Datameg Corp · 8-K/A · For 8/30/04 · EX-20.01

Filed On 9/7/04 4:09pm ET   ·   SEC File 333-107715   ·   Accession Number 1091818-4-325

Amendment to Current Report   ·   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K/A       Amended Current Report                                 2±    12K 
 2: EX-20.01    Statement to Shareholders                             18±    91K 
 3: EX-20.02    Statement to Shareholders                              3±    15K 

EX-20.01   ·   Statement to Shareholders
Exhibit Table of Contents

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EX-20.01-Stockholder Solicitation                                               

Datameg Corp. 
9 West Broadway 
Boston, MA 02127

August 31, 2004                                                                 

Dear Fellow Shareholders:                                                       

The enclosed written consent is for your use in connection with four            
important Datameg Corp. matters.                                                

We ask you to furnish your written consent to the following matters:  

(1)     approval of a proposed change in the state of incorporation of Datameg  
Corp. from New York to Delaware;                                                

(2)     approval of a proposal to amend the Datameg Bylaws;                     

(3)     approval of a proposal to fix the number of directors at one and to     
elect Andrew Benson as the sole director, to serve until the next annual meeting
of the stockholders of Datameg; and                                             

(4)     approval of a proposal to ratify, confirm, and approve, in all respects,
the Restated Certificate of Incorporation of Datameg filed on August 4, 2000,   
and all subsequent amendments.                                                  

Please complete, date and sign the written consent and promptly return it       
in the enclosed postage prepaid envelope.  Your prompt response is              
important and is most appreciated.                                              

If your shares are held in the name of a bank, brokerage firm or other          
nominee, please contact the party responsible for your account and direct       
him or her to execute a consent on the enclosed written consent form.           

Sincerely,

       /s/ Andrew Benson

   Andrew Benson
President 

=========================================================================       

Datameg Corp. 

Notice

August 31, 2004 

To the Shareholders of Datameg Corp.:                                           

Notice is hereby given that, in accordance with the Certificate of Incorporation
of Datameg Corp. and Section 615 of the New York Business Corporation Law,      
allowing for action by written consent of shareholders, Datameg Corp. is asking 
you to furnish your written consent to the following matters:                   

(1)     approval of a proposed change in the state of incorporation of Datameg  
Corp. from New York to Delaware;                                                

(2)     approval of a proposal to amend the Datameg Bylaws;                     

(3)     approval of a proposal to fix the number of directors at one and to     
elect Andrew Benson as the sole director, to serve until the next annual meeting
of the stockholders of Datameg; and                                             

(4)     approval of a proposal to ratify, confirm, and approve, in all respects,
the Restated Certificate of Incorporation of Datameg filed on August 4, 2000,   
and all subsequent amendments.                                                  

Only shareholders of record at the close of business on August 30, 2004 are     
entitled to notice of and to vote by this written consent.  To assure your      
representation, please complete, sign and date the enclosed written consent and 
return it promptly in the envelope provided.                                    

                FOR THE BOARD OF DIRECTORS

       /s/ Andrew Benson

   Andrew Benson
         Corporate Secretary

Boston, Massachusetts                                                           
August 31, 2004                                                                 
================================================================================

Datameg Corp. 

STOCKHOLDER SOLICITATION

GENERAL INFORMATION 

Stockholder Solicitation                                                        

This Stockholder Solicitation is furnished to the holders of the Common Stock of
Datameg Corp., a New York corporation (the "Company"), in connection with the   
solicitation by the Board of Directors of your written consent to the following 
matters:                                                                        

(1)     approval of a proposed change in the state of incorporation of Datameg  
Corp. from New York to Delaware;                                                

(2)     approval of a proposal to amend the Datameg Bylaws;                     

(3)     approval of a proposal to fix the number of directors at one and to     
elect Andrew Benson as the sole director, to serve until the next annual meeting
of the stockholders of Datameg; and                                             

(4)     approval of a proposal to ratify, confirm, and approve, in all respects,
the Restated Certificate of Incorporation of Datameg filed on August 4, 2000,   
and all subsequent amendments.                                                  

The approximate date on which this Stockholder Solicitation and accompanying    
written consent are first being sent is September 1, 2004.  The deadline for    
returning your written consent is September 30, 2004.                           

The Board of Directors of the Company is soliciting your written consent.  These
solicitation materials are first being mailed on or about September 1, 2004 to  
all shareholders entitled to execute written consents.  Written consents will be
solicited by mail.  The Company will make arrangements with brokerage houses and
other custodians, nominees and fiduciaries to send written consents to the      
beneficial owners of shares and will reimburse them for their expenses in so    
doing.  Should it appear desirable to do so to ensure adequate representation of
shares, officers, agents and employees of the Company may communicate with      
shareholders, banks, brokerage houses and others by telephone, facsimile or in  
person to request that written consents be furnished.  All expenses incurred in 
connection with this solicitation will be borne by the Company.                 

Revocability of Written Consents                                                

A written consent and a return envelope are enclosed.  You may revoke the       
authority granted by your execution of the written consent at any time before   
September 30, 2004 by filing with the Secretary of the Company a written notice 
of revocation or a duly executed consent bearing a later date.  Shares of the   
Company's Common Stock represented by executed and unrevoked consents will be   
tabulated in accordance with the choice or instructions specified thereon.      

Record Date and Voting Rights                                                   

Only shareholders of record at the close of business on August 30, 2004 are     
entitled to notice of this written consent.  As of August 30, 2004, the         
Company's issued and outstanding capital stock consisted of 243,236,084 shares  
of Common Stock.                                                                

Under the Company's Certificate of Incorporation and as permitted by New York   
law, the affirmative consent of the holders of a majority of the shares of the  
Company's Common Stock outstanding on the Record Date, executing consents       
together as a single class, is required for approval of the proposed            
reincorporation in Delaware through a merger (the "Reincorporation").  The      
holders of the Common Stock are entitled to cast one vote for each share held on
the four matters set forth in the written consent.                              

