<PAGE>
Date File: May 22, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 19, 1997.
INTERNET HOLDINGS, INC
(Exact Name of Registrant as Specified in its Charter)
UTAH 0-26886 13-3758042
(State or Other (Commission (Employer
Jurisdiction) File Number) Identification
Number)
C/o The Law Office of Lewis M. Klee, 40 Exchange Place, 8th Floor,
New York, NY 10005
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (212) 271 4366
Page 1 of 6
<PAGE>
Item 1 Changes in Control of Registrant
As a result of the acquisition of Chiron Systems Ltd (CSL) which is described in
Item 2 (below) the registrant has issued a total of 2,640,313 shares to the
shareholders of CSL in order to acquire 100% of the issued capital of CSL. These
shares account for 57% of the current issued share capital of the Registrant.
The shareholders of Chiron as a group have a majority of the shares issued but
no one shareholder controls more than 50%.
The Managing Director of CSL has joined the board of directors of the
Registrant. The existing directors and officers of the Registrant remain on the
board and will continue to serve in the same positions as prior to the
acquisition of CSL.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to beneficial ownership
of Common Stock by (i) each person known by the Registrant to own beneficially
more than five percent (5%) of the outstanding Common Stock of the Registrant,
(ii) each director of the Registrant, and (iii) all directors and officers of
the Registrant as a group. Except as other wise indicated the named person has
sole voting and investment power with respect to such person's shares.
<TABLE>
<CAPTION>
Number of shares
Name Beneficially owned Percent
<S> <C> <C>
Christopher J. Wilkes 100,000 2.2%
Chairman & President
22 Parrotts Field
Hoddesdon
Hertfordshire EN11 OQU, United Kingdom
Lewis M. Klee 50,000 1.1%
Director & Secretary
The Law Office of Lewis M. Klee,
40 Exchange Place, 8th Floor
New York, New York 10004
Ian M. Treddinick 1,473,293 32.1%
Director
Chiron Systems Ltd
Wyvols Court
Swallowfield
Reading, Berkshire RG7 1PY, United Kingdom
Page 2 of 6
<PAGE>
Michael J. Kennedy 506,940 11.1%
Chiron Systems Ltd
Wyvols Court
Swallowfield
Reading, Berkshire RG7 1PY, United Kingdom
Patricia Treddinick 406,608 8.9%
Chiron Systems Ltd
Wyvols Court
Swallowfield
Reading, Berkshire RG7 1PY, United Kingdom
All executive officers and directors
As a group: 1,623,293 35.4%
</TABLE>
Item 2 Acquisition or Disposition of Assets
On May 22, 1997 the company acquired the whole of the issued capital of Chiron
Systems Ltd. (CSL), in exchange for 2,640,313 shares of the Company's common
stock. CSL is an English company, engaged in the business of designing and
developing products for the Integrated Services Digital Network (ISDN) market
place. Chiron was a management buy-out from GEC-Plessey Telecommunications
("GPT") in 1993 and had transferred to it, under the terms of that buy-out,
rights to certain technology developed by GPT which had a development cost in
excess of $6million.
The Registrant is now engaged in the business of providing hardware and software
products and services for the Internet and ISDN markets. ISDN is the
international digital telephony standard that has been adopted worldwide. It
provides two 64kilobit channels for voice and/or data and one 8kilobit signaling
channel. This provides clear digitized speech and high speed error free data
communication. In Europe and Asia in particular telecommunications suppliers are
moving rapidly to introduce ISDN service. The Registrant's wholly owned
subsidiary, CSL, is one of the leading suppliers of ISDN converters and ISDN
termination points (Anatel 4000 range) and also of ISDN "modems" (SAT 100 range)
in Europe. Launched in 1996 these products are already in use by three European
PTTs and have been placed on the bidding list for several more. CSL has other
telephony products ready for market all based around its proprietary ISDN
technology.
General
The Registrant operates its ISDN business through its wholly owned subsidiary
(CSL). CSL was founded in March 1993, as a corporation organized under the laws
of England, with the acquisition of a set of ISDN products and technology from
GEC Plessey Telecommunications Ltd. (GPT). GPT
Page 3 of 6
<PAGE>
is one of the largest telecommunications companies in the world.
Licenses
The Registrant's wholly owned subsidiary CSL has a technology license from GPT
dated January 10, 1994. This license entitles CSL to utilize certain GPT
technology for which CSL pays a royalty for 4 years at 3% of net sales up to a
maximum total payment of $400,000. Thereafter CSL may use the technology without
further payment.
Marketing
ISDN is the new digital technology, which will take over from analogue in terms
of all telecommunications including telephone, facsimile, answerphones etc.
However for the last four years this new technology has been used mainly in
niche applications in certain areas of finance, security and retail. This is now
rapidly expanding with British Telecom alone installing 30,000 circuits per
year. This market is expected to double every 6-10 months.
CSL primarily sells its products to major telecommunications network operators
such as British Telecom, Belgacom and the Netherlands PTT. These companies then
sell the products to end-users. In future CSL may license some of its technology
to obtain access to other world markets.
Employees
As of May 22, 1997 the Registrant had 6 full time employees. In addition the
company operates a subcontract system both for a portion of its research and
development and for all of its manufacturing and physical distribution. Of the
full time employees 2 were executives, 3 were engaged in research and
development or the supervision of research and development sub-contractors or
production subcontractors and 1 clerical worker. None of the employees are
covered by a collective bargaining agreement. The Registrant believes its
employee relations are good.
Properties
CSL's executive offices are in Reading, England located in leased space of
approximately 2,000 square feet in a multi-tenant office building. The lease is
renewable annually with the consent of both parties and commenced in 1993. The
current monthly rental pursuant to the lease is $2,800.
On May 19, 1997 the Registrant acquired from W.F. Clarke Ltd office, factory and
warehouse premises in Accra, Ghana. These are held under the Ghanaian system of
leasehold title and are wholly owned by the Registrant. The Registrant purchased
these premises, together with various items of equipment for $2.25million. The
premises and equipment have an appraised value of $2.5million. The majority of
the space in Accra is leased to the former owners of the property W.F. Clarke
Ltd. The Registrant and W.F. Clarke have signed an agreement to form a joint
venture to exploit Internet services in West Africa.
Page 4 of 6
<PAGE>
Item 9 Sales of Equity Pursuant to Regulation S
Simultaneously with the acquisition of CSL on May, 22 1997 the company raised
$2,522,689 through the issue of Common Stock.
Purpose of Funding
The purpose of this funding is to enable the Registrant to purchase property and
assets in Accra, Ghana to facilitate the expansion of the Registrant's joint
venture into Internet and related services in Africa. The funding will also be
used to expand CSL and to position the Registrant to acquire other compatible
companies with products or services related to the Internet and ISDN.
Terms of the share issue
The 1,483,935 shares were issued at $1.70 per share. After deducting placing
commission of 5% and costs the net proceeds realized by the Registrant was
$2,375,000.
Class of Investors
The subscribers to the share issue are corporations or individuals who are
Accredited Investors and who are not US Persons as defined by the Securities
Acts 1933 and 1934.
Exemption from Registration
The offering is exempt from Registration under Section 4(2) of the Securities
Act of 1933, as the issue of the securities did not involve a public offering.
The offering is exempt from Registration under the Regulation S exemption
governing the sale of securities to individuals or entities who are not US
Persons as defined by the Securities Act of 1933.
Item 7 Financial Statements, Pro-Forma Financial Information and Exhibits
Financial Statements
Financial Statements for the Registrant as of December 31, 1996 were filed by
the Registrant in its Form 10-KSB filed May 20, 1997, for the period January 1,
1996 to December 31, 1996 and are incorporated herein by reference.
Audited Financial Statements for CSL for the nine months ended December 31, 1996
are attached.
Page 5 of 6
<PAGE>
Unaudited Pro-Forma Group Financial Statements showing the group after the
acquisition of CSL and following the acquisition of the property in Accra is
attached restated for the year to December 31, 1996.
Exhibits
2. Agreement and Plan of Reorganization dated May 22, 1996
2.1 Agreement for Sale of Certain Assets and equipment dated May 19, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Dated this ___22nd _____ day of May, 1997
Internet Holdings, Inc.
(The Registrant)
By: /S Christopher Wilkes
Christopher J. Wilkes
President
<PAGE>
INTERNET HOLDINGS, INC.
PPRO-FORMA FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
UNAUDITED
<PAGE>
INTERNET HOLDINGS, INC.
PRO-FORMA GROUP CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
December 31
1996
(Unaudited)
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 125,551
Accounts Receivable 102,741
Stock 160,776
------------------
Total Current Assets $ 389,068
------------------
FIXED ASSETS 2,296,317
INTANGIBLE ASSETS 647,717
==================
$ 3,333,102
==================
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank Overdraft $ 99,535
Taxes payable 7,333
Accounts payable 157,083
Other liabilities 269,048
------------------
Total current liabilities 532,999
------------------
Long term loans due after one year 412,500
------------------
Total liabilities 945,499
------------------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 50,000,000 shares
authorized, 4,336,481 shares issued and outstanding 4,336
Additional paid-in capital 5,651,481
Accumulated deficit (3,268,214)
------------------
Total stockholders' Equity 2,387,603
------------------
$ 3,333,102
==================
</TABLE>
The accompanying notes to financial statements are an
integral part of this statement.
F-1
<PAGE>
INTERNET HOLDINGS, INC.
PRO-FORMA STATEMENT OF GROUP OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1996
-----------------
<S> <C>
NET SALES AND REVENUES $ 860,018
COST OF SALES 583,630
-----------------
Gross Profit from Continuing Operations 276,388
SELLING OPERATING AND ADMINISTRATIVE
EXPENSES 224,332
-----------------
Profit before provision for income taxes 52,056
PROVISION FOR INCOME TAXES -
-----------------
Net Profit from continuing operations 52,056
-----------------
LOSS FROM DISCONTINUED OPERATIONS (161,241)
-----------------
Net Profit $ (109,185)
=================
PER SHARE DATA:
Profit from continuing operations $ 0.01
=================
Loss from discontinued operations $ (0.04)
=================
Net loss $ (0.03)
=================
Weighted average number of common
shares outstanding 4,336,481
=================
</TABLE>
The accompanying notes to financial statements are
an integral part of these statements.
F-2
<PAGE>
INTERNET HOLDINGS, INC.
NOTES TO PRO-FFORMA UNAUDITED FINANCIAL STATEMENTS
(1) Business and organization
Internet Holdings, Inc. (the "Company") was originally incorporated in
the State of Utah on July 22, 1977, under the name of Western Corn Dog
Factories. On May 22, 1997 the company acquired the whole of the issued
capital of Chiron Systems Ltd. (CSL), in exchange for 2,640,313 shares
of the Company's common stock. CSL is an English company, engaged in
the business of designing and developing products for the Integrated
Services Digital Network (ISDN) market place. Chiron was a management
buy-out from GEC-Plessey Telecommunications ("GPT") in 1993 and had
transferred to it, under the terms of that buy-out, rights to certain
technology developed by GPT which had a development cost in excess of
$6million.
The Company is now engaged in the business of providing hardware and
software products and services for the Internet and ISDN markets. ISDN
is the international digital telephony standard that has been adopted
worldwide. It provides two 64kilobit channels for voice and/or data and
one 8kilobit signaling channel. This provides clear digitized speech
and high speed error free data communication. In Europe and Asia in
particular telecommunications suppliers are moving rapidly to introduce
ISDN service. The Registrant's wholly owned subsidiary, CSL, is one of
the leading suppliers of ISDN converters and ISDN termination points
(Anatel 4000 range) and also of ISDN "modems" (SAT 100 range) in
Europe. Launched in 1996 these products are already in use by three
European PTTs and have been placed on the bidding list for several
more. CSL has other telephony products ready for market all based
around its proprietary ISDN technology.
