UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-SB
GENERAL INFORMATION FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNET MARKETING, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 76-0618144
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
552 Rancho Bauer, Suite 100, Houston, Texas 77079
(Address of Principal Executive Offices) (Zip Code)
tel. (281) 435-1519
tel. (281) 496-6393
(Registrant's Telephone Number, including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
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TABLE OF CONTENTS
PART I
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Item 1. Description of Business 1
Item 2. Plan of Operation 8
Item 3. Description of Property 10
Item 4. Security Ownership of Certain Beneficial Owners and Management 10
Item 5. Directors, Executive Officers, Promoters and Control Persons 11
Item 6. Executive Compensation 12
Item 7. Certain Relationships and Related Transactions 13
Item 8. Description of Securities 14
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters 15
Item 2. Legal Proceedings 16
Item 3. Changes in and Disagreements With Accountants 16
Item 4. Recent Sales of Unregistered Securities 17
Item 5. Indemnification of Directors and Officers 17
PART F/S
Financial Information 18 and F-1
PART III
Item 1. Index to Exhibits 18
Item 2. Description of Exhibits
The Exhibits required by this item are included
as set forth in the Exhibit Index
Signatures 19
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PART I
Item 1. Description of Business
INTRODUCTION
Internet Marketing, Inc., a Nevada company, (the "Company") was
incorporated in March, 1977. The Company presently operates a web site at
www.wallstreetfindsite.com, which contains several hundred web pages of
information and links for investors. The principal executive offices of the
Company are located at 552 Rancho Bauer, Suite 100, Houston, Texas 77079, tel.
(281) 435-1519 and (281) 496-6393.
The Company's common stock is currently traded on the over-the-counter
market under the symbol "IMIZ."
The Company is in the development stage. References to the Company in this
Form 10-SB include the Internet Marketing, Inc., a Nevada corporation, and its
wholly-owned subsidiary, Internet Marketing, Inc., a Texas corporation.
HISTORY
The Company was originally incorporated in the State of Nevada in 1997
under the name Chandelier Business Services, Inc., In March, 1999, pursuant to
a Stock Exchange Agreement, the Company acquired all of the equity of Internet
Marketing, Inc., a Texas corporation, in exchange for 6,500,000 shares of
common stock of the Company. Internet Marketing, Inc., a Texas corporation,
was formed in 1998 to own and operate e-commerce businesses. Following this
transaction, the Company changed its name to Internet Marketing, Inc. At the
time of the acquisition, Chandelier Business Services, Inc. had no viable
business activities and could be characterized as being a shell company. In
connection with the exchange, Company shareholders agreed to cancel 2,300,000
shares of an original 2,546,000 outstanding, and an additional 1,754,000
Company shares were issued to promoters for nominal consideration.
The Company treated the acquisition of Internet Marketing, Inc., a Texas
corporation, as a recapitalization whereby Internet Marketing, Inc., a Texas
corporation, was the accounting acquiror. At the time of the acquisition, there
were only an infrequent number of trades and virtually no trading volume of the
common stock of the Company, and the Company is unable to estimate the market
value of the Company's common stock to determine a resulting valuation of this
acquisition.
BUSINESS ACTIVITIES
Internet Portal and FindSite Activities. The Company presently operates a
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web site at www.wallstreetfindsite.com. The Wall Street FindSite contains
several hundred web pages of information and links for investors. The Company
also plans to operate various special interest web sites which serve as search
and information portals called FindSites for particular subjects (special
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interest FindSites). These FindSites are hybridized search engines and cyber
malls, which target niche industries or special interest areas and provide a
comprehensive, easy to use gateway to the Internet. The Company uses
specialized software to not only simplify the search for relevant Internet
sites, but also to accurately track and predict the user's navigation through
the site. This tracking and predictive feature of the Company's proprietary
software allows the Company to select appropriate banner advertising for display
to the user. The Company believes that a mature FindSite will have links to
2,000 to 10,0000 web sites of others that are most pertinent to the particular
subject or industry
The Company owns the following domain names:
<TABLE>
<CAPTION>
Subject Domain Name
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<S> <C>
Investing and
The Wall Street FindSite www.wallstreetfindsite.com (an operating web site)
Mexico Tourism www.mexicofindsite.com
Toys www.toysfindsite.com
Sites for Kids www.kidsfindsite.com
Software www.softwarefindsite.com
Fishing www.fishingfindsite.com
Auctions www.auctionfindsite.com
Fun www.funfindsite.com
Computers www.computerfindsite.com
Maps www.mapsfindsite.com
Antiques www.antiquesfindsite.com
Real Estate www.realestatefindsite.com
Hunting www.huntingfindsite.com
Golf www.golffindsite.com
Horse www.horsefindsite.com
University www.universityfindsite.com
Internet www.internetfindsite.com
The WWW www.webfindsite.com
U.S.A. www.usafindsite.com
Germany www.germanyfindsite.com
Chile www.chilefindsite.com
Brazil www.brazilfindsite.com
Australia www.australiafindsite.com
Argentina www.argentinafindsite.com
</TABLE>
The Company also owns several other general (generic) names for find sites,
for example www.yourfindsite.com.
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Attracting Traffic to the Company's Web Sites. The Company's first
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objective is to build traffic at its web sites.
The Company proposes to raise capital to purchase banner space on the web
sites of others, making the Company an advertiser at the other web site. The
banners are links to the Company's web site. The Company will pay the other
sites for each "impression", that is, each time a user is at a page on the web
site of the other which contains the Company's banner. A portion of the users
will click on the banner and be transported to the Company's own web site, thus
becoming traffic at the Company's web site ("click throughs"). The Company
expects to pay from a fraction of a cent up to approximately ten cents to the
other web site for each impression. The Company has conducted limited testing
of this procedure and has concluded that it is an effective and economical
method of attracting traffic to the Company's web sites.
Revenue from Impression Banners on the Company's Web Sites. The Company
-------------------------------------------------------------
plans to sell banner space to advertisers on each page of the Company's web
sites and charge a fee to the advertisers for each impression (in effect, the
opposite type of transaction describe above to attract traffic to the Company's
web site). The Company presently plans to have up to six banners of advertisers
on each of its web pages. For example, on the Wall Street FindSite, there would
be up to six banners of advertising on each of several hundred web pages that
are part of the Wall Street FindSite. Based on the cost to the Company of
attracting traffic to the Company's web sites, and the potential revenue to the
Company from the sale of impressions created at the Company's web sites, the
Company believes that its business model is robust. At such time as sufficient
traffic has been created at the Company's web sites, the Company believes that
banner space on its web sites will be attractive to advertisers. The Company
presently does not have any contracts to buy or sell banner space and has not
had any revenue from impressions.
EMPLOYEES
As of October 22, 1999, the Company had one employee, Bill J. Rogers who is
the CEO. He is not represented by a union. The Company believes that its
employee relations are good. Upon implementation of the business plan, the
Company may engage the services of contractors and consultants to perform
periodic updates and maintenance to the Company's web sites.
BUSINESS PLAN
The Company's source of revenue will be revenue from the sale of impression
banners on its web site. The Company plans a private placement of its common
stock to qualified investors to fund its current operations. The purpose of the
proceeds of this proposed private placement is to provide the Company with funds
to purchase banner space on other web sites which will direct Internet traffic
to the Company's web site, and thereby create a market for banner space on its
own web site. The Company believes that $500,000 in funds would be sufficient
to execute its business plan.
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By filing this Form 10-SB, the Company plans to become a reporting
company under the Securities and Exchange Act of 1934. Management believes this
step will provide a market for its common stock and could provide a means of
obtaining future funds necessary to implement its business plan. The Company
believes that cash flows from businesses that it is currently developing could
provide the financial resources for its continued operations. Presently, the
Company does not have any revenue from operations. In the event that the
Company is unable to generate sufficient revenue from operations, or is unable
to obtain additional financing, it may be unable to implement its business plan.
There can be no assurance that the Company's planned private placement of equity
securities or its planned public reporting status will be successful or that
the Company will have the ability to implement its business plan and
ultimately attain profitability.
The Company's long-term viability is dependent upon three key factors,
as follows:
1. The Company's ability to obtain adequate sources of debt or equity
funding to implement its business plan.
2. The ability of the Company to develop viable e-commerce activities.
3. The ability of the Company to ultimately achieve adequate
profitability and cash flows from operations to sustain its operations.
RISK FACTORS
Financial Matters
The Company presently has limited financial resources. In order for the
Company to effectuate its business plan, the Company must first obtain funds to
pay for a sufficient amount of banner advertising on the web sites of others
which the Company believes will create click throughs to the Company's web
sites, resulting in a high traffic count. In the event that the Company is
unable to generate sufficient revenue from operations, or is unable to obtain
additional financing, the Company may be unable to implement its business plan.
There can be no assurance that the Company's planned private placement of equity
securities will be successful or that the Company will have the ability
to implement its business plan and ultimately attain profitability. There is no
assurance that capital will be available from any source, or, if available, upon
terms and conditions acceptable to the Company.
Effect of financing
Financing obtained through the sale of the Company's securities may cause
significant dilution in per share net tangible book value to existing
shareholders. Debt financing could result in the assets of the Company being
pledged as collateral and restrictive loan terms.
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Recent Losses and Accumulated Losses and Deficit, and Potential Deficiencies in
Liquidity
The Company incurred a net loss of $(98,574) for the year ending December
31, 1998. Revenue during 1998 were nil. Losses are attributable to the
development of the Company's web site. Management believes that revenue will
achieved and ultimately that the Company will be profitable, although there can
no assurance that this will occur.
Control by Management
Bill J. Rogers, a Director and the Chief Executive Officer and President of
the Board of the Company presently owns approximately 61% of the outstanding
common stock of the Company. As a result, management, as a practical matter,
will be able to elect all directors and otherwise control the affairs of the
Company for the foreseeable future.
Dependence On, and Availability of Management; Management of Growth
The success of the Company is substantially dependent upon the time,
talent, and experience of Bill J. Rogers. The Company, through its subsidiary
Internet Marketing, Inc., a Texas corporation, has an employment agreement with
Bill J. Rogers. The loss of the services of Mr. Rogers would have a material
adverse impact on the Company and its business. No assurance can be given,
however, that a replacement for Mr. Rogers could be located in the event of his
unavailability. Further, in order for the Company to expand its business
operations, it must continue to improve and expand the level of expertise of its
personnel and must attract, train and manage qualified managers and employees to
oversee and manage the expanded operations. Demand for Internet and computer
industry personnel is high. There is no assurance that the Company will be in a
position to offer competitive compensation to attract or retain such personnel.
The Company has no key man life insurance on Bill J. Rogers.
Shares Eligible for Future Sale
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Of the 9,570,014 outstanding shares of common stock of the Company as of
October 22, 1999, approximately 532,500 are free trading shares, and
approximately 8,967,500 shares are restricted securities as that term is defined
in Rule 144 adopted under the Act ("Restricted Securities"). Rule 144 governs
resales of Restricted Securities for the account of any person, other than an
issuer, and restricted and unrestricted securities for the account of an
"affiliate" of the issuer. Restricted securities generally include any
securities acquired directly or indirectly from an issuer or its affiliates
which were not issued or sold in connection with a public offering registered
under the Securities Act. An affiliate of the issuer is any person who directly
or indirectly controls, is controlled by, or is under common control with, the
issuer. Affiliates of the Company may include its directors, executive officers,
and persons directly or indirectly owning 10% or more of the outstanding common
stock. Under Rule 144, unregistered resales of restricted common stock cannot be
made until it has been held for one year from the later of its acquisition from
the Company or an affiliate of the Company. Thereafter, shares of common stock
may be resold without registration subject to Rule 144's volume limitation,
aggregation, broker transaction, notice filing requirements, and requirements
concerning publicly available information about the Company ("Applicable
Requirements"). Resales by the Company's affiliates of restricted and
unrestricted common stock are subject to the Applicable Requirements. The volume
limitations provide that a person, or persons who must aggregate their sales,
cannot, within any three-month period, sell more than the greater of (i) one
percent of the then outstanding shares, or (ii) the average weekly reported
trading volume during the four calendar weeks preceding each such sale. A person
who is not deemed an "affiliate" of the Company and who has beneficially owned
shares for at least two years would be entitled to sell such shares under Rule
144 without regard to the Applicable Requirements. At the present time, no
restricted shares have been held for more than two years. However, between now
and March, 2001, the Company believes that approximately 1,467,500 shares of its
restricted common stock will have been held for more than two years, and
therefore could be sold by non-affiliates without limitation. No prediction can
be made as to the effect, if any, that sales of shares of common stock or the
availability of such shares for sale will have on the market prices prevailing
from time to time. Nevertheless, the possibility that substantial amounts of
common stock may be sold in the public market would likely have a material
adverse effect on prevailing market prices for the common stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
Limited Operating History; No Assurance of Successful Implementation of Business
Strategy
The Company became active in its Internet operations in March, 1999. In
addition to those risks specifically inherent in the establishment and growth of
a developing businesses, including, among other things, limited access to
capital, delays in the completion of its business plan in certain markets and
intense competition, profits from Internet business endeavors have been elusive.