A broker "non-vote" occurs when a nominee holding shares for a beneficial owner 
does not have discretionary voting power with respect to that item and has not  
received voting instructions from the beneficial owner.  Broker "non-votes" and 
the shares as to which a shareholder abstains from executing a written consent  
will have the effect of a vote AGAINST the matters set forth in the written     
consent.                                                                        

BENEFICIAL OWNERSHIP OF COMMON STOCK                                            

The following table sets forth the following information about the beneficial   
ownership of our common stock as of August 30, 2004 by (i) each person who we   
know is the beneficial owner of more than 5% of the outstanding shares of common
stock, (ii) each of our directors and executive officers, and (iii) all of our  
directors and executive officers as a group. We are not aware of any beneficial 
owner of more than 5% of the outstanding common stock other than as set forth in
the following table. Unless otherwise indicated, the address of each named      
beneficial owner or executive officer is c/o Datameg Corp., 9 West Broadway,    
Boston, MA 02127.                                                               

Name and Address of             Amount and Nature of            Percentage      
Beneficial Owner (1)            Beneficial Ownership            of Class (2)    
--------------------            ------------------------        ----------      
Andrew Benson                        24,831,006(3)                 10.21%       

La Jolla Cove Investors, Inc.                                                   
7817 Hersphel Ave., Suite 200,                                                  
La Jolla, CA 92037                   11,480,142(4)                  4.72%       

Dan Ference                           9,260,000(5)                  3.81%       

(1)  We believe that all persons named in the table have sole voting and        
investment power with respect to all shares of common stock beneficially owned  
by them. For purposes hereof, a person is considered to be the beneficial owner 
of securities that can be acquired by such person within 60 days after August   
30, 2004 upon the exercise of warrants or options or the conversion of          
convertible securities.                                                         

(2)  Each beneficial owner's, director's or executive officer's percentage      
ownership is determined by assuming that any warrants, options or convertible   
securities that are held by such person (but not those held by any other person)
and which are exercisable within 60 days after August 30, 2004 have been        
exercised.                                                                      

(3)  Including 5,000,000 shares of our common stock that Mr. Benson the right to
acquire through the exercise of fully vested stock options.                     

(4)  In July 2004, La Jolla Cove Investors, Inc. entered into a non-binding     
agreement to loan us $250,000 in the form of a convertible debenture,           
convertible into shares of our common stock at conversion price per share of    
approximately 75% of the volume weighted average prices of our stock in the     
prior 10 trading days prior to the conversion.                                  

(5)  Including 5,500,000 shares of our common stock that Mr. Ference has the    
right to acquire through the exercise of fully vested stock options.            

PROPOSAL ONE

APPROVAL OF REINCORPORATION IN DELAWARE 

General                                                                         

The Board of Directors has approved a proposal to change the Company's state of 
incorporation from New York to Delaware, subject to shareholder approval.  The  
Reincorporation will be effected by merging the Company with and into Datameg   
Corp., a Delaware corporation ("Datameg DE"), formed by the Company for the     
purpose of the Reincorporation, in accordance with the terms of an Agreement and
Plan of Merger (the "Merger Agreement").  A copy of the form of Merger Agreement
is attached to this Stockholder Solicitation as Exhibit A, and statements herein
regarding such Agreement are qualified by reference to the complete Merger      
Agreement.                                                                      

Upon the effective date of the Reincorporation, each outstanding share of the   
Company's Common Stock will automatically become one share of the Common Stock  
of Datameg DE (the "New Datameg Stock").  The Company will cease to exist as a  
New York corporation, and Datameg DE will be the continuing or surviving        
corporation of the Reincorporation.  Thus, Datameg DE will succeed to all of the
business and operations, own all of the assets and other properties and assume  
and become responsible for all of the liabilities and obligations of the        
Company.  The Reincorporation, therefore, will not involve any change in the    
business, properties or management of the Company. The name of the surviving    
company will be Datameg Corp.  The persons serving as officers and directors of 
the Company will serve as the officers and directors of Datameg Corp. after the 
Reincorporation.                                                                

Purpose of Merger and Reincorporation                                           

The purpose of the Reincorporation is to change the state of incorporation and  
legal domicile of the Company from New York to Delaware.  The Board of Directors
believes that this change in domicile would be in the best interests of the     
Company and its shareholders.  The Company was incorporated in New York in 1982.
Delaware has long been a leading state in adopting, construing and implementing 
comprehensive and flexible corporate laws that respond to the legal and business
needs of corporations.  As a result, the Delaware General Corporation Law (the  
"DGCL") is widely regarded to be one of the best-defined bodies of corporate law
in the United States.  The Delaware legislature is particularly sensitive to    
corporate law issues, and Delaware courts have developed considerable expertise 
in construing Delaware's corporate law.  Accordingly, the Board of Directors    
believes that the DGCL would provide greater predictability in the Company's    
legal affairs than is currently available under New York law.                   

The interests of the Company's Board of Directors, management and affiliated    
shareholders in voting on the Reincorporation proposal may not be the same as   
those of unaffiliated shareholders.  The DGCL does not afford minority          
shareholders some of the rights and protections available under New York law.  A
discussion of the principal differences between New York and Delaware law as    
they affect shareholders is set forth below in the section entitled "Significant
Changes Caused by the Reincorporation."                                         

Authorized Shares of Stock                                                      

The Company's Certificate of Incorporation, as amended, authorizes 340,000,000  
shares of Common Stock, and 10,000,000 shares of Preferred Stock, par value     
$0.01 per share, of which 243,236,084 shares of Common Stock are issued and     
outstanding as of the Record Date.  Similarly, Datameg DE's Certificate of      
Incorporation authorizes 340,000,000 shares of Common Stock and 10,000,000 of   
Preferred Stock, par value $0.01 per share.  No shares of any capital stock will
be issued by Datameg DE in connection with the reincorporation, other than the  
shares of Datameg DE Common Stock to be issued for the Company's outstanding    
Common Stock.                                                                   

Furthermore, the Company will grant options in exchange for any options then    
outstanding for the purchase of the Company's Common Stock.                     