On May 19, 1997 the Company entered into an agreement whereby it
acquired office and factory premises in Accra, Ghana and formed a joint
venture with W.F. Clarke (Ghana) Ltd. to exploit Internet products and
services in West Africa.
The Company has had a series of mergers with other companies, all
accounted for as reverse acquisitions, with the Company in each case
changing its name to that of or similar to the reverse acquirer. In
this regard, the Company's previous names were: Resources West, Inc.,
Magma Resources, Inc., Cellular Telecommunications & Technologies, Inc.
in 1993 and most recently China Biomedical Group, Inc. in 1995.
The name Internet Holdings, Inc. was adopted on July 12, 1996.
In 1993, the Company acquired Cellular Payphones, Inc., ("CPI"), (a
Delaware Corporation), whereby all of the issued and outstanding shares
of CPI were exchanged for approximately 90% of the issued and
outstanding stock of the Company. This transaction was accounted for as
a reverse acquisition purchase, in which CPI was the acquiring
corporation, and the Company was the acquired corporation. The Company
accounted for this transaction as a recapitalization of CPI, with the
issuance of 2,625,000 shares of
F-3
<PAGE>
common stock for the net assets of the Company. Following the 1993
acquisition, the Company was engaged in the business of (i)
installation and servicing of cellular credit-card pay telephones in
taxicabs, radio-cabs, limousines, rental cars, trains, ferries, hotels,
and business conference centers, and (ii) the data processing and
development of streamline software specializing in credit card
authorization processing with real-time billing functions. The Company
ceased such operations in October 1994 due to substantial losses.
Effective April 3, 1995, the Company acquired C.B. Marketing and
Investment Limited, a privately-held English corporation engaged in the
business of medical market research and the manufacture of
pharmaceuticals and contraceptives in the Peoples' Republic of China.
On April 22, 1996, the Company entered into a divestiture agreement
with respect to C.B. Marketing and Investment Limited. During 1996, the
Company was reorganized to invest in internet and ISDN ("International
Standard Digital Network") related technologies.
(2) Summary of significant accounting policies:
Revenue and cost recognition -
Revenues are generally recognized as earned and expenses are recognized
when incurred under the accrual basis of accounting.
Net profit/loss per share -
Net profit and loss per share was computed by dividing net profit or
loss by the number of common shares issued and outstanding following
the Company's acquisition of CSL.
Income taxes -
The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes", to account for deferred income
taxes. Deferred taxes are computed based on the tax liability or
benefit in future years of the reversal of temporary differences in the
recognition of income or deduction of expenses between financial and
tax reporting purposes. The net difference, if any, between the
provision for taxes and taxes currently payable is reflected in the
balance sheet as deferred taxes. Deferred tax assets and/or
liabilities, if any, are classified as current and noncurrent based on
the classification of the related asset or liability for financial
reporting purposes, or based on the expected reversal date for deferred
taxes that are not related to an asset or liability.
(3) Discontinued operations
On April 22, 1996, the Company's stockholders approved a divestiture
agreement whereby the Company delivered to certain stockholders who had
previously owned C.B. Marketing and Investment Limited (the
"Subsidiary") all the outstanding shares in this
F-4
<PAGE>
corporation. In return, the C.B. Marketing and Investment Limited
shareholders transferred to the Company 540,006 shares (2,700,000
shares pre-reverse split) of the Company's common stock. The operating
results for the Subsidiary have been reflected as a loss from
discontinued operations for all periods presented. (See Note 5).
(5) Stockholders' equity
On February 8, 1995, a Special Meeting of the Company's stockholders
was held and the Company's stockholders approved, among other
proposals, a proposal to effect a 1-for-2 reverse stock split of the
issued and outstanding shares of the Company's common stock. The
reverse split was effective March 28, 1995. As a result of the reverse
split and after adjustments for fractional shares, the number of shares
was reduced from 3,527,769 to 1,764,343. The reverse split did not
affect the number of shares of the Company's common stock authorized.
On April 3, 1995, the Company acquired C.B. Marketing and Investment
Limited, a privately-held English corporation in a stock-for-stock
exchange. As a result of such transaction, which has been accounted for
under the "pooling of interests" method for business combinations, the
Company issued 2,700,000 shares of its authorized but unissued shares
of common stock to the shareholders of C.B. Marketing and Investment
Limited.
In August 1995, the Company sold pursuant to a private placement under
Regulation D Rule 504, 84,000 shares of common stock for proceeds of
$270,000. The proceeds are net of $30,000 in sales commission.
Also in August 1995, the Company issued 12,000 common shares in
settlement of certain obligations.
In December 1995, the Company issued 1,000,000 shares of common stock
under Regulation S in satisfaction of two convertible loan notes held
by offshore investors.
On January 27, 1996, the Board of Directors approved a 1-for-5 reverse
stock split of the issued and outstanding shares of the Company's
common stock.
On April 22, 1996, the Company's stockholders approved a divestiture
agreement whereby the Company delivered to certain stockholders who had
previously owned C.B. Marketing and Investment Limited all the
outstanding shares in this corporation. In return, the C.B. Marketing
and Investment Limited shareholders transferred to the Company 540,006
shares (2,700,000 shares pre-reverse split) of the Company's common
stock. Such shares were immediately canceled.
On April 25, 1996, the Board of Directors approved the issuance of
59,000 shares of the Company's common stock in satisfaction of
obligations in the amount of $118,000.
F-5
<PAGE>
On July 3, 1996, the Board of Directors approved the issuance of
1,066,000 shares of the Company's common stock in satisfaction of
obligations in the amount of $266,500.
On May 22, 1997, the Company acquired Chiron Systems Ltd, a
privately-held English corporation in a stock-for-stock exchange. As a
result of such transaction, which has been accounted for under the
"pooling of interests" method for business combinations, the Company
issued 2,640,313 shares of its authorized but unissued shares of common
stock to the shareholders of Chiron Systems Ltd.
On May 22, 1997, the Company issued 1,483,935 shares were issued at
$1.70 per share. After deducting placing commission of 5% and costs the
net proceeds realized by the Registrant was $2,375,000.
(6) Income taxes
The Company has net operating loss carryforwards to offset future
taxable income. As it is not more likely than not that the resulting
deferred tax benefits will be realized, a valuation allowance has been
recognized for such deferred tax assets.
(7) Commitments and contingencies
The Company has not filed federal nor state income tax returns for the
past several years, and is currently working with the Internal Revenue
Service and state taxing authorities to ensure filings of all requisite
returns are made as soon as possible. In management's opinion, there
are no material liabilities as a result of the delay in filing these
returns.
F-6
<PAGE>
1
AGREEMENT AND PLAN OF REORGANIZATION
May 22nd 1997
INTERNET HOLDINGS, INC.
A Utah Corporation
ACQUISITION OF
CHIRON SYSTEMS LTD
A UK Limited Company
<PAGE>
2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
. RECITALS:.......................................................................................................3
. AGREEMENT.......................................................................................................3
.1. PLAN OF REORGANIZATION....................................................................................3
.2. EXCHANGE OF SHARES.........................................................................................3
.3. DELIVERY OF SHARES.........................................................................................4
.4. TERMINATION................................................................................................4
.5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND ACQUIREE................................................6
.6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR................................................................15
.7. CLOSING DATE..............................................................................................19
.8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE AND THE STOCKHOLDERS..................................19
.9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR.......................................................20
.10. INDEMNIFICATION..........................................................................................20
.11. NATURE AND SURVIVAL OF REPRESENTATIONS...................................................................21
.12. DOCUMENTS AT CLOSING.....................................................................................21
.13. ADDITIONAL COVENANTS & UNDERTAKINGS......................................................................22
.14. MISCELLANEOUS............................................................................................24
Exhibit "A" - Stockholders of Acquiror
Exhibit "B" - Consent of Stockholders
Exhibit "C" - Stockholders Certifications
Exhibit "D" - Investment Letters
</TABLE>
<PAGE>
3
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganisation is entered into this 22nd day of May,
1996, by and between Internet Holdings, Inc., a Utah corporation, (hereinafter
"Acquiror") ; Chiron Systems Ltd, a UK Limited Company (hereinafter "Acquiree");
and the persons listed in Exhibit "A" attached hereto and by this reference made
a part hereof, the stockholders of Acquiree (hereinafter "Stockholders").
RECITALS:
WHEREAS, Stockholders own all of the issued and outstanding capital stock of
Acquiree; and
WHEREAS, Acquiror desires to acquire all of the issued and outstanding shares of
capital stock of Acquiree, making Acquiree a wholly-owned subsidiary of
Acquiror; and
WHEREAS, Stockholders desire to make a tax-free exchange of their shares in
Acquiree solely for shares of Acquiror's common stock, par value $0.001 as
described herein; and
NOW, THEREFORE, for the mutual consideration set out herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
(1) PLAN OF REORGANIZATION.
Stockholders of Acquiree are the owners of all of the issued and outstanding
shares of capital stock of Acquiree. It is the intention of the parties hereto
that all of the issued and outstanding shares of capital stock of Acquiree shall
be acquired by Acquiror in exchange solely for Acquiror's voting restricted
common stock. It is the intention of the parties hereto that this transaction
qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and related sections thereunder.
(2) EXCHANGE OF SHARES.
Acquiror and Stockholders agree that all of the issued and outstanding shares of
capital stock of Acquiree will consist, at the Closing Date (the "Closing
Date"), of 52,000 shares of common stock which will be exchanged with Acquiror
for 2,640,313 shares of voting
<PAGE>
4
restricted common stock of Acquiror. The Acquiror shares will as soon as
practicable after the Closing Date, as hereafter defined, be delivered to the
Stockholders in exchange for their shares in Acquiree. Stockholders represent
and warrant that they will hold such shares of common stock of Acquiror for
investment purposes and not for further public distribution and agree that the
shares shall be appropriately restricted.
(3) DELIVERY OF SHARES.
On or before the Closing Date, Stockholders will deliver certificates
representing all of the issued and outstanding shares of Acquiree, duly endorsed
so as to make Acquiror the sole holder thereof, free and clear of all claims and
encumbrances. Such shares of Acquiree will be appropriately restricted as to
transfer. As soon as practicable after the Closing Date, delivery of the
Acquiror shares, which will be appropriately restricted as to transfer, will be
made to the Stockholders as set forth herein. The transaction contemplated
herein shall not close unless all of the issued and outstanding shares of
Acquiree are delivered at the Closing and the owners thereof execute this
Agreement. A list of shares of Acquiree, the owner thereof and shares of
Acquiror to be received by each Stockholder is attached hereto as Exhibit "A".
Each Stockholder herein shall sign Exhibit "B", attached hereto and by this
reference made a part hereof, evidencing his or her intent to be a party to this
Agreement and bound hereby.
(4) TERMINATION
[A] This Agreement may be terminated by action of the Board of Directors of
Acquiror, by the Board of Directors of Acquiree or by the Stockholders
of Acquiree at any time prior to the Closing Date if:
(a) There shall be any actual or threatened action or proceeding
by or before any court or any other governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in the
judgment of such Board of Directors made in good faith and
based upon the advice of legal counsel, makes it inadvisable
to proceed with the transactions contemplated by this
Agreement; or
(b) The Closing shall not have occurred prior to May 22nd, 1997,
or such later date as shall have been approved by parties
hereto, other than for reasons set forth in paragraph B or C
below.
