AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 5, 2000.
REGISTRATION NO. 333-76533
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
AMENDMENT NO.2
to
FORM SB-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
PLANET RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1041 76-0600966
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION INDUSTRIAL CLASSIFICATION IDENTIFICATION
OR ORGANIZATION) CODE NUMBER) NUMBER)
A.W. Dugan, President and CEO
Planet Resources, Inc. A.W. Dugan
1415 Louisiana, Suite 3100 1415 Louisiana, Suite 3100
Houston, Texas 77002 Houston, Texas 77002
(713) 658-1142 (713) 658-1142
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP
TELEPHONE NUMBER INCLUDING AREA CODE, CODE, AND TELEPHONE NUMBER
OF REGISTRANT'S PRINCIPAL INCLUDING AREA CODE, OF AGENT
EXECUTIVE OFFICES) FOR SERVICE)
COPIES TO:
Robert L. Sonfield, Jr., Esq.
Sonfield & Sonfield
770 S. Post Oak Lane
Houston, Texas 77056
(713) 877-8333
Facsimile: (713) 877-1547
_______________
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT As soon as practicable on or
OF PROPOSED SALE TO THE PUBLIC: after the registration statement
becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Each Class Number of Proposed Proposed Maximum Amount of
of Securities Shares Being Maximum Aggregate Offering Registration Fee(3)
Being Registered Registered Offering Price Per Price
Share
- --------------------- ------------ -------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock 2,000,000 $ .0101(3) $ 20,236.00 $ 6.07
Common Stock Options 405,000 - - -
Common Stock 50,000 - - -
Options(1)
Common Stock(2) 405,000 $ .15 $ 60,750.00 $ 18.23
Common Stock(2) 50,000 $ .40 $ 20,000.00 $ 6.00
<FN>
(1) Issuable to a consultant upon this registration statement being declared effective by the
Securities and Exchange Commission.
(2) Issuable upon exercise of Common Stock Options.
(3) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457 based
upon the book value of the Common Stock as of December 31, 1999.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
INITIAL PUBLIC OFFERING
PROSPECTUS
Subject To Completion, Dated April
PLANET RESOURCES, INC.
2,000,000 SHARES OF COMMON STOCK
AND
455,000 COMMON STOCK OPTIONS
Planet Resources, Inc.
1415 Louisiana, Suite 3100
Houston, Texas 77002
We are distributing shares of our common stock to certain of Internet law
Library, Inc.'s shareholders as defined below. This is our initial public
offering, and no public market currently exists for our shares. You will receive
shares of our common stock if you were a stockholder of record of Internet Law
on April 14, 1999 and did not receive your common stock in Internet Law as a
result of the reverse acquisition by National Law. Furthermore, upon the
registration statement, of which this prospectus is a part, being declared
effective by the Securities and Exchange Commission, 50,000 options will be
issued to a consultant.
As a Planet stockholder, you will pay no consideration for the shares of
our common stock to be received by you in the distribution. There is currently
no public trading market for our shares of common stock.
Proposed Trading Symbol:
Over-The-Counter Bulletin Board ("OTCBB") -- PLRS
_____________________________________
The Common Stock Involves a High Degree of Risk. See "Risk Factors" Beginning on
Page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of the prospectus is ___________________, 2000
<PAGE>
PLANET RESOURCES, INC.
PROSPECTUS TABLE OF CONTENTS
PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . .1
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
CAUTIONARY STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . 8
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . .8
CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . .8
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . .12
MANAGEMENT'S PLAN OF OPERATION. . . . . . . . . . . . . . . . . 12
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
PRINCIPAL SHAREHOLDERS OF PLANET. . . . . . . . . . . . . . . . 22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . .23
DESCRIPTION OF PLANET CAPITAL STOCK. . . . . . . . . . . . . . 23
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . 26
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . .26
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . .27
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . F-1
<PAGE>
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
INFORMATION THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
PROSPECTUS SUMMARY
This prospectus is being furnished to certain stockholders of Internet Law
Library, Inc. and a consultant to our company.
OVERVIEW
Internet Law Library, Inc., our parent company and formerly known as Planet
Resources, Inc., operates an Internet portal that provides subscription access
to databases used for legal research through its wholly-owned operating
subsidiary, National Law Library, Inc. The content of these databases consists
of federal and state case law, statutory law and regulatory materials that can
be useful to individual lawyers, judges, law firms, corporate legal departments,
government agencies, businesses, and individuals involved in litigation,
legislative efforts, and corporate legal planning. Interfacing with these
databases is a software retrieval engine that is also owned and operated by
National Law.
Prior to its reverse acquisition by National Law in March 1999, Planet Resources
had no operations. It did, however, own and maintain certain mineral properties
and related assets and had $54,000 in cash. Because its mineral properties and
related assets are not integral or related to its current business, Internet Law
has decided, pursuant to terms of the Agreement and Plan of Distribution dated
March 25, 1999, to transfer these mineral properties and related assets to us in
exchange for our common stock so that we may pursue our own business plan
relating to these assets. Immediately following the transfer of the mineral
properties and related assets, all of our common stock will be distributed to
the stockholders of Internet Law as of the record date of April 14, 1999 who did
not receive their common stock in Internet Law as a result of the reverse
acquisition by National Law.
These shareholders will receive the same number of shares of common stock of our
company as they owned of Internet Law as of April 14, 1999. Although we will
not have any operations, we will own all of the mineral properties and related
assets, including the cash remaining after payment of certain expenses. Thus,
the shareholders of Planet will have the same proportional rights and interests
they had in Internet Law prior to its reverse acquisition by National Law
Library, Inc. Internet Law will continue its corporate existence under the laws
of the State of Delaware. After the distribution, we will be an independent,
publicly-traded company owning the mineral properties and related assets
previously owned by Internet Law.
Internet Law's transfer agent, Atlas Stock Transfer Corporation, will act
as the agent for the distribution and will deliver certificates for our common
stock as soon as practicable to certain holders of record of Internet Law common
stock. All shares of our common stock will be fully paid and nonassessable and
the holders will not be entitled to preemptive rights.
PLANET
We are currently a wholly-owned subsidiary of Internet Law incorporated
under the laws of the State of Delaware. The mailing address of Internet Law's
principal executive offices is 4301 Windfern, Suite 2001, Houston, Texas 77041,
and the telephone number at such address is (281) 600-6000. Following the
distribution, the mailing address of our principal executive offices will be as
listed in the cover of this prospectus and the telephone number at such address
will be (713) 658-1142.
<PAGE>
THE OFFERING
This prospectus covers 2,000,000 shares of common stock, par value $.001
per share of Planet, 405,000 options to purchase shares of Planet common stock
at $0.15 per share and 50,000 options to purchase shares of Planet common stock
at $0.40 per share. This prospectus is being furnished to certain stockholders
of Internet Law Library, Inc., the sole stockholder of Planet, in connection
with the proposed distribution of all the outstanding shares of Planet common
stock, in accordance with the terms of the Agreement and Plan of Distribution,
dated as of March 25, 1999, by and between Internet Law and Planet. This
prospectus is also being distributed to a consultant to the company.
One share of Planet common stock will be distributed for each share of common
stock of Internet Law, par value $.001 per share, issued and outstanding on
April 14, 1999, which was not received as a result of the reverse acquisition by
National Law.
TAX CONSIDERATIONS
Internet Law has received the opinion of Sonfield & Sonfield to the effect
that, among other things, the distribution will qualify as a reorganization
under Section 368(a)(1)(D) of the Internal Revenue Code of 1986. Neither
Internet Law, Planet nor their stockholders will recognize any gain or loss upon
the receipt by Planet of the mineral properties and related assets from Internet
Law in exchange for the Planet common stock, or upon receipt by Internet Law
stockholders of the Planet common stock in the distribution.
<PAGE>
RISK FACTORS
An investment in the securities offered hereby is speculative in nature and
involves a high degree of risk. In addition to the other information contained
in this prospectus, the following factors should be considered carefully in
evaluating us before making any investment decisions with respect to our common
stock to be received in the distribution. This prospectus contains, in addition
to historical information, forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from the results
discussed in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
below, as well as those discussed elsewhere in this prospectus.
THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK.
There is no existing trading market for our common stock to be received by
you in the distribution and there can be no assurance as to the establishment of
an active trading market. We intend to qualify our common stock for quotation
on the Over-The-Counter Bulletin Board ("OTCBB") under the trading symbol
"PLRS." Our management expects that 2,000,000 shares of our common stock will be
outstanding after the distribution. Our common stock may experience price
volatility following the distribution until trading values become established.
As a result, it might be difficult to make purchases or sales of our common
stock in the open market at any particular time. There can be no assurance as
to the price at which our common stock will trade following the consummation of
the distribution.
WE HAVE AN OBLIGATION TO INDEMNIFY INTERNET LAW.
The distribution agreement and the indemnification agreement, which is part
of the distribution agreement, indemnify Internet Law with respect to any
losses, damages, claims and liabilities, financial or otherwise, which may arise
from its ownership of the mineral properties before the distribution.
BECAUSE WE HAVE A LIMITED OPERATING HISTORY, WE MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE OUR BUSINESS OR ACHIEVE PROFITABILITY.
While we intend to pursue strategies to maintain our mineral properties and
identify joint venture partners with which to commence operations as a going
business, we cannot assure you that we will be successful in implementing our
strategies or that, if implemented, our strategies will result in profitable
business.
OUR EARNINGS MAY BE AFFECTED BY METAL PRICE VOLATILITY.
A significant portion of our potential future revenues may be derived from
royalties earned from the sale of metals and minerals extracted from our
property. As a result, our earnings may be directly related to the prices of
these metals. Metals and minerals prices fluctuate widely and are affected by
numerous factors including:
- - expectations for inflation;
- - speculative activities;
- - relative exchange rate of the U.S. dollar;
- - global and regional demand and production;
- - political and economic conditions; and
- - production costs in major producing regions.
<PAGE>
THE VOLATILITY OF METALS PRICES MAY ADVERSELY AFFECT OUR ABILITY TO ATTRACT A
JOINT VENTURE MINING PARTNER FOR DEVELOPMENT AND EXPLORATION EFFORTS.
Our ability to attract a joint venture partner for the mining of our
properties is directly related to the prices of the metals which may be found in
our property. If prices for these metals decline, it may not be economically
feasible for a mining company to develop commercial production on our property.
OUR OBTAINMENT OF ADDITIONAL PROPERTIES FOR EXPLORATION BY A POTENTIAL JOINT
VENTURE PARTNER IS LIMITED.
Our ability to secure additional properties for mining depends on the
success of our current property.
THE MINERAL AND METAL EXPLORATION OF OUR PROPERTY MAY NOT BE SUCCESSFUL.
Mineral and metal exploration, particularly for gold and silver, is highly
speculative. It involves many risks and is often non-productive. Even if
valuable deposits of minerals or metals are found on our property, it may be
several years before production is possible. During that time, it may become
economically infeasible to produce those minerals or metals. As a result of
these costs and uncertainties, we may not be able to realize any revenues from
the development of our property for some time, if at all.
OUR ORE RESERVE ESTIMATES MAY BE IMPRECISE.
We currently have no reserve estimates on our properties. Should we
conduct tests in the future to derive ore estimates, there can be no guarantee
that we will recover the indicated quantities of these minerals or metals. Ore
reserve estimates may change based on actual production experience. In
addition, the economic value of such possible ore reserves may be adversely
affected by:
- - declines in the market price of the various mineral or metals extracted;
- - increased production costs; or
- - reduced recovery rates.