The state of Delaware imposes a franchise tax on corporations in connection with
the issuance of authorized shares.  There are two methods by which Delaware     
computes its franchise tax, the authorized share method, and the assumed par    
value capital method.  Under the authorized share method, the franchise tax on  
Datameg would be $165,000, the maximum amount allowed under the law.  The       
Company is unable to precisely determine its franchise tax obligation under the 
assumed par value capital method, but the Company believes that its franchise   
tax under the assumed par value capital method will be substantially less than  
the $165,000.  Nonetheless, the Company's Delaware franchise tax will increase  
as the Company's assets grow.                                                   

Conversion of Stock                                                             

Assuming shareholder approval of the Reincorporation proposal, upon the         
Reincorporation becoming effective, each outstanding share of the Company's     
Common Stock will automatically convert into and be exchanged for one share of  
Datameg DE Common Stock, and the stockholders of the Company's Common Stock will
automatically become stockholders of Datameg DE Common Stock.                   

In addition, each outstanding option, right or warrant to acquire shares of the 
Company's Common Stock outstanding upon the Reincorporation will be converted   
into an option, right or warrant to acquire the same number of shares of Datameg
DE Common Stock at the same price and at the same terms.                        

From the effective date of the Reincorporation, each Datameg stock certificate  
that was outstanding immediately prior to the Reincorporation will automatically
represent the same number of shares of Datameg DE Common Stock.  Stockholders of
the Company need not exchange their stock certificates for Datameg DE stock     
certificates. Likewise, stockholders should not destroy their old certificates  
and should not send their old certificates to the Company, either before or     
after the effective date of the Reincorporation. Shareholders do not have any   
statutory appraisal rights on the Reincorporation.                              

Transferability of Shares                                                       

Shareholders whose shares of the Company's Common Stock that are freely tradable
before the Reincorporation will own shares of Datameg DE that are freely        
tradable after the Reincorporation. Similarly, any shareholders holding         
securities with transfer restrictions before the Reincorporation will hold      
shares of Datameg DE that have the same transfer restrictions after the         
Reincorporation.  For purposes of computing the holding period under Rule 144 of
the Securities Act, those who hold Datameg DE stock certificates will be deemed 
to have acquired their shares on the date they originally acquired their Company
Common Stock.                                                                   

After the Reincorporation, Datameg DE will continue to be a publicly held       
company and, like the Company's shares, shares of Datameg DE will be quoted on  
the OTC Bulletin Board, under the same trading symbol and CUSIP number.  Datameg
DE will also file with the SEC and provide to its stockholders the same types of
information that the Company has previously filed and provided.                 

Certain Federal Income Tax Consequences of the Reincorporation                  

The discussion of U.S. federal income tax consequences set forth below is for   
general information only and does not purport to be a complete discussion or    
analysis of all potential tax consequences that may apply to a shareholder.     
Shareholders are urged to consult their tax advisors to determine the particular
tax consequences of the Reincorporation, including the applicability and effect 
of federal, state, local, foreign and other tax laws.                           

The following discussion sets forth the principal U.S. federal income tax       
consequences of the Reincorporation to the Company shareholders who hold their  
shares as a capital asset. It does not address all of the federal income tax    
consequences that may be relevant to a particular shareholder based upon his    
individual circumstances or to shareholders who are subject to special rules,   
such as financial institutions, tax-exempt organizations, insurance companies,  
dealers in securities, foreign holders or holders who acquired their shares     
pursuant to the exercise of employee stock options or otherwise as compensation.

The following disclosure is based on the Internal Revenue Code, Treasury        
Regulations, rulings and decisions in effect as of the date of this Stockholder 
Solicitation, all of which are subject to change, possibly with retroactive     
effect, and to differing interpretations.  The following disclosure does not    
address the tax consequences to our shareholders under state, local and foreign 
laws.  The Company has neither requested nor received a tax opinion from legal  
counsel with respect to the federal income tax consequences of The              
Reincorporation.  No rulings have been or will be requested from the Internal   
Revenue Service as to the federal income tax consequences of the                
Reincorporation.  There can be no assurance that future legislation,            
regulations, administrative rulings or court decisions would not alter the      
consequences set forth below.                                                   

The Reincorporation provided for in the Merger Agreement is intended to be      
treated as a "tax-free" reorganization as described in Section 368(a)(1)(F) of  
the Internal Revenue Code of 1986, as amended. Assuming the Reincorporation     
qualifies as a "tax-free" reorganization, no gain or loss will be recognized to 
the holders of the Company's capital stock as a result of consummation of the   
Reincorporation, and no gain or loss will be recognized by the Company or       
Datameg DE.  The basis of the acquired assets in the hands of Datameg DE will be
the same as the Company's basis in such assets.  Each former holder of the      
Company's Common Stock will have the same basis in the capital stock of Datameg 
DE received by that holder pursuant to the Reincorporation as that holder has in
the Company's Common Stock held by that holder at the time the Reincorporation  
is consummated.  Each shareholder's holding period with respect to Datameg DE   
Common Stock will include the period during which that shareholder held the     
corresponding Company Common Stock, provided the latter was held by such holder 
as a capital asset at the time the Reincorporation was consummated.             

Accounting Treatment                                                            

In accordance with accounting principles generally accepted in the United       
States, the Company expects that the Reincorporation will be accounted for as a 
reorganization of entities under common control and recorded at historical cost.

