U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
AMENDMENT NO. 3 TO GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ComputerXpress.com, Inc.
(Name of Small Business Issuer in its charter)
Nevada 86-0853156
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(State or other jurisdiction of I.R.S. Employer
incorporation or organization) ID. No.)
79811A Country Club Dr.
Bermuda Dunes, CA 92201
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 760-345-2400
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class
is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
Item 1. Description of Business
Business Development
The Company was incorporated in the State of Nevada on January
15, 1997, under the original name of Stop-N-Sock, Ltd. Its
predecessor entity, Stock-N-Sock "SEED", was a California Limited
Partnership formed in 1996 to develop a high-tech driving range.
Up until March 1, 1999, the Company was engaged in the business
of development of its Coachella Valley real estate into a driving
range. On March 1, 1999, consistent with the Company's agreement
to purchase the assets of another Nevada corporation,
COSTPLUSFIVE.COM, INC., which was incorporated on January 25,
1999, and is now defunct (hereinafter referred to as "CP1." The
Company attempted to change its name to CostPlusFive.com, Inc.
and changed its business to a wholesale buying club, specializing
in the sale of high quality, multimedia computer systems, and
peripherals (external hardware items, such as modems) via the
Internet. The Company entered into an agreement on February 16,
1999, to acquire the assets of CP1 Inc." for 17 million shares of
Company common stock. CP1 was a corporation, separate and apart
from the Company. The assets consisted of goodwill, and inventory
and equipment located in nine separately owned retail computer
stores; as follows: one store in Rockville, Maryland, owned by
Bill Barker; one store in Tuscon, AZ, owned by Frank Scivally;
two stores in Houston, Texas, owned by Lee Jackson and Tom
Mitchell, respectively; one store in Boise, Idaho, owned by Paul
Graham; one store in Grapevine, Texas, owned by Mahlon Meier; one
store in Bedford, Texas, owned by John Fecteau; and one store in
Phoenix, AZ, owned by Don Smallman. On March 1, 1999, the Company
issued 6,984,000 of the 17 million shares in performance of the
agreement. Shortly thereafter, the Company discovered that the
charter of CP1's corporate charter had been revoked for non
payment of fees to the Secretary of the State of Nevada, and that
financial statements presented to the Company during the due
diligence process, did not represent the true financial condition
of two stores owned by Lee Jackson. As a result, the Company
rescinded the contract after it discovered that the state of
Texas was preparing to close Mr. Jackson's two stores in Houston
for non payment of taxes. The Company rescinded the asset
purchase contract because the discovery of the financial
discrepancies on the two Houston stores made all of the financial
statements suspect.
However, Management of the company felt that, given the suspect
nature of the financial statements surrounding two of the retail
locations, it would be best to run the web site with retail
affiliates, instead of purchasing and running the retail stores.
Mr. Scivally and Mr. Smallman have a management background in
computer systems building and sales, and the Company's management
had none. The web site being developed by Smallman and Scivally
was generating a lot of traffic. The decision was made to
salvage the agreement by acquiring the web site, the trade name,
and the expert management team needed to run the company's new
business. The retail locations at one time used the trade name,
but, as has been disclosed, there were conflicting claims made on
the name and the company abandoned it. The plan was proposed to
the owners of each store, to affiliate with the store owner,
whereby those owners wishing to affiliate with the Company, but
retain the responsibility of managing their own stores could do
so in exchange for 500,000 shares of common stock for which they
would each issue to the company a promissory note in the sum of
$125,000. Thereupon, the Company rescinded the asset purchase
agreement and offered to instead enter into an agreement to
acquire the web site from Frank Scivally and Donald Smallman, and
to acquire the domain name, Costplusfive.com, and affiliate with
each of the remaining store owners in exchange for a position
with the Company. Frank Scivally, Don Smallman, Mahlon Meier, and
Bill Barker agreed, but Lee Jackson, Tom Mitchell, Paul Graham
and John Fecteau refused. 500,000 shares each in exchange for
$125,000 promissory notes were issued to Scivally, Barker, Meier
and Smallman, for a total of 2,000,000 shares. The Company
canceled 1,240,000 shares of the 6,984,000 issued, and has placed
stop transfer orders and is seeking the return of the remaining
5,744,000 shares.
On April 13, 1999, the Company purchased the right to the
proprietary website "http://www.costplusfive.com" from Frank
Scivally and Donald Smallman by a fully performed oral agreement
that was memorialized in minutes of the Board of Directors dated
April 13, 1999, which are being filed as an exhibit to this
amended registration statement. The terms of the agreement were
simply that the Company was acquiring the web site and domain
name for recited consideration of $10.00. The Company changed its
business to Internet computer sales. The new directors, Frank
Scivally, William Barker, Mahlon Meier and Donald Smallman, were
installed as a new management team to lead the Company in its new
business focus. The web site was roughly developed at the time
of the acquisition. The domain name has been registered to Frank
Scivally on December 3, 1998. The Company acquired the rights to
the domain name and the site in March, 1999, but the domain name
was not registered in the Company's name until April 12, 2000.