There can be no assurance that the Company=s business ultimately will be
successful. Therefore, ownership of securities of the Company must be regarded
as the placing of funds at a high risk in a new or developing venture with all
of the unforeseen costs, expenses, problems, and difficulties to which such
ventures are subject.
Penny Stock Securities Law Considerations
The Company's stock is considered penny stock and subject to the penny
stock rules promulgated under the Securities Exchange Act of 1934, Rules 15g-1
to 15g-9. The penny stock rules require broker-dealers to take steps under
certain circumstances prior to executing any penny stock transactions in
customer accounts. Among other things, Rule 15g-3 requires a broker or dealer
to advise potential purchasers of a penny stock of the lowest offer and highest
bid quotations for such stock, and Rule 15g-4 requires a broker or dealer to
disclose to the potential purchaser its compensation in connection with such
transaction. Under Rule 15g-9, a broker or dealer who recommends such
securities to persons other than established customers must make a special
written suitability determination for the purchaser and receive the purchaser=s
prior agreement to such a transaction. The effect of these regulations may be
to delay transactions in stocks that are deemed to be penny stocks, and
therefore sales of the Company=s common stock by brokers or dealer and resales
by investors could be adversely affected.
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Possible Volatility of Common Stock Price
The market price of the Common Stock may be highly volatile, as has been
the case with the securities of many other small capitalization companies.
Additionally, in recent years, the securities markets have experienced a high
level of price and volume volatility and the market prices of securities for
many companies, particularly small capitalization companies, have experienced
wide fluctuations which have not necessarily been related to the operating
performances or underlying asset values of such companies.
No Cash Dividends
The Company has never paid cash dividends on its Common Stock and the Board
of Directors does not anticipate paying cash dividends in the foreseeable
future. It currently intends to retain future earnings to finance the growth of
its business.
Limitation on Director Liability
The Company's Bylaws Article V provide that the Company shall indemnify any
person who is a party to a lawsuit by reason of the fact that they were an
officer or director of the Company with certain exceptions. These provisions
may discourage stockholders from bringing suit against a director for breach of
fiduciary duty and may reduce the likelihood of derivative litigation brought by
stockholders on behalf of the Company against a director.
Competition
There are many companies which are currently engaged in Internet
activities. Many of the Company=s competitors are more established companies
with substantially greater capital resources and have substantially greater
marketing capabilities than the Company. No assurances can be given that the
Company will be able to successfully compete with such companies. The cost of
entry into Internet activities is low. Further, the Company anticipates that
the number of competitors will increase in the future.
Ability to Manage Growth
It is the intention of the Company to expand its existing business
operations by acquiring companies and starting new businesses. Such expansion
will subject the Company to a variety of risks associated with rapidly growing
companies. In particular, the Company's growth may place a significant strain on
its day-to-day operations. There can be no assurance that its systems, controls
or personnel will be sufficient to meet these demands. Inadequacies in these
areas could have a material adverse effect on the Company=s business, financial
condition and results of operations.
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Item 2. Plan of Operation
The following description of the Company's plan of operation should be read
in conjunction with the Financial Statements and the Notes to Financial
Statements, contained in this report as set forth beginning on page F-1.
INTRODUCTION
The Company was originally incorporated in the State of Nevada in 1997
under the name Chandelier Business Services, Inc. In March, 1999, pursuant to a
Stock Exchange Agreement, the Company acquired all of the equity of Internet
Marketing, Inc., a Texas corporation, in exchange for 6,500,000 shares of common
stock of the Company. Internet Marketing, Inc., a Texas corporation, was formed
in 1998 to own and operate e-commerce businesses. Following this transaction,
the Company changed its name to Internet Marketing, Inc. At the time of the
acquisition, Chandelier Business Services, Inc. had no viable business
activities and could be characterized as being a shell company. In connection
with the exchange, Company shareholders agreed to cancel 2,300,000
shares of an original 2,546,000 outstanding, and an additional 1,754,000 Company
shares were issued to promoters for nominal consideration.
The Company treated the acquisition of Internet Marketing, Inc., a Texas
corporation, as a recapitalization whereby Internet Marketing, Inc., a Texas
corporation, was the accounting acquiror. At the time of the acquisition, there
were only an infrequent number of trades and virtually no trading volume of the
common stock of the Company, and the Company is unable to estimate the market
value of the Company's common stock to determine a resulting valuation of this
acquisition. The financial statements of accounting acquiror became the
financial statements of the Company.
PLAN OF OPERATION
The Company is in the development stage. At the present time, the Company
has no cash commitments. At the present time, the cash requirements of the
Company are relatively small and include web hosting costs of approximately $500
per month and de minimis administrative costs. The Company believes that these
cash requirements can be met for at least for the next 12 months. Mr. Rogers
has made an informal agreement with the Company to make working capital loans to
the Company in an amount not to exceed $6,000 during the next 12 months at the
market interest rate.
The Company plans a private placement of its common stock to qualified
investors to fund the implementation of its business plan. The purpose of the
proceeds of this proposed private placement is to provide the Company with funds
to purchase banner space on other web sites which will direct Internet traffic
to the Company's web site, and thereby create a market for banner space on its
own web site. The Company believes that $500,000 in funds would be sufficient
to execute its business plan.
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By filing this Form 10-SB, the Company plans to become a reporting
company under the Securities and Exchange Act of 1934. Management believes this
step will provide a market for its common stock and could provide a means of
obtaining future funds necessary to implement its business plan. In the event
that the Company is unable to generate sufficient revenue from operations, or is
unable to obtain additional financing, it may be unable to implement its
business plan. There can be no assurance that the Company's planned private
placement of equity securities or its planned public reporting status will be
successful or that the Company will have the ability to implement its business
plan and ultimately attain profitability.
The Company's long-term viability is dependent upon three key factors,
as follows:
1. The Company's ability to obtain adequate sources of debt or equity
funding to implement its business plan.
2. The ability of the Company to develop viable e-commerce activities.
3. The ability of the Company to ultimately achieve adequate
profitability and cash flows from operations to sustain its operations.
The Company's current plan of operation involves the further development of
the Company's FindSites on the Internet. The Company's Wall Street FindSite is
fully operational.
EFFECTS OF FINANCING THROUGH SALES OF SECURITIES
In order for the Company to effectuate its business plan, the Company must
first obtain funds to pay for a sufficient amount of banner advertising on the
web sites of others which the Company believes will create click throughs to the
Company's web sites, resulting in a high traffic count. There is no assurance
that the Company will be able to obtain acceptable forms and amounts of
financing. Financing obtained through the sale of the Company's securities, may
cause significant dilution in per share net tangible book value to existing
shareholders.
YEAR 2000 ISSUES AND Y2K
The Company presently believes that its computers are Y2K compliant and the
Company presently anticipates no Y2K impact in connection with its suppliers or
customers. However, the Company is presently assessing its Year 2000 compliance
status and the status of its suppliers and customers. However, since the
Company's future revenue from Internet operations are wholly dependent on others
being able to use their own computers to connect to the Internet, there can be
no assurance that the Company will escape the consequences of a Year 2000
compliance deficiency.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time sensitive software may recognize a date
using"00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculation causing disruption of business activities.
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Based on ongoing assessments, the Company believes that no significant
modifications of existing computer software will be required. The Company
believes that its computer systems will function properly with respect to dates
in the year 2000 and thereafter. The Company also believes that costs related
to the Year 2000 issue will not be significant.
The Company has assessed its relationships with significant suppliers and
customers to determine the extent to which the Company is vulnerable to any
known third party's failure to remedy their own Year 2000 issues. Based on
these assessments, management believes that significant exposure does not exist
with respect to known third parties.
Y2K Contingency Plans. In the event that the Company's computers
ultimately are shown not to be Y2K compliant, the Company will shift its
internal and external programming capabilities to addressing Y2K compliance.
Item 3. Description of Property
The Company's principal executive offices are located at 552 Rancho Bauer,
Suite 100, Houston, Texas 77079, in approximately 1,000 square feet of office
space which has been provided to the Company on a month to month verbal lease at
no charge by Bill J. Rogers. The Company may seek larger space in the future
which it may lease from Mr. Rogers. However, there are no arrangements for
futures leases between the Company and Mr. Rogers. The Company believes that
its offices are adequate for its present and future needs.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of October 22, 1999,
with respect to the beneficial ownership of shares of common stock by (i) each
person who is known to the Company to beneficially own more than 5% of the
outstanding shares of common stock, (ii) each director of the Company, (iii)
each executive officer of the Company and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated, each
stockholder has sole voting and investment power with respect to the shares
shown.
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<CAPTION>
Percent
Name and Address Shares of Common of
of Beneficial Holder Stock Beneficially Owned Class
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<S> <C> <C>
Bill J. Rogers 5,797,000 61.2%
552 Rancho Bauer, Suite 100
Houston, Texas 77079
Thomas Devine 50,000 .5%
6830 N. Eldridge Pkwy.
Houston, Texas 77041
Bill Sherrill 50,000 .5%
2106 Nantucket Drive
Houston, Texas 77057
Wajed "Roger" Salam 50,000 .5%
2717 Seville Blvd. #11101
Clearwater, Florida 33766
Richard Randall 25,000 .5%
4320 N. Walnut
Muncie, Indiana 47303
All officers and directors as
a Group--Five Persons 5,973,000 62.9%
</TABLE>
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Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and executive officers of the Company are as follows.
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<CAPTION>
Name and Address Age Position
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Bill J. Rogers 60 Director, CEO and President
Thomas Devine 65 Director
Bill Sherrill 73 Director
Wajed "Roger" Salem 37 Director
Richard Randall 50 Chief Financial Officer
</TABLE>
Directors are elected annually and hold office until the next annual
meeting of the stockholders of the Company or until their successors are elected
and qualified. Officers serve at the discretion of the Board of Directors. There
is no family relationship between or among any of the directors and executive
officers of the Company.
BIOGRAPHIES
Bill J. Rogers has been a director and the CEO and President of the Company
since March, 1999. Mr. Rogers founded Internet Marketing, Inc., a Texas
corporation (a wholly-owned subsidiary of the Company) in July, 1998. For more
than five years prior to 1998, Mr. Rogers has owned the Rogers Investment
Company, which specializes in the business development of entrepreneurial
companies. Mr. Rogers holds a BBA Degree from the University of Texas.
Thomas Devine has been a director of the Company since March, 1999. For
more than five years prior to 1999, Mr. Devine has been an attorney in private
practice in Texas. Mr. Devine holds a BA Degree and an LLB Degree from the
University of Texas.
Bill Sherrill has been a director of the Company since March, 1999. For
more than five years prior to 1999, Mr. Sherrill has been an executive professor
at the University of Houston's Center for Entrepreneurship & Innovation. Mr.
Sherrill holds a BBA from the University of Houston and an MBA from Harvard
University
Wajed "Roger" Salem has been a director of the Company since March, 1999.
Mr. Salem is the President of the Internet and Marketing Consulting Group, a
provider of Internet business solutions. For more than five years prior to
1999, Mr. Salem has been associated with the Anthony Robins Institute in sales
and marketing positions. Mr. Salem holds a BA Degree from UCLA.
Richard Randall has been the Chief Financial Officer of the Company since
March, 1999. For more than five years prior to 1999, Mr. Randall has been a
C.P.A. in private practice in Florida and Indiana. Mr. Randall holds a
Professional Accounting Degree from Ball State University.
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Item 6. Executive Compensation
The following table reflects all forms of compensation for services to the
Company for years ended December 31, 1998, 1997 (the year if inception) of the
chief executive officer. No executive officer of the Company received
compensation which exceeded $100,000 during these periods.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM COMPENSATION
COMPENSATION
AWARDS PAYOUTS
OTHER ALL
NAME AND ANNUAL RESTRICTED SECURITIES OTHER
PRINCIPAL COMPEN- STOCK UNDERLYING LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS/SARS PAYOUTS SATION
- --------------- ----------- ----- ------- ---------- ------------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Bill J. Rogers
CEO
1998 $37,000 (1) -0- -0- -0- -0- -0- -0-
_______________
<FN>
(1) This amount of $37,000 was accrued for 1998, but not paid yet.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company, through its subsidiary Internet Marketing, Inc., a Texas
corporation, has a current employment agreement with Bill J. Rogers, pursuant
to which Mr. Rogers is entitled to receive $7,500 per month. This agreement
commenced in January, 1999 and has a term of three years. Mr. Rogers' salary is
presently being accrued and has not been paid.