WE MAY FACE STRONG COMPETITION FROM OTHER MINING COMPANIES FOR THE ACQUISITION
OR LEASE OF NEW PROPERTIES.
Mines have limited lives. As a result, we may eventually seek to replace
and expand our properties through the acquisition of new properties. Because we
may face strong competition for new properties from other mining companies, many
of whom have greater financial resources than we do, we may be unable to acquire
attractive new mining properties on terms that we consider acceptable.
<PAGE>
OUR POTENTIAL JOINT VENTURE MINING COMPANY PARTNERS MAY BE ADVERSELY AFFECTED BY
RISKS AND HAZARDS ASSOCIATED WITH THE MINING INDUSTRY.
Mining companies are subject to a number of risks and hazards including:
- - environmental hazards;
- - industrial accidents;
- - labor disputes;
- - unusual or unexpected geologic formations;
- - cave-ins;
- - rockbursts; and
- - flooding and periodic interruptions due to inclement or hazardous weather
conditions.
Such risks could result in:
- - damage to or destruction of mineral properties or producing facilities;
- - personal injury;
- - environmental damage;
- - delays in mining;
- - monetary losses; and
- - legal liability.
WE DO NOT INTEND ON PAYING DIVIDENDS ON OUR COMMON STOCK.
We expect to retain any future earnings for use in our business to develop,
operate and expand our business. As a result, we do not anticipate paying any
dividends to our stockholders in the foreseeable future.
WE ARE SUBJECT TO VARIOUS ANTI-TAKEOVER PROVISIONS THAT MAKE IT DIFFICULT FOR A
THIRD PARTY TO GAIN CONTROL OVER US.
Certain provisions of our Certificate of Incorporation may have the effect
of preventing or delaying an acquisition or tender offer, which might be viewed
by the stockholders to be in their best interests. These provisions include:
- - the authorized issuance of up to 1,000,000 shares of preferred stock and
25,000,000 shares of common stock;
- - the calling of annual stockholder meetings only by our board of directors
or a duly designated committee of the board;
- - a classified board of directors;
- - the requirement of a super-majority stockholder vote to approve a business
combination with related persons, and other matters; and,
- - advance notice requirements for nomination of directors and proposals of a
new business at annual stockholder meetings.
<PAGE>
OUR PRINCIPAL OFFICERS, DIRECTORS AND STOCKHOLDERS HAVE SIGNIFICANT CONTROL
Upon completion of this distribution, our officers, directors and greater
than 5% stockholders, including their affiliates, will, in the aggregate,
beneficially own approximately 80.23% of our fully-diluted outstanding common
stock. Accordingly, these individuals may be able to approve major corporate
transactions including those involving amendments to our Certificate of
Incorporation or By-laws. As a result, these persons, acting together, will
have the ability to control all matters submitted to stockholders for approval,
including the election and removal of directors, the consideration of any
merger, consolidation or sale of all or substantially all of our assets, and
control of our management and affairs through the elections of all of our
directors. Such concentration of ownership may have the effect of delaying,
deferring or preventing a change in control of our company, impeding a merger,
consolidation, takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could have an adverse effect
on the market price of the our common stock.
FUTURE ISSUANCE OF SHARES WILL CAUSE DILUTION AND MAY ADVERSELY AFFECT THE
MARKET FOR YOUR SHARES.
Upon completion of the distribution, we will have a total of 2,000,000
shares of Planet common stock outstanding. 455,000 shares of common stock have
been reserved for issuance upon exercise of the Planet options. After the
exercise of all the Planet options we will have 2,455,000 shares of common stock
outstanding and 22,545,000 shares of authorized but unissued shares of common
stock available for issuance without further stockholder approval. As a result,
any issuance of additional shares of common stock may cause you to suffer
significant dilution, which may adversely affect the market and the value of
your shares.
You should be aware that the possibility of sales may, in the future, have a
depressive effect on the price of the Planet common stock in any market which
exists or may develop. The ability of any investor to sell his or her shares
may be dependent directly upon the number of shares that are offered and sold.
Other stockholders may sell their shares during a favorable movement in the
market price of our securities, which may have a depressive effect on the price
per share.
<PAGE>
WE DEPEND ON A.W. DUGAN FOR THE MAINTENANCE OF OUR MINERAL PROPERTIES.
Our operations are dependent on the efforts, ability and experience of A.W.
Dugan. The loss of his services could have a material adverse impact on our
future results of operations. In addition to Mr. Dugan's management expertise,
he will provide, at no cost, the office space and administrative support
necessary to maintain our mineral properties until such time as we can provide
these services for ourselves. Mr. Dugan will also provide us with the necessary
working capital over the next twelve months to support our operations, including
the costs associated with the identification of a mining company partner to
exploit our mineral assets. This may be funded through the exercise of options
which Mr. Dugan owns to purchase common stock.
WE HAVE LIMITED FINANCIAL RESOURCES AVAILABLE TO US AT THIS TIME TO IMPLEMENT A
SUCCESSFUL BUSINESS PLAN.
Mr. Dugan has agreed to satisfy our cash operating requirements only over
the next twelve months. There is no written agreement between Mr. Dugan and
Planet for the provision of his financial support and Mr. Dugan could decide at
any time to no longer continue to financially support our company. We have no
other source of income at this time and there can be no assurance that we will
develop alternative sources of income to fund our company, or that Mr. Dugan
will extend his commitment to fund our company, beyond twelve months.
"PENNY STOCK" REGULATIONS IMPOSE RESTRICTIONS ON MARKETABILITY OF OUR SECURITIES
The Commission has adopted regulations which generally define "penny stock"
to be any equity security that has a market price less than $5.00 per share or
an exercise price of less than $5.00 per share, subject to certain exceptions.
In the event of authorization of the Planet common stock for quotation on the
OTC Bulletin Board, such securities will initially be covered by the definition
of "penny stock." If the securities or the common stock are removed from listing
on the OTC Bulletin Board at any time following the Effective Date, Planet's
securities may become subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors. Accredited investors are
generally those persons with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse. For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and must have received the
purchaser's written consent to the transaction prior to the purchase.
In addition, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our securities and may affect the
ability of purchasers in this offering to sell our securities in the secondary
market.
In the event that we are not able to qualify our securities for listing on
the OTC Bulletin Board, we will attempt to have our securities traded in the
"pink sheets." In such event, holders of our securities may encounter
substantially greater difficulty in disposing of their securities and/or in
obtaining accurate quotations as to the prices of our securities.
<PAGE>
THE YEAR 2000 ISSUE COULD ADVERSELY AFFECT OUR BUSINESS.
If various third parties, including any mining company with whom we may
contract in the future, do not successfully achieve year 2000 compliance, our
business and future operating results could be adversely affected. In addition,
if our transfer agent does not achieve year 2000 compliance, that would have an
adverse effect on your ability to trade the common stock. To date we have not
experienced any material problems attributable to the inability to recognize
dates beginning with the year 2000.
CAUTIONARY STATEMENTS
When used in this prospectus with respect to Planet and Internet Law the
words "estimate," "project," "intend," "expect" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Such risks and uncertainties include those
risks, uncertainties and risk factors identified in this prospectus under the
headings "Risk Factors," "The Distribution," "Certain Federal Income Tax
Consequences," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
USE OF PROCEEDS
There will be no proceeds from the issuance of the Planet common stock.
CAPITALIZATION
The following table sets forth the capitalization of Planet as of December
31, 1999. It also includes the effects of the distribution of mineral rights
and related assets, valued at $10,000, and reflects the issuance of 2,000,000
shares of common stock. This table should be read in conjunction with the
financial information and its accompanying notes included in this prospectus.
<TABLE>
<CAPTION>
Actual as of Pro forma
December 31, 1999 As Adjusted
------------------- -------------
<S> <C> <C>
Stockholder's Equity:
Preferred stock, par value $.001; $ -- $ --
1,000,000 shares authorized, none issued or outstanding
Common stock, par value $.001; 25,000,000 shares authorized, 1,000 1 2,000
actual and 2,000,000 pro forma shares issued and outstanding
Additional paid-in capital 36,274 44,275
Retained earnings (deficit) (16,039) (16,039)
Total stockholder's equity $ 20,236 $ 30,236
------------------- -------------
</TABLE>
<PAGE>
THE DISTRIBUTION
The following information summarizes the proposed distribution. The entire
agreement is filed as an exhibit to the registration statement of which this
prospectus is a part and is available from Planet or the SEC web site at
http://www.sec.gov. You are urged to read such agreement in its entirety.
TERMS OF THE DISTRIBUTION AGREEMENT
The distribution will be effected by giving to each holder of Internet Law
common stock who did not receive their common stock of Internet Law as a result
of the reverse acquisition by National law, as of the close of business on April
14, 1999, certificates representing one share of Planet common stock for each
share of Internet Law common stock.
MANNER OF EFFECTING THE DISTRIBUTION
On the distribution date, Internet Law's transfer agent, will deliver
certificates for Planet common stock as soon as practicable to holders of record
of Internet Law common stock who were stockholders of record on April 14, 1999,
and did not receive their common stock in Internet Law as a result of the
reverse acquisition by National Law.
All shares of Planet common stock will be fully paid and nonassessable and the
holders will not be entitled to preemptive rights.
LISTING OF PLANET COMMON STOCK; RESTRICTIONS ON RESALE
Planet intends to apply to a member of the National Association of
Securities Dealers, Inc. to make a market in the Planet common stock and provide
a quotation on the NASD inter-dealer Electronic Bulletin Board under the trading
symbol "PLRS." The Planet common stock received from the distribution and
included in this registration statement will be freely transferable under the
Securities Act.
TREATMENT OF INDEBTEDNESS
Neither Internet Law nor Planet will assume or be responsible for any debts
or monetary obligations of the other prior to the date of the reverse
acquisition. However, according to the terms of the indemnification agreement,
we will be responsible for any liabilities, monetary or otherwise, that may
arise from Internet Law's ownership of the mineral properties prior to the date
of acquisition.
EXPENSES
The terms of the distribution agreement state that we shall bear all
expenses incurred in connection with the distribution, including the
preparation, execution and the performance of the distribution agreement and the
transactions contemplated thereby, and all fees and expenses of counsel and
accountants. Expenses incurred in printing, mailing, SEC filing fees, fees
related to any state securities or "blue sky" laws and stock exchange listing
application fees as to this prospectus and related registration statement will
be paid by us. We estimate that these expenses will approximate $30,000, of
which a significant portion of these expenses were paid prior to December 31,
1999
<PAGE>
INDEMNIFICATION AND INSURANCE
The distribution agreement provides that from and after the distribution
date, Internet Law will indemnify, defend and hold harmless Planet and its
subsidiaries, as well as the directors and officers of Planet and the various
Planet subsidiaries, which may be formed in the future, from and against all
losses arising out of or relating to:
- - any breach, whether before or after the distribution date, by Internet Law
of any provision of the distribution agreement,
- - liabilities related to the operation of Internet Law.
The distribution agreement also provides that from and after the
distribution date, Planet will indemnify, defend and hold harmless Internet Law
and its subsidiaries, as well as the directors and officers of Internet Law and
the various Internet Law subsidiaries from and against all losses arising out of
or relating to:
- - any breach, whether before or after the distribution date, by Planet of
any provision of the distribution agreement,
- - any claims arising out of this prospectus or the registration statement
pertaining thereto, and
- - liabilities related to the operation of Planet.