In the event of termination pursuant to this Section 4 [A], no obligation,
right, or liability shall arise hereunder and each party shall bear all of
the expenses incurred by them in connection with the negotiation,
drafting, and execution of this Agreement
<PAGE>
5
and the consummation of the transactions herein contemplated.
[B] This Agreement may be terminated at any time prior to the Closing Date
by action of Acquiror if:
(a) Acquiree or the Stockholders shall fail to comply in any material
respect with any of its or their covenants or agreements
contained in this Agreement or if any of the representations or
warranties of Acquiree or the Stockholders contained herein shall
be inaccurate in any material respect; or
(b) There shall have been any material adverse change after December
31, 1996, in the assets, properties, business, or financial
condition of Acquiree taken as a whole which could have a
materially adverse effect on the value of the business of
Acquiree except any changes disclosed in any exhibits or
schedules attached hereto.
In the event this Agreement is terminated pursuant to this Section 4 (B), this
Agreement shall be of no further force or effect, no obligation, right, or
liability shall arise hereunder, and Acquiree shall bear its own costs as well
as the legal, accounting, printing, and other costs incurred by Acquiror in
connection with the negotiation, preparation, and execution of this Agreement
and the transactions herein contemplated.
[C] This Agreement may be terminated at any time prior to the closing Date
by action of the Board of Directors of Acquiree or by the Stockholders
of Acquiree if:
(a) Acquiror shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Acquiror contained herein
shall be inaccurate in any material respect; or
(b) There shall have been any material adverse change after December
31, 1996, in the assets, properties, business, or financial
condition of Acquiror as a whole which could have a materially
adverse effect on the value of the business of Acquiror taken as
a whole except any changes disclosed in any exhibit or schedule
attached hereto.
In the event this Agreement is terminated pursuant to this Section 4(C) , this
Agreement shall be of no further force or effect; no obligation, right, or
liability shall arise hereunder, and Acquiror shall bear its own costs as well
as the legal, accounting, printing, and other
<PAGE>
6
costs incurred by Acquiree and the Stockholders in connection with negotiation,
preparation, and execution of this Agreement and the transactions herein
contemplated.
[D] This agreement may be terminated by the Acquiror or Acquiree post closing
and for a period of not more than 6 months from the date thereof in the event
that either party fails to perform in accordance with the `budget for financing'
( schedule E ) and such under-performance is not rectified within a period of 8
weeks from receipt of a written notice from one party to the other confirming
the intention to break the agreement due to under-performance. In such cases
monies invested by either party would not be recoverable.
In the event of termination pursuant to this Section 4 (D), no obligation,
right, or liability shall arise hereunder and each party shall bear all of the
expenses incurred by them in connection with the negotiation, drafting, and
execution of this Agreement and the consummation of the transactions herein
contemplated.
(5) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
AND ACQUIREE
[A] The Stockholders and Acquiree hereby represent and warrant that,
effective this date and the Closing Date, the representations and
warranties listed below are true and correct.
(A 1) STOCKHOLDERS OF ACQUIREE. The Stockholders are the
owners of all of the issued and outstanding shares of
the capital stock of Acquiree; such shares are free
from claims, liens, or other encumbrances; and,
subject to compliance with applicable securities
laws, Stockholders have the unqualified right to
sell, transfer, and dispose of such shares subject to
the laws of bankruptcy, insolvency, and general
creditors' rights. Each Stockholder represents and
warrants, that in regard to his, her or its shares of
Acquiree, such Stockholder has the full right and
authority to execute this Agreement and to transfer
his, her or its shares of Acquiree to Acquiror.
(A 2) RESTRICTED SHARES TO BE ISSUED. The Stockholders
understand and are aware that the issuance of
Acquiror shares hereunder is being made without
registration under the Securities Act of 1933, as
amended, (the "Act"), or any state securities laws
and that the shares so issued may not be sold or
transferred without registration under the Act and
under applicable state securities laws, or unless an
exemption from such registration is available. The
Stockholders understand that the investment in the
shares
<PAGE>
7
of Acquiror is speculative and may remain so for an
indefinite period and acknowledge that the
Stockholders are able to bear the economic risk of
their investment in the shares of Acquiror. All
certificates evidencing Acquiror's common stock to be
issued to Stockholders shall bear appropriate
restrictive legends.
[B] The Principal Stockholders of Acquiree (defined for purposes
of this Agreement as all holders of more than 10% or more of
Acquiree's common stock and all officers and directors of
Acquiree) and Acquiree hereby represent and warrant that,
effective this date and the Closing Date, the representations
and warranties listed below are true and correct.
(B1) CORPORATE AUTHORITY. Acquiree has the full corporate
power and authority to enter into this Agreement and
(subject to any requisite approval by the holders of
Acquiree common shares) to carry out the transactions
contemplated by this Agreement. The Board of
Directors of Acquiree has duly authorized the
execution, delivery, and performance of this
Agreement.
(B2) FINANCIAL STATEMENTS. Financial statements of
Acquiree as of December 31, 1996, have been delivered
to Acquiror ("Acquiree Financial Statements"). To the
best knowledge of Acquiree and its Principal
Stockholders, except as set forth in Acquiree's
Schedules, there are no material liabilities, either
fixed or contingent, not reflected in such financial
statements other than contracts or obligations in the
ordinary and usual course of business or, agreements
constituting liens or other liabilities which, if
disclosed, would alter substantially the financial
condition of Acquiree as reflected in such financial
statements.
(B3) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in this Agreement or the Acquiree Schedules
attached hereto, since the date of the Acquiree
Financial Statements, December 31, 1996:
(b.3.a) There has not been (1) any material adverse
change in the business, operations,
properties, assets, or financial condition
of Acquiree taken as a whole; or (2) any
damage, destruction, or loss to Acquiree
(whether or not covered by insurance)
materially and adversely affecting the
business, operations, properties, assets, or
conditions of Acquiree;
<PAGE>
8
(b.3.b) Acquiree has not (1) amended its Articles of
Incorporation or Bylaws; (2) declared or
made, or agreed to declare to make, any
payment of dividends or distributions of any
assets of any kind whatsoever to
Stockholders or purchased or redeemed, or
agreed to purchase or redeem any of their
capital stock; (3) waived any rights of
value which in the aggregate are
extraordinary or material considering the
business of Acquiree; (4) made any material
change in its method of management,
operation, or accounting; (5) entered into
any other material transactions not in the
ordinary course of business except as
otherwise contemplated by this Agreement;
(6) made any accrual or arrangement for or
payment of bonuses or special compensation
of any kind or any severance or termination
pay to any present or former officer or
employee; (7) increased the rate of
compensation payable or to become payable by
it more than 10% to any of its officers or
directors or any of its employees whose
monthly compensation exceeds $4,000; or (8)
made any increase in any profit sharing,
bonus, deferred compensation, insurance,
pension, retirement, or other employee
benefit plan, payment, or arrangement made
to, for, or with its officers, directors, or
employees;
(b.3.c) Acquiree has not (1) granted or agreed to
grant any options, warrants, or other rights
for its stocks, bonds, or other corporate
securities calling for the issuance thereof
except as described in the Schedules
attached hereto; (2) borrowed or agreed to
borrow any funds or incurred, or become
subject to, any material obligation or
liability (absolute or contingent) except
liabilities incurred in the ordinary course
of business; (3) paid any material
obligation or liability (absolute or
contingent) other than current liabilities
reflected in or shown on the balance sheet
contained in the Acquiree Financial
Statement and current liabilities incurred
since that date in the ordinary course of
business; (4) sold or transferred, or agreed
to sell or transfer, any of its assets,
property, or rights (except assets,
property, or rights held as inventory) or
cancelled or agreed to cancel, any valid
debts or claims (except debts or claims
which in the aggregate are of a value of
less than $2,000); (5) made or permitted any
amendment or termination of any contract,
agreement, or license to which it is a party
if
<PAGE>
9
such amendment or termination is material,
considering the business of Acquiree taken
as a whole; or (6) issued, delivered, or
agreed to issue or deliver any stock, bonds,
or other corporate securities including
debentures (whether authorized and unissued
or held as treasury stock); and
(b.3.d) To the best knowledge of Acquiree, it has
not become subject to any law or regulation
which materially and adversely affects, or
in the future may adversely affect, its
business, operations, properties, assets, or
condition.
[C] LITIGATION AND PROCEEDINGS. To the best knowledge of Acquiree and
Principal Stockholders, Acquiree is not
involved in any pending litigation or
governmental investigation or proceeding not
reflected in such financial statements, or
otherwise disclosed in the Acquiree
Schedules and, to the best knowledge of
Acquiree and Principal Stockholders, no
litigation, claims, assessments, or
governmental investigation or proceeding is
threatened against Acquiree, its Principal
Stockholders, or properties.
[D] ORGANIZATION
(d1) As of the Closing Date, Acquiree will be in
good standing in its jurisdiction of
incorporation, and will be in good standing
and duly qualified to do business in each or
any County, Province or, State and
jurisdiction where the failure to qualify
would have a material adverse effect on
Acquiree.
(d2) To the best knowledge of Acquiree and its
Principal Stockholders, Acquiree has
complied with all state, federal, local and
international laws in connection with its
formation, issuance of securities,
capitalization, and operations, and no
contingent liabilities have been threatened
or claims made, and no basis for the same
exists with respect to said operations,
formation, or capitalization, including
claims for violation of any state or federal
securities laws except where any non-
compliance would not materially affect the
business or property of the Acquiree.
<PAGE>
10
[E] COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Acquiree and its Principal
Stockholders represent and warrant that
Acquiree complies with all applicable
federal laws, rules and regulations, all
applicable state laws, rules and regulations
and all local and international laws rules
and regulations relating to the operation of
its business and the sale of Acquiree's
products except to the extent that
non-compliance would not materially and
adversely affect the business, operations,
properties, assets, or condition of Acquiree
or except to the extent that non- compliance
would not result in the incurring of any
material liability for Acquiree.
[F] TAX RETURNS. Acquiree has filed all federal, state,
county, and local income, excise, property,
sales, and other tax returns, forms, or
reports, which are due or required to be
filed by it prior to the date hereof and has
paid or made adequate provisions for the
payment of all taxes, penalty fees, or
assessments which have or may become due
pursuant to such returns or pursuant to any
assessments received.
[G] SUBSIDIARIES. Acquiree has no subsidiaries and does not
own any capital stock, security, partnership
interest, or other interest of any kind in
any corporation, partnership, joint venture,
association, or other entity except as
defined in the attached schedules hereto and
made a part of this Agreement.
[H] NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this Agreement
will not violate or breach any document,
instrument, agreement, contract, or
commitment material to the business of
Acquiree to which Acquiree or its Principal
Stockholders are a party and has been duly
authorised by all appropriate and necessary
action.
[I] CAPITALIZATION. The authorised capital stock of Acquiree
consists of 100,000 shares of common stock (
each(pound)1 shares ), of which 52,000
shares have been validly issued and are now
outstanding. There are no outstanding
convertible securities, warrants, options,
or commitments of any nature which may cause
authorised but un-issued shares to be issued
to any person. All issued and outstanding
shares are legally issued, fully paid, and
non-assessable, and are not issued in
violation of the pre-emptive or
<PAGE>
11
other right of any person.