Regulatory Approvals                                                            

The Reincorporation will not be consummated until after shareholder approval.   
The Company will obtain all required consents of governmental authorities,      
including the filing of a Certificate of Merger with the Secretary of State of  
New York and the filing of a Certificate of Merger with the Secretary of State  
of Delaware.                                                                    

Significant Changes Caused by the Reincorporation                               

The DGCL differs in certain respects from New York law. Although it is not      
practical to compare all the differences between the laws of governing          
corporations in New York and Delaware, the following discussion provides a      
summary of certain material differences which may affect the rights of          
shareholders. The Company's corporate affairs are governed at present by the    
Business Corporation Law of New York (the "New York Law"), by its Certificate of
Incorporation filed in New York (the "New York Certificate") and by the Bylaws  
adopted pursuant to New York Law (the "New York Bylaws").                       

Following the Reincorporation, the Company's corporate affairs will be governed 
by the DGCL, by the Certificate of Incorporation of Datameg DE (the "Delaware   
Certificate") and by the Bylaws of Datameg DE (the "Delaware Bylaws").  A copy  
of the Delaware Certificate is attached hereto as Exhibit B.  A copy of the     
Delaware Bylaws is attached hereto as Exhibit C.  The discussion below regarding
the DGCL and New York Law is current as of the date of this Stockholder         
Solicitation.  There may be changes in either or both the New York Law or the   
DGCL that could affect the analysis below.                                      

Both sets of Certificates of Incorporation and Bylaws are also available for    
inspection during business hours at the Company's principal executive offices.  
In addition, copies may be obtained by writing to the Company at Datameg Corp., 
9 West Broadway, Boston, MA 02127.                                              

Under New York Law, a person who owns stock of the Company is referred to as a  
"shareholder," while under the DGCL, such person is known as a "stockholder."   
Such terms have the same meaning and are used herein interchangeably.           

Action by Written Consent of Shareholders in lieu of a Shareholder Vote.  New   
York Law allows shareholders to act by written consent in lieu of a meeting only
by unanimous written consent of those shareholders who would have been entitled 
to vote on a given action at a meeting, unless the Certificate of Incorporation 
permits that action to be taken by the holders of outstanding shares having at  
least the minimum number of votes required to authorize the action at a meeting 
at which all shares entitled to vote thereon were present and voted.  The New   
York Certificate contains such a provision.  Conversely, the DGCL states that   
unless the Certificate of Incorporation provides otherwise, stockholders may act
by written consent of at least the minimum number of votes required to authorize
that action at a meeting at which all shares entitled to vote thereon were      
present and voted.  The Delaware Certificate expressly permits any action by    
stockholders to be taken by written consent.                                    

Amendment of Certificate of Incorporation.  The DGCL allows a Board of Directors
to recommend that stockholders amend the Certificate of Incorporation, and a    
majority of the shares entitled to vote at a stockholders' meeting are          
sufficient to approve that amendment.  Under New York Law, except for certain   
ministerial changes to the Certificate of Incorporation that the Board of       
Directors may authorize and except as otherwise required by the Certificate of  
Incorporation, the Board of Directors may recommend an amendment to the         
Certificate of Incorporation for approval by shareholders.  A majority of the   
shares entitled to vote at a shareholders' meeting is sufficient to approve that
amendment.                                                                      

Who May Call a Special Meeting of Shareholders.  Under both New York Law and the
DGCL, the Board of Directors or anyone authorized in the Certificate of         
Incorporation or Bylaws may call a special meeting of shareholders.  Currently, 
the New York Bylaws provide that a special meeting can be called only by the    
President or the Board of Directors.  The Delaware Bylaws provide that a meeting
of stockholders may be called only by a majority of the Board of Directors or   
the Chairman of the Board.                                                      

Right of Shareholders to Inspect Shareholder List.  Under New York Law, a       
shareholder of record may inspect the list of shareholders of record at any     
meeting of shareholders upon the request thereat or prior thereto.  Under the   
DGCL, any stockholder may, upon making a demand under oath stating the purpose  
thereof, inspect the stockholders' list for any purpose reasonably related to   
that person's interest as a stockholder. In addition, for at least ten days     
prior to each stockholder's meeting, as well as at the meeting, a Delaware      
corporation must make available for examination a list of stockholders entitled 
to vote at the meeting.                                                         

Vote Required for Certain Transactions.  Until February 1998, New York Law      
required the holders of at least two-thirds of the outstanding stock of a New   
York corporation at a meeting of the stockholders to approve certain mergers,   
consolidations or sales of all or substantially all the corporation's assets    
that may occur outside the ordinary course of business.  Since February 1998, a 
New York corporation then in existence, which would include the Company, may    
provide in its Certificate of Incorporation that the holders of a majority of   
the outstanding stock may approve such transactions.  The Company adopted such a
provision in its Certificate of Incorporation, and so the holders of a majority 
of the Company's outstanding stock must approve such transactions.              