RIGHTS OF INTERNET LAW SHAREHOLDERS BEFORE AND AFTER THE DISTRIBUTION
Before the acquisition and the distribution, the shareholders of Internet
Law, under its former name Planet Resources, Inc., owned all of the equity
interest in the mineral properties and related assets described in this
prospectus. After the acquisition and the distribution, these same shareholders
will own the same ratable equity interest in the mineral properties and related
assets as well as a very small percentage interest in the continuing operations
of Internet Law.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
THE FOLLOWING DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE
TAX CODE, TREASURY REGULATIONS UNDER THE TAX CODE AND CURRENT ADMINISTRATIVE
RULINGS AND COURT DECISIONS. ALL ARE SUBJECT TO CHANGES WHICH MAY OR MAY NOT BE
RETROACTIVE, AND ANY SUCH CHANGES COULD AFFECT THE TAX CONSEQUENCES DESCRIBED
HEREIN. YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO YOU OF THE DISTRIBUTION, INCLUDING, THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND THE POSSIBLE EFFECTS OF CHANGES IN
APPLICABLE TAX LAWS.
The following summary description of the material federal income tax
consequences of the distribution is based upon the opinion of Sonfield &
Sonfield, federal tax counsel for Planet.
Tax opinions are not binding on the IRS or any court. Moreover, the tax
opinions are based upon, among other things, certain representations as to
factual matters made by Internet Law, which representations if incorrect or
incomplete in certain material respects, would jeopardize the conclusions
reached in the opinions.
<PAGE>
TAXES EFFECTS OF THE DISTRIBUTION
We believe, based on the opinion issued to us by Sonfield & Sonfield, that
the distribution will qualify as a reorganization under the applicable tax laws,
and will not cause you to recognize any taxable gain or loss.
TAXATION OF STOCK AS A DIVIDEND
Dividends paid on common stock are taxed as ordinary income to the extent
of Planet's current or accumulated earnings and profits as computed for federal
income tax purposes. To the extent that the amount of the dividend paid on the
common stock exceeds Planet's current and accumulated earnings and profits for
federal income tax purposes, such dividend will be treated first as a nontaxable
return of capital which will be applied against and reduce the adjusted tax
basis of the common stock of the holder. Any amount in excess of the holder's
adjusted tax basis would then be taxed as capital gain, and will be long-term
capital gain if the holder's holding period for the common stock exceeds one
year.
TAXPAYER RELIEF ACT
The Taxpayer Relief Act of 1997 was signed into law on August 5, 1997. It
contains certain restrictions involving a distribution or "spin off" to
stockholders of portions of a business enterprise, accompanied by a merger or
acquisition of a specific unit of the business enterprise involving a third
party acquiror. This distribution is not affected by these restrictions.
BACKUP WITHHOLDING
United States information reporting requirements and backup withholding at
the rate of 31% may apply to dividends paid on, and proceeds from the taxable
sale, exchange or other disposition of Internet Law common stock, unless the
stockholder:
- - is a corporation or comes within certain other exempt categories, and,
when required, demonstrates these facts, or
- - provides a correct taxpayer identification number, certifies as to no loss
of exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules.
STATE TAX CONSEQUENCES
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the stockholders in all of the state taxing
jurisdictions in which they are already subject to tax. You are urged to
consult your own tax advisors with respect to state income and corporate
franchise tax consequences.
<PAGE>
DIVIDEND POLICY
Internet Law currently does not pay dividends on any of its issued and
outstanding securities. We do not expect to pay any dividends for the
foreseeable future. Any future payments of dividends will be dependent upon our
results of operations, financial condition, cash requirements, future prospects
and other factors deemed relevant by our board of directors from time to time.
Payment and declaration of dividends on our common stock and purchases of shares
by us will be subject to restrictions if we fail to pay dividends on any series
of our preferred stock ranking prior to our common stock as to the payment of
dividends.
MANAGEMENT'S PLAN OF OPERATION
GENERAL
Since incorporation, our only business activity has been organizational
matters and entering into the distribution agreement with Internet Law.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
As per our agreement with Internet law, after the distribution we will own
the subsurface mineral rights on approximately 190 acres of land located in the
city of Mullan, Idaho. During the next twelve months, we may attempt to
identify and contract with a mining company that will agree to search for
minerals that may underlie our property. During the time our search is in
progress, the small amounts of cash required to maintain our operations, as well
as the costs associated with the identification and contracting of a mining
company partner, will be provided by our chief executive officer and principal
stockholder, A.W. Dugan. Future funding by Mr. Dugan may come from the exercise
of options to purchase our common stock and/or through future agreements between
Planet and Mr. Dugan negotiated on terms equivalent or better than those terms
negotiated on an arms-length basis. As a result, we do not believe there will
be the need to raise additional funds during the next twelve months, other than
through Mr. Dugan, if and when required.
While we have not completed the formulation of our plan to contract with a
mining company, we anticipate that any such plan will have the following
characteristics:
- - An investigation of mining companies which are currently operating in the
general area of our properties. This investigation may include the use of
industry databases, as well as the investigation of governmental records and
industry experts. We do not expect this cost to exceed $2,500.
- - Initial discussions with those potential mining company partners as
determined from our investigation. We do not expect this cost to exceed $5,000.
- - Contract negotiations with an interested mining partner. We do not expect
the costs, legal or otherwise, to exceed $10,000.
Though no formal agreement exists between us and Mr. Dugan, Mr. Dugan has
agreed to fund the costs of such plan to the extent that such costs do not
exceed $30,000. If we are able to contract with a mining company, we
anticipate that all expenses for exploration and exploitation of our mineral
properties will be borne by the mining company and not by us. In return, we
would receive a royalty fee based on a percentage of the proceeds from the sale
of those minerals the mining company may recover from our properties.
We are unable to make any guarantees that:
- - we will be able to identify and negotiate an arrangement with a mining
company within the next twelve months,
- - our mining properties will be found attractive to a prospective mining
company partner, or
- - if mined, our properties will produce any saleable minerals or metals that
would result in Planet receiving any income.
While we believe that such opportunities can be investigated, reviewed and
consummated for minimal costs, we cannot give any assurances that such costs
will be minimal.
We have no employees. Our officers and directors serve our company without
receiving a salary. However, from time to time as appropriate, they may receive
expense reimbursements and stock options. Though we have no formal written
agreement in place, our office space and administrative support is provided by
Mr. Dugan. Other than those costs and expenses previously discussed, we do not
plan any significant expenditures for new projects of any sort within the next
twelve months.
BUSINESS
GENERAL
Planet is a wholly-owned subsidiary of Internet Law Library, Inc., formerly
Planet Resources, Inc. We were organized and incorporated under the laws of the
state of Delaware on March 26, 1999, as required by the terms of the Agreement
and Plan of Distribution dated March 25, 1999, for the purpose of acquiring all
of the mineral properties and related assets, including the remaining cash after
payment of certain expenses. As a result, we are the owner of subsurface
mineral rights previously owned by Planet Resources, Inc. on approximately 190
acres of land located in the City of Mullan, Idaho.
Our mineral properties are adjacent to Hecla Mining Company's operations on the
Lucky Friday Mine. The Lucky Friday mine has produced in excess of 100 million
ounces of silver and is currently producing in excess of 7 million ounces of
silver per year. The Hecla operation is less than 1,500 feet from the eastern
perimeter of our property. Our strategy is to maintain title to and preserve
the ownership of our mineral properties until Hecla's underground tunnel extends
to the border of our mineral properties, and Hecla needs additional ore
reserves. It is our intention to explore joint venture relationships with Hecla
or other mining companies who may have an interest in the mining of our mineral
properties. There are no active discussions taking place regarding our mineral
properties currently. We do not have plans to initiate mining operations on our
property until a suitable joint venture partner is identified.
We presently have no commercial operations. Since incorporation, our only
business has been organizational activities.
<PAGE>
CORPORATE HISTORY
Our parent company, Internet Law, was originally incorporated as Allied
Silver-Lead Company in the State of Idaho in 1967 and, until 1992, operated as
an exploratory mining company in the development stage. During that time, the
business activities of Allied were confined to the acquisition of mineral rights
lying beneath the City of Mullan, Shoshone County, Idaho, and the identification
of a third-party partner to finance exploration and development of the property.
On May 1, 1981, Allied entered into an agreement with the City of Mullan, which
superseded a previous agreement dated December 31, 1971. The Allied-Mullan
agreement provided Allied, as Lessee, the right to mine subsurface minerals on
approximately 200 acres of land owned by the City of Mullan for a period of 25
years, with an option to renew the lease for an additional 25 years. These
mineral rights are located in the Hunter Mining District. A separate lease was
obtained for the mineral rights to approximately 3 acres of land owned by School
District #392. The lease of mineral rights, as it relates to School District
#392, has expired. However, the lease of mineral rights, as it relates to the
City of Mullan, has not expired and is current and in good standing. Under the
Allied-Mullan agreement, the City of Mullan, as lessor, received 20% of all
royalty payments or other consideration received by Allied from the mining of
the property north of the Osburn Fault. The agreement also provided, that in
the event Allied entered into a lease agreement for the exploration and
development of "City Property" south of the Osburn Fault, the City of Mullan
would receive 15% of the royalties received from that lease agreement. No
royalties have been paid on "City Property" south of the Osburn Fault.
On January 1, 1981, Allied entered into a lease agreement with Sunshine Mining
Company, a Delaware corporation, with mining properties situated in Shoshone
County, Idaho. On June 26, 1984, the lease was assigned by Sunshine to Hecla
Mining Company, a Delaware corporation listed on the New York Stock Exchange,
also with mining operations near Mullan, Idaho. The lease covered all of our
properties north of the Osburn Fault as defined in the lease agreement. The
lease was for a period of forty years with a right to renew for an additional
forty years. On October 16, 1991, Hecla notified Allied that it was electing to
terminate the lease agreement on January 16, 1992. At a later date, Hecla
provided Allied with an inventory of the pipe, track and writing installed on
Allied's property.
Title to the subsurface mineral rights was acquired by issuance to the real
property owners of one share of common stock of Allied for each 25 square feet
of surface owned. Conveyance of title included all subsurface rights lying
beneath adjacent streets and alleys where ownership rested with the grantor.
On January 15, 1996, Allied was reincorporated in Delaware as a result of a
merger with Planet Resources, Inc. and, among other shareholder actions taken at
that time, changed its name to Planet Resources, Inc. The reincorporation
resulted in:
(1) shares of common stock of Allied being converted into the right to
receive one share of common stock of Planet Resources for each five shares of
common stock of Allied as of the date of reincorporation,
(2) elimination of the right to cumulative voting for the election of
directors,
(3) persons serving as officers and directors of Allied continuing to serve
in their respective capacities, and
(4) the Articles of Incorporation of Allied being changed to:
a. reduce the par value of the common stock from $.01 to $.001,
b. reduce the number of shares of common stock the Company is
authorized to issue from 50,000,000 to 10,000,000, and
c. authorize the Company to issue 1,000,000 preferred shares
with a par value of $.001 per share.
Between 1992 and the date of its reverse acquisition by National Law in
March of 1999, the company had no operations. However, our company maintained
title to its mining properties and related assets. In January 1999, Planet
Resources, Inc. agreed in principal to acquire National Law and change its name
to Internet Law Library, Inc.