[J] TITLE AND RELATED MATTERS. Acquiree has good and marketable title to
all of its licenses, copyrights, trademarks,
trade secrets, patents, patents pending,
properties, inventory, interests in
properties, and other assets, real and
personal, ( as defined in Exhibit "F" )
which are reflected in the Acquiree
Financial Statements, or acquired after that
date (except properties, interest in
properties, and assets sold or otherwise
disposed of since such date in the ordinary
course of business), free and clear of all
mortgages, liens, pledges, charges, or
encumbrances except (i) statutory liens or
claims not yet delinquent; (ii) such
imperfections of title and easements as do
not and will not materially detract from or
interfere with the present or proposed use
of the assets or properties subject thereto
or affected thereby or otherwise materially
impair present business operations on such
properties or in connection with such
assets; and (iii) as described in Acquiree
Financial Statements or in the Acquiree
Schedules. Acquiree owns, free and clear of
any liens, claims, encumbrances, royalty
interests (save for the GPT agreement as
referred to in exhibit F) , or other
restrictions or limitations of any nature
whatsoever, any and all procedures,
techniques, business plans, methods of
management, or other information utilised in
the conduct of its business or operations,
whether or not the value thereof is
reflected in the most recent balance sheet
included in the Acquiree Schedules. The
plants, structures, and equipment of
Acquiree that are necessary or used in the
operations of its business are in good
operating condition and repair, normal wear
and tear excepted.
[K] CONTRACTS
(k1) Except as included or described in the
Acquiree Schedules, there are no material
contracts, agreements, franchises, license
agreements, or other commitments to which
Acquiree is a party or by which it or any of
its
<PAGE>
12
properties or assets are bound.
(k2) Subject to the laws of bankruptcy,
receivership, insolvency, general creditor's
rights, and equitable principles, all
contracts, agreements, franchises, license
agreements, and other commitments to which
Acquiree is a party or by which its
properties or assets are bound and which are
material to its operations taken as a whole,
are valid and enforceable in all respects.
(k3) Acquiree is not a party to or bound by, and
the assets of Acquiree are not subject to,
any contract, agreement, other commitment or
instrument; any charter or other corporate
restriction; or any judgment, order, writ,
injunction, or decree which materially and
adversely affects, or in the future may (as
far as Acquiree can now foresee), materially
and adversely affect, the business,
operations, properties, assets, or condition
of Acquiree.
(k4) Except as included or described in the
Acquiree Schedules or reflected in the most
recent Acquiree Financial Statements,
Acquiree is not a party to any oral or
written (a) contract for employment of any
officer or employee which is not terminable
on 30 days (or less) notice; (b) profit
sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit, or
retirement plan, agreement, or arrangement
covered by Title IV of the Employee
Retirement Income Security Act, as amended;
(c) agreement, contract, or indenture
relating to the borrowing of money exceeding
$5,000; (d) guaranty of any obligation,
other than one on which Acquiree is a
primary obligor, for the borrowing of money
or otherwise, excluding endorsements made
for collection and other guarantees of
obligations, which, in the aggregate do not
exceed $5,000; (e) consulting or other
similar contract with an unexpired term of
more than one year or providing for payment
in excess of $60,000 in the aggregate from
the date of agreement; (f) collective
bargaining agreement, (g) agreement with any
present or former officer or director of
Acquiree or its subsidiaries; or (h)
contract, agreement, or other commitment
involving payments by it of more than $1,000
in the aggregate.
<PAGE>
13
[L] MATERIAL CONTRACT DEFAULTS.
To the best knowledge of Acquiree and its
Principal Stockholders, Acquiree is not in
default in any material respect under the
terms of any outstanding contract,
agreement, lease, or other commitment which
is material to the business, operations,
properties, assets, or condition of
Acquiree, and there is no event of default
or other event which, with notice or lapse
of time or both, would constitute a default
in any material respect under any such
contract, agreement, lease, or other
commitment in respect of which Acquiree has
not taken adequate steps to prevent such a
default from occurring.
[M] ACQUIREE SCHEDULES. Acquiree has delivered to Acquiror the
following schedules which are collectively
referred to as the "Acquiree Schedules" and
which consist of separate schedules dated as
of the date of execution of this Agreement
and instruments and data as of such date,
all certified by the chief executive officer
of Acquiree and its Principal Stockholders,
as complete, true, and correct:
(m1) A schedule containing complete and correct
copies of the Articles of Incorporation and
Bylaws of Acquiree in effect as of the date
of this Agreement;
(m2) A schedule including the financial
statements of Acquiree identified in
paragraph 5(B)(2);
(m3) A schedule containing a complete and correct
copy of the stock ledger of Acquiree;
(m4) A schedule containing a description of all
real property owned or leased by Acquiree or
its subsidiaries, together with a
description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance,
claim, or equity interest of any nature
whatsoever in such real property with copies
of the underlying documentation;
(m5) A schedule containing copies of all
promissory notes issued by Acquiree;
(m6) A schedule containing copies of all Warrants
options
<PAGE>
14
entitling holders thereof to acquire shares
of Acquiree;
(m7) Copies of all Registration Rights Agreements
which entitle any person to require Acquiree
to register any shares or other securities
of Acquiree;
(m8) A schedule containing copies of all material
contracts, promissory notes, profit sharing
arrangements, options, warrants, employment
agreements, licenses, agreements, or other
instruments to which Acquiree is a party or
by which it or its properties or assets are
bound;
(m9) A schedule describing all governmental
licenses, permits, and other governmental
authorisations (or requests or applications
therefor) pursuant to which Acquiree carries
on or proposes to carry on its business
(except those which, in the aggregate, are
immaterial to the present or proposed
business of Acquiree);
(m10) A schedule setting forth a description of
any material adverse change in the business,
operations, property, inventory, assets or
liabilities of Acquiree since the date of
the Acquiree Financial Statements; and
(m11) A schedule of all litigation or governmental
investigation or proceeding which is pending
or which, to the best knowledge of
management, is threatened or contemplated.
(m12) A schedule (F) defining all designs,
patents, patents pending and, Intellectual
Property rights
(m13) Copies of contracts of employment for all
staff being retained.
[N] INFORMATION. The information concerning Acquiree set
forth in this Agreement and in the Acquiree
Schedules is complete and accurate in all
material respects and does not contain any
untrue statement of a material fact or omit
to state a material fact required to make
the statements made in light of the
circumstances under which they were made not
misleading.
<PAGE>
15
(6) REPRESENTATIONS AND WARRANTIES OF ACQUIROR.
Acquiror hereby represents and warrants that effective this date and the Closing
Date, the following representations are true and correct:
(1) ISSUANCE OF SHARES. As of the Closing Date, the Acquiror shares
to be delivered to the Stockholders, will
constitute valid and legally issued shares
of Acquiror, fully-paid and non- assessable,
and will be legally equivalent in all
respects to the common stock of Acquiror
issued and outstanding as of the date
hereof.
(2) AUTHORISATION. The officers of Acquiror are duly authorised
to execute this Agreement and have taken all
action required by law and agreements,
charters, Bylaws, etc., to properly and
legally execute this Agreement.
(3) FINANCIAL STATEMENTS. [3a] Acquiror has delivered to Acquiree
financial statements dated as
December 31, 1995, and September 30,
1996. Said financial statements do
fairly and accurately reflect the
financial condition of the Acquiror
as of the date hereof and the
results of operations for the period
reflected therein. Such statements
have been prepared in accordance
with generally accepted accounting
principles, consistently applied.
[3b] The Acquiror will make available
upon actual completion the sum of
not less that US $200,000 for use by
the Acquiree in accordance with
schedule `E' of this Agreement
(4) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this
agreement or the Acquiror Schedules, since December 31, 1996:
(4a) There has not been (a) any material adverse
change in the business, operations,
properties, assets, or financial condition
of Acquiror (whether or not covered by
insurance) materially and adversely
affecting the business, operations,
properties, assets, or conditions of
Acquiror;
(4b) Acquiror has not (a) amended its Articles of
Incorporation or Bylaws; (b) declared or
made, or agreed to declare or make, any
payment of dividends or
<PAGE>
16
distributions of any assets of any kind
whatsoever to stockholders or purchased or
redeemed, or agreed to purchase or redeem
any of its capital stock; (c) waived any
rights or value which in the aggregate are
extraordinary or material considering the
business of Acquiror; (d) made any material
change in its method of management,
operation, or accounting; (e) entered into
any other material transactions; (f) made
any accrual or arrangement for or payment of
bonuses or special compensation of any kind
or any severance or termination pay to any
present or former officer or employee; (g)
increased the rate of compensation payable
or to become payable by it to any of its
officers or directors of any of its
employees; or (h) established or made any
increase in any profit sharing, bonus,
deferred compensation, insurance, pension,
retirement, or other employee benefit plan,
payment, or arrangement made to, for, or
with its officers, directors, or employees;
(4c) Acquiror has not (a) granted or agreed to
grant any options, warrants, or other rights
for its stocks, bonds, or other corporate
securities calling for the issuance thereof;
(b) borrowed or agreed to borrow any funds
or incurred, or become subject to, any
material obligation or liability (absolute
or contingent) except liabilities incurred
in the ordinary course of business; (c) paid
any material obligation or liability
(absolute or contingent) other than current
liabilities reflected in or shown on the
Acquiror balance sheet as of December 31,
1996, and current liabilities incurred since
that date in the ordinary course of
business; (d) sold or transferred, or agreed
to sell or transfer, any of its assets,
property, or rights, (e) made or permitted
any amendment or termination of any
contract, agreement, or license to which it
is a party if such amendment or termination
is material, considering the business of
Acquiror; or (f) issued, delivered, or
agreed to issue or deliver any stock, bonds,
or other corporate securities including
debentures (whether authorised and un-issued
or held as treasury stock) , except for the
agreement to issue certain shares in
connection with the raising of finance under
Regulation `S'.
(4d) To the best knowledge of Acquiror, it has
not become subject to any law or regulation
which materially and
<PAGE>
17
adversely affects, or in the future may
adversely affect, the business, operations,
properties, assets, or condition of
Acquiror.
(4e) There have been no material changes to the
By-laws of the Acquiror since the date of
the last filing.
(5) LITIGATION AND PROCEEDINGS. To the best knowledge of Acquiror it is not
involved in any pending litigation, claims, or governmental
investigation or proceeding not reflected in such financial statements
or otherwise disclosed in the Acquiror Schedules and there are no
lawsuits, claims, assessments, investigations, or similar matters, to
the best knowledge of management, threatened or contemplated against
Acquiror, its management, or properties.
(6) ORGANISATION. As of the Closing Date Acquiror shall be duly organised,
validly existing, and in good standing under the laws of the State of Utah;
it has the corporate power to own its property and to carry on its business
as now being conducted and is duly qualified to do business in any
jurisdiction where the failure to qualify would have a material adverse
effect on Acquiror.
(7) TAX RETURNS. Acquiror has filed all federal, state, county, and local
income, excise, property, and other tax returns, forms, or reports, which
are due or required to be filed by it prior to the date hereof. Acquiror
has paid or made adequate provisions for the payment of all taxes, penalty
fees, or assessments which have or may become due pursuant to such filed
returns or pursuant to any assessments received.
(8) CONTRACTS
(8a) Subject to the laws of bankruptcy,
insolvency, general creditor's rights, and
equitable principles, all contracts,
agreements, franchises, license agreements,
and other commitments to which Acquiror is a
party or by which it or its properties are
bound, and which are material to the
operations of Acquiror, are valid and
enforceable by Acquiror in all respects.
