September 30, 1997 to $192,684. Current assets decreased by $9,128 from September 30, 1997 to $110,410. The decrease consists of a $1,232 increase in cash, a $4,797 decrease in accounts receivable, an $1,000 decrease in Notes receivable related to the sale of Hansen & Associates Inc. dba Property Masters and a $2,099 decrease in prepaid expenses primarily related to the travel agency operations. Current liabilities decreased $17,331 from September 30, 1997 to $303,094. The decrease consists of a $1,500 decrease in the current portion of long-term debt, a $1,776 increase related to the accrued interest on the debentures, a $5,028 decrease in accounts payable and a $11,599 decrease in accrued expenses. Unearned tuition decreased by $980. Advances to officer made pursuant to the officer's compensation program decreased by $12,217. The long term note receivable of $46,544 relates to the sale of Hansen and Associates Inc. and decreased by $5,500 due to collections. Property and equipment decreased by $2,245 as a result of equipment acquisitions of $417 offset by depreciation of $2,662. Goodwill decreased by $830 due to amortization. Course materials decreased by $491 due to amortization. Other assets decreased by $18,625. In February 1997, the Company acquired 35.66 acres of undeveloped land in Glenn County, California which is recorded for financial reporting purposes at $587,567. The land has been pledged as collateral for three trust deed notes payable totaling $601,000. The Company is planning the formation of a Real Estate Investment Trust (REIT) or other alternative to whom the undeveloped land would be sold or contributed. Interest payments on the second and third trust deed notes payable are delinquent and the holder of the second trust deed Note payable filed a notice of default on March 30, 1998. If the REIT or other alternative is not formed with the resulting sale or contribution of the land, the Company will be required to take other steps to sell the land which could be at a sales price that would be less than the trust deed notes payable. The July and August 1997 purchase price of the travel agencies exceeded the indentifiable tangible assets of the agencies by $110,288 and relates primarily to the value of the income production of the approximately 175 Home Based Travel Agents who place their travel sales through FirsTravel . The original cost has been reduced by amortization of $11,028 with $5,514 of amortization being recorded in the three months ended December 31, 1997. Long-term debt decreased by $2,609 due to payments. The convertible debentures of $56,450 plus the related accrued interest are classified as current liabilities as they were due on December 31, 1996. Currently, the debentures remain unpaid and the Company believes that they will eventually be retired through conversion to the Company's Class A common stock, although no assurance that such a conversion will be elected by the debenture holders. The Company's management has continued its program to expand the services operations through further expansion of its existing operations plus the acquisition of other service organizations. Working capital continues to limit the expansion of the Company although the Company in February 1997 acquired 35.66 acres of undeveloped land for 250,000 Class A shares of its common stock plus approximately $500,000 of trust deed notes payable. The Company intends to plan the development of the parcel and has used the land as collateral for a $100,000 loan to provide an interim resolution to the working capital deficiency. Further, in March 1998 the Company obtained a one year bank revolving line of credit in the amount of $30,000. Additionally, the Company is aggressively investigating acquisitions of adult education, travel services or other operations that are compatible with the existing operations and that can be acquired for the Company's common stock or with debt that is retired from the cash flow from the acquired operation. Further, the Company plans to complete a private placement aggregating approximately $150,000 to provide working capital, fund the acquisitions and retire a portion of the long-term debt. No assurance can be given the acquisitions will be completed or the private placement will be successful. In May 1998, The Company signed a letter of intent to acquire all of the outstanding shares of Neo Vision, Inc. For additional information, reference is made to Item 5 Other Information of this report. Item 3. Defaults Upon Senior Securities ------------------------------- The Company currently is in default on the payment of various convertible debentures in the outstanding principal amount of $56,450. The Company also is in default on various trust deed notes payable with respect to 35.66 acres of undeveloped land it owns in Glenn County, California (the "California Land") in the amount of $435,000, and the holder of the $100,000 second trust deed note payable has filed a notice of default with respect to the non-.payments on the related note. The Company is pursuing various alternatives for realizing the value of the California land, including the