PLANET RESOURCES AND NATIONAL LAW LIBRARY MERGER
In January, 1999, Planet Resources, Inc.'s management was presented with
the opportunity to merge with National Law Library, Inc. Upon review of
National Law, including its management, business plan, products and services,
and industry niche, Planet Resources' management believed that a merger with
National Law would provide an opportunity to greatly enhance Planet Resources'
shareholder value. Planet Resources' management found many factors of the
National Law business plan attractive, including the following:
- - The Internet is an increasingly significant global medium for online
commerce. According to Forrester Research, the total value of goods and services
purchased over the Web was $43 billion in 1998 and is expected to increase to
$1.3 trillion in 2003.
- - Industry sources estimate the market for on-line legal information was
$1.7 billion in 1998, and is projected to grow to $2.7 billion by 2002.
- - With the growth in litigation and the increase in the number of lawyers,
Internet Law believes the projected increase in the market for on-line legal
information is reasonable. From 1984 to 1997, civil lawsuits increased 28% and
criminal cases increased 55%. The number of lawyers in the United States as of
December 1998 was approximately 980,000 and is expected to grow to approximately
1.06 million by 2002.
- - The increased popularity of the Internet, both domestically and
internationally, and the movement towards conservation of natural resources by
using less paper, further strengthens this belief.
Internet Law's industry competitors such as, LEXIS/NEXIS(R), which is owned
by Reed-Elsevier, and West Group, a division of The Thomson Corporation, offer
similar services at significantly higher prices.
As a result of these factors, among others, as well as the successful
negotiation of a merger agreement, Planet Resources, Inc. elected to merge with
National Law in March, 1999, in an attempt to enhance shareholder value.
<PAGE>
Internet Law Library, Inc. operates an Internet portal that provides
subscription access to databases used for legal research through its
wholly-owned, operating subsidiary, National Law Library, Inc. The content of
these databases consists of federal and state case law, statutory law and
regulatory materials that can be useful to individual lawyers, judges, law
firms, corporate legal departments, government agencies, businesses, and
individuals involved in litigation, legislative efforts, and corporate legal
planning. Interfacing with these databases is a software retrieval engine that
is also owned and operated by National Law. Customers using the Internet portal
pay subscription fees to National Law for monthly or longer-term service.
National Law, a Texas corporation, was formed in November 1998 for the purpose
of developing and marketing an Internet portal to be used for legal research.
Following its formation, National Law's then sole stockholder, the current
President, Chief Executive Officer and Chairman of Internet Law, contributed to
National Law all of his rights and interests in certain retrieval and database
software and database content valued at $934,000 and $1,096,000, respectively,
in exchange for 15,152,500 shares of common stock of National Law. Commercial
operations began in January 1999.
Under the terms of the Agreement and Plan of Reorganization, dated March 25,
1999, as amended, among the Company, National Law and the stockholders of
National Law, and effective as of March 30, 1999, each share of National Law
common stock was exchanged for one share of Planet Resources' unregistered
common stock. In contemplation of this transaction, Planet Resources, Inc.'s
original stockholders agreed to a one-for-two reverse stock split, which
resulted in 2,000,000 shares of Internet Law's common stock being outstanding
immediately prior to the merger. Following the transaction, the stockholders
voted to change the name of Planet Resources, Inc. to "Internet Law Library,
Inc." As a result of these transactions, former National Law stockholders
currently hold 18,000,000 shares of Planet Resources, Inc.'s unregistered common
stock and Internet Law's original stockholders currently hold 2,000,000 shares
of Planet Resources' common stock. Under the terms of the agreement, the
majority of Planet Resources' original board of directors resigned. They were
replaced with directors elected by the new stockholders of Internet Law.
PROPERTIES
The mineral properties and related assets to be acquired from Internet Law
have been owned by the predecessor company for many years and, for the last
several years, represented the only material assets of the predecessor company.
The mineral properties owned by the predecessor company and to be owned by
Planet are described as follows:
After the distribution, Planet will be the owner of subsurface mineral rights on
approximately 190 acres of land located in the City of Mullan, Idaho. The
mineral properties consist of a mining lease with the City of Mullan and
subsurface mineral rights that Allied acquired from property owners in Mullan,
Idaho, in exchange for stock in Allied Silver. The lease with the City of
Mullan is for 25 years from May 7, 1981. The lease grants the Lessee the option
to renew the lease for 25 years from expiration of the original term. The
property leased from the City of Mullan consists of approximately two hundred
acres and involves property to the north and south of the Osburn Fault. The
City of Mullan, as Lessor, is entitled to receive 20% of any and all royalty
payments, advance or otherwise, or other consideration which may be paid by any
third parties to the Lessee as a result of mining activities north of the Osburn
Fault. The same is true for activities south of the Osburn Fault, but the
payment shall be 15%, rather than 20%.
The mineral interests owned by the predecessor company, Allied Silver,
constitutes fee simple interest to the subsurface mineral rights previously held
by property owners within the City of Mullan. Those property owners conveyed,
by deed, their subsurface mineral rights to Allied Silver in exchange for stock
in Allied Silver. These subsurface mineral rights are held as fee simple
absolute. The precise acreage for all of the subsurface mineral rights has not
been calculated, but the property from which these subsurface mineral rights
were severed was all located within the boundaries of the City of Mullan.
Therefore, to the extent there was private property within the City of Mullan,
those property owners conveyed the subsurface mineral rights to Allied Silver.
To the extent there was any property owned by the City of Mullan, including
public right-of-ways such as streets, alleys and parks, the City leased its
mineral rights to the subsurface to Allied Silver.
<PAGE>
COMPETITIVE POSITION
The Company has no competitive economic position in the mining industry as
no mineral production has ever been realized. To date, there has been no mining
activity on these properties other than two exploratory holes drilled by
Sunshine Mining during the 1980's, with inconclusive results. Furthermore, the
Company has not received revenue from its mineral rights for the last several
years since the lease with Hecla Mining Company was terminated. The termination
of this lease does not affect the prospective potential of the property, as
Hecla's current silver mining operations continue to move closer to our
properties.
BUSINESS OFFICES AND ADMINISTRATIVE SUPPORT
A private corporation controlled by A.W. Dugan provides office space and
the necessary administrative and clerical support for the corporate affairs of
Planet without any cost to Planet.
RESEARCH AND DEVELOPMENT ACTIVITIES
We have not incurred any material costs for research or development
activities since our inception.
COMPLIANCE WITH ENVIRONMENTAL LAWS
We do not believe that we will incur any material costs relating to efforts
to comply with environmental laws or other governmental regulations.
CUSTOMER AND SUPPLIERS
We do not provide any goods or services at this time. As such, we do not
have any customers or suppliers.
GOVERNMENT REGULATION
As we currently have no operations, we do not believe we are subject to
governmental regulations, which may relate to our business.
EMPLOYEES
We have no employees and our current officers and directors serve without
established compensation.
LEGAL PROCEEDINGS
We are not parties to any lawsuit, pending or threatened, that we believe
would have a material effect on our financial position.
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The table below sets forth, as to each executive officer and director of
Planet, such person's name, positions with Planet and age. Each executive
officer and director of Planet holds office until a successor is elected, or
until the earlier of death, resignation or removal. Each executive officer is
elected or appointed by the Planet board of directors. All of the directors and
executive officers listed below will continue with Planet in the same capacity
as they have served with Internet Law.
OFFICERS AND DIRECTORS
Director's
Term
Name Age Position with the Company (in Years)
------- ------ --------------------------------- ----------
A.W. Dugan 71 Chairman of the Board of 3
Directors, Chief Executive
Officer and President
Jacque N. York 53 Secretary and Director 2
Michael K. Branstetter 46 Director 1
A.W. Dugan, chairman of the board, chief executive officer and president,
organized Planet as the promoter, as that term is defined in the Securities Act
of 1933, and joined the board in 1999. Mr. Dugan also served as the President
and Chief Executive Officer of Planet Resources, Inc., the predecessor
corporation of Internet Law. Mr. Dugan's principal occupation and five year
business history is as oil and gas operator. For the past five years, Mr. Dugan
has been the chief executive officer of Nortex Corporation, a privately held
company in the business of oil and gas exploration and production.
Jacque N. York, secretary and director, joined the board in 1999. Ms.
York's principal occupation and five year business history is as corporate
officer. For the past five years, Ms. York has been the corporate secretary of
Nortex Corporation, a privately held company in the business of oil and gas
exploration and production.
Michael K. Branstetter, director, joined the board in 1999. Mr.
Branstetter's principal occupation and five year business history is as attorney
at law. He is a shareholder and Managing Director of the law firm of Hull,
Branstetter & Simpson Chartered. Mr. Branstetter is an officer and director of
the following public companies: Pilot Silver Lead, Inc., Idaho General Mines,
Inc., and Lucky Friday Extension Mining Company.
Each of the above stated directors are of the same class, but with
staggered terms, and will serve for the term indicated in the table above and
until their successors are elected and qualifiedThere are no employment
agreements between the officers of Planet and Planet. Furthermore, we do not
carry key-man insurance policies on any of the officers or directors of Planet.
Mr. Dugan, in his role as an officer and director will devote approximately 15
hours per month to Planet.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Planet has paid no remuneration to its directors or officers, other than as
provided in the following paragraph, and does not anticipate the payment of
remuneration, until the board of directors determines otherwise.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards Payouts
---------------------------------------------- ------------------------- ------------------
Securities
Name and principal Other annual Restricted underlying LTIP All other
Position Year Salary Bonus compensation stock awards options payouts compensation
- ------------------ ------- --------- --------- ------------- ------------ ------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A.W. Dugan 1999 $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Chairman, chief
executive officer
and president
Jacque N. York, 1999 $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
secretary and
director
Michael K. 1999 $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Branstetter,
director
</TABLE>
THE PLANET STOCK INCENTIVE PLAN
Planet has adopted a stock incentive plan to provide deferred stock
incentives to key employees, if any, and directors of Planet and its
subsidiaries, if any are created, who contribute significantly to the long-term
performance and growth of Planet.
<PAGE>
General Provisions of the Stock Incentive Plan
The stock incentive plan will be administered by the board of directors, or
a committee of the board of directors duly authorized and given authority by the
board of directors, to administer the stock incentive plan. The board will have
exclusive authority to administer the stock incentive plan as follows:
- - to select the employees to be granted awards under the stock incentive
plan,
- - to determine the type, size and terms of the awards to be made,
- - to determine the time when awards will be granted, and
- - to prescribe the form of instruments evidencing awards made under the
stock incentive plan.
The board will be authorized to establish, amend and rescind any rules and
regulations relating to the stock incentive plan as may be necessary for
efficient administration of the stock incentive plan. Any board action will
require a majority vote of the members of the board.
Three types of awards are available under the stock incentive plan:
- - nonqualified stock options or incentive stock,
- - stock appreciation rights and
- - restricted stock.
An aggregate of 2,500,000 shares of Planet common stock have been reserved
and may be issued under the stock incentive plan, subject to adjustment to
prevent dilution due to merger, consolidation, stock split or other
recapitalization of Planet.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
Stock options are rights to purchase shares of Planet common stock. Stock
appreciation rights are rights to receive, without payment to Planet, cash
and/or shares of Planet common stock in lieu of the purchase of shares of Planet
common stock under the stock option to which the stock appreciation right is
attached. The board may grant stock options in its discretion under the stock
incentive plan. The option price will be determined by the board at the time
the option is granted and will not be less than the par value of such shares.