Under the DGCL, unless the Certificate of Incorporation or Bylaws provide       
otherwise, the holders of a majority of the outstanding stock entitled to vote  
on such transactions have the power to approve a merger, consolidation, or sale 
of all or substantially all the assets.  Notwithstanding the foregoing, under   
the DGCL the vote of the stockholders of the surviving corporation is not       
required to authorize a merger unless the Certificate of Incorporation states   
otherwise, if these three conditions are met:  (1) the merger agreement does not
amend the surviving corporation's Certificate of Incorporation; (2) each share  
of stock of the surviving corporation that is outstanding or in the treasury    
immediately prior to the effective date of the merger is to be an identical     
outstanding or treasury share of the surviving corporation after the effective  
date; and (3) the merger results in no more than a 20% increase in its          
outstanding common stock.  Special vote requirements may apply to certain       
business combinations with interested shareholders.  See the discussion of these
requirements below under the heading "Business Combinations with Interested     
Shareholders."                                                                  

Limitations of Directors' Liability.  Both New York Law and the DGCL permit a   
corporation to limit a director's personal liability for actions taken in that  
director's official capacity. Under New York Law, a director is not liable to   
the corporation for the benefit of its creditors or shareholders for damages if 
the director has acted in good faith and with the same degree of care that an   
ordinarily prudent person would exercise in similar circumstances.  New York Law
also permits a corporation to include in its Certificate of Incorporation a     
provision eliminating or limiting the personal liability of a director, with    
certain specific exceptions, to the corporation or its shareholders for damages 
for any breach of duty in that capacity. The New York Certificate contains such 
a provision.  Under the DGCL, limits on a director's liability must be addressed
in the Certificate of Incorporation.  The Delaware Certificate limits directors'
monetary liability to the fullest extent permitted by the DGCL.  However, in    
some cases directors may be liable despite these limitations.  The DGCL forbids 
any limitation of liability where (1) a director breached the duty of loyalty to
the corporation or its stockholders, (2) a director's acts or omissions were not
in good faith or involved intentional misconduct or a knowing violation of law, 
(3) a director received an improper personal benefit from a transaction         
involving the corporation, or (4) a director authorized an unlawful dividend or 
stock repurchase or redemption.                                                 

Indemnification of Directors and Officers.  With some variations, both New York 
Law and the DGCL allow a corporation to "indemnify," that is, to make whole, any
person who is or was a director or officer of the corporation if that person is 
held liable or incurs costs for something that person did or failed to do in an 
official capacity. Additionally, each of the two laws permits a corporation to  
purchase insurance for its directors and officers against some or all of the    
costs of such indemnification or against liabilities arising from actions and   
omissions of the insured person, even though the corporation may not have power 
to indemnify the person against such liabilities.  New York Law, however,       
restricts the types of claims that may be made under insurance purchased by the 
corporation against these liabilities and restricts what costs may be covered by
insurance.  For example, there would be no insurance coverage if the person to  
be indemnified was guilty of deliberate dishonesty and that dishonesty was      
material to the event that produced the claim, or if the person gained some     
financial profit or other advantage to which he or she was not legally entitled.
If the Reincorporation is approved by the Company's shareholders, the New York  
Law indemnification provisions will continue to apply to acts and omissions that
occurred prior to the effective date of the Reincorporation.                    

Transactions with Interested Directors.  Both the DGCL and New York Law provide 
several methods for establishing the validity of transactions between a         
corporation and interested directors, including a vote by the uninterested      
directors or the shareholders, if the material facts as to the director's       
interest are disclosed in good faith to the Board of Directors or shareholders, 
respectively.  However, the DGCL also provides that a contract between a        
director and the corporation may be valid if it is fair to the corporation as of
the time it is authorized by the Board or shareholders, even if the interested  
director's votes are counted.                                                   

Appraisal Rights. Generally, "appraisal rights" entitle dissenting shareholders 
to receive the fair value of their shares in a merger or consolidation of a     
corporation or in a sale of all or substantially all its assets.  New York Law  
also extends appraisal rights to an exchange of a corporation's shares.  New    
York Law provides that dissenting shareholders have no appraisal rights if their
shares are listed on a national securities exchange.  However, our Common Stock 
trades on the OTC BB which is not a national securities exchange.  In the case  
of shares not listed on an exchange, appraisal rights under New York Law allow a
voting and dissenting shareholder of a New York corporation, with various       
exceptions, to receive fair value for its shares in such transactions.  One     
exception is a merger between a parent corporation and its subsidiary when the  
parent owns at least 90% of the subsidiary.  In this case, a shareholder of the 
parent corporation has no appraisal rights.  When appraisal rights are          
available, the shareholder may have to request the appraisal and follow other   
required procedures.                                                            

Similarly, under the DGCL, appraisal rights are not available to a stockholder  
if, among other things, the corporation's shares are listed on a national       
securities exchange, or held by more than 2,000 stockholders of record, or if   
the corporation will be the surviving corporation in a merger that does not     
require the approval of the surviving corporation's stockholders.  As noted     
above, our Common Stock trades on the OTC BB which is not a national securities 
exchange.  Under the DGCL, regardless of the foregoing, a dissenting shareholder
in a merger or consolidation has appraisal rights unless the transaction        
requires the exchange of shares for something other than one or more of the     
following:  (1) shares of stock of the surviving corporation or of a new        
corporation that results from the merger or consolidation; (2) shares of another
corporation that will be listed on a national securities exchange, designated as
a national market system security on an interdealer quotation system by the     
National Association of Securities Dealers, Inc., or held by more than 2,000    
stockholders of record after the merger or consolidation occurs; or (3) cash    
instead of fractional shares of the surviving corporation or another            
corporation.                                                                    

Business Combinations with Interested Shareholders.  Under New York Law, an     
interested shareholder is generally prohibited from entering into certain types 
of business combinations with a New York corporation for a period of five years 
after becoming an "interested shareholder," unless the Board of Directors       
approved either the business combination or the acquisition of stock by the     
interested shareholder before the interested shareholder acquired its shares.   
An "interested shareholder" under New York Law is generally a beneficial owner  
of at least 20% of the corporation's outstanding voting stock or is an affiliate
or associate of a corporation who owned at least 20% of the outstanding stock   
within the preceding five years.  "Business combinations" under New York Law    
include the following: (1) mergers and consolidations with an interested        
shareholder or between corporations where the interested shareholder is an      
affiliate; (2) sales, leases, mortgages, pledges, transfers or other            
dispositions to an interested shareholder of assets with an aggregate market    
value which either equals 10% or more of the corporation's consolidated assets  
or outstanding stock, or represents 10% or more of the consolidated earning     
power or net income of the corporation; (3) issues and transfers to an          
interested shareholder of stock with an aggregate market value of 5% or more of 
the aggregate market value of the outstanding stock of the corporation; (4)     
liquidation or dissolution of the corporation proposed by or in connection with 
an interested shareholder; (5) reclassification or recapitalization of          
securities, merger, consolidation or other transaction with an interested       
shareholder that would increase the proportionate stock ownership of an         
interested shareholder; and (6) the receipt by an interested shareholder of     
benefit from loans, guarantees, pledges or other financial assistance or tax    
benefits provided by the corporation.                                           