possibility of forming a Real Estate Investment Trust (REIT) to whom the undeveloped land would be sold or contributed. If the Company is unable to pay the balance due on the second trust deed note payable, then the Company may lose the California Land in a foreclosure sale and would be liable for any deficiency in the payment on the notes securing the land, which could be substantial. The Company currently does not have the ability to pay any of its defaulted debts and no assurance can be given that the Company will have sufficient capital to pay such debts. Item 5. Other Information ----------------- On May 28, 1998, the Company signed a letter of intent to acquire Neo Vision, Inc. in tax-free exchange of 2,000,000 of the Company's Class A common shares for all of the outstanding shares of Neo Vision, Inc. The letter of intent provides for a closing on June 30, 1998 but is subject to several contingencies and the due diligence review of both parties. Neo Vision, Inc. (Neo), an Arizona corporation, has been in the development stage since its inception in June, 1997. Neo has developed the technology to provide out-of-home, high impact advertising, programming and information to remote audiences using state of the art, computer, video and signal transmission technology. Neo expects to conclude the development phase of its operation in mid June 1998 with the start of operations of the three video screens that have been installed in Las Vegas, Nevada. The letter of intent further provides for the issuance of common shares of United States Aircraft Corporation contingent upon Neo meeting certain future conditions that prove the viability of the technology and the goodwill of the Neo Vision, Inc. product. If all of the contingent shares are issued the Neo shareholders would own approximately 80% of the outstanding shares of United States Aircraft Corporation. The letter of intent also provides for an increase in the Board of Directors at closing to nine individuals with one of the current outside directors resigning and the election of five new members to the board of directors two of whom will be outside directors nominated by Neo. Additionally the letter of intent calls for the filing of a proxy statement shortly after closing for a shareholders' meeting where the following will be presented for shareholder approval: o Authorization of new common shares and an exchange of the currently authorized Class A and B shares for the new common share. o Authorization of preferred stock with the Board of Directors being authorized to establish preferences for separate classes of the preferred stock. o Approval of a name change to Neo V. Systems, Inc. and a restatement of and revision to the articles of incorporation. o Adoption of a stock option plan along with approval of the initial grants. At this time no assurance can be given that the acquisition of Neo Vision, Inc. will be completed PART II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. 10.5 - Letter of intent with Neo Vision, Inc. dated May 27, 1998 b. 27 - Financial Data Schedule SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED STATES AIRCRAFT CORPORATION Date: June 19, 1998 /s/ Harry V. Eastlick ----------------- -------------------------------------------------- Harry V. Eastlick, President and Chief Executive Officer Date: June 19, 1998 /s/ Harry V. Eastlick ----------------- -------------------------------------------------- Harry V. Eastlick, Acting Chief Financial Officer EX-10.5 2 LETTER OF INTENT WITH NEO VISIONS [OBJECT OMITTED] UNITED STATES AIRCRAFT CORPORATION 3121 East Greenway Rd., Suite #201 Phoenix, AZ 85032 - -------------------------------------------------------------------------------- Telephone (602) 787-1351 Fax (602) 787-1384 May 28, 1998 Mr. Albert C. Lundstrom, President Neo Vision, Inc. 3625 N. 16th St. Suite 110 Phoenix, AZ 85016 Letter of intent ---------------- Dear Mr. Lundstrom: We are writing to set forth our mutual intention to exchange all of the outstanding shares of Neo Vision, Inc. (NEO) owned by the shareholders (Sellers) for shares of United States Aircraft Corporation. United States Aircraft Corporation (USAC), a Securities and Exchange Commission reporting company, ("Purchasers"), desire to make it clear that this letter of intent, if agreed to by Seller does not represent a binding contract to exchange shares, but is merely a "meeting of the minds" of the parties and this letter will be used by appropriate legal counsel as a basis for writing the binding agreement. Purchasers propose that the final form of the purchase agreement include an expanded version of the following provisions subject to the approval of both party's Boards of Directors. The Purchasers and Sellers intend to complete a tax free stock for stock or stock for assets exchange whereby the shares or the net assets of NEO owned by the shareholders (representing all of the outstanding shares) are exchanged for shares of United States Aircraft Corporation. The basic provisions of this exchange and its objectives are as follows: 1. Objective: Our mutual objective is to include the operations of NEO with the current USAC operations to provide increased profitability, capital, and management that will allow expansion of all operations. 