The board may, in its discretion, attach a stock appreciation right to an option
awarded under the stock incentive plan. A stock appreciation right is
exercisable only to the extent that the option to which it is attached is
exercisable. A stock appreciation right entitles the optionee to receive a
payment equal to the appreciated value of each Planet share under option in lieu
of exercising the option to which the right is attached. The appreciated value
is the amount by which the fair market value of a share of Planet common stock
exceeds the option exercise price for that Planet share. A holder of a stock
appreciation right may receive cash, Planet common stock or a combination of
both upon surrendering to Planet the unexercised option to which the stock
appreciation right is attached. Planet must elect its method of payment within
fifteen business days after the receipt of written notice of an intention to
exercise the stock appreciation right.
A person to whom a stock option or stock appreciation right is awarded will
have no rights as a stockholder with respect to any shares of Planet common
stock issuable under the stock option or stock appreciation rights until actual
issuance of a stock certificate for the Planet shares.
<PAGE>
RESTRICTED STOCK
The board may in its discretion award Planet common stock that is subject
to certain restrictions on transferability. This restricted stock issued as
part of the stock incentive plan may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by the laws of descent
and distribution, for a period of time as determined by the board, from the date
on which the award is granted. Planet will have the option to repurchase the
shares of restricted Planet common stock at such price as the board shall have
fixed, in its sole discretion, when the award was made, which option will be
exercisable at such times and upon the occurrence of such events as the board
shall establish when the restricted stock award is granted. Planet may also
exercise its option to repurchase the restricted Planet common stock if prior to
the expiration of the restricted period, the participant has not paid to Planet
amounts required to be withhold pursuant to federal, state or local income tax
laws.
Certificates for restricted stock will bear an appropriate legend referring to
the restrictions. A holder of restricted stock may exercise all rights of
ownership incident to such stock including the right to vote and receive
dividends, subject to any limitations the board may impose.
TAX INFORMATION
A recipient of an incentive stock option or a non-qualified stock option
will not recognize income at the time of the grant of the option. On the
exercise of a non-qualified stock option, the amount by which the fair market
value of the Planet common stock on the date of exercise exceeds the option
price will generally be taxable to the holder as ordinary income, and will be
deductible for tax purposes by Planet. The disposition of Planet shares
acquired upon exercise of a non-qualified option will ordinarily result in
capital gain or loss. In the case of officers who are subject to the
restrictions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, the date for measuring the amount of ordinary income to be recognized
upon the exercise of a non-qualified stock option will generally be six months
after exercise rather than the date of exercise.
If an incentive option is exercised through the use of Planet common stock
previously owned by the holder, the exercise generally will not be considered a
taxable disposition of the previously owned Planet shares and thus no gain or
loss will be recognized on the exercise of Planet shares. However, if the
previously owned Planet shares were acquired by the exercise of an incentive
stock option or other tax qualified stock option and the holding period
requirements for those Planet shares were not satisfied at the time the
previously owned Planet shares were used to exercise the incentive option, such
use would constitute a disqualifying disposition of the previously owned Planet
shares. This would result in the recognition of ordinary income but, under
proposed Treasury regulations, not any additional gain in capital gain, in the
amount described above.
The amount of any cash or the fair market value of any Planet common stock
received upon the exercise of stock appreciation rights under the stock
incentive plan will be subject to ordinary income tax in the year of receipt and
Planet will be entitled to a deduction for such amount. However, if the holder
receives Planet common stock upon the exercise of stock appreciation rights and
is then subject to the restrictions of Section 16(b) of the Exchange Act; unless
the holder elects otherwise, the amount of ordinary income and deduction will be
measured at the time such restrictions lapse.
<PAGE>
PRINCIPAL SHAREHOLDERS OF PLANET
The number of shares of Planet common stock shown below to be owned
beneficially by certain beneficial owners holding more than five percent of the
issued and outstanding Internet Law common stock, as well as by each director
and by all directors and officers as a group is based upon the number of shares
to be received by these individuals in the distribution. The following table
sets forth certain information about the beneficial ownership of Planet's common
stock after the distribution by:
- - each person known by us to own beneficially five percent (5%) or more of
the outstanding common stock,
- - each of our directors,
- - each of our executive officers, and
- - our directors and officers as a group.
<TABLE>
<CAPTION>
Number of Shares of Percentage
Common Stock Beneficially
Name and Address of Beneficial Owners Beneficially Owned Owned
- -------------------------------------- ------------------- -------------
<S> <C> <C>
A.W. Dugan 1,922,092 79.92%
1415 Louisiana, Suite 3100
Houston, Texas 77002
Houston Resources Corp. 200,000 10.00%
1415 Louisiana, Suite 3100
Houston, Texas 77002
Anglo Exploration Corp. 120,000 6.00%
1415 Louisiana, Suite
Houston, Texas 77002
Jacque N. York -0- 0.00%
1415 Louisiana, Suite
Houston, Texas 77002
Michael K. Branstetter 7,500 0.38%
416 River Street
Wallace, Idaho 83873-0709
ALL EXECUTIVE OFFICERS AND 1,929,592 80.238%
DIRECTORS AS A GROUP (2 PERSONS)
</TABLE>
- --------------------------------------------------------------------------------
In the preceding table:
- - A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this prospectus upon the
exercise of options. Furthermore, unless otherwise indicated below and pursuant
to applicable community property laws, each shareholder named in the table above
has sole voting and investment power with respect to the shares set forth
opposite each such shareholder's name.
- - Mr. Dugan is deemed to be the beneficial owner of 405,000 shares of common
stock that can be acquired within 60 days from the date of this prospectus upon
the exercise of options. Mr. Dugan's shares also include 120,000 shares
beneficially owned by Anglo Exploration Corp. Anglo Exploration Corp. is a
private company owned and controlled by Mr. Dugan. Furthermore, Mr. Dugan's
shares include 200,000 shares owned by Houston Resources Corp. Houston
Resources Corp. is a company beneficially owned by a trust for the benefit of
Mr. Dugan's family, and to which he disclaims any beneficial interest. Mr.
Dugan does, however, have dispositive and voting control over these shares.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PLANET COMMON STOCK OPTIONS
On July 28, 1994, Internet Law granted five (5) year options to purchase
645,000 shares of common stock at a price of $0.15 per share. During fiscal
1996, 240,000 of the options were exercised by Houston Resources Corporation, a
corporate entity owned by a trust for the benefit of the family of A.W. Dugan.
In conjunction with the reverse acquisition by National Law, the previously
remaining 405,000 unexercised options, which were to expire on July 28, 1999,
were cancelled. On August 12, 1999, Planet issued to Mr. Dugan options to
purchase 405,000 shares of its common stock exercisable at anytime prior to 5:00
p.m. December 31, 2004 at an exercise price of $0.15 per share.
PLANET'S POLICY REGARDING TRANSACTIONS WITH AFFILIATES
At this time, we have no formal policy in place regarding Planet entering
into transactions with affiliates.
DESCRIPTION OF PLANET CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The certificate of incorporation grants Planet the authority to issue
26,000,000 shares of capital stock, of which 25,000,000 are common stock, par
value $.001 per share, and 1,000,000 are preferred stock, par value $.001 per
share. At December 31, 1999, Planet had outstanding 1,000 shares of Planet
common stock, all of which are currently held by Internet Law.
PLANET SERIAL PREFERRED STOCK
Under Planet's certificate of incorporation, Planet's board of directors
may from time to time establish and issue one or more series of preferred stock
and fix the serial designations, powers, preferences and rights of the shares of
such series and the qualification, limitations or restrictions thereon,
including, but not limited to, the fixing of the dividend rights, dividend rate
or rates, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, and the
liquidation preferences, in each case, if any, of any wholly unissued series of
Planet preferred stock.
PLANET COMMON STOCK
Holders of Planet common stock are entitled to receive such dividends as
are declared by the board of directors, subject to the preference of any
outstanding Planet preferred stock, and are entitled to cast one vote per share
on all matters voted upon by stockholders. However, Planet has no present
intention of paying any dividends. There is no cumulative voting for the
election of directors and Planet common stock does not have any preemptive
rights. Upon liquidation of Planet, holders of Planet common stock are entitled
to share equally and ratably in any assets available for distribution to them,
after payment or provision for liabilities and amounts owing with respect to any
outstanding Planet preferred stock. Payment and declaration of dividends on
Planet common stock and purchases of shares thereof by Planet will be subject to
restrictions if Planet fails to pay dividends on any series of Planet preferred
stock ranking prior to Planet common stock as to the payment of dividends.
<PAGE>
PLANET COMMON STOCK OPTIONS
As of August 12, 1999, we have authorized the issuance of 405,000 options
each to purchase one share of common stock at a price of $0.15 per share at any
time up to December 31, 2004. Subsequent to the distribution, we intend to
authorize the issuance of 50,000 options to a consultant, each to purchase one
share of common stock at a price of $0.40 per share at any time up to November
2, 2006.
DEFENSES AGAINST HOSTILE TAKEOVERS
Introduction. The following discussion summarizes the reasons for, and the
operation and effects of, certain provisions of our certificate of incorporation
which management has identified as potentially having an anti-takeover effect.
Copies of the certificate of incorporation and by-laws are included as an
exhibit to the registration statement of which this prospectus is a part.
In general, the anti-takeover provisions in Delaware law and our
certificate of incorporation are designed to minimize our susceptibility to
sudden acquisitions of control which have not been negotiated with and approved
by our board of directors. As a result, these provisions may tend to make it
more difficult to remove the incumbent members of the board of directors. The
provisions would not prohibit an acquisition of control of us or a tender offer
for all of our capital stock. However, to the extent these provisions
successfully discourage the acquisition of control of us or tender offers for
all or part of our capital stock without approval of the board of directors,
they may have the effect of preventing or delaying an acquisition or tender
offer which might be viewed by stockholders to be in their best interests.
Authorized shares of capital stock. Our certificate of incorporation
authorizes the issuance of up to 1,000,000 shares of serial preferred stock and
25,000,000 shares of common stock. Shares of our preferred stock with voting
rights could be issued and would then represent an additional class of stock
required to approve any proposed acquisition. This preferred stock, together
with authorized but unissued shares of common stock, could represent additional
capital stock required to be purchased by an acquiror. Issuance of such
additional shares may dilute the voting interests of our stockholders.
Stockholder meetings. Our certificate of incorporation provides that
annual stockholder meetings may be called only by our board of directors or a
duly designated committee of the board. Our certificate of incorporation also
provides that stockholder action may be taken only at a special or annual
stockholder meeting and not by written consent. These provisions may
discourage hostile takeover attempts by making it more difficult to address
shareholders between annual meetings called by the board of directors.
Classified board of directors and removal of directors. Planet's
certificate of incorporation provides that Planet's board of directors is to be
divided into three classes which shall be as nearly equal in number as possible.
The directors in each class serve for terms of three years, with the terms of
one class expiring each year. Each class currently consists of approximately
one-third of the number of directors. Each director will serve until his
successor is elected and qualified.
A classified board of directors could make it more difficult for
stockholders, including those holding a majority of Planet's outstanding stock,
to force an immediate change in the composition of a majority of the board of
directors. Since the terms of only one-third of the incumbent directors expire
each year, it requires at least two annual elections for the stockholders to
change a majority, whereas a majority of a non-classified board may be changed
in one year. In the absence of the provisions of Planet's certificate of
incorporation classifying the board, all of the directors would be elected each
year. The provision for a staggered board of directors affects every election
of directors and is not triggered by the occurrence of a particular event such
as a hostile takeover. Thus a staggered board of directors makes it more
difficult for stockholders to change the majority of directors even when the
reason for the change would be unrelated to a takeover.