(8b) Acquiror is not a party to any contract,
agreement, commitment, or instrument or
subject to any charter or other corporate
restriction or any judgement, order, writ,
injunction, decree, which materially and
adversely affects, or in the future may (as
far as Acquiror can now foresee) materially
and adversely affect, the business,
operations, properties, assets, or condition
of Acquiror.
(8c) Except as included or referred to in the
Acquiror Schedules or reflected in the
latest Acquiror balance
<PAGE>
18
sheet, Acquiror is not a party to any
material oral or written (a) contract for
the employment of any officer or employee;
(b) profit sharing, bonus, deferred
compensation, stock option, severance pay,
pension, benefit, or retirement plan,
agreement, or arrangement covered by Title
IV of the Employee Retirement Income
Security Act, as amended; (c) agreement,
contract, or indenture relating to the
borrowing of money; (d) guaranty of any
obligation, other than one which Acquiror is
a primary obligor, for the borrowing of
money or otherwise; (e) consulting or other
similar contract; (f) collective bargaining
agreement; or (g) agreement with any present
or former officer or director of Acquiror.
(9) MATERIAL CONTRACT DEFAULTS. To the best of its knowledge, Acquiror has
not materially breached, nor has it any knowledge of any pending or
threatened claims or any legal basis for a claim that Acquiror has
materially breached, any of the terms or conditions of any agreements,
contracts, or commitments to which it is a party or is bound and the
execution and performance hereof will not violate any provisions of
applicable law of any agreement to which Acquiror is subject.
(10) NO CONFLICT WITH OTHER INSTRUMENT. The execution of this Agreement will
not violate or breach any document, instrument, agreement, contract, or
commitment material to the business of Acquiror, to which Acquiror is a
party.
(11) SECURITIES LAWS. Acquiror represents that to the best of its knowledge
it has no existing or threatened liabilities, claims, lawsuits, or
basis for the same with respect to its original stock issuance to its
founders, its public offering, or any dealings with its Stockholders,
the public, brokers, the Securities and Exchange Commission, state
agencies, or other persons
(12) COMPLIANCE WITH LAWS AND REGULATIONS. To the best of its knowledge,
Acquiror has complied with all applicable statutes and regulations of
any federal, state, or other applicable governmental entity or agency
thereof, except to the extent that non-compliance would not materially
and adversely affect the business, operations, properties, assets, or
condition of Acquiror or except to the extent that non-compliance would
not result in the incurring of any material liability.
(13) ACQUIROR SCHEDULES. Acquiror has delivered to Acquiree the following
schedules, which are collectively referred to as the "Acquiror
Schedules", which are dated the date of this Agreement, all certified
by an officer of Acquiror and the officers of Acquiror to be complete,
true, and accurate:
<PAGE>
19
(13a) A schedule containing copies of all
financial statements referred to in
paragraph 6(3.a);
(13b) A schedule setting forth a description of
any material adverse change in the business,
operations, property, inventory, assets, or
conditions of Acquiror since December31,
1996;
(13c) A schedule of all litigation or governmental
investigation or proceeding which is pending
or which, to the best knowledge of
management, is threatened or contemplated;
(14) INFORMATION. The information concerning Acquiror set forth in this
Agreement and in the Acquiror Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they were
made, not misleading.
(7) CLOSING DATE.
The Closing Date herein referred to shall be upon such date as the parties
hereto may mutually agree upon, but is expected to be on or about May 22, 1997,
but not later than June 30, 1996. As soon as practicable after the Closing,
Acquiror shall deliver and the Stockholders will be deemed to have accepted
delivery, the certificate of stock to be issued in his or her name, and in
connection therewith at closing, will make delivery of his or her stock in
Acquiree to Acquiror. Certain opinions, exhibits, etc., may be delivered
subsequent to the Closing Date upon the mutual agreement of the parties hereto
(8). CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIREE AND
THE STOCKHOLDERS.
All obligations of Acquiree and Stockholders under this Agreement are subject to
the fulfilment, by Acquiror, prior to or as of the Closing Date, of each of the
following conditions:
(1) The representations and warranties by or on behalf of Acquiror contained in
this Agreement or in any certificate or documents delivered to Acquiree
pursuant to the provisions hereof shall be true in all material respects at
and as of the time of Closing as though such representations and warranties
were made at and as of such time;
(2) Acquiror shall have performed and complied with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with
by it prior to
<PAGE>
20
or at the Closing on the Closing Date;
(3) Acquiror shall take all corporate action necessary to issue the shares to
Stockholders pursuant to this Agreement;
(9) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACQUIROR.
All obligations of Acquiror under this Agreement are subject to the
fulfilment, by Acquiree and Stockholders, prior to or as of the Closing
Date, of each of the following conditions:
(1) The representations and warranties by
Acquiree and Stockholders contained in this
Agreement or in any certificate or document
delivered to Acquiror pursuant to the
provisions hereof shall be true at and as of
the time of Closing as though such
representations and warranties were made at
and as of such time;
(2) Acquiree and Stockholders shall have
performed and complied with all covenants,
agreements, and conditions required by this
Agreement to be performed or complied with
by it prior to or at the Closing; including
the delivery of all of the outstanding stock
of Acquiree;
(3) Stockholders shall deliver to Acquiror a
letter commonly known as an "investment
letter" agreeing that the shares of stock in
Acquiror are being acquired for investment
purposes, and not with a view to public
resale and that the materials, including
current financial statements prepared and
delivered by Acquiror to Stockholders, have
been read and understood by Stockholders,
that he is familiar with the business of
Acquiror, that he is acquiring the Acquiror
shares under Section 4(2), commonly known as
the private offering exemption of the
Securities Act of 1933, and that the shares
are restricted and may not be resold, except
in reliance on an exemption under the Act.
(10) INDEMNIFICATION
Within the period provided in paragraph 12 herein and in accordance
with the terms of that paragraph, each party to this Agreement shall
indemnify and hold harmless each other party at all times after the
date of this Agreement against
<PAGE>
21
and in respect of any liability, damage, or deficiency, all actions
suits, proceedings, demands, assessments, judgments, costs, and
expenses which exceed $25,000 including attorney's fees incident to any
of the foregoing, resulting from any misrepresentations, breach of
covenant, or warranty or non-fulfilment of any agreement on the part of
such party under this Agreement or from any misrepresentation in or
omission from any certificate furnished or to be furnished to a party
hereunder. Subject to the terms of this Agreement, the defaulting party
shall reimburse the other party or parties on demand, for any
reasonable payment made by said parties at any time after the Closing,
in respect of any liability of claim to which the foregoing indemnity
relates, if such payment is made after reasonable notice to the other
party to defend or satisfy the same and such party failed to defend or
satisfy the same. No liability shall arise for a party hereof regarding
a settlement of any claim unless such settlement was previously
approved by such party.
( 11) NATURE AND SURVIVAL OF REPRESENTATIONS.
All representations warranties, and covenants made by any party in this
Agreement shall survive the Closing hereunder and the consummation of
the transactions contemplated hereby for two years from the date
hereof. All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance solely on the representations,
warranties, and covenants and agreements contained in this Agreement or
at the Closing of the transactions herein provided for and not upon any
investigation upon which it might have made or any representations,
warranty, agreement, promise, or information, written or oral, made by
the other party or any other person other than as specifically set
forth herein.
(12) DOCUMENTS AT CLOSING
At the Closing the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) Stockholders will deliver, or cause to be delivered, to Acquiror the
following:
(1) Stock certificates for all of the issued and
outstanding stock of Acquiree being tendered
and duly endorsed;
(2) All corporate records of Acquiree, including
without limitation, corporate minute books
(which shall contain copies of the Articles
of Incorporation and Bylaws, as amended to
the Closing), stock books, stock transfer
<PAGE>
22
books, corporate seals, and other such
corporate books and records as may
reasonably be requested for review by
Acquiror and its counsel;
(3) A certificate executed by the Principal
Stockholders to the effect that all
representations and warranties made by
Acquiree under this Agreement are true and
correct as of the Closing, the same as
though originally given to Acquiror on said
date;
(4) Certification from the Acquirees solicitors
dated at the date of the Closing to the
effect that Acquiree is in good standing
under the laws of the UK;
(5) An investment letter from the Stockholders
representing that they are acquiring shares
of Acquiror for investment purposes only and
not with a view to further distribution; and
(6) Such other instruments, documents, and
certificates, if any, as are required to be
delivered pursuant to the provision of this
Agreement or which may be reasonably
requested in furtherance of the provisions
of this Agreement.
(7) All Licences, Patents and Trade Marks as
relate to any and all products in concept,
design, production and/or sales stages at
the time of closing
(b) Acquiror will deliver or cause to be delivered to the Stockholders
and Acquiree as soon as practicable after the closing:
(1) Stock certificates for common stock to be
issued as part of the exchange as listed on
Exhibit "A";
(2) Such other instruments and documents as are
required to be delivered pursuant to the
provisions of this Agreement.
(13) ADDITIONAL COVENANTS & UNDERTAKINGS
Between the date hereof and the Closing Date, except with the prior written
consent of the other party:
<PAGE>
23
SECTION A
(1) Acquiror and Acquiree shall conduct their
business only in the usual and ordinary
course and the character of such business
shall not be changed nor any different
business be undertaken.
(2) No change shall be made in the Articles of
Incorporation or Bylaws of Acquiror or
Acquiree.
(3) No change shall be made in the authorised or
issued shares of Acquiror or Acquiree.
(4) Neither Acquiror nor Acquiree shall
discharge or satisfy any lien or encumbrance
or obligation or liability, other than
current liabilities shown on the financial
statements heretofore delivered and current
liabilities incurred since that date in the
ordinary course of business.
(5) Neither Acquiror nor Acquiree shall make any
payment or distribution to their respective
stockholders or purchase or redeem any
shares or capital stock.
(6) Neither Acquiror nor Acquiree shall
mortgage, pledge, or subject to lien or
encumbrance any of its assets, tangible or
intangible.
(7) Neither Acquiror nor Acquiree shall cancel
any debts or claims or waive any rights.
SECTION B
UNDERTAKING 1. - MUTUAL
The parties hereto jointly and severally
undertake to use their best efforts for a
period of not less than 2 years from the
date hereof to ensure that the following
individuals are nominated to the board of
Internet Holdings, Inc
Christopher J Wilkes President & Chairman of the Board
Ian Tredinnick Chief Executive Officer
Lewis M Klee Director & Company Secretary
<PAGE>
24
UNDERTAKING 2. In the event of the Acquiror divesting the
Acquiree at some future point, it is hereby
agreed that the Acquiror will offer a right
of first refusal to the original (
pre-acquisition ) shareholders of Chiron
Systems Ltd for a period of 8 weeks from
notification of the intention to divest. All
negotiations as to value will be carried out
on a fair `open market' basis.
(14) MISCELLANEOUS
(1) FURTHER ASSURANCES. At any time and from time to time, after the effective
date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Agreement.
(2) WAIVER. Any failure on the part of any party hereto to comply with any of
its obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
(3) NOTICES. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by
prepaid first class registered or certified mail, return receipt requested.
(4) HEADINGS. The section and subsection heading in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(5) COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(6) GOVERNING LAW. This Agreement was negotiated and is being contracted for in
the State of Utah and shall be governed by the laws of the State of Utah,
not withstanding any Utah or other conflict-of-law provision to the
contrary, and the securities being issued herein are being issued and
delivered in the State of Utah in accordance with isolated transaction and
non-public offering exemption.
(7) BINDING EFFECT. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, their respective heirs,
administrators, executors, successors, and assigns.
<PAGE>
25
(8) ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties hereto and supersedes any and all prior agreements, arrangements,
or understandings between the parties relating to the subject matter
hereof. No oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No representations,
warranties, covenants, or conditions, express or implied, other than as set
forth herein, have been made by any party.