The DGCL generally prohibits an interested stockholder from entering into       
certain types of business combinations with a Delaware corporation for three    
years after becoming an interested stockholder unless:  (1) before the          
stockholder became an interested stockholder, the Board of Directors approved   
the business combination or the transaction that resulted in the stockholder    
becoming an interested stockholder; (2) upon consummation of the transaction    
that resulted in the stockholder becoming an interested stockholder, the        
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding, subject to technical calculation rules; or (3) on or after the time
the interested stockholder became an interested stockholder, the Board of       
Directors approved the business combination, and at least two-thirds of the     
outstanding voting stock that is not owned by the interested stockholder also   
ratified the business combination at a stockholders' meeting.                   

An "interested stockholder" under the Delaware Certificate is any person other  
than the corporation and its majority-owned subsidiaries who owns directly or   
indirectly at least 10% of the outstanding voting stock or is an affiliate or   
associate of the corporation who owned directly or indirectly at least 10% of   
the outstanding stock within the preceding two years, and this definition       
includes affiliates of the corporation.  Business combinations under the DGCL   
include:  (1) mergers or consolidations; (2) sales, leases, exchanges,          
mortgages, pledges, transfers or other dispositions of 10% or more of the       
aggregate market value of all assets of the corporation or outstanding stock of 
the corporation; (3) any transactions resulting in the issuance or transfer by  
the corporation of securities in the corporation to the interested stockholder  
except in limited instances; (4) adoption of any plan or proposal for the       
liquidation or dissolution of the corporation proposed by or on the behalf of an
interested stockholder; and (5) any other transaction, with certain exceptions, 
that increases the proportionate share of the stock owned by the interested     
stockholder.                                                                    

Proxies.  Under New York Law, a proxy cannot be voted or acted upon after 11    
months from its date unless the proxy provides for a longer period.  Under the  
DGCL a proxy cannot be voted or acted upon after three years from its date      
unless the proxy provides for a longer period.                                  

Nomination of Directors.  Neither the New York Certificate nor the New York     
Bylaws contain provisions regarding the nomination of directors.  The Delaware  
Bylaws provide that nominations of directors may be made at annual meetings of  
stockholders by or at the direction of the Board of Directors, or by any        
stockholder entitled to vote for the election of directors at such annual       
meeting who provides timely notice to the Secretary of the Company.             

Preemptive Rights.  Preemptive rights are the right to purchase shares or other 
securities to be issued by the Company with the purpose of maintaining          
percentage ownership in the corporation.  Under New York Law, shareholders of   
corporations incorporated prior to February 22, 1998 are entitled to preemptive 
rights unless specifically provided otherwise in the Certificate of             
Incorporation.  The New York Certificate specifically provides otherwise.  Under
the DGCL, preemptive rights must be specifically granted to the stockholders in 
the Certificate of Incorporation.  The Delaware Certificate does not grant such 
rights.                                                                         

Removal of Directors by Shareholders.  Under New York Law, directors may be     
removed for cause by the shareholders, or if the certificate of incorporation or
by-laws provide, by either the shareholders or the directors.  Furthermore, if  
the Certificate of Incorporation or Bylaws so provide, directors may be removed 
without cause by a vote of the shareholders.  Under the DGCL, any director or   
the entire board of directors may be removed, with or without cause, by the     
holders of a majority of the shares entitled to vote.                           

Other Changes to Reflect Technical Differences Between Delaware Law and New York
Law.  In addition to the changes described above, certain technical changes have
been made in the Delaware Certificate and Delaware Bylaws from the New York     
Certificate and New York Bylaws to reflect differences between the DGCL and New 
York Law.  Such technical changes include designation of a registered office and
registered agent in the State of Delaware for jurisdiction in certain claims    
against the Company.                                                            

HE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE     
REINCORPORATION.  A VOTE FOR THE REINCORPORATION WILL CONSTITUTE APPROVAL OF THE
MERGER, THE DELAWARE CERTIFICATE AND THE DELAWARE BYLAWS.                       

PROPOSAL TWO

APPROVAL OF AMENDMENT TO BYLAWS 

General                                                                         

We are a New York Corporation that was incorporated in October 1982 as The Viola
Group, Inc.  In August 2000, we exchanged 90% of our Common Stock for 100% of   
the stock of Datameg Corp., a Virginia corporation, that was incorporated in    
January 1999.  We subsequently changed our name to Datameg Corp.  At the time of
the share exchange, we had in place Bylaws that related to the business as it   
was operated prior to such exchange.  A copy of these Bylaws are attached hereto
as Exhibit D.  We never amended these Bylaws to reflect the nature of our       
corporate operations following the share exchange.  We are taking steps now to  
bring our Bylaws into conformity with the way our business actually operates.   
In particular, we are proposing to amend the Bylaws to permit the Company to    
operate with only a single director.                                            

Our Bylaws, as they presently exist, require a board of directors of six        
members.  Further, a majority of all of the directors (and not all of the       
directors then in office) is required in order to take any action.  As indicated
above, we operate with only a single director and have done so since the time of
the share exchange in August, 2000.  We, therefore, are proposing to amend the  
Bylaws so that they conform to the manner in which we have operated our business
and plan to continue to operate our business.                                   