Stockholder vote required to approve business combinations with related
persons. Our certificate of incorporation generally requires the approval of
the holders of 75% of our outstanding voting stock, including any class or
series entitled to vote separately, and a majority of the outstanding stock not
beneficially owned by a related person, up to a maximum requirement of 85% of
the outstanding voting stock, to approve business combinations, as defined,
involving the related person, except in cases where the business combination has
been approved in advance by two-thirds of those members of our board of
directors who were directors prior to the time when the related person became a
related person. The supermajority stockholder vote requirements under the
Delaware Certificate and Delaware law may have the effect of foreclosing mergers
and other business combinations which the holders of a majority of our stock
deem desirable and place the power to prevent such a transaction in the hands of
a minority of our stockholders.
Advance notice requirements for nomination of directors and proposal of new
business at annual stockholder meetings. Our certificate of incorporation
generally provides that any stockholder desiring to make a nomination for the
election of directors or a proposal for new business at a stockholder meeting
must submit written notice not less than 30 or more than 60 days in advance of
the meeting. Making the period for nomination of directors and introducing new
business a period not less than 10 days prior to notice of a stockholder meeting
may tend to discourage persons from bringing up matters disclosed in the proxy
materials furnished by Planet and could inhibit the ability of stockholders to
bring up new business in response to recent developments.
Supermajority voting requirement for amendment of certain provisions of the
certificate of incorporation. Our certificate of incorporation provides that
specified provisions contained in the certificate of incorporation may not be
repealed or amended except upon the affirmative vote of the holders of not less
than 75% percent of the outstanding stock entitled to vote. This requirement
exceeds the majority vote that would otherwise be required by Delaware law for
the repeal or amendment of the certificate of incorporation. Specific
provisions subject to the supermajority vote requirement are:
<PAGE>
- - the calling of stockholder meetings and the requirement that stockholder
action be taken only at annual or special meetings,
- - written notice to Planet of nominations for the election of directors and
new business proposals,
- - the number and terms of Planet's directors,
- - the removal of directors,
- - approval of business combinations involving related persons,
- - the consideration of various factors in the evaluation of business
combinations,
- - indemnification of directors, officers, employees and agents,
- - limiting directors' liability, and
- - the required stockholder vote for amending the by-laws and certificate of
incorporation.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the distribution, Planet will have an estimated
2,000,000 shares of common stock outstanding held beneficially by approximately
1,449 persons, all of which will be freely tradable without restriction or
further registration under the Securities Act. Following the distribution,
455,000 shares of Planet common stock will be issuable upon the exercise of
options.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for Planet by Sonfield & Sonfield, Houston, Texas.
EXPERTS
The financial statements of Planet as of December 31, 1999, appearing in
this prospectus have been audited by Harper & Pearson Company, independent
auditors, as set forth in their report appearing elsewhere herein, and upon the
authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Planet intends to furnish to its shareholders annual reports, which will
include financial statements audited by independent accountants, and such other
periodic reports as it may determine to furnish or as may be required by law,
including sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as
amended.
Planet has filed a registration statement with the Securities Exchange
Commission under the Securities Act with respect to the shares registered
hereby. This Prospectus omits certain information contained in the registration
statement as permitted by the rules and regulations of the Commission. For
further information about respect to Planet Resources, Inc. and Planet common
stock, investors should read the registration statement, including the exhibits
included with it. Statements in this Prospectus about the contents of any
contract or any other document are not necessarily complete; investors should
read such contract or other document filed with the Commission as an exhibit to
the registration statement. The registration statement, including all of the
attached exhibits and schedules, may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549. Copies of such materials can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
NW, Washington, D.C. 20549, at prescribed rates. Planet will file registration
statements (including this one) and other documents and reports electronically
through the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR")
which is publicly available through the Commission's Internet World Wide
website, http://www.sec.gov.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . .F-2
Balance Sheet as of December 31, 1999. . . . . . . . . . . . . . . . . F-3
Statement of Operations for the Six Months Ended December 31, 1999. . . . . F-4
Statement of Stockholder's Equity for
the Six Months Ended December 31, 1999 . . . . . . . . . . . . . . . . . . . F-5
Statement of Cash Flows for the Six Months Ended December 31, 1999. . . . . F-6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . .F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholder
Planet Resources, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Planet Resources, Inc.
(formerly New Planet Resources, Inc.) as of December 31, 1999, and the related
statements of operations, changes in stockholder's equity and cash flows for the
period March 25, 1999 (date of inception) through December 31, 1999. 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 Planet Resources, Inc. at
December 31, 1999, and the results of its operations and its cash flows for the
period March 25, 1999 (date of inception) through December 31, 1999 in
conformity with generally accepted accounting principles.
Houston, Texas
January 20, 2000
F-2
<PAGE>
PLANET RESOURCES, INC.
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
--------
<S> <C>
CURRENT ASSETS $ 20,236
========
Cash
TOTAL ASSETS $ 20,236
========
LIABILITIES AND STOCKHOLDER'S EQUITY
-------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Preferred stock - par value $.001; 1,000,000 shares $ -0-
authorized, none issued or outstanding
Common stock - par value $.001; 25,000,000 shares 1
authorized, 1,000 shares issued and outstanding
Additional paid-in capital 36,274
Retained earnings (deficit) (16,039)
---------
Total stockholder's equity 20,236
---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 20,236
=========
</TABLE>
F-3
<PAGE>
PLANET RESOURCES, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 25, 1999 THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
REVENUE $ -0-
---------
EXPENSES
Professional fees 15,638
Other 401
---------
Total expenses 16,039
---------
NET LOSS $(16,039)
---------
BASIC LOSS PER SHARE OUTSTANDING $ (16.03)
=========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,000
=========
</TABLE>
F-4
<PAGE>
PLANET RESOURCES, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD MARCH 25, 1999 THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Common Additional Retained Total
Shares Stock Paid-In Earnings
Issued Capital (Deficit)
------ -------- ------------ --------- ---------
BALANCE, -0- $ -0- $ -0- $ -0- $ -0-
MARCH 25, 1999
SHARES ISSUED 1,000 1 36,274 -0- 36,275
FOR CASH
NET LOSS -0- -0- -0- (16,039) (16,039)
------ -------- ------------ --------- ---------
BALANCE,
DECEMBER 31, 1999 1,000 $ 1 $ 36,274 $ (16,039) $ 20,236
</TABLE>
See accompanying notes.
F-5
<PAGE>
PLANET RESOURCES, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 25, 1999 THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(16,039)
---------
Cash used by operating activities (16,039)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 36,275
---------
Cash provided by financing activities 36,275
---------
CASH FLOWS FROM INVESTING ACTIVITIES -0-
---------
NET INCREASE IN CASH 20,236
CASH AT BEGINNING OF PERIOD -0-
---------
CASH AT END OF PERIOD $ 20,236
</TABLE>
See accompanying notes.
F-6
<PAGE>
PLANET RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Planet Resources, Inc. ("Planet") (formerly New Planet Resources, Inc.) was
incorporated in the State of Delaware on March 26, 1999, as a wholly owned
subsidiary of Internet Law Library, Inc. ("Internet Law") (formerly Planet
Resources, Inc.) ("Old Planet"). Planet was formed in connection with the
execution of an Agreement and Plan of Distribution (the 'Distribution
Agreement') by and between Internet Law and Planet dated March 25, 1999. Under
the Distribution Agreement, Internet Law will transfer all of its mineral
properties to Planet and shares of Planet will be distributed to the Internet
Law stockholders in a tax-free spin-off accounted for as a pooling of interest.
Effective March 30, 1999, Old Planet acquired National Law Library ("National
Law") through a tax free exchange of shares of common stock of National Law for
Internet Law common shares ("Acquisition"), all as contemplated by an Agreement
and Plan of Reorganization dated March 25, 1999 ("Acquisition Agreement").
Effective July 8, 1999, Old Planet changed its corporate name to Internet Law
Library, Inc. and effective July 15, 1999, New Planet Resources, Inc. changed
its corporate name to Planet Resources, Inc.
Planet intends to become a public company upon the effectiveness of a
registration statement, and will continue the business of Old Planet. The
Distribution Agreement provides that the Distribution is subject to customary
regulatory approvals and the receipt of an opinion of counsel concerning the
tax-free nature of the transaction.
Planet has no commercial operations although management is evaluating various
future operating strategies. Planet has incurred minimal expenses for
professional and other costs which have been reflected on the accompanying
statement of operations.
Basic Loss Per Share - Basic loss per share of common stock is based on the
- -----------------------
weighted average number of shares outstanding during the period.
- ----
Estimates - The preparation of financial statements in conformity with generally
- ---------
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
See accompanying notes.
F-7
<PAGE>
2. PROFORMA EFFECTS OF DISTRIBUTION AGREEMENT
The following table reflects the current financial position of Planet as
reflected on the accompanying balance sheet and the proforma effects on Planet's
financial position following the execution of the Distribution Agreement. Upon
completion of the Distribution, there will be a total of 2,000,000 shares of
Planet Stock outstanding and 405,000 options each to purchase one share of
Planet Common Stock for a price of $.15 per share. Shares of the Company's
Common Stock have been reserved for issuance upon exercise of Planet Options.
The Company has adopted a Stock Incentive Plan and has reserved 2,500,000 shares
of the Company's Common Stock under the Plan.
<TABLE>
<CAPTION>
Actual Proforma
--------- ----------
ASSETS
---------
<S> <C> <C>
CURRENT ASSETS
Cash $ 20,236 $ 20,236
Total current assets 20,236 20,236
PROPERTY
Mineral rights -0- 10,000
Depreciable property -0- 15,963
25,963
---------
Accumulated depreciation -0- 15,963
Net property -0- 10,000
TOTAL ASSETS $ 20,236 $ 30,236
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - par value $.001; 1,000,000 shares $ -0- $ -0-
authorized, none issued or outstanding
Common stock - par value $.001; 25,000,000 shares 1 2,000
authorized, 1,000 actual and 2,000,000 proforma
shares issued and outstanding
Additional paid-in capital 36,274 44,275
Retained earnings (deficit) (16,093) (16,039)
Total stockholders' equity 20,236 30,236
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,236 $ 30,236
</TABLE>
See accompanying notes.
F-8
<PAGE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR PROFORMA EFFECTS OF
DISTRIBUTION AGREEMENT
(a) Equipment and Leasehold Improvements - The costs of equipment and
---------------------------------------
leasehold improvements are capitalized and charged to earnings utilizing the
straight-line method of depreciation, with useful lives ranging from three to
ten years. The costs of routine maintenance are charged to earnings as incurred.
When assets are sold or retired, any resulting gain or loss is reflected in
operations.
(b) Realization of the Carrying Cost of Mining Property and Exploration
------------------------------------------------------------------------
Costs - In January 1992, the Board of Directors wrote down the mineral rights
-
and capitalized exploration costs to their best estimate of their net realizable
value of $10,000. The ultimate realization of Planet's carrying costs in these
assets is dependent upon the discovery and the ability of Planet to finance
successful exploration and development of commercial ore deposits, if any, in
the mining properties in sufficient quantity for Planet to recover its recorded
value.