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DIRECTOR COMPENSATION
Messrs. Devine and Sherrill were directors of Internet Marketing, Inc., a
Texas corporation, prior to the Stock Exchange Agreement with the Company, and
had each received 50,000 shares of the Internet Marketing, Inc., a Texas
corporation, as Director compensation. These shares were exchanged for shares
of the Company pursuant to the Stock Exchange Agreement. Mr. Salem received
50,000 shares of the Company as Director compensation. The Company has not paid
any other type of director compensation.
EMPLOYEE STOCK OPTION PLAN
The Company believes that equity ownership is an important factor in its
ability to attract and retain skilled personnel, and the Board of Directors of
the Company may adopt an employee stock or stock option plan in the future. The
purpose of the plan will be to further the interest of the Company and its
stockholders by providing incentives in the form of stock or stock options to
key employees and directors who contribute materially to the success and
profitability of the Company. The grants will recognize and reward outstanding
individual performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing their personal interest in
the Company's continued success and progress. This program will also assist the
Company in attracting and retaining key employees and directors.
Item 7. Certain Relationships and Related Transactions
The Company believes that the terms and conditions of the following
transaction was no less as favorable to the Company that terms attainable from
unaffiliated third parties.
In March, 1999, the Company entered into a Stock Exchange Agreement with
the stockholders and subscribers of Internet Marketing, Inc., a Texas
corporation. This transaction was made at a time when the Company's common
stock had a deminimis value, there were only an infrequent number of trades and
virtually no trading volume. The Company issued a total of 7,500,000 shares of
common stock of the Company to these stockholders, subscribers and a financial
consultant in exchange for all of the outstanding shares of Internet Marketing,
Inc., a Texas corporation, and for services rendered . The terms and conditions
of the Stock Agreement Exchange were determined by the parties through arms
length negotiations. However, no appraisal was performed. As a result of
these transactions, Bill J. Rogers, a stockholder of Internet Marketing, Inc., a
Texas corporation became the owner of 5,797,000 shares of the common stock
of the Company. The Company treated the acquisition of Internet Marketing,
Inc., a Texas corporation as a recapitalization whereby Internet Marketing,
Inc., a Texas corporation was the accounting acquiror. At the time of the
acquisition, there were only an infrequent number of trades and virtually no
trading volume of the common stock of the Company, and the Company is unable
to estimate the market value of the Company's common stock to determine a
resulting valuation of this acquisition.
13
<PAGE>
Item 8. Description of Securities
The authorized capital stock of the Company consists of 25,000,000 shares
of common stock, par value $0.001. The Board of Directors may establish series
or classes of shares out of the authorized shares. As of October 22, 1999, the
Company had 9,570,014 shares of common stock deemed outstanding, of which
70,014 shares are to be issued.
The Company has no present plans or agreements to increase the number of
authorized shares of its capital stock.
The following summary description of the securities of the Company is
qualified in its entirety by reference to the Certificates of Incorporation, as
amended, and the Bylaws of the Company, as amended, copies of which are filed as
exhibits to this Form 10-SB.
COMMON STOCK
The Company's Articles of Incorporation authorize 25,000,000 shares of
common stock. The holders of common stock are entitled to one vote per share
with respect to all matters required by law to be submitted to stockholders of
the Company, including the election of directors. The common stock does not
have any cumulative voting, preemptive, subscription or conversion rights. The
election of directors and other general stockholder action requires the
affirmative vote of a majority of shares represented at a meeting in which a
quorum is represented, except that pursuant to the Bylaws a consent to corporate
action by a majority of shareholders entitled to vote on a matter is permitted.
The outstanding shares of common stock are validly issued, fully paid and
non-assessable.
The holders of common stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of funds legally available. In the
event of liquidation, dissolution or winding up of the affairs of the Company,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them subject to the rights of holders of
senior securities, if any.
At the present time, no preferred stock is authorized in the Articles of
Incorporation, and there are no outstanding options or warrants.
14
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Stock and
Other Shareholder Matters
The Company's common stock is currently traded on the over-the-counter
market under the symbol "IMIZ". The following table sets forth, for the
periods indicated, the reported high and low closing bid quotations for the
common stock of the Company as reported on the over the counter market. The bid
prices reflect inter-dealer quotations, do not include retail markups, markdowns
or commissions and do not necessarily reflect actual transactions. There is
presently no active market for the Company's common stock.
<TABLE>
<CAPTION>
HIGH LOW
QUARTER ENDED BID BID
<S> <C> <C>
Inception through
December 31, 1997 $ (*) $ (*)
March 31, 1998 $ (*) $ (*)
June 30, 1998 $ (*) $ (*)
September 30, 1998 $ (*) $ (*)
December 31, 1998 $ (*) $ (*)
March 31, 1999 $ (*) $ (*)
June 30, 1999 $ 5.00 $ 5/8
September, 1999 $ 2-1/8 $ 3/4
<FN>
(*) To the best of the Company's knowledge, through March, 1999, no
broker-dealer made an active market or regularly submitted quotations for the
Company's stock. During this period there were only an infrequent number of
trades and virtually no trading volume.
On October 19, 1999, the bid price Company's common stock was $.125 per
share. As of October 22, 1999, there were approximately 102 holders of record
of the Company's common stock.
The Company's transfer agent is Colonial Stock Transfer Company, Inc., 455
East 400 South, Suite 100, Salt Lake City, Utah 84111; (801) 355-5740.
</TABLE>
15
<PAGE>
DIVIDEND POLICY
The Company has not paid, and the Company does not currently intend to pay
cash dividends on its common stock in the foreseeable future. The current policy
of the Company's Board of Directors is for the Company to retain all earnings,
if any, to provide funds for operations and expansion of the Company's business.
The declaration of dividends, if any, will be subject to the discretion of the
Board of Directors, which may consider such factors as the Company's results of
operations, financial condition, capital needs and acquisition strategy, among
others.
Item 2. Legal Proceedings
None.
Item 3. Changes in and Disagreements With Accountants
(a) On September 1, 1999, the Company engaged Malone & Bailey, PLLC ("Malone
& Bailey") as its independent accountant. The decision to engage Malone &
Bailey as the Company's independent accountant was recommended and approved by
the chairman of the Company's Board of Directors.
(b) In a report dated March 8, 1999, Jones, Jensen & Company, LLC ("Jones,
Jensen") reported on the Company's financial statements as of January 31, 1998
and 1999, and the related statements of operations, stockholders' equity and
cash flow for the year ended January 31, 1999 and since inception on March 4,
1997 through January 31, 1998 and 1999. Such report contained did not contain
an adverse opinion or disclaimer of opinion, nor was such report qualified or
modified as to uncertainty, audit scope, or accounting principles, except for a
going concern qualification. Jones, Jensen understands that it was terminated
as the Company's independent accountant effective August 1, 1999. Thereafter,
the Company engaged Malone & Bailey, PLLC as its independent accountant on
September 1, 1999.
(c) During the Company's two years ended January 31, 1998 and 1999, and the
subsequent interim period preceding the decision to engage independent
accountants, there were no "reportable events" (hereinafter defined) requiring
disclosure pursuant to Item 304 of Regulation S-B.
(d) Effective September 1, 1999, the Company engaged Malone & Bailey as its
independent accountant. During the two years ended January 31, 1998 and 1999,
and the subsequent interim period preceding the decision to engage independent
accountants, neither the Company nor anyone on its behalf consulted Malone &
Bailey regarding either the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, nor has Malone & Bailey
provided to the Company a written report or oral advice regarding such
principles or audit opinion.
Jones, Jensen has provided a letter to the Company pursuant to Rule 304 of
Regulation S-B.
16
<PAGE>
Item 4. Recent Sales of Unregistered Securities
During the past three years, the following transactions were effected by
the Company in reliance upon exemptions from registration under the Securities
Act of 1933 as amended (the "Act") as provided in Section 4(2) thereof. Each
certificate issued for unregistered securities contained a legend stating that
the securities have not been registered under the Act and setting forth the
restrictions on the transferability and the sale of the securities. No
underwriter participated in, nor did the Company pay any commissions or fees to
any underwriter in connection with any of these transactions. None of the
transactions involved a public offering.
In March, 1999, the Company entered into a Stock Exchange Agreement with
The stockholders and subscribers of Internet Marketing, Inc. , a Texas
corporation. The Company issued a total of 7,500,000 shares of common stock of
the Company to these stockholders, subscribers and a financial consultant in
exchange for all of the outstanding shares of Internet Marketing, Inc., a Texas
corporation, and for services rendered. The Company believes that each of
the persons had knowledge and experience in financial and business matters which
allowed them to evaluate the merits and risk of the receipt of these securities
of the Company, and that they were knowledgeable about the Company's operations
and financial condition.
In April, 1999, the Company received the amount of $35,007 from an investor
for the purchase of common stock at $.50 per share, and is to issue 70,014
shares to the investor. The Company believes that this investor had knowledge
and experience in financial and business matters which allowed him to evaluate
the merits and risk of the receipt of these securities of the Company, and that
he was knowledgeable about the Company's operations and financial condition.
In September, 1999 the Company issued 20,000 shares of common stock to an
attorney as compensation for services rendered. The Company believes that the
attorney had knowledge and experience in financial and business matters which
allowed him to evaluate the merits and risk of the receipt of these securities
of the Company. The attorney was knowledgeable about the Company's operations
and financial condition.
Item 5. Indemnification of Directors and Officers
The following summary description of material provisions of the Company's
Bylaws is qualified in its entirety by reference to the Bylaws of the Company, a
copy of which are included as an exhibit to this Form 10-SB.
17
<PAGE>
The Company's Bylaws Article V provide that the Company shall indemnify any
person who is a party to a lawsuit by reason of the fact that they were an
officer or director of the Company with certain exceptions. These provisions
may discourage stockholders from bringing suit against a director for breach of
fiduciary duty and may reduce the likelihood of derivative litigation brought by
stockholders on behalf of the Company against a director.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the Company's Certificate of Incorporation or Bylaws, the Company has been
informed that, in the opinion of the SEC, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
PART F/S
The financial information required by this item is included as set forth
beginning on page F-1.
PART III
Item 1. Index to Exhibits.
<TABLE>
<CAPTION>
<C> <S>
3.1 Certificate of Incorporation and Amendments thereto.
3.2 By-Laws and Amendments thereto.
4.1 Form of Common Stock Certificate.
10.1 Agreement and Plan of Reorganization
10.2 Employment Agreement with Bill J. Rogers
16.1 Letter from Jones, Jensen & Company, LLC
21.1 Subsidiaries of the registrant.
27.1 Financial Data Schedule for the year ended December 31, 1998.
27.2 Financial Data Schedule for second quarter ended June 30, 1999.
</TABLE>
Item 2. Description of Exhibits.
The Exhibits required by this item are included as set forth in the Exhibit
Index.
18
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Form 10-SB registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Internet Marketing, Inc.
October 22, 1999 By /s/ Bill J. Rogers
-----------------------------------
Bill J. Rogers
Director, CEO and President
October 22, 1999 By /s/ Richard A. Randall
-----------------------------------
Richard A. Randall
Chief Financial Officer
19
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Directors and Stockholders
Internet Marketing, Inc.
Houston, Texas
We have audited the accompanying consolidated balance sheet of Internet
Marketing, Inc. as of December 31, 1998, and the related consolidated statements
of income, stockholders' equity, and cash flow for the period from July 27, 1998
(Inception), through December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet Marketing, Inc. as of
December 31, 1998, and the results of their operations and cash flows for the
period then ended in conformity with generally accepted accounting principles.
September 19, 1999
/s/ Malone & Bailey, PLLC
Malone & Bailey, PLLC
Houston, Texas
F1
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
<S> <C>
ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 370
----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . $ 370
==========
LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . $ 1,089
Accrued salary payable to founding shareholder. . . . . . 37,500
----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 38,589
----------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 10,000,000 shares authorized,
no shares issued or outstanding
Common stock, $.001 par, 100,000,000 shares authorized,
6,100,000 shares issued and outstanding . . . . . . . . 6,100
Paid in capital . . . . . . . . . . . . . . . . . . . . . 54,255
Deficit accumulated during the development stage. . . . . (98,574)
----------
TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . (38,219)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . . $ 370
==========
</TABLE>
See accompanying notes.
F2
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC.