2. Organization: NEO will be operated as a separate subsidiary of USAC with its existing officers and management, except that the Board of Directors of NEO shall consist of Anthony Christopher, Chairman, Albert C. Lundstrom, Jack Eberentz and Harry V. Eastlick plus Harry V. Eastlick shall also serve as the Treasurer and Chief Financial Officer of NEO. The Board of Directors of United States Aircraft Corporation will be increased to nine members at the closing and will include the following: Anthony Christopher Chairman of the Board of Directors Albert C. Lundstrom President and Chief Executive Officer/Director Harry V.Eastlick Executive Vice President and Chief Operating and Financial Officer/Director Jack Eberenz Executive Vice President and Secretary/Director Donald E.Cline Director Dale L. Dykema Director Whipple H.Manning Director John R. Thomas Director One of the existing outside directors shall resign prior to the closing and two new Outside Directors will be nominated by NEO and elected by the existing board. 3. Employment Contracts: United States Aircraft Corporation will execute employment contracts with Anthony Christopher, Albert Lundstrom, Jack Eberenz and the employment contract with Harry V. Eastlick will be revised with the following provisions: o Term - to be determined o Compensation - to be determined o Fringe Benefits - Health insurance premiums to be paid plus participation in any other fringe benefits provided as described in the Employment Contract Draft. o Stock Options - Stock Options grants will be made, subject to shareholder approval of the stock option plan and initial grants, with the aggregate initial grants to the four officers covered by this paragraph, being 1,800,000 shares of the new common stock (assuming a 10 for 1 reverse split). o Business Expenses - Employees will be reimbursed for their use in the business of their personal automobile. o A copy of the Harry V. Eastlick current Employment Contact is attached and will serve as the basic form for the final contracts to be executed. 4. Share Exchange: At the closing, the Sellers shall exchange all of their shares in NEO, duly endorsed, for 2,000,000 Class A common shares with a par value of $.50 of the Purchaser. As well as the foregoing, additional shares of United States Aircraft Corporation Class A, $.50 par value common stock will be issued to the Seller, collectively, contingent on the following future conditions: Additional Shares (a). Extended performance of technology over a 90 day period from April 1, 1998 or later. 35,000,000 (b). Installation of the two screens in the "D" concourse at the McCarran Airport in Las Vegas, Nevada and program screening for a period of 30 days 20,000,000 (c). Obtaining positive cash flow for a 30 day period from the operation of the Meadows Mall Screen or comparable location. 10,000,000 The total additional shares to be issued pursuant to this provision is limited to 45,775,592 which brings Sellers interest to 80% of the outstanding shares. The Purchaser and Seller understand that there is not sufficient authorized common shares to issue the additional shares set forth above; however, the Purchaser has agreed to present at the next meeting of its shareholders amendments to its Articles of Incorporation to provide sufficient authorized common shares to allow the issuance of the additional shares. It is further understood by the Seller that one new class of common stock will be authorized and that the Class A shares will be exchanged for the new common shares. Further, there could be a reverse split of the outstanding shares at rate to be mutually agreed upon by the Purchaser and Seller. The number of additional shares to be issued will be adjusted accordingly and the shares to be issued at closing will be exchanged for the newly authorized common shares. Purchaser and Seller intend to close the transaction prior to the next shareholders meeting. The common shares of Purchaser delivered to Seller shall be validly issued, fully paid and nonassessable. All such shares shall bear a legend containing a restriction on transfer indicating that the shares may not be offered or sold and no transfer of them may be made unless in compliance with the Securities Act of 1933. This transaction shall be completed in accordance with the provisions of Section 368(a)(1)(b) of the Internal Revenue Code. 5. Contingencies: A. Purchasers and Seller's have a right to review and approve the books, financial statements, tax returns and records, list of assets related to the respective business hereunder. B. Sellers and Purchasers disclosure of all litigation, proceeding, or assessed tax deficiency pending against or relating to Seller and Purchaser or properties, assets, or business sold hereunder which may interfere with the use and quiet possession of the assets of the respective businesses. C. Purchasers have a right to review and evaluate the technology, systems,, procedures including current board locations and will be allowed to hire consultants, at Purchasers