Prior to the acquisition, the web site was an informational web
site, which contained information about what products were
offered by CostPlusFive affiliates, and what telephone numbers to
contact to order products. After the Company acquired the web
site, it developed the web site into a fully functional e
commerce site.
The Company agreed to buy the trade name, COST PLUS FIVE.COM,
INC. from CP1 in February, 1999, but then rescinded the
agreement. The domain name, CostPlusFive.com, had been
registered to Franklin Scivally, and owned by Franklin Scivally
and Donald Smallman. The name, CostPlusFive.com was never a
registered trademark or service mark. It was used as the
corporate name of the other Nevada corporation. The Company had
already submitted an amendment to its articles of incorporation
to change its name from Stop-N-Sock, Ltd. to CostPlusFive.com,
Inc., which was filed on March 12, 1999. However, the amendment
was rejected by the Secretary of the State of Nevada almost
immediately after filing. The Company was unaware of the
rejection until April 19, 2000 because it was sent to the
Company's former agent for service of process, who failed to
notify the Company of the rejection. The Company has since
changed its name to ComputerXpress.com, Inc. on , to reflect a
change in its business focus, and also because Lee Jackson and
Tom Mitchell discovered that the Company's amendment to articles
of incorporation had been rejected and filed their own articles
of incorporation for Cost Plus Five.com, Inc. The Company has
also been requested by Cost Plus, who has registered the name,
"Cost Plus," to cease using the name "CostPlusFive.com" as a
trade name, because it was allegedly too similar to the Cost Plus
name as to cause confusion in the minds of the public.
On October 12, 1999, the Company signed a definitive stock
purchase agreement to purchase Beverly Boulevard Associates as a
wholly owned subsidiary in exchange for 3 million shares of
Company common stock. Beverly Boulevard Associates operates two
courier services in Southern California under the names,
"Corporate Couriers" and "Corporate Legal." Beverly operates out
of a two story, 4,000 square foot office building in Los Angeles,
where approximately 100 messengers are dispatched daily
throughout Southern California. Three million shares were issued
(but not delivered) to consummate the purchase, to be exchanged
for 100% of the shares of Beverly Boulevard Associates. However,
one of the contingencies of the consummation of the agreement was
that Beverly Boulevard Associates was to provide financial books
and records suitable for auditing for consolidation with the
Company's financial statements, and it was not able to do this
within a reasonable time, so the transaction was mutually
rescinded, and the 3 million shares have been returned to the
Company treasury for cancellation.
In General
The Company is in the business of sales of high quality,
multimedia computer systems and peripherals through its web site
on the Internet, supported by affiliated retail locations in
Arizona. The Company's products use components from nationally
recognized suppliers as they become available, such as Intel,
Advanced Micro Devices, ASUS, Sony, Yamaha and Creative Labs.
Distribution is accomplished through a drop-ship arrangement with
the Company's suppliers. The product is shipped directly from
the supplier to the customer. Customers are invoiced for and pay
the Company directly for all products ordered before shipping.
The Company's suppliers and the Company have an understanding
that the suppliers will not deal directly with the Company's
customers without the Company's permission, such as is customary
in most retail situations where materials are drop shipped.
Therefore, management believes there is little risk that the
customer and the supplier will make their own purchase
arrangements.
The current operations of the Company are online and telephone
sales of computer systems and hardware. The Company formerly
offered products at 5% over its wholesale cost. However, this
business model did not find acceptance with investors in
particular. The Company has undertaken informal studies of its
customer base, and has found that approximately 70% of all sales
during the past twelve months have come from other businesses, as
opposed to the general consumer. As a result of this study, in
late January 2000, the Board of Directors decided to drop the 5%
over cost business model. The Company will continue to offer
online and telephone sales of computer systems and hardware to
the public, but the Company will focus on a new emphasis;
designing data computer solutions and providing computer systems
and hardware to businesses.
The Company currently has three retail affiliate locations to
support its Internet sales program. These locations offer after
market support and repair services for the Company's customers.
The Company originally had four retail affiliate locations in
Phoenix, Tuscon, Rockville, Maryland and Bedford, Texas. The
Bedford store was closed in September, 1999, and the owner of the
Bedford store and former Company president, Mahlon Meier,
resigned from his post as president and resigned from the Board
of Directors. He subsequently filed a voluntary petition in
bankruptcy. The current three retail locations are in Phoenix,
Arizona, which is owned by Don Smallman; in Tuscon, Arizona,
which is owned by Franklin Scivally; and in Rockville, Maryland,
which is owned by William Barker. The Tuscon location operates
under the name, "PC Exchange," and has been in operation since
September, 1996, and was formerly operated under the name, "Cyber
Exchange." The Rockville location operates under the name,
"Hytec Exchange," and has been in operation since September,
1996, and was formerly operated under the trade name, "Cyber
Exchange." The Phoenix location operates under the name,
"ComputerXpress, from inside a PAC MAIL store, and has been in
operation since September, 1999. A prior Phoenix location at
4206 East Chandler Boulevard, which was in operation since 1996
under the former trade name, "Cyber Exchange," was closed in
September, 1999. The current retail locations are as follows:
1. 5420 East Broadway Blvd., Suite 234, Tuscon, Arizona.