(A Development Stage Company)
STATEMENT OF OPERATING DEFICIT
For the Period from July 27, 1998 (Inception)
Through December 31, 1998
<S> <C>
Administrative expenses . 98,574
-----------
NET (LOSS). . . . . . . $ (98,574)
===========
Average (Loss) per share. $ (.02)
Weighted average shares . 6,045,000
</TABLE>
See accompanying notes.
F3
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from July 27, 1998 (Inception)
Through December 31, 1998
<S> <C>
CASH FLOWS USED BY OPERATING ACTIVITIES
Net (Loss). . . . . . . . . . . . . . . . . . . . $(98,574)
Adjustments to reconcile net income to net cash
Provided by operating activities:
Stock issued for services . . . . . . . . . . . 27,500
Change in cash from:
Accounts payable. . . . . . . . . . . . . . . . 1,089
Accrued salary payable to founding shareholder. 37,500
---------
NET CASH USED BY OPERATING ACTIVITIES . . . . (32,485)
---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Cash contributed by majority shareholder. . . . . 32,855
---------
NET CASH FLOWS FROM FINANCING ACTIVITIES. . . 32,855
---------
NET INCREASE IN CASH. . . . . . . . . . . . . 370
CASH ON HAND - beginning of period . . . . . . . . 0
---------
- end of period . . . . . . . . . . . . $ 370
=========
</TABLE>
See accompanying notes.
F4
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from July 27, 1998 (Date of Inception)
Through December 31, 1998
--Common Stock-- Paid in Accumulated
Shares Value Capital Deficit Totals
------------------ --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Shares issued to founding
shareholder. . . . . . . . 5,825,000 $ 5,825 $ 27,030 $ 32,855
Shares issued for services
In August 1998 . . . . . . 275,000 275 27,225 27,500
Net (loss) . . . . . . . . . $ (98,574) (98,574)
------------------ --------- ------------ --------- ---------
Balances, December 31, 1998. 6,100,000 $ 6,100 $ 54,255 $(98,574) $(38,219)
================== ========= ============ ========= =========
</TABLE>
See accompanying notes.
F5
<PAGE>
INTERNET MARKETING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
Nature of Business. Internet Marketing, Inc, ("IMI-Texas") was formed as a
- ---------------------
Texas corporation on July 27, 1998 to pursue the creation and marketing of
"Internet Malls". Internet Marketing, Inc. ("Company") was incorporated in
Nevada as Chandelier Business Services, Inc. on March 4, 1997. The Company
entered into a "reverse acquisition" ("reorganization") with IMI-Texas as
described in Note 3. IMI-Texas is a wholly-owned subsidiary of the Company.
Internet Malls are Internet web sites which provide links to common-interest
site elsewhere. A potential web customer can access specific selling sources
through a common web site, the "Internet Mall". The Company hopes to obtain
revenues from such Internet Malls through the receipt of commissions on sales
occurring through such links and from the sale of site "banner" rentals which
advertise specific locations on the Internet.
In preparing financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance sheet
and revenue and expenses in the income statement. Actual results could differ
from those estimates.
Cash and cash equivalents. For purposes of the cash flow statement, the Company
- --------------------------
considers cash on hand and cash in the bank as cash and cash equivalents.
Development Stage. The Company does not yet have revenues. Operating funds
have been contributed by the majority shareholder and from private sales of
stock.
NOTE 2 - CORPORATE FORMATION
At inception, the Company issued 275,000 shares of stock to several key
individuals who serve on the Board of Directors or as advisors. These shares
are recorded at $.10 per share, which was management's opinion of their fair
value at that time.
NOTE 3 - REORGANIZATION
On March 30, 1999, the Company agreed to a reorganization with IMI-Texas. Prior
to that time, the Company was a Nevada shell company with no significant assets
or operations. Pursuant to this acquisition, IMI-Texas shareholders agreed to
exchange their 6,500,000 shares for 6,500,000 shares of the Company. In
connection with the exchange, Company shareholders agreed to cancel 2,300,000
shares of an original 2,546,000 outstanding, and an additional 1,754,000 Company
shares were issued to promoters for nominal consideration. A summary of shares
outstanding at the conclusion of this reorganization is as follows:
F6
<PAGE>
INTERNET MARKETING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - REORGANIZATION (Continued)
<TABLE>
<CAPTION>
<S> <C>
Shares outstanding of the Company on December 31, 1998 2,546,000
Shares cancelled in the reorganization . . . . . . . . (2,300,000)
Shareholders of IMI-Texas on December 31, 1998 . . . . 6,100,000
Issuance of shares for cash. . . . . . . . . . . . . . 488,014
Cancellation of original founder shares. . . . . . . . (18,000)
Issuance of shares to promoters. . . . . . . . . . . . 2,754,000
-----------
Total shares outstanding at June 30, 1999. . . . . 9,570,014
</TABLE>
Stock issued to promoters and attorneys in connection with the reorganization
and fundraising efforts is valued at $.50 and is shown as a reduction of paid in
capital.
In connection with this reorganization, the legal acquiror is treated as the
accounting acquiree, and hence the financial statements and all other footnotes
are shown as if IMI-Texas is and has been the Company since inception.
NOTE 4 - EMPLOYMENT CONTRACT
The founding shareholder, who is president and chief operating officer, has an
employment contract with the Company for a term of 3 years, expiring January
2002. The contract calls for a base salary of $90,000 per year. As of December
31, 1998, no salary had been paid, and $37,500 had been accrued.
F7
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC
(A Development Stage Company)
BALANCE SHEET
June 30, 1999
(Unaudited)
<S> <C>
ASSETS
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 106
Computer equipment, net of depreciation of $1,880 . . . . 24,483
----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . $ 24,589
==========
LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . $ 15,255
Advance from shareholder. . . . . . . . . . . . . . . . . 6,000
Accrued salary payable to founding shareholder. . . . . . 58,500
----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 79,755
----------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par, 10,000,000 shares authorized,
no shares issued or outstanding
Common stock, $.001 par, 100,000,000 shares authorized,
9,570,014 shares issued and outstanding . . . . . . . . 9,570
Paid in capital . . . . . . . . . . . . . . . . . . . . . 302,792
Deficit accumulated during the development stage. . . . . (367,528)
----------
TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . (55,166)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . . $ 24,589
==========
</TABLE>
F8
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC.
(A Development Stage Company)
STATEMENTS OF OPERATING DEFICIT
For the Six Months Ended June 30, 1999
And the Period from July 27, 1998 (Inception)
Through June 30, 1999
(Unaudited)
Inception
1999 to Date
----------- -----------
<S> <C> <C>
Administrative expenses . 268,954 367,528
----------- -----------
NET (LOSS). . . . . . . $ (268,954) $ (367,528)
=========== ===========
Average (Loss) per share. $ (.03)
Weighted average shares . 8,390,005
</TABLE>
F9
<PAGE>
<TABLE>
<CAPTION>
INTERNET MARKETING, INC
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1999
And the Period from July 27, 1998 (Inception)
Through June 30, 1999
Unaudited)
Inception
1999 to Date
---------- -----------
<S> <C> <C>
CASH FLOWS USED BY OPERATING ACTIVITIES
Net (Loss). . . . . . . . . . . . . . . . . . . . $(268,954) $ (367,528)
Adjustments to reconcile net income to net cash
Provided by operating activities:
Stock issued for services . . . . . . . . . . . 27,500
Depreciation. . . . . . . . . . . . . . . . . . 1,880 1,880
Change in cash from:
Accounts payable. . . . . . . . . . . . . . . . 14,167 15,256
Accrued salary payable to founding shareholder. 21,000 58,500
---------- -----------
NET CASH USED BY OPERATING ACTIVITIES . . . . (231,907) (264,392
----------
CASH FLOWS USED BY INVESTING ACTIVITIES
Purchases of computer equipment and software. . . (26,364) (26,364)
---------- -----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Advance from shareholder. . . . . . . . . . . . . 6,000 6,000
Sale of stock . . . . . . . . . . . . . . . . . . 244,007 244,007
Cash contributed by majority shareholder. . . . . 8,000 40,855
---------- -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES. . . 258,007 290,862
---------- -----------
NET INCREASE (DECREASE) IN CASH . . . . . . . (264) 106
CASH ON HAND - beginning of period . . . . . . . . 370 0
---------- -----------
- end of period . . . . . . . . . . . . $ 106 $ 106
========== ===========
</TABLE>
F10
<PAGE>
INTERNET MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited interim financial statements of Internet Marketing,
Inc. have been prepared in accordance with generally accepeted accounting
principles and the rules of the Securities and Exchange Commission. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year.
F11
<PAGE>
Articles of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
Secretary of State
(For filing office use) (For filing office use)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT: Read instructions on reverse side before completing this form.
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: Chandelier Business Services. Inc.
-------------------------------------
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
--------------
where process may be served)
Name of Resident Agent: Nevada Corporate Services, Inc.
----------------------------------
Street Address: 1800 East Sahara Avenue. Ste 107 Las Vegas. NV 89104
-------------------------------------------------------
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 25,000,000 Par value: $0. 001 /share
---------- --------------
Number of shares without par value: 0
-
4. GOVERNING BOARD: shall be styled as (check one): X Directors Trustees
--- ---
The FIRST BOARD OF DIRECTORS shall consist of 1 members and the names and
-
addresses are as follows (attach additional pages if necessary):
York Chandler 935 E. Northc1iff Drive
-------------------- -----------------------------------------------------
Name Address Salt Lake City, UT 84103 City/State
-------------------- -----------------------------------------------------
Name Address City/State
5. PURPOSE (optional- see reverse side): The purpose of the corporation shall
be:
All legal activity
--------------------
6. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to NRS
78.037 or any other information you deem appropriate. If any of the additional
information is contradictory to this form it cannot be filed and will be
returned to you for correction. Number of pages attached 0.
-
7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (Signatures must be notarized.)
(Attach additional pages if there are more than two incorporators.)
York Chandler
---------------------------------- ----------------------------------------
Print Name Print Name
935 E. Northcliffe Drive
------------------------------------------------ --------------------------
Address: Salt Lake City, UT 84103 City/State/Zip Address City/State/Zip
---------------------------------- ----------------------------------------
Signature Signature
State of Nevada County of Clark State of Country of
------ ----- ------ ----------
This instrument was acknowledged This instrument was acknowledged
before me on before me on
February 21, 1997, by ___________, 19__
------------ --
York Chandler
---------------------------------- ----------------------------------------
Name of Person Name of Person
as incorporator as incorporator
of Chandelier Business Services. Inc. of ___________________
-------------------------------------
---------------------------------- ----------------------------------------
(name of party no behalf of whom (name of party no behalf of whom
instrument was executed) instrument was executed)
/S/ Alan Herbert Russell
---------------------------------- ----------------------------------------
Notary Public Signature Notary Public Signature
---------------------------------- ----------------------------------------
(affix notary stamp or seal) (affix notary stamp or seal)
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
Nevada Corporate Services. Inc hereby accept appointment as Resident
---------------------------------
Agent for the above named corporation
/S/ R. Smith 2/21/97
- -------------------------------------- -------
Signature of Resident Agent
|---------------------------------|
| [SEAL OF NOTARY PUBLIC] |
| Notary Public-State of Nevada |
| Alan Herbert Russell |
| County of Clark |
| My Commission Expires |
| October 5, 1988 |
- ----------------------------------
<PAGE>
FILED THE
IN THE OFFICE OF
SECRETARY OF THE STATE OF THE
STATE OF NEVADA
APR 09 1999
No C4361-47
Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
CHANDELIER BUSINESS SERVICES, INC.
The undersigned, York K. Chandelier, the President and sole executive
officer and director of Chandler Business Services, inc., a Nevada corporation
(the "Corporation'), does hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the Articles of
lncorporation of the Corporation shall be amended as followed:
The name of the Corporation is "Internet Marketing, Inc."
II
The foregoing amendment; was adopted by Unanimous Consent of the Board of
Directors pursuant - S.3 15 of the Nevada Revised Statutes, and by Consent of
Majority Stockholder pursuant to Section 78.320 of the Nevada Revised Statutes.
III
The number of shares entitled to vote on the amendment was 2,546,000.
IV
The number of share voted in favor of the amendment was 2,000,000 with none
opposing and none abstaining.
/S/ York K. Chandler
-----------------------
York K. Chandler, President and Secretary
STATE OF UTAH )
COUNTY OF SALT LAKE )ss
)
On the 7th day of April, 1999 personally appeared before me, a Notary
Public, York K. Chandler, who acknowledged that he is the President/Secretary of
Chandelier Business Services, Inc., and that he is authorized to and did execute
the above instrument.