4. PROPERTY - MINERAL RIGHTS AND LEASES
(a) Planet is the owner of subsurface mineral rights on approximately 190
acres located in the City of Mullan, Idaho. Title was acquired by issuance to
real property owners of one share of capital stock for each 25 square feet of
surface owned. The acquisition of such mineral rights was completed in November
1985.
(b) Leases - Planet entered into an agreement dated May 1, 1981, with the
------
City of Mullan (which supersedes a previous agreement dated December 3, 1971),
whereby Planet, as lessee, has the right to mine subsurface minerals on
approximately 200 acres owned by the City north of the Osburn Fault for a period
of 25 years. The City, as lessor, will receive 20% of all royalty payments or
other consideration received by Planet. In the event Planet enters into a lease
agreement for the exploration and development of "City Property" south of the
Osburn Fault, the City shall receive 15% of the royalties received. No royalties
have been received or paid on "City Property" south of the fault.
See accompanying notes.
F-9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law applies to Planet and
the relevant portion of the Delaware General Corporation Law provides as
follows:
145. Indemnification of Officers, Directors, Employees and Agents; Insurance.
(a) A corporation may indemnify any person who was or is a party or is
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, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
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 contendere or its equivalent, shall not, of
itself, 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
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit 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 except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
See accompanying notes.
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
<PAGE>
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear
and determine all actions for advancement of expenses or indemnification brought
under this section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Planet's certificate of incorporation limits the liability of directors (in
their capacity as directors, but not in their capacity as officers) to Planet or
its stockholders to the fullest extent permitted by the Delaware General
Corporation Law, as amended. Specifically, no director of Planet will be
personally liable to Planet or its stockholders for monetary damages for breach
of the director's fiduciary duty as a director, except as provided in Section
102 of the Delaware General Corporation Law for liability: (i) for any breach of
the director's duty of loyalty to Planet or its stockholders; (ii) for acts or
omissions not in good faith and which involve intentional misconduct or knowing
violation of law; (iii) under Section 174 of the Delaware General Corporation
Law, which relates to unlawful payments of dividends or unlawful stock
repurchases or redemptions; or (iv) for any transaction from which the director
derived an improper personal benefit. The inclusion of this provision in
Planet's certificate of incorporation may have the effect of reducing the
likelihood of derivative litigation against directors, and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duty of care, even though such action, if successful, might
otherwise have benefited Planet and its stockholders.
Under Planet's certificate of incorporation and in accordance with Section
145 of the Delaware General Corporation Law, Planet will indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than a "derivative" action by or in the
right of Planet) by reason of the fact that such person was or is a director or
officer of Planet, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of Planet, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such acts were unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such an action and then, where the person is adjudged to be liable to Planet,
only if and to the extent that the Court of Chancery of the State of Delaware or
the court in which such action was brought determines that such person is fairly
and reasonably entitled to such indemnity and then only for such expenses as the
court deems proper. Planet will indemnify, pursuant to the standard enumerated
in Section 145 of the Delaware General Corporation Law, any past or present
officer or director who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed derivative action by or in the right of
Planet.
The certificate of incorporation of Planet provides that Planet may pay for the
expenses incurred by an indemnified director or officer in defending the
proceedings specified above in advance of their final disposition, provided
that, if the Delaware General Corporation Law so requires, such indemnified
person agrees to reimburse Planet if it is ultimately determined that such
person is not entitled to indemnification. Planet's certificate of
incorporation also allows Planet, in its sole discretion, to indemnify any
person who is or was one of its employees and agents to the same degree as the
foregoing indemnification of directors and officers. To the extent that a
director, officer, employee or agent of Planet has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law,
or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith. In addition, Planet may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of Planet or another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against and incurred by such person in such capacity, or arising out of
the person's status as such whether or not Planet would have the power or
obligation to indemnify such person against such liability under the provisions
of the Delaware General Corporation Law. Planet maintains insurance for the
benefit of Planet's officers and directors insuring such persons against certain
liabilities, including civil liabilities under the securities laws.
<PAGE>
Additionally, Planet has entered into indemnification agreements with each of
the Directors of Planet, which, among other things, provides that Planet will
indemnify such Directors to the fullest extent permitted by Planet's certificate
of incorporation and the Delaware General Corporation Law and will advance
expenses of defending claims against such Directors.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by Planet in connection with the issuance
and distribution of the securities being registered are as follows:
SEC Registration Fee. . . . . . . . . . . . . . . . .$30
Legal Fees and Expenses*. . . . . . . . . . . . . 15,000
Accounting Fees and Expenses*. . . . . . . . . . .2,500
Financial Printing*. . . . . . . . . . . . . . . .5,000
Transfer Agent Fees*. . . . . . . . . . . . . . . .1,500
Blue Sky Fees and Expenses*. . . . . . . . . . . . 3,000
Miscellaneous*. . . . . . . . . . . . . . . . . . .2,500
TOTAL**. . . . . . . . . . . . . . . . . . . . . $29,530
__________________
*Estimated
** A significant portion of these expenses were paid prior to December 31,
1999.
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On March 26, 1999, Planet issued 1,000 shares of common stock to Internet
Law Library, Inc., a Delaware corporation for the cash sum of $1,000 in reliance
on the exemption from registration in Section 4(2) of the Securities Act.
In conjunction with the reverse acquisition by National Law, the previously
remaining 405,000 unexercised options, which were to expire on July 28, 1999,
were cancelled. On August 12, 1999, Planet issued options to purchase 405,000
shares of its common stock exercisable at anytime prior to 5:00 p.m. December
31, 2004 at an exercise price of $0.15 per share.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. Description of Document
- ------------ -------------------------
1.1 Agreement and Plan of Distribution**
3.1 Certification of Incorporation**
3.1.1 Amendment of Certificate of Incorporation changing name from New Planet
to Planet.**
3.2 By-Laws**
4.1 Common Stock Option Agreement**
4.2 Form of Common Stock Option Certificate (included as
an exhibit to Exhibit 4.1)**
4.3 Form of Common Stock Certificate**
5.1 Opinion of Sonfield & Sonfield**
8.1 Opinion of Sonfield & Sonfield with respect to tax matters (included as
part of Exhibit 5.1).*
10.1 Planet Incentive Stock Option Plan**
10.2 Indemnification Agreement between Planet and A.W. Dugan**
10.3 Indemnification Agreement between Planet and Jacque N. York**
10.4 Indemnification Agreement between Planet and Michael K. Branstetter**
10.5 Indemnification Agreement between Planet and Danyel Owens**
10.6 Indemnification Agreement between Planet and Internet Law Library, Inc.
under its former name**
10.7 Lease Agreement with City of Mullan, Idaho (included as an exhibit to
Exhibit 10.8)**
10.8 Form of Assignment of Mineral Lease**
10.9 Form of Mineral Deed**
10.10 Letter report from an independent geologist used by management in
justifying the $10,000 carrying-value of the mineral assets*
23.1 Consent of Harper & Pearson Company***
23.2 Consent of Sonfield & Sonfield**
23.3 Consulting Agreement by and between Genesis Financial Group, L.L.C and
Planet Resources, Inc.***
________________________
* Filed herewith
** Previously filed
*** To be filed by amendment
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to participating
broker-dealers, at the closing, certificates in such denominations and
registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.
The undersigned Registrant also undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; Provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or preceding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
The undersigned Registrant also undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as a part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this amendment number 3 to the registration statement on Form SB-2 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Houston, State of Texas, on the 3rd day of April, 2000.
PLANET RESOURCES, INC.
By:
A.W. Dugan, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed on the dates indicated by the
following persons in the capacities indicated.
---------------------------------------- ------------------------------
A.W. Dugan, Chief Executive Officer, Jacque N. York, Secretary and
President and Director Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Document
- ----------- -------------------------
1.1 Agreement and Plan of Distribution**
3.1 Certification of Incorporation**
3.1.1 Amendment of Certificate of Incorporation changing name from New
Planet to Planet.**
3.2 By-Laws**
4.1 Common Stock Option Agreement**
4.2 Form of Common Stock Option Certificate (included as an
exhibit to Exhibit 4.1)**
4.3 Form of Common Stock Certificate**
5.1 Opinion of Sonfield & Sonfield**
8.1 Opinion of Sonfield & Sonfield with respect to tax matters
(included as part of Exhibit 5.1).*
10.1 Planet Incentive Stock Option Plan**
10.2 Indemnification Agreement between Planet and A.W. Dugan**
10.3 Indemnification Agreement between Planet and Jacque N. York**
10.4 Indemnification Agreement between Planet and Michael K. Branstetter**
10.5 Indemnification Agreement between Planet and Danyel Owens**
10.6 Indemnification Agreement between Planet and Internet Law Library,
Inc. under its former name**
10.7 Lease Agreement with City of Mullan, Idaho (included as an exhibit to
Exhibit 10.8)**
10.8 Form of Assignment of Mineral Lease**
10.9 Form of Mineral Deed**
10.10 Letter report from an independent geologist used by management in
justifying the $10,000 carrying-value of the mineral assets*
23.1 Consent of Harper & Pearson Company***
23.4 Consent of Sonfield & Sonfield**
23.5 Consulting Agreement by and between Genesis Financial Group, L.L.C and
Planet Resources, Inc.***
________________________
* Filed herewith
** Previously filed
*** To be filed by amendment
<PAGE>
EXHIBIT 23.1
CONSENT OF HARPER & PEARSON COMPANY
We consent to the use in this Registration Statement on Form SB-2 No.
33-76533 of our report dated January 20, 2000, relating to the financial
statements of Planet Resources, Inc., and to the reference to our Firm under the
caption "Experts" in the Prospectus.
Houston, Texas
April 3, 2000
<PAGE>
EXHIBIT 23.3
CONSULTING AGREEMENT BY AND BETWEEN
GENESIS FINANCIAL GROUP, L.L.C AND PLANET RESOURCES, INC.
THIS AGREEMENT (the "Agreement") is entered into as of this 2nd day of
November, 1999, by and between Genesis Financial Group, L.L.C., a Delaware
limited liability company with principal offices at 2476 Bolsover, Suite 607,
Houston, Texas 77005 (the "Consultant") and Planet Resources, Inc., a Delaware
corporation (formerly New Planet Resources, Inc, a wholly-owned subsidiary of
Internet Law Library, Inc. (formerly Planet Resources, Inc.)) with its principal
offices at 1415 Louisiana, Suite 3100, Houston, Texas 77002 (collectively
hereinafter referred to as the "Corporation").
WHEREAS, the Consultant has developed expertise in providing strategic
business advice and consulting services; and
WHEREAS, the Corporation desires to engage the services of the Consultant
and the Consultant desires to provide services to the Corporation as set forth
below, upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for such other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. ENGAGEMENT. Effective upon execution hereof, the Corporation hereby
engages the Consultant to render to it assistance in the preparation of certain
sections of the SB-2 Registration Statement for the Corporation (currently, a
wholly-owned subsidiary of Internet Law Library, Inc.) (formerly Planet
Resources, Inc.), as well as preparation of responses to comments on the initial
SB-2 Registration Statement for the Corporation received from the United
States Securities and Exchange Commission (the "SEC") in its letter to the
Corporation dated May 20, 1999. (the "Project"). This Agreement shall remain in
effect for a period of the earlier of six months from the date hereof or the
approval of said registration statement by the SEC (the "Term"). The Term
hereof may be extended or renewed upon the written agreement of the Corporation
and the Consultant prior to expiration of the Term hereof upon such terms as the
parties hereto may negotiate at the time of such extension or renewal.