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE    
AMENDMENT TO THE BYLAWS.                                                        

PROPOSAL THREE

APPROVAL OF PROPOSAL TO FIX THE NUMBER OF DIRECTORS OF THE
COMPANY AT ONE AND ELECT ANDREW BENSON AS THE SOLE DIRECTOR OF THE COMPANY

As described under Proposal Two above, we operate with a Board consisting of a  
single director.  Andrew Benson is nominated to serve as the sole director of   
the Company until the next Annual Meeting of Stockholders and until his         
successor or successors are duly elected and qualified.  Mr. Benson is currently
the sole director of the Company.  The following table sets forth certain       
information concerning the nominee for Director and his ownership of Common     
Stock as of August 30, 2004.                                                    

Nominee, Age, Year      Principal Occupation, Other   Number of Shares  Precent 
First Became            Business Experience and       Beneficially        of    
Director                Other Directorships           Owned             Class   
--------------------------------------------------------------------------------
Andrew Benson           Mr. Benson has served as our    24,831,006(1)    10.21% 
Age:  49                President and Sole Director                             
Director since 1999     since January 1999. Mr. Benson                          
was formally the President and  
Chief Executive Officer of      
Video Sentry Corporation, a     
business that developed and     
manufactured the SentryVision   
CCTV system.  Video Sentry      
Corporation was incorporated    
in 1990, introduced its line    
of SentryVision systems into    
the marketplace in 1992, and    
went public in October 1994.    

Video Sentry Corporation was    
merged with Knogo North America 
in February 1997, forming a new 
corporation named Sentry        
  Technology Corporation. Mr. Benson
worked with Sentry Technology   
Corporation as a consultant     
from February 1997 through      
December 1998.  In 1998, Mr.    
Benson joined Georgetown        
Ventures LLC, which funded      
our formation in January 1999.  

(1) Including 5,000,000 shares of our common stock that Mr. Benson has the right
to acquire through the exercise of fully vested stock options.                  

Board of Directors and Corporate Governance                                     

Our Board of Directors, consisting of a single director, oversees the activities
of our management and the handling of the business and affairs of our Company.  
As part of the Board's oversight responsibility, it will monitor developments in
the area of corporate governance including new SEC requirements, and            
periodically review and amend, as appropriate, our governance policies and      
procedures.                                                                     

During the Company's fiscal year ended December 31, 2003, there were no formal  
meetings of the Board of Directors, as it would be impractical to hold a Board  
meeting with only one director.  In addition, during the same period, the Board 
of Directors took a number of actions by written consent in lieu of meeting.    

We have not designated a nominating committee, an audit committee, or any other 
committee performing similar functions.  Our sole director performs the         
functions usually designated to such committees.  Accordingly, we do not have an
audit committee financial expert.  As we generate revenue in the future, we     
intend to revisit the appropriateness of adding additional directors to our     
Board of Directors and appointing appropriate committees.                       

Section 16(a) Beneficial Ownership Reporting Compliance                         

Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange     
Act"), does not apply to us because we do not have any securities registered    
under the Exchange Act.  Rather, we file periodic reports under the Exchange Act
because we have shares of stock registered under the Securities Act of 1933, as 
amended.                                                                        

Compensation of Directors                                                       

We do not currently compensate our sole director for serving on the Board of    
Directors.                                                                      

Communications with Directors                                                   

Stockholders may send written communications to the Board of Directors by       
mailing those communications to the Board at 9 West Broadway, Boston, MA 02127. 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE    
APPROVAL OF THE PROPOSAL TO FIX THE NUMBER OF DIRECTORS OF THE COMPANY AT ONE   
AND ELECT ANDREW BENSON AS THE SOLE DIRECTOR OF THE COMPANY.                    

PROPOSAL FOUR 

RATIFICATION OF RESTATED CERTIFICATE OF AMENDMENT OF THE COMPANY AND SUBSEQUENT 
AMENDMENTS TO SUCH RESTATED CERTIFICATES OF INCORPORATION 

In connection with several moves of the Company's principal executive office    
between August 2000 and March 2004, certain records of the proceedings of       
stockholders and directors of the Company and other corporate records have been 
lost and have not been located despite diligent search.  In addition, certain   
corporate actions may not have been appropriately approved the stockholders and 
directors of the Company.  Therefore, we desire to ratify and confirm certain of
the material corporate actions taken from and since the share exchange in       
August, 2000.  We are therefore proposing that the Restated Certificate of      
Incorporation of the Company filed on August 4, 2000, (under the Company's prior
name, "The Viola Group, Inc.") and all of the following amendments to such      
Restated Certificate of Incorporation be ratified, confirmed, and approved by   
the stockholders of the Company:                                                

-      Certificate of Amendment filed September 7, 2000 (changing the name of   
the Company to DataMEG Corp.);                                                  

-      Certificate of Amendment filed August 7, 2002 (increasing authorized     
capital stock to 125,000,000 shares of Common Stock and 5,000,000 shares of     
Preferred Stock);                                                               

-      Certificate of Amendment filed December 31, 2002 (increasing authorized  
capital stock to 175,000,000 shares of Common Stock and 10,000,000 shares of    
Preferred Stock); and                                                           

-      Certificate of Amendment filed May 12, 2003 (increasing authorized       
capital stock to 340,000,000 shares of Common Stock and 10,000,000 shares of    
Preferred Stock).                                                               

The Restated Certificate of Incorporation, filed August 4, 2000, and each       
Certificate of Amendment are attached hereto Exhibit E.                         

Among other things, the ratification proposed by us is necessary so that we may 
certify to the SEC, among others, that the Company's outstanding capital stock  
has been properly authorized by the shareholders of the Company.                

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE    
APPROVAL OF THE RATIFICATION OF RESTATED CERTIFICATE OF AMENDMENT OF THE COMPANY
AND SUBSEQUENT AMENDMENTS TO SUCH RESTATED CERTIFICATES OF INCORPORATION.       