/S/ Sheryl A. Ross
---------------------
NOTARY PUBLIC
|------------------------------------------|
| [SEAL OF NOTARY PUBLIC] |
| Sheryl A. Ross |
| NOTARY PUBLIC |
| STATE OF UTAH |
| My Commission Expires Jan 6, 2000 |
| 3735 South 300 East SLC UT 86115 |
|------------------------------------------|
<PAGE>
BY-LAWS
OF
CHANDELIER BUSINESS SERVICES, INC.
ARTICLE I - OFFICES
Section 1. The principal office of the corporation in the State of Utah
shall be at 935 East NorthCliffe Drive, Salt Lake City, UT. The registered
office of the corporation in Nevada shall be 1800 East Sahara Avenue, Suite 107,
Las Vegas, NV 89104. The registered agent at that address shall be Nevada
Corporate Services, Inc.
Section 2 The corporation may have such other offices within or without
the state as the board of directors may from time to time designate.
ARTICLE II- STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders
---------------
shall be held at the corporate office on the third Friday of August of each year
beginning in 1998, at the hour of 10:00 a.m., or at such other time as may be
fixed by the board of directors, for the purpose of electing directors and for
the transaction of such other business as may come before the meeting. If the
election of directors shall not be held on the day designated herein for the
annual meeting or at any adjournment thereof, the board of directors shall cause
the election to be held at a special meeting of the stockholders as soon
thereafter as may be convenient.
Section 2. Special Meetings. Special meetings of the stockholders, for
-----------------
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the president or by any director, and shall be called by the president at the
written request of twenty-five percent of all outstanding shares of the
corporation entitled to vote at the meeting. Unless requested by stockholders
entitled to cast a majority or all the votes entitled to be case at the meeting,
<PAGE>
a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any meeting of stockholders held
during the preceding twelve months.
Section 3. Place of Meeting. The board of directors may designate any
----------------
place, either within or without the State of Utah, as the place of any annual or
special meeting of stockholders.
Section 4. Notice of Meeting. Written notice stating the place, day
-------------------
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall, unless otherwise prescribed by
statute, be delivered not less than ten nor more than fifty days before the
meeting, either personally or by mail, to each stockholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be delivered
ten days after it has been deposited in the United States Mail, addressed to the
stockholder at his address as it appears on the share registry of the
corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For any
---------------------------------------------------
purpose requiring identification of shareholders, the record date shall be
established by the board of directors, and shall be not more than twenty days
from the date on which any such purpose is to be accomplished. Absent a
resolution establishing any such date, the record date shall be deemed to be the
date on which any such action is accomplished.
Section 6. Voting List. The corporation shall maintain a stock ledger
------------
which contains:
(1) The name and address of each stockholder.
(2) The number of shares of stock of each class which the
stockholder holds.
<PAGE>
The stock ledger shall be in written form and available for visual inspection.
The original or a duplicate of the stock ledger shall be kept at the principal
office of the corporation.
Section 7. Quorum. A majority of the outstanding shares of the
-------
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be presented or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to reduce the number of stockholders present to less than
a quorum.
Section 8. Proxies. At all meetings of stockholders, a stockholder may
--------
vote in person or by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the secretary of
the corporation before or at the time of the meeting. A proxy shall be void one
year after it is executed unless it shall, prior to the expiration of one year,
have been renewed in writing. All proxies shall be revocable.
Section 9. Voting of Shares. Each outstanding share entitled to vote
------------------
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of stockholders.
Section 10. Informal Action by Stockholders. Any action required or
---------------------------------
permitted to be taken at a meeting of the stockholders, except matters as to
which dissenting stockholders may hold a statutory right of appraisal, may be
taken without a meeting if a consent in writing, setting forth the action so
<PAGE>
take, shall be signed by all of the stockholders entitled to vote with respect
to the subject matter thereof.
Section 11. Cumulative Voting. There shall be no cumulative voting of
------------------
shares.
Section 12. Removal of Directors. At a meeting called expressly for
that purpose, directors may be removed with or without cause, by a vote of the
holders of a majority of the shares entitled to vote at an election of
directors.
ARTICLE III - DIRECTORS
Section 1. The business and affairs of this corporation shall be
managed by its Board of Directors, which may be no less than one nor more than
three in number. The directors need not be residents of this state or
stockholder in the corporation. They shall be elected by the stockholders at
the annual meeting of stockholder of the corporation. Each director shall be
elected for the term of one year, and until his successor shall have been
elected and accepted his election to the Board in writing.
Section 2. The number of directors may be increased or decreased from
time to time by the vote of a majority of the outstanding shares of the
corporation.
Section 3. Regular meetings. A regular meeting of the board of
-----------------
directors shall be held without any notice other than this by-law immediately
after, and at the same place as, the annual meeting of stockholders. The board
of directors may provide, by resolution, the time and place for the holding of
additional regular meetings without notice other than such resolution.
<PAGE>
Section 4. Special Meetings. Special meetings of the board of
------------------
directors may be called by or at the request of the president or any director.
The person or persons calling any such meeting may fix the time and place of the
meeting.
Section 5. Notice. Notice of any special meeting shall be given at
-------
least five days previously thereto by written notice delivered personally,
mailed or delivered by fax to each director at his business address. Notices
shall be deemed to have been delivered when transmitted personally or by fax,
and two days after mailed. Any director may waive notice of any meeting so long
as such waiver is in writing. The business to be conducted at any special
meeting need not be specified in the notice.
Section 6. Quorum A majority of the duly elected board of directors
------
shall constitute a quorum of the board of directors for the transaction of
business at any meeting of the board of directors.
Section 7. Manner of Acting. The act of the majority of the directors
----------------
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 8. Informal Action by Directors. Action consented to by a
--------------------------------
majority of the board of directors without a meeting is nevertheless board
action so long as (a) a written consent to the action is signed by all the
directors of the corporation and (b) a certificate or resolution detailing the
action taken is filed with the minutes of the corporation. Any one or more
directors may participate in any meeting of the board of directors by means of
conference telephone or other similar communications device which permits all
directors to hear the comments made by the others at the meeting.
Section 9. Executive and other committees. The board of directors may,
-------------------------------
from time to time. as the business of the corporation may demand, delegate its
authority to committees of the board of directors under such terms and
conditions as it may deem appropriate. The appointment of any such committee,
the delegation of authority to it or action by it under that authority does not
constitute of itself, compliance by any director not a member of the committee,
with the standard provided by statute for the performance of duties of
directors.
Section 10. Compensation. By resolution of the board of directors,
-------------
each director may be paid his expenses, if any, of attendance at each meeting of
the board of directors, and may be paid a stated salary as director or a fixed
per diem for attendance at each such meeting of the board of directors, or both.
No such payments shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Section 11. Presumption of Assent. A director of the corporation who
-----------------------
is present at a meeting of the board of directors at which action on any
corporate action is taken shall be presumed to have assented to the action taken
unless he shall announce his dissent at the meeting and his dissent is entered
in the minutes and he shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Section 12. Certificates of Resolution. At any such time as there
-----------------------------
shall be only one duly elected and qualified director, actions of the
corporation may be manifest by the execution by such director of a Certificate
of Resolution specifying the corporate action taken and the effective date of
such action.
<PAGE>
ARTICLE IV - OFFICERS
Section 1. Number. Officers of the corporation shall be a president
-------
and a secretary, each of whom shall be elected by the board of directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the board of directors. Any two or more offices may be held by
the same person, except that no officer may act in more than one capacity where
action of two or more officers is required by law.
Section 2. Election and Term of Office. The officers of the
--------------------------------
corporation shall be elected annually by the board of directors after each
annual meeting of the stockholders. Each officer shall hold office for a period
of one year and until his successor shall have been duly elected and shall have
accepted his election as an officer of the corporation in writing.
Section 3. Removal. Any officer or agent may be removed by the board
--------
of directors whenever in its judgment, the best interests of the corporation
will be served thereby. Election to an office in the corporation shall not
create any contractual right of any type or sort in the person elected.
Section 4. Vacancies. A vacancy in any office may be filled by the
----------
board of directors for the unexpired portion of the term.
Section 5. President. The president shall be a director of the
---------
corporation and shall be the principal executive officer of the corporation, and
subject to the control of the board of directors, shall in general supervise and
control all of the business and affairs of the corporation. The president shall
have authority to institute or defend legal proceedings when the directors are
deadlocked. He shall, when present, preside at all meetings of the
<PAGE>
stockholders and of the board of directors. He may sign, with the secretary or
any other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the hoard of directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
Section 6. Secretary. The secretary shall: (a) keep the minutes of the
----------
proceedings of the stockholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation, if any;
(d) keep a register of the post office address of each stockholder which shall
be furnished to the secretary by such stockholder; (e) sign, with the president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (f) have general charge
of the stock registry of the corporation; (g) have charge and custody of and be
responsible for all funds and securities of the corporation; (h) Receive and
give receipts for moneys due and payable to the corporation and deposit all such
moneys in the name of the corporation in such bank accounts as may be
established for that purposed; and (i) in general, perform all duties incident
to the office of secretary, as well as such duties as generally devolve upon
treasurers of corporations.
<PAGE>
Section 7. Salaries. The salaries of the officers shall be fixed from
---------
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that the is also a director of the
corporation.
ARTICLE V - INDEMNIFICATION OF DIRECTORS
AND OFFICERS OF THE CORPORATION.
Section 1. The corporation shall indemnify any person who was or is a
party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director or officer of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendre or its equivalent shall not, without more, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
ARTICLE VI - CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The board of directors may authorize any officer
----------
or officers or agents to enter into any contract or execute and deliver any
instrument, including loans, mortgages, checks, drafts, deposits, deeds and
<PAGE>
documents evidencing other transactions, in the name of the corporation. Such
authority may be general or confined to specific instances.
ARTICLE VII- CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares
-------------------------
of the corporation shall be in the form approved in the organizational
resolutions of the corporation. They shall be signed by the president and
secretary of the corporation. Each certificate shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on each certificate and on the stock registry of the
corporation. All certificates surrendered to the corporation for transfer shall
be cancelled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled, except in
the case of a lost, destroyed or mutilated certificate, a new one may be issued
therefor upon such terms of indemnity to the corporation as the board of
directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
--------------------
shall be made only on the stock registry of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
<PAGE>
ARTICLE VIII - FISCAL YEAR
Section 1. The fiscal year of the corporation shall begin on the first
day of March of each year and expire on the twenty-eighth day of February of
each year.
ARTICLE IX - CORPORATE SEAL
Section 1. Use of the corporate seal adopted by the board of directors
shall he optional with the officer or agent of the corporation signing any
document on behalf of the corporation. No duly executed corporate document
shall be void because it does not bear the imprint of a seal.
ARTICLE X - WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any
stockholder or director of the corporation under these By-laws, by provisions of
the Articles of Incorporation, or by the statutes of the State of Nevada, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
Section 1. The board of directors shall have the power to make, alter
and repeal by-laws; but by-laws made by the board may be altered or repealed, or
new by-laws made, by the stockholders.
ADOPTED by order of the sole director of the corporation on August 30,
1997.
CHANDELIER BUSINESS SERVICES, INC.
By: York Chandler
-------------------------------------
York Chandler, Sole Director
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
INTERNET MARKETING, INC.
25,000,000 AUTHORIZED SHARES $.001 PAR VALUE NON-ASSESSABLE
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
SHARES OF INTERNET MARKETING, INC. COMMON STOCK
TRANSFERABLE ON THE BOOKS OF THE CORPORTATION BY THE HOLDER HEREOF IN PERSON OR
BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THE CERTIFICATE PROPERLY ENDORSED.
THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND
REGISTERED BY THE REGISTRAR. WITNESS THE FACSIMILE SEAL OF THE CORPORTATION AND
THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.
DATED:
Felix Kelly [NTERNET MARKETING, INC. Bill J. Rogers
SECRETARY CORPORATE SEAL OF NEVADA] PRESIDENT
<PAGE>
Exhibit 10.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made this
30th day of March, 1999, among Chandelier Business Services, Inc., a Nevada
corporation ("Chandelier"); Internet Marketing, Inc., a Texas corporation
("Internet Marketing"); the initial Internet Marketing stockholders (the
"Internet Marketing Stockholders"); and the Internet Marketing subscribers (the
"Internet Marketing Subscribers") of common stock of Internet Marketing; all of
whom are listed on Exhibit A hereto and who execute and deliver a copy of the
Plan (sometimes, collectively, the "Internet Marketing Stockholders").