(9) SEVERABILITY. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
<PAGE>
26
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
ATTEST: INTERNET HOLDINGS, INC.
a Utah corporation
BY: /S Christopher Wilkes
President
ATTEST: CHIRON SYSTEMS LTD
a UK Limited Company
BY: /S Ian Tredinnick
Managing Director
STOCKHOLDERS
(See Exhibit "B" attached hereto in counter parts.)
The signing of this page has been WITNESSED BY:-
Name: J.D. Wainwright
Signed: /S J.D. Wainwright
Occupation: Company Director
<PAGE>
27
EXHIBIT "A"
<TABLE>
<CAPTION>
NAME AND ADDRESS CHIRON SYSTEMS LTD INTERNET H. INC.
OF STOCKHOLDERS COMMON STOCK RESTRICTED STOCK
<S> <C> <C> <C>
Ian R Tredinnick 29,000 (55.8%) 1,473,293
Little Poplars,
Cold Ash Hill
Cold Ash
Nr Newbury
Berkshire
RG16 9PT
Michael J Kennedy 10,000 (19.2%) 506,940
Landfall
Wych Hill Lane
Woking
GU22 0AB
Mrs P Tredinnick 8,000 (15.4%) 406,608
Little Poplars,
Cold Ash Hill
Cold Ash
Nr Newbury
Berkshire
RG16 9PT
Mrs B Taylor 2500 (4.8%) 126,736
25 Eden Way
Nr Wokingham
Reading
Berks
RG11 5PQ
Mr A Sykes 2500 (4.8%) 126,736
Rock Cottage
Cold Hatton
Nr. Wellington
North Shropshire
TF6 6QU
52000 (100%) 2,640,313
</TABLE>
<PAGE>
28
EXHIBIT "B"
To the Agreement dated May 22nd 1997, between Internet Holdings, Inc.,
Chiron Systems Ltd. and the Stockholders of Chiron Systems Ltd.
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Chiron Systems Ltd a UK Company,
does hereby consent to the exchange of the shares of Chiron Systems Ltd. owned
by the undersigned, for shares of restricted Common Stock of Internet Holdings,
Inc., a Utah corporation. The exchange shall be on a basis wherein the
undersigned shall receive 1,473,293 shares of Internet Holdings, Inc., for all
of the issued and outstanding shares of Chiron Systems Ltd and all intellectual
property rights, patents and, trade marks which are owned by the Undersigned.
ACCEPTANCE
DATED: May 22nd 1997 BY: /S Ian R Tredinnick
Ian R Tredinnick
<PAGE>
29
EXHIBIT "B"
To the Agreement dated May 22nd 1997, between Internet Holdings, Inc.,
Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd .
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited
Company, does hereby consent to the exchange of the shares of Chiron Systems
Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet
Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the
undersigned shall receive 506,940 shares of Internet Holdings, Inc., for all of
the issued and outstanding shares of Chiron Systems Ltd., which are owned by the
Undersigned. and all intellectual property rights, which are owned by the
Undersigned.
ACCEPTANCE
DATED: May 22nd 1997 BY: /S Michael Kennedy
Michael Kennedy
<PAGE>
30
EXHIBIT "B"
To the Agreement dated May 22nd 1997, between Internet Holdings, Inc.,
Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd .
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited
Company, does hereby consent to the exchange of the shares of Chiron Systems
Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet
Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the
undersigned shall receive 406,608 shares of Internet Holdings, Inc., for all of
the issued and outstanding shares of Chiron Systems Ltd., which are owned by the
Undersigned. and all intellectual property rights, which are owned by the
Undersigned.
ACCEPTANCE
DATED: May 22nd 1997 BY: /S Patricia Tredinnick
Patricia Tredinnick
<PAGE>
31
EXHIBIT "B"
To the Agreement dated May 22nd 1997, between Internet Holdings, Inc.,
Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd .
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited
Company, does hereby consent to the exchange of the shares of Chiron Systems
Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet
Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the
undersigned shall receive 126,736 shares of Internet Holdings, Inc., for all of
the issued and outstanding shares of Chiron Systems Ltd., which are owned by the
Undersigned. and all intellectual property rights, which are owned by the
Undersigned.
ACCEPTANCE
DATED: May 22nd 1997 BY: /S Mrs B Taylor
Mrs B Taylor
<PAGE>
32
EXHIBIT "B"
To the Agreement dated May 22nd 1997, between Internet Holdings, Inc.,
Chiron Systems Ltd and the Stockholders of Chiron Systems Ltd .
CONSENT OF STOCKHOLDERS
The undersigned stockholder of Common Stock of Chiron Systems Ltd , a UK Limited
Company, does hereby consent to the exchange of the shares of Chiron Systems
Ltd. owned by the undersigned, for shares of restricted Common Stock of Internet
Holdings, Inc., a Utah corporation. The exchange shall be on a basis wherein the
undersigned shall receive 126,736 shares of Internet Holdings, Inc., for all of
the issued and outstanding shares of Chiron Systems Ltd., which are owned by the
Undersigned. and all intellectual property rights, which are owned by the
Undersigned.
ACCEPTANCE
DATED May 22nd 1997 BY: /S A Sykes
Mr A Sykes
<PAGE>
33
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does
hereby certify that the undersigned is a principal stockholder of Acquiree, a
United Kingdom Limited Company, and as such is familiar with the business
affairs of said company, and is familiar with and has read the Agreement and
Plan of Reorganization between Internet Holdings, Inc.
( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997.
The undersigned does hereby state that the representations and
warranties made by the undersigned and Acquiree contained in said Agreement, to
the best knowledge of the undersigned, are true and correct at and as of the
time of closing. In addition, the undersigned hereby states that, to the best
knowledge of the undersigned, Acquiree has performed and complied with all
covenants, agreements, and conditions required by the Agreement to be performed
or complied with by Acquiree prior to or at the closing on the closing date.
IN WITNESS WHEREOF, the undersigned have hereunto duly executed this
Certificate this day May 22nd 1997.
/S Ian R Tredinnick
Ian R Tredinnick
<PAGE>
34
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does
hereby certify that the undersigned is a principal stockholder of Acquiree, a
United Kingdom Limited Company, and as such is familiar with the business
affairs of said company, and is familiar with and has read the Agreement and
Plan of Reorganization between Internet Holdings, Inc.
( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997.
The undersigned does hereby state that the representations and
warranties made by the undersigned and Acquiree contained in said Agreement, to
the best knowledge of the undersigned, are true and correct at and as of the
time of closing. In addition, the undersigned hereby states that, to the best
knowledge of the undersigned, Acquiree has performed and complied with all
covenants, agreements, and conditions required by the Agreement to be performed
or complied with by Acquiree prior to or at the closing on the closing date.
IN WITNESS WHEREOF, the undersigned have hereunto duly executed this
Certificate this day May 22nd 1997.
/S Michael J Kennedy
Michael J Kennedy
<PAGE>
35
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does
hereby certify that the undersigned is a principal stockholder of Acquiree, a
United Kingdom Limited Company, and as such is familiar with the business
affairs of said company, and is familiar with and has read the Agreement and
Plan of Reorganization between Internet Holdings, Inc.
( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997.
The undersigned does hereby state that the representations and
warranties made by the undersigned and Acquiree contained in said Agreement, to
the best knowledge of the undersigned, are true and correct at and as of the
time of closing. In addition, the undersigned hereby states that, to the best
knowledge of the undersigned, Acquiree has performed and complied with all
covenants, agreements, and conditions required by the Agreement to be performed
or complied with by Acquiree prior to or at the closing on the closing date.
IN WITNESS WHEREOF, the undersigned have hereunto duly executed this
Certificate this day May 22nd 1997.
/S Patricia Tredinnick
Patricia Tredinnick
<PAGE>
36
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does
hereby certify that the undersigned is a principal stockholder of Acquiree, a
United Kingdom Limited Company, and as such is familiar with the business
affairs of said company, and is familiar with and has read the Agreement and
Plan of Reorganization between Internet Holdings, Inc.
( "Acquiror") a Utah corporation, and Acquiree dated
May 22nd 1997.
The undersigned does hereby state that the representations and
warranties made by the undersigned and Acquiree contained in said Agreement, to
the best knowledge of the undersigned, are true and correct at and as of the
time of closing. In addition, the undersigned hereby states that, to the best
knowledge of the undersigned, Acquiree has performed and complied with all
covenants, agreements, and conditions required by the Agreement to be performed
or complied with by Acquiree prior to or at the closing on the closing date.
IN WITNESS WHEREOF, the undersigned have hereunto duly executed this
Certificate this day May 22nd 1997.
/S Mrs B Taylor
Mrs B Taylor
<PAGE>
37
EXHIBIT "C"
STOCKHOLDER'S CERTIFICATE
The undersigned stockholder of Chiron Systems Ltd. ("Acquiree") , does
hereby certify that the undersigned is a principal stockholder of Acquiree, a
United Kingdom Limited Company, and as such is familiar with the business
affairs of said company, and is familiar with and has read the Agreement and
Plan of Reorganization between Internet Holdings, Inc.
( "Acquiror") a Utah corporation, and Acquiree dated May 22nd 1997.
The undersigned does hereby state that the representations and
warranties made by the undersigned and Acquiree contained in said Agreement, to
the best knowledge of the undersigned, are true and correct at and as of the
time of closing. In addition, the undersigned hereby states that, to the best
knowledge of the undersigned, Acquiree has performed and complied with all
covenants, agreements, and conditions required by the Agreement to be performed
or complied with by Acquiree prior to or at the closing on the closing date.
IN WITNESS WHEREOF, the undersigned have hereunto duly executed this
Certificate this day May 22nd 1997.
/S A Sykes
Mr A Sykes
<PAGE>
38
EXHIBIT "D"
INVESTMENT LETTER
The undersigned hereby represents to Internet Holdings, Inc. that (1)
the shares of the Company's $.001 par value common stock (the "Securities")
which are being acquired by the undersigned are being acquired for his, her or
its own account and for investment and not with a view to the public resale or
distribution thereof; (2) The undersigned will not sell, transfer, or otherwise
dispose of the Securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) he is aware that the Securities are "Restricted
Securities" as that term is defined in Rule 144 or the general rules and
regulations under the Act.
The undersigned further acknowledges that he has had an opportunity to
ask questions of, and receive answers from duly designated representatives of
the corporation concerning the terms and conditions pursuant to which the
Securities are being offered. The undersigned acknowledges that he has been
afforded an opportunity to examine such documents and other information which he
has requested for the purpose of verifying the information given him.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
Only the Company may register its Securities under the Act and it
currently is not contemplating registering any of its Securities. Furthermore,
the Company has not made any representations, warranties or covenants to the
purchaser regarding the registration of the Securities.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions, for
the most part, are set forth in Rule 144. The rule permits sales of "Restricted
Securities" upon compliance with the requirements of such rule. If the rule is
available to the undersigned, the undersigned may make only routine sales of
Securities, in limited amounts, in accordance with the terms and conditions of
that rule.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities and the
possibility of the total loss of my investment.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefore, shall bear an
investment legend which the undersigned understands.
The purchaser further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Company has informed the undersigned of its intention to issue such
instructions.