expense, to complete the review and evaluation. D. Purchasers and Sellers have a right to complete background checks and evaluate all key officers and employees of the respective businesses hereunder, including any subsidiaries. E. NEO has issued convertible debentures with a principal balance of $500,000. The debentures provide for conversion at $1 per share when NEO "goes public" including through a transaction such as set forth in this letter of Intent. The debenture holders shall agree prior to closing to convert the debentures into 500,000 shares of the New USAC common stock to be authorized at the USAC shareholders meeting. F. Purchaser and Seller agree that $450,000 of additional capital is required by May 31, 1998 and that such additional capital shall be raised by NEO prior to closing. It is anticipated that NEO will issue convertible preferred stock through an issuance exempt from registration and that the convertible preferred shares will provide for conversion into approximately 333,333 shares of the New USAC common stock to be authorized at the shareholders meeting. The parties shall mutually agree on the financing terms including arrangements with any consultants engaged to complete the financing and that the funding of this additional capital shall be completed prior to closing. The parties further acknowledge that an additional $550,000 of capital will be required to be raised prior to September 30, 1998 and that the terms and conditions for that financing will be determined subsequent to closing. G. Purchaser and Seller agree that a reverse split of the Purchasers new common shares will be required to facilitate the raising of the new capital and in order to have an appropriate market for the shares and the parties shall mutually agree to the reverse split ratio prior to closing. 6. Condition of Business and Subsequent Performance: Seller and Purchasers shall take no action in the period preceding closing that will materially change the nature of the business and its relationship with its customers, employees, and suppliers beyond normal business actions of a prudent business person. Any material changes that require a decision in the period preceding closing shall only be made after the mutual agreement of the Purchaser and Seller. After the Closing the Purchaser commits to the following: (a) The shares to be issued to Sellers pursuant to the contingent provisions of Section 4 hereof exceed the currently authorized shares of the Purchaser. At the next shareholders meeting of the Purchaser, expected to be held in August 1998, the following actions will be presented to the shareholders for approval: (i) Authorization of a single new class of common shares totaling approximately 50,000,000 to 100,000,000 shares as mutually agreed to by the Purchaser and Seller. (ii) Exchange of the currently outstanding Class A shares for the newly authorized common shares on the basis of 1 share of the Class A for each 1 share of the new common. (iii) Exchange of the currently outstanding Class B shares for the newly authorized common shares on a basis of 1.3 shares of the Class B for each 1 share of the new common. (iv) A reverse split of the outstanding shares of the new common stock at rates to be agreed upon by the Purchaser and Seller. (v) Approval of Neo V Systems, Inc. as the New Name of Purchaser or some other name mutually agreeable to Purchaser and Seller. (vi) Adoption of Stock Option Plans and initial grants. (vii) Authorization of preferred stock of 75,000,000 shares with the Board of Directors being authorized to establish the preferences for separate classes of preferred stock. (b) It is understood that an S-4 registration statement is intended to be filed in connection with the above exchange and accordingly the new common shares issued should be registered shares, subject to such restriction on transfer as set forth in the Rules and Regulations of the Securities and Exchange Commission. 7. Costs: Each of the parties will bear their own costs and expenses in connection with this transaction. 8. Closing: It is the intent of the Parties that closing will occur no later than June 30, 1998 at a time and place mutually agreeable to all parties. Please sign, where provided below, if all of the foregoing provisions meet with your approval and you agree that binding agreements, subject to the approval of both parties Board's of Directors, will be entered into with Purchasers containing these provisions. Sincerely, United States Aircraft Corporation (Purchasers) /s/ Harry V. Eastlick Harry V. Eastlick President and Chief Executive Officer Accepted by Seller on behalf of the Shareholders Neo Vision, Inc. Albert C. Lundstrom, President /s/ Albert C. Lundstrom ------------------------------ Date: 5-28-98 ----------------- EX-27 3 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1 U.S. Dollar 3-MOS SEP-30-1998 DEC-31-1997 1 19,195 0 71,514 0 0 110,410 123,533 68,624 1,021,849 303,094 618,370 0 0 3,831,215 (3,730,830) 1,021,849 511,640 511,640 522,873 522,873 9,634 0 3,503 (24,370) 0 (24,370) 0 0 0 (24,370) (.002) (.002)
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