W I T N E S S E T H:
RECITALS
--------
WHEREAS, the respective Boards of Directors of Chandelier and Internet
Marketing and the Internet Marketing Stockholders have adopted resolutions
pursuant to which Chandelier shall acquire and Internet Marketing Stockholders
shall exchange 100% of the outstanding common stock and subscriptions to
purchase common stock of Internet Marketing; and
WHEREAS, the sole consideration for 100% interest in Internet
Marketing shall be the exchange of $0.001 par value common stock of Chandelier
(which shares are all "restricted securities" as defined in Rule 144 of the
Securities and Exchange Commission) as outlined in Exhibit A; and
WHEREAS, the Internet Marketing Stockholders shall acquire in exchange
the "restricted securities" of Chandelier in a reorganization within the meaning
of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, it is agreed:
Section 1
Exchange of Stock
-----------------
1.1 Number of Shares. The Internet Marketing Stockholders and the
----------------
Internet Marketing Subscribers respectively agree to transfer to Chandelier at
the closing (the "Closing") 100% of the outstanding securities and subscriptions
to purchase securities of Internet Marketing, listed in Exhibit A, which is
attached hereto and incorporated herein by reference (the "Internet Marketing
Shares"), in exchange, respectively, for 6,072,000 shares of common stock of
Chandelier (for the outstanding securities of Internet Marketing), and 428,000
shares of common stock of Chandelier (for the outstanding subscriptions).
Taking into account (i) these shares (collectively, 6,500,000 shares); (ii) the
<PAGE>
current outstanding shares of Chandelier (2,546,000 shares) and the shares to be
canceled as outlined in Section 1.5 below (546,000 shares); (iii) and the shares
to be issued to a financial consultant or its designees as outlined in Section
1.6 below (1,000,000 shares); there will be 9,500,000 outstanding shares of the
reorganized Chandelier on the Closing. The exchange shall be on a basis of one
share of Chandelier for each of the Internet Marketing Shares, provided,
however, Bill J. Rogers, the President and a director of Internet Marketing,
shall receive 28,000 less shares due to an over subscription in the
subscriptions of Internet Marketing, by agreement with Mr. Rogers.
1.2 Delivery of Certificates by Internet Marketing Stockholders.
-------------------------------------------------------------
The transfer of the Internet Marketing Shares by the Internet Marketing
Stockholders shall be effected by the delivery to Chandelier at the Closing of
stock certificate or certificates representing the transferred shares duly
endorsed in blank or accompanied by stock powers executed in blank with all
signatures witnessed or guaranteed to the satisfaction of Chandelier and with
all necessary transfer taxes and other revenue stamps affixed and acquired at
the Internet Marketing Stockholders' expense. Since Internet Marketing Shares
have not been issued to the Internet Marketing Subscribers, who subscribed with
the understanding that the Plan would be completed and each would receive the
number of shares subscribed for in the reorganized Chandelier, the signed
Counterpart Signature Page to the Plan of the Internet Marketing Subscribers,
together with Chandelier's acceptance thereof at the Closing, shall be
sufficient to transfer the equity interest in Internet Marketing of the Internet
Marketing Subscribers to Chandelier.
1.3 Further Assurances. At the Closing and from time to time
-------------------
thereafter, the Internet Marketing Stockholders and the Internet Marketing
Subscribers shall execute such additional instruments and take such other action
as Chandelier may request in order to exchange and transfer clear title and
ownership in the Internet Marketing Shares to Chandelier.
1.4 Resignations of Present Directors and Executive Officers and
--------------------------------------------------------------
Designation of New Directors and Executive Officers. On Closing, the sole
--------------------------------------------------------
present director and executive officer of Chandelier, York K. Chandler, shall
designate the directors and executive officers nominated by Internet Marketing
to serve in his place and stead, until the next respective annual meetings of
the stockholders and the Board of Directors of Chandelier, and until their
respective successors shall be elected and qualified or until their respective
prior resignations or terminations, who shall be: Bill J. Rogers, President,
CEO and Director; Thomas J. Devine, Director; Richard A. Randall, Comptroller
and CFO; Wajed (Roger) Salam, Director; William W. Sherrill, Director; Andrew M.
Dubinsky, Director; and Felix L. Kelley, Jr., Secretary/Treasurer; and then, Mr.
Chandler shall resign.
1.5 Cancellation of Certain Pre-Plan Shares. In consideration of
----------------------------------------
the Plan, York K. Chandler, President and a director of Chandelier, shall convey
to Chandelier simultaneous with the Closing, 546,000 shares of common stock of
Chandelier which are owned by him, for cancellation.
1.6 Financial Consultant's Compensation. In consideration of
-------------------------------------
services rendered in connection with the negotiation and Closing of the Plan,
simultaneous with the Closing, Chandelier shall issue 1,000,000 shares of its
"restricted securities" (common stock) to Eurotrade Financial, Inc. or its
designees.
-2-
<PAGE>
1.7 Change of Name. Simultaneous with the Closing of this Plan,
---------------
the Board of Directors of Chandelier, with the written consent of York K.
Chandler, its majority stockholder, shall adopt the resolutions necessary to
amend Chandelier's Articles of Incorporation to change its name to "Internet
Marketing, Inc."
1.8 Assets and Liabilities of Chandelier at Closing. Chandelier
-------------------------------------------------
shall have no material assets and no liabilities at Closing, and all costs
incurred by Chandelier incident to the Plan shall have been paid or satisfied.
1.9 Limitation on Reverse Splits. Without the prior written
-------------------------------
consent of the current members of the Board of Directors of Chandelier, no
reverse split of the outstanding voting securities of Chandelier shall be
effected following the Closing, for a period of not less than 12 months.
1.10 Closing. The Plan will be deemed to be completed on receipt
-------
of the signatures of Internet Marketing Stockholders or Internet Marketing
Subscribers collectively owning or having rights to acquire not less that 80% of
the Internet Marketing Shares.
Section 2
Closing
-------
The Closing contemplated by Section 1 shall be held at the offices of
Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East 500 South, Salt
Lake City, Utah 84111, on or before ten days following the execution and
delivery of this Plan, unless another place or time is agreed upon in writing by
the parties. The Closing may be accomplished by wire, express mail or other
courier service, conference telephone communications or as otherwise agreed by
the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of Chandelier
--------------------------------------------
Chandelier represents and warrants to, and covenants with, the
Internet Marketing Stockholders, the Internet Marketing Subscribers and Internet
Marketing as follows:
3.1 Corporate Status. Chandelier is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Nevada and
is licensed or qualified as a foreign corporation in all states in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary (Nevada only.) Chandelier is a
publicly held company, having previously and lawfully offered and sold a portion
of its securities in accordance with applicable federal and state securities
laws, rules and regulations. Chandelier's common stock is quoted on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc. (the
"NASD") under the symbol "CHBD."
-3-
<PAGE>
3.2 Capitalization. The current pre-Plan authorized capital stock
--------------
of Chandelier consists of 25,000,000 shares of $0.001 par value common voting
stock, of which 2,546,000 shares are issued and outstanding, all fully paid and
non-assessable. Except as otherwise provided herein, there are no outstanding
options, warrants or calls pursuant to which any person has the right to
purchase any authorized and unissued common stock of Chandelier.
3.3 Financial Statements. The financial statements of Chandelier
---------------------
furnished to the Internet Marketing Stockholders and Internet Marketing,
consisting of audited financial statements for the years ended January 31, 1999
and 1998, attached hereto as Exhibit B and incorporated herein by reference, are
correct and fairly present the financial condition of Chandelier at such dates
and for the periods involved; such statements were prepared in accordance with
generally accepted accounting principles consistently applied, and no material
change has occurred in the matters disclosed therein, except as indicated in
Exhibit C, which is attached hereto and incorporated herein by reference. Such
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Chandelier has no liabilities of any
-----------------------
nature except to the extent reflected or reserved against in its balance sheets,
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance sheets, except
---------------
as set forth in Exhibit C, there have been no (1) changes in financial
condition, assets, liabilities or business of Chandelier which, in the
aggregate, have been materially adverse; (2) damages, destruction or losses of
or to property of Chandelier, payments of any dividend or other distribution in
respect of any class of stock of Chandelier, or any direct or indirect
redemption, purchase or other acquisition of any class of any such stock; or (3)
increases paid or agreed to in the compensation, retirement benefits or other
commitments to its employees.
3.6 Title to Property. Chandelier has good and marketable title
-------------------
to all properties and assets, real and personal, reflected in Chandelier's
balance sheets, and the properties and assets of Chandelier are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown therein or in
Exhibit C, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending, or
----------
to the knowledge of Chandelier, threatened, against or relating to Chandelier,
its properties or business, except as set forth in Exhibit C. Further, no
officer, director or person who may be deemed to be an affiliate of Chandelier
is party to any material legal proceeding which could have an adverse effect on
Chandelier (financial or otherwise), and none is party to any action or
proceeding wherein any has an interest adverse to Chandelier.
-4-
<PAGE>
3.8 Books and Records. From the date of this Plan to the Closing,
-----------------
Chandelier will (1) give to the Internet Marketing Stockholders and Internet
Marketing or their respective representatives full access during normal business
hours to all of Chandelier's offices, books, records, contracts and other
corporate documents and properties so that the Internet Marketing Stockholders
and Internet Marketing or their respective representatives may inspect and audit
them; and (2) furnish such information concerning the properties and affairs of
Chandelier as the Internet Marketing Stockholders and Internet Marketing or
their respective representatives may reasonably request.
3.9 Tax Returns. Chandelier has filed all federal and state
------------
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if there
---------------
is no Closing), Chandelier and its representatives will keep confidential any
information which they obtain from the Internet Marketing Stockholders or from
Internet Marketing concerning the properties, assets and business of Internet
Marketing. If the transactions contemplated by this Plan are not consummated by
April 9, 1999, Chandelier will return to Internet Marketing all written matter
with respect to Internet Marketing obtained by Chandelier in connection with the
negotiation or consummation of this Plan.
3.11 Corporate Authority. Chandelier has full corporate power and
-------------------
authority to enter into this Plan and to carry out its obligations hereunder and
will deliver to the Internet Marketing Stockholders and Internet Marketing or
their respective representatives at the Closing a certified copy of resolutions
of its Board of Directors authorizing execution of this Plan by Chandelier's
officers and performance thereunder, and that the sole director adopting and
delivering such resolutions is the duly elected and incumbent director of
Chandelier.
3.12 Due Authorization. Execution of this Plan and performance by
-----------------
Chandelier hereunder have been duly authorized by all requisite corporate action
on the part of Chandelier, and this Plan constitutes a valid and binding
obligation of Chandelier and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Chandelier.
3.13 Environmental Matters. Chandelier has no knowledge of any
----------------------
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Chandelier or
Chandelier' predecessors. In addition, to the best knowledge of Chandelier,
there are no substances or conditions which may support a claim or cause of
action against Chandelier or any of Chandelier' current or former officers,
directors, agents or employees, whether by a governmental agency or body,
private party or individual, under any Hazardous Materials Regulations.
"Hazardous Materials" means any oil or petrochemical products, PCB's, asbestos,
urea formaldehyde, flammable explosives, radioactive materials, solid or
hazardous wastes, chemicals, toxic substances or related materials, including,
-5-
<PAGE>
without limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act and the Federal Water Pollution Control Act.
3.14 Access to Information Regarding Internet Marketing.
-------------------------------------------------------
Chandelier acknowledges that it has been delivered copies of what has been
represented to be documentation containing all material information respecting
Internet Marketing and Internet Marketing's present and contemplated business
operations, potential acquisitions, management and other factors; that it has
had a reasonable opportunity to review such documentation and discuss it, to the
extent desired, with its legal counsel, directors and executive officers; that
it has had, to the extent desired, the opportunity to ask questions of and
receive responses from the directors and executive officers of Internet
Marketing, and with the legal and accounting firms of Internet Marketing, with
respect to such documentation; and that to the extent requested, all questions
raised have been answered to Chandelier's complete satisfaction.
Section 4
Representations, Warranties and Covenants of Internet Marketing
---------------------------------------------------------------
and the Internet Marketing Stockholders
---------------------------------------
Internet Marketing and the Internet Marketing Stockholders (Sections
4.1, 4.11, 4.12 and 4.15 are the only representations of the Internet Marketing
Subscribers) represent and warrant to, and covenant with, Chandelier as follows:
4.1 Ownership. Internet Marketing Stockholders own the Internet
---------
Marketing Shares, free and clear of any liens or encumbrances of any type or
nature whatsoever, and each has full right, power and authority to convey the
Internet Marketing Shares owned without qualification.