Yours Sincerely,
/S Ian R Tredinnick
Ian R Tredinnick
<PAGE>
39
EXHIBIT "D"
INVESTMENT LETTER
The undersigned hereby represents to Internet Holdings, Inc. that (1)
the shares of the Company's $.001 par value common stock (the "Securities")
which are being acquired by the undersigned are being acquired for his, her or
its own account and for investment and not with a view to the public resale or
distribution thereof; (2) The undersigned will not sell, transfer, or otherwise
dispose of the Securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) he is aware that the Securities are "Restricted
Securities" as that term is defined in Rule 144 or the general rules and
regulations under the Act.
The undersigned further acknowledges that he has had an opportunity to
ask questions of, and receive answers from duly designated representatives of
the corporation concerning the terms and conditions pursuant to which the
Securities are being offered. The undersigned acknowledges that he has been
afforded an opportunity to examine such documents and other information which he
has requested for the purpose of verifying the information given him.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
Only the Company may register its Securities under the Act and it
currently is not contemplating registering any of its Securities. Furthermore,
the Company has not made any representations, warranties or covenants to the
purchaser regarding the registration of the Securities.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions, for
the most part, are set forth in Rule 144. The rule permits sales of "Restricted
Securities" upon compliance with the requirements of such rule. If the rule is
available to the undersigned, the undersigned may make only routine sales of
Securities, in limited amounts, in accordance with the terms and conditions of
that rule.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities and the
possibility of the total loss of my investment.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefore, shall bear an
investment legend which the undersigned understands.
The purchaser further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Company has informed the undersigned of its intention to issue such
instructions.
Yours Sincerely,
/S Michael J Kennedy
Michael J Kennedy
<PAGE>
40
EXHIBIT "D"
INVESTMENT LETTER
The undersigned hereby represents to Internet Holdings, Inc. that (1)
the shares of the Company's $.001 par value common stock (the "Securities")
which are being acquired by the undersigned are being acquired for his, her or
its own account and for investment and not with a view to the public resale or
distribution thereof; (2) The undersigned will not sell, transfer, or otherwise
dispose of the Securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) he is aware that the Securities are "Restricted
Securities" as that term is defined in Rule 144 or the general rules and
regulations under the Act.
The undersigned further acknowledges that he has had an opportunity to
ask questions of, and receive answers from duly designated representatives of
the corporation concerning the terms and conditions pursuant to which the
Securities are being offered. The undersigned acknowledges that he has been
afforded an opportunity to examine such documents and other information which he
has requested for the purpose of verifying the information given him.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
Only the Company may register its Securities under the Act and it
currently is not contemplating registering any of its Securities. Furthermore,
the Company has not made any representations, warranties or covenants to the
purchaser regarding the registration of the Securities.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions, for
the most part, are set forth in Rule 144. The rule permits sales of "Restricted
Securities" upon compliance with the requirements of such rule. If the rule is
available to the undersigned, the undersigned may make only routine sales of
Securities, in limited amounts, in accordance with the terms and conditions of
that rule.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities and the
possibility of the total loss of my investment.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefore, shall bear an
investment legend which the undersigned understands.
The purchaser further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Company has informed the undersigned of its intention to issue such
instructions.
Yours Sincerely,
/S Patricia Tredinnick
Patricia Tredinnick
<PAGE>
41
EXHIBIT "D"
INVESTMENT LETTER
The undersigned hereby represents to Internet Holdings, Inc. that (1)
the shares of the Company's $.001 par value common stock (the "Securities")
which are being acquired by the undersigned are being acquired for his, her or
its own account and for investment and not with a view to the public resale or
distribution thereof; (2) The undersigned will not sell, transfer, or otherwise
dispose of the Securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) he is aware that the Securities are "Restricted
Securities" as that term is defined in Rule 144 or the general rules and
regulations under the Act.
The undersigned further acknowledges that he has had an opportunity to
ask questions of, and receive answers from duly designated representatives of
the corporation concerning the terms and conditions pursuant to which the
Securities are being offered. The undersigned acknowledges that he has been
afforded an opportunity to examine such documents and other information which he
has requested for the purpose of verifying the information given him.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
Only the Company may register its Securities under the Act and it
currently is not contemplating registering any of its Securities. Furthermore,
the Company has not made any representations, warranties or covenants to the
purchaser regarding the registration of the Securities.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions, for
the most part, are set forth in Rule 144. The rule permits sales of "Restricted
Securities" upon compliance with the requirements of such rule. If the rule is
available to the undersigned, the undersigned may make only routine sales of
Securities, in limited amounts, in accordance with the terms and conditions of
that rule.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities and the
possibility of the total loss of my investment.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefore, shall bear an
investment legend which the undersigned understands.
The purchaser further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Company has informed the undersigned of its intention to issue such
instructions.
Yours Sincerely,
/S Mrs B Taylor
Mrs B Taylor
<PAGE>
42
EXHIBIT "D"
INVESTMENT LETTER
The undersigned hereby represents to Internet Holdings, Inc. that (1)
the shares of the Company's $.001 par value common stock (the "Securities")
which are being acquired by the undersigned are being acquired for his, her or
its own account and for investment and not with a view to the public resale or
distribution thereof; (2) The undersigned will not sell, transfer, or otherwise
dispose of the Securities except in compliance with the Securities Act of 1933,
as amended (the "Act"); and (3) he is aware that the Securities are "Restricted
Securities" as that term is defined in Rule 144 or the general rules and
regulations under the Act.
The undersigned further acknowledges that he has had an opportunity to
ask questions of, and receive answers from duly designated representatives of
the corporation concerning the terms and conditions pursuant to which the
Securities are being offered. The undersigned acknowledges that he has been
afforded an opportunity to examine such documents and other information which he
has requested for the purpose of verifying the information given him.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
Only the Company may register its Securities under the Act and it
currently is not contemplating registering any of its Securities. Furthermore,
the Company has not made any representations, warranties or covenants to the
purchaser regarding the registration of the Securities.
The undersigned further acknowledges that he is fully aware of the
applicable limitations on the resale of the Securities. These restrictions, for
the most part, are set forth in Rule 144. The rule permits sales of "Restricted
Securities" upon compliance with the requirements of such rule. If the rule is
available to the undersigned, the undersigned may make only routine sales of
Securities, in limited amounts, in accordance with the terms and conditions of
that rule.
I am capable of bearing the economic risks of an investment in the
Securities. I fully understand the speculative nature of the Securities and the
possibility of the total loss of my investment.
My present financial condition is such that I am under no present or
contemplated future need to dispose of any portion of the Securities to satisfy
any existing or contemplated undertaking, need, or indebtedness.
Any and all certificates representing the Securities, and any and all
Securities issued in replacement thereof or in exchange therefore, shall bear an
investment legend which the undersigned understands.
The purchaser further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent and acknowledges that the
Company has informed the undersigned of its intention to issue such
instructions.
Yours Sincerely,
/S A Sykes
Mr A Sykes
<PAGE>
Page: 1 of 1
INTERNET HOLDINGS, INC
W.F. CLARKE (GHANA) LTD
1. AGREEMENT FOR SALE OF PROPERTY & OTHER
ASSETS AT W.F. CLARKE, ACCRA, GHANA
2. AGREEMENT TO FORM JOINT VENTURE TO EXPLOIT
INTERNET RELATED OPPORTUNITTIES IN WEST AFRICA
<PAGE>
43
Date: 19th May 1997
Parties to this Agreement:
1. Internet Holdings, Inc of 40 Exchange Place, 8th Floor, New York, NY
10005, USA ("INHI")
AND
2. W.F. Clarke (Ghana) Limited of Airport House, 1 Agostino Neto Road,
Airport Area, Accra, Ghana ("WFC")
Definitions:
1. "The Property" means those buildings and land owned by WFC in the Accra
industrial zone more particularly described in Appendix 1 hereto.
Whereas:
A. WFC is a long established Ghanaian company with operations and
infrastructure in many parts of Ghana;
B. INHI has expertise in technology related to the Internet and ISDN
(Integrated Services Digital Network);
C. WFC wishes to sell and INHI wishes to purchase The Property;
D. WFC and INHI wish to enter into a joint venture to market Internet
services in West Africa.
Now it is hereby agreed as follows:
1. Obligations of WFC
1.1. WFC hereby transfers to INHI the Property as more particularly defined in
Appendix 1.
1.2. WFC hereby warrants that it will take all necessary actions to transfer
good and marketable title to the Property to INHI.
Page 2 of 6
<PAGE>
1.3. In the event that WFC does not fully transfer such title in a good and
timely fashion then INHI may at its sole option terminate this agreement.
1.4. WFC hereby undertakes to invest 50% (fifty percent) of the proceeds of
sale of the Property received by WFC into the proposed INHI/WFC joint
venture.
2. Obligations of INHI
2.1. In consideration of the matters set out in Clause 1 above INHI will pay
to WFC the sum of US$2,250,000 (two million two hundred and fifty
thousand United States dollars) within 120 (one hundred and twenty days)
of the date of this agreement.
2.2. In the event that the payment set out in this Clause 2 is not made in a
timely fashion then all rights granted under this agreement and any other
agreement entered into by INHI pursuant to or associated with this
agreement will lapse.
2.3. At the sole discretion of WFC payment of the sum set out in this Clause 2
may be made either in cash or shares or loan stock or in some combination
or variation of these and once any such payment or part of it is accepted
in a particular form by WFC then this shall constitute satisfaction of
that portion of INHI's pro-rata obligations under this Clause 2 of this
agreement.
2.4. Within 30 days of the date of this agreement INHI will enter into a lease
with WFC for the following portions of the Property as described on the
site plan:
2.4.1. Factory Area
2.4.2. Car Park 2
2.4.3. Car Park 4
2.4.4. Storage Area
2.4.5. Office Numbers 1 through 4 and 6
2.4.6. Access to the common parts of the site to reach the above premises
2.5. Pending the execution of the said lease WFC shall continue to have access
to the above mentioned premises on the current basis.
Page 3 of 6
<PAGE>
3. Obligations of INHI and WFC to enter into Joint Venture
3.1. By the signing of this agreement INHI and WFC hereby signify their intent
to enter into a formal joint venture agreement within 120 days of the
date of this agreement setting out the parties obligations to exploit the
Internet in relation to Ghana and West Africa.
Confidentiality
4. The Parties acknowledge that the contents of this agreement are
confidential to them and are not to be disclosed to any other persons
save on a need to know basis so as to allow each party to carry out its
obligations under this agreement. This agreement is executed in duplicate
and is not to be copied or reproduced or shown to any other party except
as required by law other than with the permission of all the Parties.
Governing Law
5. The construction validity and performance of this agreement shall be
governed by the laws of the State of New York without giving effect to
the conflict of laws principles thereof. The parties hereby submit to the
jurisdiction of the courts of the State of New York, county of New York.
Notice
6. The addresses for service of documents for the Parties shall be as shown
under this agreement.
7. Each party shall give written notice to the other of any change in its
address for service under this agreement.
8. Any notice shall be deemed well served on the party to whom it is
addressed if it is served personally or sent by pre-paid recorded
delivery post addressed to such party at its address for service.
<PAGE>
Warranties & Entire Agreement
9. The Parties hereby warrant that all necessary approvals and authorities
have been obtained by them to enable the completion of this agreement and
that the signatories hereto are authorised by their respective
organisations to sign this agreement and to bind the Parties.
10. This contract contains the complete and entire agreement o the parties as
to the subject matter herein. No modification or amendment shall be
effective except in writing signed by the parties hereto.
Signed for and on behalf of Internet Holdings, Inc
/S Christopher Wilkes
President
Witnessed
/S Lewis Mitchell Klee
Signed for and on behalf of W. F. Clarke Limited
/S John N. D. Carmichael
Managing Director
Witnessed
/S Lewis Mitchell Klee
<PAGE>
Appendix 1
That property situated at the Accra Industrial Area identified as owned by W. F.