By Order of the Board of Directors                              

       /s/ Andrew Benson
      ------------------
   Andrew Benson
         Corporate Secretary

Date: August 31, 2004                                                           

Exhibits                                                                        

Exhibit A - Datameg Reincorporation - Agreement and Plan of Merger              

Exhibit B - Datameg Delaware Certificate of Incorporation                       

Exhibit C - Datameg Delaware Bylaws                                             

Exhibit D - Datameg New York Bylaws                                             

Exhibit E - Datameg New York Restated Certificate of Incorporation, filed August
4, 2000, as amended September 7, 2000, August 7, 2002, December 31, 2002 and May
12, 2003                                                                        

(Exhibit E is filed as Exhibits 3.11 and 3.13 to 3.16 to Datameg's registration 
statement on Form SB-2 filed with the SEC on August 6, 2003).                   

WRITTEN CONSENT OF STOCKHOLDERS OF DATAMEG CORP.                                

The undersigned stockholder of record of Datameg Corp. (the "Company") as of    
August 30, 2004 hereby consents, pursuant to Section 615 of the New York        
Business Corporation Law, with respect to all shares of capital stock of the    
Company held by the undersigned, to the following actions without a meeting.    

1.      Proposal to approve a change in the state of incorporation of the       
Company from New York to Delaware.                                              

   / / CONSENT/FOR      / / CONSENT WITHHELD/AGAINST       / / ABSTAIN

2.      Proposal to amend the Bylaws of the Company to replace Article IV,      
Section 1 in its entirety with the following:                                   

The business, property, and affairs of the Corporation shall be managed under   
the direction of a Board of one or more directors; provided, however, that the  
Board, by resolution adopted by vote of a majority of the then authorized number
of directors, may increase or decrease the number of directors.  The directors  
shall be elected by the holders of shares entitled to vote thereon at the annual
meeting of shareholders, and each shall serve (subject to the provisions of     
Article IV, Section 8 below) until the next succeeding annual meeting of        
stockholders and until his respective successor has been elected and qualified. 

   / / CONSENT/FOR      / / CONSENT WITHHELD/AGAINST       / / ABSTAIN

3.      Proposal to fix the number of directors of the Company at one (1) and to
elect Andrew Benson as the sole director of the Company, to serve until the next
annual meeting of stockholders of the Company and until his successor(s) is duly
elected and qualified.                                                          

   / / CONSENT/FOR      / / CONSENT WITHHELD/AGAINST       / / ABSTAIN

4.      Proposal to ratify, confirm and approve, in all respects, the Restated  
Certificate of Incorporation of the Company filed on August 4, 2000 (under the  
Company's prior name, "The Viola Group, Inc.") and all of the following         
amendments to such Restated Certificate of Incorporation:                       

-      Certificate of Amendment filed September 7, 2000 (changing the name of   
the Company to DataMEG Corp.);                                                  

-      Certificate of Amendment filed August 7, 2002 (increasing authorized     
capital to 125,000,000 shares of common stock and 5,000,000 shares of preferred 
stock);                                                                         

-      Certificate of Amendment filed December 31, 2002 (increasing authorized  
capital to 175,000,000 shares of common stock and 10,000,000 shares of preferred
stock); and                                                                     

-      Certificate of Amendment filed May 12, 2003 (increasing authorized       
capital to 340,000,000 shares of common stock and 10,000,000 shares of preferred
stock).                                                                         
   / / CONSENT/FOR      / / CONSENT WITHHELD/AGAINST       / / ABSTAIN

INSTRUCTIONS: TO CONSENT, WITHHOLD CONSENT OR ABSTAIN FROM CONSENTING TO THE    
APPROVAL OF EACH PROPOSED AMENDMENT, PLEASE CHECK THE APPROPRIATE BOX ABOVE. IF 
NO BOX IS MARKED ABOVE WITH RESPECT TO THE PROPOSED AMENDMENT, THE UNDERSIGNED  
WILL BE DEEMED TO HAVE CONSENTED TO THE PROPOSED AMENDMENT.                     

PLEASE DATE, SIGN AND MAIL THIS CONSENT PROMPTLY, USING THE ENCLOSED ENVELOPE.  

Dated: ______________, 2004                                                   

_________________________________                                         
[print name of record stockholder as set                                  
forth on certificate]                                                     

_________________________________                                         
[signature of record stockholder or person                                
authorized to sign on behalf of record                                    
stockholder]                                                              

_________________________________                                         
[Title or authority of authorized person,                                 
if applicable]                                                            

_________________________________                                         
[signature, if held jointly]                                              

If an individual, please sign exactly as the name appears on the certificate    
representing your shares of stock. If a corporation, partnership, trust, limited
liability company or other entity, please identify the entity as the name       
appears on the certificate representing your shares of stock, cause an          
authorized person to sign on behalf of the entity, and clearly identify the     
title of such authorized person. This Written Consent of Stockholders shall vote
all shares to which the signatory is entitled. This Written Consent of          
Stockholders, together with all written consents in substantially the same form,
shall be treated as a single consent of stockholders.                           

Dates Referenced Herein   and   Documents Incorporated By Reference

This 8-K/A Filing		Date		Other Filings
		2/22/98
		8/4/00
		9/7/00
		8/7/02
		12/31/02		10KSB/A, NT 10-K/A, 10KSB
		5/12/03
		8/6/03		SB-2, SC 13G
		12/31/03		10KSB/A, 10KSB, 8-K, NT 10-K
For The Period Ended		8/30/04		8-K
		8/31/04		15-12G, 8-K
		9/1/04
Filed On / Filed As Of		9/7/04
		9/30/04		NT 10-Q, 10QSB/A, 10QSB
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