4.2 Corporate Status. Internet Marketing is a corporation duly
-----------------
organized, validly existing and in good standing under the laws of the State of
Texas and is licensed or qualified as a foreign corporation in all states or
foreign countries and provinces in which the nature of Internet Marketing's
business or the character or ownership of Internet Marketing properties makes
such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of Internet
--------------
Marketing consists of 100,000,000 shares of common stock, par value $0.001 per
share, of which 6,100,000 shares are issued and outstanding, all fully paid and
non-assessable; and 10,000,000 shares of preferred stock, par value $0.001 per
share, of which no shares are issued and outstanding. Except for the
subscriptions of the Internet Marketing Subscribers referred to elsewhere
herein, there are no outstanding options, warrants or calls pursuant to which
any person has the right to purchase any other securities of Internet Marketing.
-6-
<PAGE>
Internet Marketing has received subscriptions in the total amount of $214,000,
representing the agreement to purchase 428,000 post-Plan shares of common stock
of Chandelier. The amount of pre-Plan subscriptions was contemplated to be for
400,000 shares, and because of the over subscription, Bill J. Rogers has agreed
to deduct the additional 28,000 shares which were over subscribed from the
shares of common stock he is to receive under the Plan.
4.4 Financial Statements. The financial statements of Internet
---------------------
Marketing furnished to Chandelier, consisting of unaudited financial statements
from July 27, 1998 (date of inception) through December 31, 1998, attached
hereto as Exhibit D and incorporated herein by reference, are correct and fairly
present the financial condition of Internet Marketing as of these dates and for
the periods involved, and such statements were prepared in accordance with
generally accepted accounting principles consistently applied, and no material
change has occurred in the matters disclosed therein, except as indicated in
Exhibit E, which is attached hereto and incorporated herein by reference. These
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. Internet Marketing has no material
------------------------
liabilities of any nature except to the extent reflected or reserved against in
the balance sheet, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E attached hereto and incorporated herein by
reference.
4.6 Interim Changes. Since the date of the balance sheet, except
----------------
as set forth in Exhibit E, there have been no (1) changes in the financial
condition, assets, liabilities or business of Internet Marketing, in the
aggregate, have been materially adverse; (2) damages, destruction or loss of or
to the property of Internet Marketing, payment of any dividend or other
distribution in respect of the capital stock of Internet Marketing, or any
direct or indirect redemption, purchase or other acquisition of any such stock;
or (3) increases paid or agreed to in the compensation, retirement benefits or
other commitments to their employees.
4.7 Title to Property. Internet Marketing has good and marketable
-----------------
title to all properties and assets, real and personal, proprietary or otherwise,
reflected in the balance sheet, and the properties and assets of Internet
Marketing are subject to no mortgage, pledge, lien or encumbrance, except as
reflected in the balance sheet or in Exhibit E, with respect to which no default
exists.
4.8 Litigation. There is no litigation or proceeding pending, or
----------
to the knowledge of Internet Marketing, threatened, against or relating to
Internet Marketing or its properties or business, except as set forth in Exhibit
E. Further, no officer, director or person who may be deemed to be an affiliate
of Internet Marketing is party to any material legal proceeding which could have
an adverse effect on Internet Marketing (financial or otherwise), and none is
party to any action or proceeding wherein any has an interest adverse to
Internet Marketing.
4.9 Books and Records. From the date of this Plan to the Closing,
-----------------
the Internet Marketing Stockholders will cause Internet Marketing to (1) give to
Chandelier and its representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate documents and
-7-
<PAGE>
properties so that Chandelier may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Internet Marketing as
Chandelier may reasonably request.
4.10 Tax Returns. Internet Marketing has filed all federal and
------------
state income or franchise tax returns required to be filed or has received
currently effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
---------------
there is no Closing), Internet Marketing, the Internet Marketing Stockholders
and their representatives will keep confidential any information which they
obtain from Chandelier concerning its properties, assets and business. If the
transactions contemplated by this Plan are not consummated by April 9, 1999,
Internet Marketing and the Internet Marketing Stockholders will return to
Chandelier all written matter with respect to Chandelier obtained by them in
connection with the negotiation or consummation of this Plan.
4.12 Investment Intent. The Internet Marketing Stockholders are
------------------
acquiring the shares to be exchanged and delivered to them under this Plan for
investment and not with a view to the sale or distribution thereof, and the
Internet Marketing Stockholders have no commitment or present intention to
liquidate the Company or to sell or otherwise dispose of the Chandelier shares.
The Internet Marketing Stockholders shall execute and deliver to Chandelier on
the Closing an Investment Letter attached hereto as Exhibit F and incorporated
herein by reference, acknowledging the "unregistered" and "restricted" nature of
the shares of Chandelier being received under the Plan in exchange for the
Internet Marketing Shares; receipt of certain material information regarding
Chandelier; and compromising and/or waiving any claims any has or may have
against Internet Marketing by reason of the purchase of any securities of
Internet Marketing by each or any of them prior to the Closing of the Plan
4.13 Corporate Authority. Internet Marketing has full corporate
--------------------
power and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to Chandelier or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution of
this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and performance by
-----------------
Internet Marketing hereunder have been duly authorized by all requisite
corporate action on the part of Internet Marketing, and this Plan constitutes a
valid and binding obligation of Internet Marketing and performance hereunder
will not violate any provision of the Articles of Incorporation, Bylaws,
agreements, mortgages or other commitments of Internet Marketing.
4.15 Environmental Matters. Internet Marketing and the Internet
----------------------
Marketing Stockholders have no knowledge of any assertion by any governmental
agency or other regulatory authority of any environmental lien, action or
proceeding, or of any cause for any such lien, action or proceeding related to
the business operations of Internet Marketing or its predecessors. In addition,
to the best knowledge of Internet Marketing, there are no substances or
conditions which may support a claim or cause of action against Internet
-8-
<PAGE>
Marketing or any of its current or former officers, directors, agents, employees
or predecessors, whether by a governmental agency or body, private party or
individual, under any Hazardous Materials Regulations. "Hazardous Materials"
means any oil or petrochemical products, PCB's, asbestos, urea formaldehyde,
flammable explosives, radioactive materials, solid or hazardous wastes,
chemicals, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any applicable federal or state laws or regulations. "Hazardous Materials
Regulations" means any regulations governing the use, generation, handling,
storage, treatment, disposal or release of hazardous materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act and the Federal Water
Pollution Control Act.
4.15 Access to Information Regarding Chandelier. Internet
----------------------------------------------
Marketing and the Internet Marketing Stockholders acknowledge that they have
been delivered copies of what has been represented to be documentation
containing all material information respecting Chandelier and its present and
contemplated business operations, potential acquisitions, management and other
factors; that they have had a reasonable opportunity to review such
documentation and discuss it, to the extent desired, with their legal counsel,
directors and executive officers; that they have had, to the extent desired, the
opportunity to ask questions of and receive responses from the directors and
executive officers of Chandelier, and with the legal and accounting firms of
Chandelier, with respect to such documentation; and that to the extent
requested, all questions raised have been answered to their complete
satisfaction.
Section 5
Conditions Precedent to Obligations of Internet Marketing
---------------------------------------------------------
and the Internet Marketing Stockholders
---------------------------------------
All obligations of Internet Marketing and the Internet Marketing
Stockholders under this Plan are subject, at their option, to the fulfillment,
before or at the Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
---------------------------------------------------
representations and warranties of Chandelier contained in this Plan shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Chandelier shall have performed and complied
---------------
with all of the terms and conditions required by this Plan to be performed or
complied with by it before the Closing.
5.3 Officers' Certificate. Internet Marketing and the Internet
----------------------
Marketing Stockholders shall have been furnished with a certificate signed by
the President of Chandelier, in such capacity, attached hereto as Exhibit G and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of Chandelier contained herein are true and
-9-
<PAGE>
correct; and (2) that since the date of the financial statements (Exhibit B
hereto), there has been no material adverse change in the financial condition,
business or properties of Chandelier, taken as a whole.
5.4 Opinion of Counsel of Chandelier. Internet Marketing and the
---------------------------------
Internet Marketing Stockholders shall have received an opinion of counsel for
Chandelier, dated as of the Closing, to the effect that (1) the representations
of Sections 3.1, 3.2 and 3.11 are correct; (2) except as specified in the
opinion, counsel knows of no inaccuracy in the representations in 3.5, 3.6 or
3.7; and (3) the shares of Chandelier to be issued to the Internet Marketing
Stockholders under this Plan will, when so issued, be validly issued, fully paid
and non-assessable.
5.5 Assets and Liabilities of Chandelier. Unless otherwise
----------------------------------------
agreed, Chandelier shall have no assets and no liabilities at Closing, and all
costs, expenses and fees incident to the Plan shall have been paid.
5.6 Resignation of Directors and Executive Officers and
---------------------------------------------------------
Designation of New Directors and Executive Officers. The present sole director
-------------------------------------------
and executive officer of Chandelier shall resign, and shall have designated
nominees of Internet Marketing as outlined in Section 1.4 hereof as directors
and executive officers of Chandelier to serve in his place and stead, until the
next respective annual meetings of the stockholders and Board of Directors of
Chandelier, and until their respective successors shall be elected and qualified
or until their respective prior resignations or terminations.
5.7 Name Change of Chandelier, Cancellation of Pre-Plan
---------------------------------------------------------
Outstanding Shares and Issuance of Compensation Shares. Simultaneous with the
---------------------------------------------
Closing of this Plan, (i) Chandelier and its majority stockholder shall have
adopted such resolutions as are necessary for the purpose of amending its
Articles of Incorporation to change the name of Chandelier to "Internet
Marketing, Inc."; (ii) to cause the shares of common stock as outlined in
Section 1.5 hereof to be canceled; and (iii) to cause the shares of common stock
outlined in Section 1.6 hereof to be issued as fully paid and non-assessable
shares.
Section 6
Conditions Precedent to Obligations of Chandelier
-------------------------------------------------
All obligations of Chandelier under this Plan are subject, at
Chandelier's option, to the fulfillment, before or at the Closing, of each of
the following conditions:
6.1 Representations and Warranties True at Closing. The
---------------------------------------------------
representations and warranties of Internet Marketing and the Internet Marketing
Stockholders contained in this Plan shall be deemed to have been made again at
and as of the Closing and shall then be true in all material respects and shall
survive the Closing.
-10-
<PAGE>
6.2 Due Performance. Internet Marketing and the Internet
----------------
Marketing Stockholders shall have performed and complied with all of the terms
and conditions required by this Plan to be performed or complied with by them
before the Closing.
6.3 Officers' Certificate. Chandelier shall have been furnished
----------------------
with a certificate signed by the President of Internet Marketing, in such
capacity, attached hereto as Exhibit H and incorporated herein by reference,
dated as of the Closing, certifying (1) that all representations and warranties
of Internet Marketing and the Internet Marketing Stockholders contained herein
are true and correct; and (2) that since the date of the financial statements
(Exhibit D), there has been no material adverse change in the financial
condition, business or properties of Internet Marketing, taken as a whole.
6.4 Books and Records. The Internet Marketing Stockholders or the
-----------------
Board of Directors of Internet Marketing shall have caused Internet Marketing to
make available all books and records of Internet Marketing, including minute
books and stock transfer records; provided, however, only to the extent
requested in writing by Chandelier at Closing.
Section 7
Termination
-----------
Prior to Closing, this Plan may be terminated (1) by mutual consent in
writing; (2) by either the sole director of Chandelier or Internet Marketing and
the Internet Marketing Stockholders if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or (3) by either the sole director of Chandelier or Internet Marketing
and the Internet Marketing Stockholders if the Closing shall not have taken
place, unless adjourned to a later date by mutual consent in writing, by the
date fixed in Section 2.
Section 8
General Provisions
------------------
8.1 Further Assurances. At any time, and from time to time, after
------------------
the Closing, 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 Plan.
8.2 Waiver. Any failure on the part of any party hereto to comply
------
with any of Chandelier obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties hereunder
-------
that no broker or finder has acted for it in connection with this Plan, and
agrees to indemnify and hold harmless the other parties against any fee, loss or
expense arising out of claims by brokers or finders employed or alleged to have
been employed by he/she/it.
-11-
<PAGE>
8.4 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, as follows:
If to Chandelier: 935 East Northcliffe Drive
Salt Lake City, Utah 84103
If to Internet Marketing: 552 Rancho Bauer, Suite 100
Houston, Texas 77079
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to the Internet Marketing
Stockholders: To the addresses listed on Exhibit A
8.5 Entire Agreement. This Plan constitutes the entire agreement
-----------------
between the parties and supersedes and cancels any other agreement,
representation or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this Plan
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and construed
--------------
and enforced in accordance with the laws of the State of Nevada, except to the
extent pre-empted by federal law, in which event (and to that extent only),
federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of, and be
----------
binding upon, the parties hereto and their successors and assigns.