Clarke (Ghana) Limited by Title Number 74698.
All office and factory equipment and fixtures and fittings are included in the
sale except for corporate and business records of W. F. Clarke Ltd, Agritech
(Ghana) Ltd and The Bristol Bond which are identified as being in Office 4.
As soon as practicable but in any event not later than thirty days after the
date of this agreement INHI and WFC will enter into a lease enabling WFC to
occupy those parts of the Property as set out in Clause 2.4 of this agreement
and such other parts of the Property and such equipment as INHI and WFC shall
jointly decide.
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
ACCOUNTS
21 DECEMBER 1996
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
ACCOUNTS
31 DECEMBER 1996
CONTENTS PAGE
General information 1
Statement of directors' responsibilities 2
Report of the accountants 3
Statement of accounting policies 4
Profit and loss account 5
Balance sheet 6
Notes to the accounts 7-8
GENERAL INFORMATION
Directors
Ian R. Tredinnick
Michael R. Kennedy
Company secretary and registered office
B R W Daughtrey, c/o Kidd Rapinet, 35 Windsor Road, Slough SL1 2EB
Registered number
2801103
Principal activity
The principal activity of the company continued to be that of selling and
developing digital communications products.
Auditors
Blackborn & Co., Chartered Accountants, Lovell House, 271 High Street, Uxbridge
UB8 1LQ
Reporting accountants
Alan Sacks + Co., Chartered Accountants, Little Red Court, 7 St. Ronans Close,
Hadley Wood, Herts EN4 0JH
Solicitors
Kidd Rapinet, 35 Windsor Road, Slough SL1 2EB
Bankers
National Westminster Bank PLC, PO Box No 78, 13 Market Place, Reading, Berks
RG1 2EP
1
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Copmany law requires the directors to prepare accounts for each financial period
which give a true and fair view of the state of affairs of the company and of
the profit and loss of the company for that period. In preparing those accounts,
the directors are required to:
(bullet) select suitable accounting policies and then apply them consistently;
(bullet) make judgments and estimates that are reasonable and prudent;
(bullet) prepare the accounts on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
2
<PAGE>
Alan Sacks + Co. Little Red Court 7 St. Ronans Clowe Hadley
Chartered Accountants Wood Herts EN4 OJH
Telephone 0181 440 5501
(Symbol of chartered
accountants goes here)
ACCOUNTANTS REPORT TO THE DIRECTORS OF
INTERNET HOLDINGS INC. AND CHIRON SYSTEMS LIMITED
In accordance with your instructions, we have audited the accounts set out on
pages 4 to 8 which have been prepared under the historical cost convention and
on the basis of the accounting policies set out on page 4, including in
particular, those relating to the going concern basis and development
expenditure.
It should be noted that, in the absence of a directors' report, these accounts
are incomplete for UK statutory purposes and must not be filed with the
Registrar of Companies.
Respective responsibilities of directors adn auditors
As described on page 2, the directors of Chiron Systems Limited ("the company")
are responsible for the preparation of the accounts. It is our responsibility to
form an independent opinion, based on our audit, on those accounts and to report
our opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgments made by the
directors of the company in the preparation of the accounts, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement whether caused by fraud or other irregularity or error. In
forming our opinion we also evaluated the overall adequacy of presentation of
information in the accounts.
Opinion
In our opinion the accounts give a true and fair view of the state of affairs of
the company as at 31 December 1996 and of its profit for the nine months then
ended and have been properly prepared in accordance with the provisions of the
Companies Act 1985 applicable to small companies.
/s/ Alan Sacks
Alan Sacks + Co.
Chartered Accountants and Registered Auditors
24 February 1997
Alan Sacks FCA
Registered to carry on audit work and authorized to carry on investment business
by the Institute of Chartered Accountants in England & Wales
3
<PAGE>
Alan Sacks + Co/
CHIRON SYSTEMS LIMITED
STATEMENT OF ACCOUNTING POLICIES
The principal accounting policies which have been adopted in the preparation of
these accounts are as follows:
Accounting convention
The accounts have been prepared under the historical cost convention.
The company meets its day-to-day working capital requirements through an
overdraft facility which, in common with all such facilities is repayable on
demand; the company also enjoys the use of invoice factoring facilities. In
addition to these short-term arrangements, the company has long-term loans (see
Note 9) of (pound sign)250000 which have been used in order to finance the
company's software development programme (see Note 4).
The directors consider that the above finance facilities will continue to be
available to the company; the directors therefore believe it is appropriate to
prepare the accounts on the going concern basis. If the company was unable to
continue trading, notwithstanding the belief and confidence of the directors,
adjustments would have to be made to reduce the value of the assets to their
realisable amounts, to provide for any further liabilities which may arise and
to reclassify fixed assets as current assets.
Development expenditure
Development expenditure relating to specific projects intended for commercial
exploitation is carried forward; it is amortised over the period expected to
benefit from it. Expenditure on pure and applied research is charged to the
profit and loss account in the period in which it is incurred.
Depreciation
All fixed assets are initially recorded at cost. Depreciation is provided on all
tangible fixed assets at the rate of 25% pa of cost in order to write off each
asset evenly over its expected useful life.
Stock
Stock, which comprises raw materials and finished products, is stated at the
lower of cost and net realisable value using the first-in-first-out principle.
Cost includes all direct expenditure and related overheads incurred to the
balance sheet date.
Deferred taxation
In the opinion of the directors, no provision for deferred taxation is
necessary because of the improbability of any liability in the foreseeable
future.
Cash flow statement
The company has taken advantage of the exemption in Financial Reporting
Standard No. 1 from producing a cash flow statement on the grounds that it is
a small company.
4
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD FROM 1 APRIL 1996 TO 31 DECEMBER 1996
<TABLE>
<CAPTION>
9 months ended Year ended
31 December 31 March
1996 1996
(pound sign) (pound sign)
<S> <C> <C>
TURNOVER 430,408 363,259
COST OF SALES 297,743 228,858
GROSS PROFIT 132,665 134,401
Administrative expenses 103,203 130,663
OPERATING PROFIT BEFORE AND AFTER TAXATION 29,372 3,738
RETAINED PROFIT (LOSS)
As at beginning of period -31,002 -34,740
As at end of period -1,630 -31,002
</TABLE>
All income in the period was derived from the continuing activities.
5
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
BALANCE SHEET AS AT 31 DECEMBER 1996
<TABLE>
<CAPTION>
31 December 31 March
1996 1996
(pound sign) (pound sign)
<S> <C> <C>
FIXED ASSETS
Intangible 392,556 263,124
Tangible 28,071 38,329
CURRENT ASSETS
Stock 97,440 101,173
Debtors 62,267 63,155
Cash at bank and in hand 334 0
CREDITORS: due within one year 280,208 210,783
NET CURRENT LIABILITIES -120,257 -40,455
TOTAL ASSETS LESS CURRENT LIABILITIES 300,370 260,998
CREDITORS: due after one year 260,000 250,000
CAPITAL AND RESERVES
Called up share capital 52,000 42,000
Profit and loss account -1,630 -31,002
</TABLE>
EQUITY SHAREHOLDERS' FUNDS
The directors have taken advantage of special exemptions conferred by the
Companies Act 1985 applicable to small companies and have done so on the
grounds that, in their opinion, the company is entitled to those exemptions.
Approved by the Board of Directors on 7 February 1997
I Terdinnick C. Wilkes
Director Director
6
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
NOTES TO THE ACCOUNTS
FOR THE PERIOD FROM 1 APRIL 1996 TO 31 DECEMBER 1996
1. TURNOVER
Turnover, which is stated net of VAT, comprises amounts invoiced for sales.
2. OPERATING PROFIT
<TABLE>
<CAPTION>
9 months ended Year ended
31 December 31 March
1996 1996
(pound sign) (pound sign)
<S> <C> <C>
The operating profit is stated after charging:
Directors' remuneration(a) 22,156 49,632
Depreciation 7,604 6,963
Auditor's remuneration 3,500 3,500
</TABLE>
(a) The amount charged to profit and loss account
includes consultancy fees payable to a related
party (note 1)). Amounts have also been capitalised
as software development (note 4) as follows:
3. TAXATION
No liability to taxation is expected to arise in view of the availability of
losses brought forward.
4. INTANGIBLE FIXED ASSETS
Software
development
(pound sign)
Cost
As at 1 April 1996 163,124
Additions 129,432
As at 31 December 1996 392,556
Additions include capitalised interest of (pound sign) 28,607 (prior period
(pound sign)25,814). Amortisation of this asset is expected to commence in 1997.
In the opinion of the directors, the value of this asset is substantially
greater than its stated cost.
5. TANGIBLE FIXED ASSETS
Plant,
mahinery, etc.
(pound sign)
Cost
As at 1 April 1996 and 31 December 1996 54,443
Dpereciation
As at 1 April 1996 16,114
Charge for period 10,258
As at 31 December 1996 26,372
Net book values
As at 31 December 1996 28,071
As at 31 March 1996 38,329
The chareg for the period comprises (pound sign)7,604 (prior period:
(pound sign)6,963) recorded in the profit and loss account and
(pound sign)2,654 ((pound sign)3,428) capitalised in the additions to software
development (note 4).
7
<PAGE>
Alan Sacks + Co.
CHIRON SYSTEMS LIMITED
NOTES TO THE ACCOUNTS
6. DEBTORS
<TABLE>
<CAPTION>
31 December 31 March
1996 1996
(pound sign) (pound sign)
<S> <C> <C>
Trade 55,089 52,859
Other 7,178 10,296
62,267 63,155
7. CREDITORS
Due within one year
Bank and factoring loans and overdraft (secured) 60,324 65,800
Trade 95,202 105,329
Other taxes and special security costs 4,444 11,213
Other 120,328 28,441
280,208 210,783
Due after one year
Bank loans repayable within one adn five years
(secured) 260,000 250,000
8. CALLED UP SHARE CAPITAL
Authorized
90000 A Ordinary shares of (pound sign)1 each 90,000 90,000
10000 B Ordinary shares of (pound sign)1 each 10,000 10,000
100,000 100,000
Issued and fully paid
52000 A Ordinary shares of (pound sign)1 each 52,000 42,000
</TABLE>
10000 A Ordinary shares of (pound sign)1 each were issued at par during
December 1996 in satisfaction of a director's loan account of (pound sign)10000.
The A and B Ordinary shares each rank pari passu.
9. DIRECTORS AND THEIR INTERESTS
The directors of the company throughout the period and their interests in the
issued (pound sign)1 Ordinary shares were:
31 December 31 March
1996 1996
IR Tredinnick 37,000 27,000
MJ Kennedy 10,000 15,000
10. EQUITY SHAREHOLDERS' FUNDS
Profit for the period 29,372 3,738
New share capital subscribed 10,000 0
Equity shareholders' funds
Net increase 39,372 3,738
As at beginning of period 10,998 7,260
As at end of period 50,370 10,998
11. RELATED PARTY TRANSACTIONS
Mr. IR Tredinnick is the sole proprietor of Strategic Technology Services
which has rendered consultancy services to the company at normal commercial
rates; the amount charged during the period was (pound sign)18,340 (prior
period: (pound sign)18,952)
12. POST BALANCE SHEET EVENTS
The directors and shareholders of the company have completed an agreement for
the acquisition of the company by way of a share exchanges into Internet
Holdings Inc., a US company quoted on the NASDAQ QTC system.
8
<PAGE>