2. SERVICES. For the Term of this Agreement, the Consultant shall render to
the Corporation management consulting advice in the areas of strategic
planning, business strategy, administration and such other related management
services as shall reasonably be requested by the board of directors of the
Corporation in connection with the Project. Notwithstanding the foregoing, yet
understanding that time is of the essence in the completion of the Project, the
Consultant shall not be required to devote more than twenty hours per week to
the performance of services hereunder.
3. COMPENSATION. In consideration for the performance of the services
described above, the Corporation shall pay to the Consultant, Five Thousand
Dollars ($5,000) in cash upon execution of this Agreement. In addition, within
five (5) business days from the date the SB-2 Registration Statement of the
Corporation is declared effective by the SEC, the Corporation shall pay to the
Consultant an additional $5,000 in cash and issue to the Consultant (as the
Consultant designates) a warrant to purchase an aggregate of 50,000 shares of
common stock of the Corporation with an exercise price of $0.40 per share (the
"Warrant"). The purchase price of the Warrant shall be $10.00. The Warrant, in
the aggregate, will have an expiration date of five (5) years from the date
of execution of this Agreement.
<PAGE>
4. OUT-OF-POCKET EXPENSES. The Corporation shall reimburse Consultant for
its travel and other out-of-pocket expenses incurred in connection with this
Agreement, and such reimbursement shall be in addition to any other fees payable
hereunder. The Consultant will submit to the Corporation for pre-approval
of all out-of-pocket expenses greater than $500. Out-of-pocket expenses less
than $500 will not require pre-approval by the Corporation. All invoices shall
be paid in cash and are due and payable upon receipt of monthly invoices from
Consultant
5. WARRANT. The Warrant outlined in paragraph 3 hereof shall provide for
cashless exercise and shall be exercisable as to all or any portion thereof from
time to time on any Business Day for a period of seven years. The
Corporation shall include in the registration statement, which is being prepared
pursuant to this Agreement, 50,000 shares of common stock to be registered to
cover the sale of the shares of common stock issuable upon exercise of the
Warrant. The Warrant shall be purchasable by the Consultant, its affiliates, or
its designees in amounts yet to be determined. The Warrant, as to all or any
part of the number of shares of common stock issuable under the terms of the
Warrant, and all options and rights under the Warrant, shall be transferable.
In the event that the registration statement contemplated hereby is not declared
effective, then on any date subsequent hereto in which the Corporation proposes
to file a registration statement relating to any of its securities under the
Securities Act in connection with the public offering of such securities, the
Corporation shall promptly give the Consultant written notice of such
registration (the "Piggy-Back Notice"), and the Consultant shall be afforded the
right to include the shares of common stock issuable upon exercise of the
Warrant in such registration statement.
6. CONFIDENTIAL INFORMATION. By reason of performance under this Agreement,
the Consultant may have access to and may obtain specialized knowledge,
trade secrets and confidential information about the business and operation of
the Corporation, its subsidiaries and divisions thereof. Therefore, the
Consultant hereby agrees that he shall keep secret and retain in confidence and
shall not use, disclose to others, or publish, other than in connection with the
performance of services hereunder and in accordance herewith, any information
relating to the business, operation or other affairs of the Corporation, its
subsidiaries and divisions thereof, which information is acquired in the course
of providing services for the Corporation. To the extent that any of such
information may be deemed from time to time to be "material non-public
information" as construed under the Exchange Act of 1934, the Consultant hereby
agrees not to purchase or sell (or offer to purchase or sell) any of the
Corporation's securities while in possession of information which may be so
deemed to be "material non-public information" prior to termination of this
engagement without prior approval of legal counsel. Notwithstanding the
foregoing, the Corporation is entitled to sell the shares of common stock of the
Corporation resulting from the exercise of the Warrant as outlined in paragraph
3 hereof.
<PAGE>
7. INDEMNIFICATION. The Consultant and the Corporation hereby agree as
follows:
(a) the Corporation will indemnify and hold harmless the Consultant against
and in respect of all damages, claims, losses and expenses (including, without
limitation, attorneys' fees and disbursements) reasonably incurred (all such
amounts may hereinafter be referred to as the "Damages") by the Consultant
arising out of: (i) any misrepresentation or breach of any warranty made by the
Corporation pursuant to the provisions of this Agreement or in any statement,
certificate or other document furnished by the Corporation pursuant to this
Agreement, and (ii) the nonperformance or breach of any covenant, agreement or
obligation of the Corporation contained in this Agreement which has not been
waived by the Consultant;
(b) the Corporation will be obligated to indemnify and hold harmless the
Consultant with respect to claims for Damages as to which the Consultant shall
have given written notice to the Corporation on or before the close of business
on the sixtieth day following the expiration of the Term hereof;
(c) in any case where the Corporation has indemnified the Consultant for any
Damages and the Consultant recovers from third parties all or any part of the
amount so indemnified by the Corporation, the Consultant shall promptly pay over
to the Corporation the amount so recovered;
(d) with respect to claims or demands by third parties, whenever the
Consultant shall have received notice that such a claim or demand has been
asserted or threatened which, if valid, would be subject to indemnification
hereunder, the Consultant shall as soon as reasonably possible and in any event
within thirty (30) days of receipt of such notice, notify the Corporation of
such claim or demand and of all relevant facts within its knowledge which relate
thereto. The Corporation shall then have the right at its own expense to
undertake the defense of any such claims or demands utilizing counsel selected
by the Corporation and approved by the Consultant, which approval shall not be
unreasonably withheld. In the event that the Corporation should fail to give
notice of the intention to undertake the defense of any such claim or demand
within thirty (30) days after receiving notice that it has been asserted or
threatened, the Consultant shall have the right to satisfy and discharge the
same by payment, compromise or otherwise and shall give written notice of any
such payment, compromise or settlement to the Corporation;
(e) the Consultant will indemnify and hold harmless the Corporation against
and in respect of all Damages reasonably incurred by the Corporation arising out
of: (i) any misrepresentation or breach of any warranty made by the Consultant
pursuant to the provisions of this Agreement, and (ii) the nonperformance or
breach of any covenant, agreement or obligation of the Consultant which has not
been waived by the Corporation;
(f) the Consultant will be obligated to indemnify the Corporation for
Damages as to which the Corporation shall have given written notice to the
Consultant on or before the close of business on the sixtieth day following the
second anniversary hereof;
(g) in any case where the Consultant has indemnified the Corporation for any
Damages and the Corporation recovers from third parties all or any part of the
amount so indemnified by the Consultant, the Corporation shall promptly pay over
to the Consultant the amount so recovered; and
(h) with respect to claims or demands by third parties, whenever the
Corporation shall have received notice that such a claim or demand has been
asserted or threatened, which, if valid, would be subject to indemnification
hereunder, the Corporation shall as soon as reasonably possible and in any event
within thirty (30) days of receipt of such notice, notify the Consultant of such
claim or demand and of all relevant facts within its knowledge which relate
thereto. The Consultant shall have the right at its expense to undertake the
defense of any such claim or demand utilizing counsel selected by the Consultant
and approved by the Corporation, which approval shall not be unreasonably
withheld. In the event that the Consultant should fail to give notice of its
intention to undertake the defense of any such claim or demand within thirty
(30) days after receiving notice that it has been asserted or threatened, the
Corporation shall have the right to satisfy and discharge the same by payment,
compromise or otherwise and shall give written notice of any such payment,
compromise or settlement to the Consultant.
<PAGE>
8. APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws thereof and shall inure to the benefit of and be
binding upon the Consultant and the Corporation and their respective legal
successors and assigns.
9. ARBITRATION. The Corporation represents, warrants, covenants and agrees
that any controversy or claim brought in any capacity by the Corporation against
the Consultant or any members, officers, directors, agents, affiliates,
associates, employees or controlling persons of the Consultant shall be settled
by expedited arbitration under the Federal Arbitration Act in accordance with
the commercial arbitration rules of the American Arbitration Association ("AAA")
and judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Any controversy or claim brought by the
Consultant against the Corporation or its securityholders, officers, directors,
agents, affiliates, associates, employees or controlling persons shall be
settled by arbitration under the Federal Arbitration Act in accordance with the
commercial arbitration rules of the AAA and judgment rendered by the arbitrators
may be entered in any court having jurisdiction thereof. In arbitration
proceedings under this section, the parties shall be entitled to any and all
remedies that would be available in the absence of this section and the
arbitrators, in rendering their decision, shall follow the substantive laws of
the State of Delaware. The arbitration of any dispute pursuant to this
paragraph shall be held in the State of Delaware.
Notwithstanding the foregoing, in order to preserve the status quo pending the
resolution by arbitration of a claim seeking relief of an injunctive or
equitable nature, any party, upon submitting a matter to arbitration as required
by this section, may simultaneously or thereafter seek a temporary restraining
order or preliminary injunction from a court of competent jurisdiction pending
the outcome of the arbitration. This section is intended to benefit the
members, managers, agents, affiliates, associates and employees of the
Consultant, each of whom shall be deemed to be a third party beneficiary of this
section, and each of whom may enforce this section to the full extent that the
Consultant could do so if a controversy or claim were brought against it.
10. NO CONTINUING WAIVER. The waiver by any party of any provision or
breach of this Agreement shall not operate as or be construed to be a waiver of
any other provision hereof or of any other breach of any provision hereof.
11. NOTICE. Any and all notices from either party to the other which may be
specified by, or otherwise deemed necessary or incident to this Agreement
shall, in the absence of hand delivery with return receipt requested, be deemed
duly given when mailed if the same shall be sent to the address of the party set
out on the first page of this Agreement by registered or certified mail, return
receipt requested, or express delivery (e.g., Federal Express).
12. SEVERABILITY OF PROVISIONS. The provisions of this Agreement shall be
considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable.
Such invalid, void or otherwise unenforceable provisions shall be
automatically replaced by other provisions which are valid and enforceable and
which are as similar as possible in term and intent to those provisions deemed
to be invalid, void or otherwise unenforceable. Notwithstanding the foregoing,
the remaining provisions hereof shall remain enforceable to the fullest extent
permitted by law.
13. ASSIGNABILITY. This Agreement shall not be assignable without the prior
written consent of the non-assigning party or parties hereto and shall be
binding upon and inure to the benefit of any heirs, executors, legal
representatives or successors or permitted assigns of the parties hereto.
<PAGE>
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement among the Corporation and the Consultant with respect to the subject
matter hereof. This Agreement may not be amended, changed, modified or
discharged, nor may any provision hereof be waived, except by an instrument in
writing executed by or on behalf of the party against whom enforcement of any
amendment, waiver, change, modification or discharge is sought. No course of
conduct or dealing shall be construed to modify, amend or otherwise affect any
of the provisions hereof.
15. HEADINGS. The paragraph headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of the provisions of this Agreement.
16. SURVIVAL. Sections 3, 4, 5, 6, 7, 8, 9, 10 and 12 of this Agreement
shall survive the termination of this Agreement for any reason (whether such
termination is by the Corporation, upon the expiration of this Agreement, by its
terms or otherwise).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as set forth below and have
caused their respective corporate seals to be hereunder affixed as of the date
first above written.
GENESIS FINANCIAL GROUP, L.L.C.
By:---------------------------------
Managing Member
PLANET RESOURCES, INC.
By:---------------------------------
Its:---------------------------------
[/R]