8.9 Counterparts. This Plan 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.
8.10 Default. In the event of any default hereunder, the
-------
prevailing party in any action to enforce the terms and provisions hereof shall
be entitled to recover reasonable attorney's fees and related costs.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
and Plan of Reorganization effective the day and year first above written.
CHANDELIER BUSINESS SERVICES, INC.
Date: 3-30-99 By /s/ York Chandler
York K. Chandler, President
INTERNET MARKETING, INC.
Date: 3-30-99 By /s/ Bill J. Rogers
Bill J. Rogers, President
INTERNET MARKETING, INC.
STOCKHOLDERS
Date: 3-30-99 /s/ Bill J. Rogers
Bill J. Rogers
Dated: 3-29-99 /s/ Thomas Devine
Thomas Devine
Dated: 3-29-99 /s/ Andrew M. Dubinsky
Andrew M. Dubinsky
Dated: 3-29-99 /s/ L & J FAMILY LIMITED PARTNERSHIP
By /s/ W. Salem
W. Salem
Dated: March 29, 1999 /s/ William Sherril
William Sherrill
Dated: 03/29/99 AMENS FAMILY LIMITED PARTNERSHIP
By: /s/ R. A. Randall, G.P.
R. A. Randall, G.P.
Dated: 3-29-99 /s/ Felix Kelley
Felix Kelley
-13-
<PAGE>
Form of:
AGREEMENT AND PLAN OF REORGANIZATION
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain AGREEMENT AND PLAN OF
Reorganization (the "Agreement") dated as of the ____ day of March, 1999, among
Chandelier Business Services, Inc., a Nevada corporation ("Chandelier");
Internet Marketing, Inc., a Texas corporation ("Internet Marketing"); the
initial Internet Marketing stockholders (the "Internet Marketing Stockholders");
and the Internet Marketing subscribers (the "Internet Marketing Subscribers") of
common stock of Internet Marketing, who are signatories thereto, is executed by
the undersigned, an Internet Marketing Subscriber as of the date first written
above. The undersigned, through execution and delivery of this Counterpart
Signature page, intends to be legally bound by the terms of the Agreement.
_______________________________________
Name (Please Print)
-14-
<PAGE>
EMPLOYMENT CONTRACT
-------------------
NOTICE TO PROSPECTIVE EMPLOYEES
-------------------------------
YOU SHOULD CAREFULLY READ THE FOLLOWING DOCUMENT PRIOR TO SIGNING. IT CONTAINS
A NUMBER OF RULES AND REQUIREMENTS GOVERNING YOUR EMPLOYMENT, CONDUCT AND
ACTIONS. AS THE TERMS ARE USED IN THLS AGREEMENT YOU ARE THE EMPLOYEE AND THE
--- --------
COMPANY IS EMPLOYER. IF YOU HAVE ANY QUESTIONS CONSULT A LAWYER BEFORE SIGNING.
- ------- --------
EMPLOYMENT AND CONFIDENTIALITY AGREEMENT
THIS AGREEMENT made between Internet Marketing, Tue. (IMI), a Texas
Corporation, maintaining offices at 552 Rancho Bauer, Suite 100, Houston, Texas
77079, (hereinafter "Employer" or Company"), and Bill I. Rogers, (hereinafter
"Employee"), an individual currently residing at 552 Rancho Bauer, Houston,
Texas 77079.
IN CONSIDERATION of the employment or continued employment of the Employee
by Employer and the mutual contained herein, it is agreed as follows:
1. EMPLOYMENT.
-----------
Employer hereby employs or continues the employment of the Employee and the
Employee hereby accepts employment upon the terms and conditions contained
herein.
2. COMPENSATION.
-------------
Compensation shall consist of salary benefits, vacation, and holidays, as
follows:
(a) SALARY. First Year - For the services rendered by the Employee to
Employer, Employer shall pay the Employee a salary at the rate of $7,500 per
month, or as otherwise shall be agreed upon from time to time by the parties
hereto. Any raises in salary to which Employee shall become entitled, shall be
evidenced by a written memorandum awarding such raise to the Employee, signed by
Employer.
(b) BENEFITS. Benefits shall be paid to Employee by Employer in accordance
with the standard practice of Employer, as defined by it from time to time.
Benefits presently anticipated include fully paid, standard Employer provided
health insurance for the Employee, and a fifty percent (5 0%) co-payment of
health insurance premiums under the standard Employer provided policy for
dependent members of Employee's family. No other benefits are offered at the
time of entering into this contract. Employer may chose to offer other benefits
to Employee from time to time.
1
<PAGE>
EMPLOYMENT CONTRACT
-------------------
(c) VACATIONS AND HOLIDAYS. Employee shall be entitled to paid vacation of
ten (10) work days, and in addition shall be entitled to take off from work
during all designated federal holidays with pay.
(d) EXPENSE ACCOUNT. Employee shall be entitled to reimbursement for
documented business and travel expenses, of the following nature: air fare,
hotel, meals, taxi and entertainment where such expenses entitle the Employer to
a tax deduction upon reimbursement. Employee shall be required to submit a
monthly statement of reimbursable expenses for approval by such person or group
as determined by the Board of Directors of Employer. Such statement shall
include a copy of the expense receipt, a statement of business puu7pose, and
amount reimbursable under this Agreement. A company car and all related
expenses shall also be provided to Employee.
(e) BONUSES. Employer shall review Employees performance from time to time
and reward Employee with bonuses.
(f) STOCK OPTIONS. To be determined in the future by the Board of
Directors.
(g) SEVERANCE PACKAGE. If employee should be dismissed for any reason,
employer agrees to pay employee $7500.00 per month for 6 months.
3. TERM.
-----
This Agreement shall provide for a term of Three Years, terminable at any
time by either the Employer or the Employee. This Agreement shall be
interpreted to provide a defined contract of employment for a specific or of any
specific term. Should the Employee be dismissed "for cause" under this
Agreement, all payments due and accruing to Employee shall be payable.
4. DUTIES AND EXTENT OF SERVICES.
------------------------------
The Employee is engaged to perform work as President and Chief Operating
Officer of Employer. Employee shall report to the Board of Directors of
Employer.
(a) GENERAL DUTIES. The precise duties or services to be performed by
Employee are as set forth in the Corporate Bylaws of Employer, and as may be
extended or curtailed, from time to time, at the direction of the President of
the Employer. The Employee shall devote the majority of Employee's workday,
attention and energies to the business of Employer, and shall assume and perform
such further reasonable responsibilities and duties as may be assigned to him
from time to time by Employer. Employee is management, and shall have no set
working hours. Employee will endeavor to be available at such times as required
by Employer for consultations, demonstrations, etc.
(b) CONFLICTING EMPLOYMENT. Employee shall be able to perform additional
employment duties during the term of this Agreement. For purposes of this
covenant,
2
<PAGE>
EMPLOYMENT CONTRACT
-------------------
"employment" shall mean provision of services similar in any manner to those
provided by Employee to Employer, to any other person or entity, whether or not
for compensation. Such outside work shall include the use of or relate to
Proprietary Information provided by Employer to Employee.
5. CONSIDERATION.
--------------
Employee acknowledges receipt of good and sufficient consideration to make
this a binding agreement, which consideration is as follows: (i.) Payment of Ten
Dollars ($10.00) in cash, receipt of which is hereby acknowledged, and (ii) The
payment from time to time of wages and such benefits (as provided in Article 2)
which at the discretion of the Employer may be provided (however, failure to pay
wages and failure to provide
benefits shall not be considered to be a failure of consideration or inadequate
consideration, provided at least one pay period of wages is paid by Employer to
Employee), and (iii) The covenants of Employer, including the contractual
requirement of indemnification, made herein to Employee. By signing this
Agreement, Employee submits that the agreed consideration is good, sufficient
and binding upon Employee for this to be a good and valid agreement.
6. INDEMNIFICATION.
----------------
Employer, at its own expense, shall defend, indemnify and hold Employee
harmless from any claim, demand, cause of action, debt or liability (including
attorneys' fees) to the extent it is based on a claim that Employee in the
course of this Agreement, infringed or violated the patent of a third party,
provided Company is notified promptly of such claim and provided that such claim
is based upon the Proprietary Information provided by Company. Company shall
have the right to control the defense in any such action and to enter into a
stipulation of discontinuance and settlement of such claim in its discretion.
7. STANDARD OF CONDUCT.
--------------------
Any work performed by Employee under this Agreement is as an Employee of
the Company. Employee is authorized to negotiate for Company as directed by the
Board of Directors of Company. Employee may sign agreements for Company as
directed by its Board of Directors. It is the intention of the parties to at
all times conduct themselves, both with respect to activities under this
Agreement, and their respective business activities generally, in compliance
with all applicable federal and state laws. The mutual interests of both
parties to this Agreement require that both parties act in good faith to fulfill
the intent and purpose of this Agreement.
8. INJUNCTIVE RELIEF.
------------------
Employee hereby irrevocably and unconditionally consents and submits to the
exclusive jurisdiction of the courts of the State of Texas located in The City
of Houston, Texas for any actions, suits or proceedings arising out of or
relating to this Agreement or
3
<PAGE>
EMPLOYMENT CONTRACT
-------------------
any Transaction contemplated hereby, and Employee agrees not to commence any
action, suits or proceeding relating thereto except in such a court. Employee
agrees that service of any process, summons, notice or document by U.S.
certified mail, postage prepaid, to your address set forth hereinbelow shall be
effective service of process for commencement or maintenance of any proceeding
brought against Employee in any such court.
9. GENERAL PROVISIONS.
-------------------
NO WAIVER. Employee's obligation(s) as set forth in this Agreement may be
waived, in whole or part, by Employer. To be effective, a waiver by the Company
must be in writing, shall specifically refer to this Agreement and the
obligation being waived, and must be executed by an executive office of the
company, A waiver on one occasion will not be deemed a waiver of the same or any
other occasions or on any future occasion. It is further understood and agreed
that no failure or delay by Employer in exercising any tight, power or privilege
under this Agreement shall operate as a waiver thereof nor shall any single or
partial exercise preclude any other or further exercise of any right, power or
privilege hereunder.
NOTICES. Any notice hereby required or permitted to be given shall be
sufficient if in writing and mailed by registered or certified mail, postage
prepaid, to either party at the address of such party set forth below or at such
other address as shall have been designated by written notice by such party to
the other party.
Initially such notices shall be sent as follows:
If by Employer to:
Mr. Bill J. Rogers
552 Rancho Bauer, Suite 100
Houston, Texas 77079
If by Employee to:
Mr. Bill J. Rogers
552 Rancho Bauer
Houston, Texas 77079
ENTIRE CONTRACT. This Agreement shall constitute the entire contract
(unless otherwise stated) between the parties and supersedes all existing
agreements between them, whether oral or written, with respect to the subject
matter hereof No change, modification or amendment of this Agreement, which is
to be binding upon Employer, shall be of any effect unless in writing signed by
the Employee and by the Authorized Officer of Employer
4
<PAGE>
EMPLOYMENT CONTRACT
-------------------
GOVERNING LAW. This Agreement shall be governed by the laws of the State
of Texas, and without regard to any principles of conflicts of laws, the state
(not federal) courts of the State of Texas shall have jurisdiction and venue
over controversies concerning interpretation of this Agreement. Each party
agrees to be solely responsible for any legal fees incurred by it in connection
with negotiation and execution of this Agreement, and represents that it owes no
commission or other fee, including any employment agency fee, to any other
entity for bringing about or introduction of parties to this Agreement.
SEVERABILITY. Should any provision of this Agreement not be enforceable in
any jurisdiction, the remainder of the Agreement shall not be affected thereby,
and this Agreement shall be interpreted as though the non-enforceable part was
not contained herein.
ASSIGNMENT. This Agreement is not assignable by Employee, because Employer
is contracting for the personal work of the Employee. Employer may assign this
Agreement to another entity. Upon assignment, Employer shall notify Employee in
writing.
Signed in Duplicate by the Parties hereto.
Employee: Bill J. Rogers
DATED: 1-1-1999 By: /S/ Bill J. Rogers
-------- ---------------------
Individually
Employer: Internet Marketing, Inc.
DATED: 1-1-1999 By: /S/ Bill J. Rogers
-------- ---------------------
President
5
<PAGE>
JONES, JENSEN & COMPANY, LLC
----------------------------
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
September 24, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read Item 3 of Form 10-SB of Internet Marketing. Inc. (formerly
Chandelier Business Services, Inc.) and are in agreement with the statements
contained therein in so far as they relate to our firm. We have no basis to
agree or disagree with other statements of the registrant contained therein
Very truly yours,
/S/ Jones, Jensen & Company
Jones, Jensen & Company
<PAGE>
Exhibit 21.1 Subsidiaries
Internet Marketing, Inc., a Texas corporation, wholly-owned.
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