2. 12274-C Rockville Pike, Rockville, Maryland.
3. 3941 East Chandler Blvd., Ste. 106, Phoenix, Arizona.
The Company will seek to expand its affiliated retail locations
in the future, by developing additional locations through the use
of approximately 100 square foot retail kiosks strategically
placed in existing businesses and shopping centers. The kiosks
will offer sales of all computer products offered by the Company,
and service. Operators of retail location where the kiosks are
located will split 50% of gross profits from all sales and
services. The Company is currently seeking affiliates interested
in this type of venture with the Company. There can be no
assurance that the Company will be successful in obtaining these
proposed future affiliated retail locations.
The Company emphasizes business to business sales of computer
systems designed to solve particular business data processing and
computing requirements. The Company also sells its products to
present members of its wholesale buying club at five percent over
wholesale price (the cost the Company pays for the product from
its suppliers, including shipping and handling). Members pay
$39.95 per family or $139.95 per business per year to receive
these discounts on all products the company sells. However, new
memberships are no longer being sold, since the Company has
changed its emphasis to business to business commerce and has
dropped the five percent above wholesale price business model.
The Company will continue to sell to its existing members sales
are also made to non members on a full retail basis. The last
current membership will expire on September 6, 2000. No
memberships will be renewed.
The Industry
Retail sales in computer hardware products is a relatively new
industry, which is in a constant state of change, due to the
advances in microchip technology, which results in the
development of more diversified and technologically advanced
hardware. Internet sales of computer products is a more recent
development. Both of these industries are highly competitive.
During the calendar year 1999, the Company's web site has
received approximately 11,676 "hits." Management feels this is
an indication that the Company has an Internet presence, but does
not believe that "hits" have any direct correlation to sales.
Management formerly believed that the Company's niche in this
industry was the fact that the Company offered a membership,
which stimulates customer loyalty, but has since formed the
opinion that customer service and product support stimulated
customer loyalty with its business customers, and that the
general consuming public who shop online pay more attention to
price when they shop. This, and the fact that there are a
proliferation of Internet computer stores was a factor leading
the Company to put an emphasis on business to business commerce.
Management originally thought that it was the membership program
which stimulated customer loyalty, because, since the Company
initiated the membership program for CostPlusFive.com, the
Company has found that, in approximately 1500 cases, its member
customers will usually call or shop with the Company for
peripheral components and associated hardware. This was mainly
evident when customers call or shop the Company for upgrades of
equipment they have purchased from the Company. Upon reflection
of these statistics, management has changed its opinion and now
feels that it is the Company's service and product support which
accounts for most of the repeat business. Management also
believes that customers of the Company are afforded further
advantages in that they are able to go to affiliated (not owned)
locations in Phoenix, Tuscon, and Rockville, Maryland, for after
market support and repairs. The benefits of membership are that
members can buy products sold by the Company for a price five
percent above the wholesale price paid by the Company. The
Company is not selling any more memberships after March 13, 2000,
but still offers the same price structure to its current members.
Discontinued Business
The Company was formerly known as Stop-N-Sock, Inc. The Company
owned a 32 acre unimproved and undeveloped site in the Coachella
Valley on Miles Avenue between Washington Boulevard near to
Highway 111 in Indian Wells. The driving range was in the
development stages, and never commenced operations. Management
had plans to erect a high-tech golf practice range and teaching
facility plus full pro shop, to feature 60 driving range stations
having climate compensating misters/heaters, full lighting for
night usage, automatic ball spotters, and computer aided video
swing analysis.
The Company discontinued the implementation of its planned
operation of the driving range when its changed its direction to
Internet computer sales. The Company was unable to sell the
undeveloped golf range property to satisfy the secured debt on
the property, and was unable to justify the raising of capital to
service the secured debt. The driving range was in the
development stages, and never commenced operations. The Company
spent a small amount of cash and issued 245,000 shares from its
treasury to purchase the driving range property, subject to a
note and two deeds of trust for $867,000, which the Company was
to service by paying 10% interest payments. The Company was
unable to raise the capital needed to service the debt on the
driving range property as of February, 1999, and determined that
it was in the best interests of the Company to sell the driving
range property. The Company entered into an escrow to sell the
property on February 22, 1999 for a net sales price of
$1,700,000, payable $100,000 by April 22, 1999, with the balance
being paid on or about June 22, 1999. The prospective buyer did
not perform by depositing the $100,000 down payment, and the
escrow was cancelled. The Company, facing foreclosure on the
property, with no means to satisfy the ongoing debt, and having
changed its business focus to computer sales, deeded the property
in lieu of foreclosure on June 24, 1999 to the secured lenders
George and Rita White and Terisa Edwards, who were also
stockholders in the Company.
Products
The Company offers a full line of fully customer configurable
multimedia computer systems, which means that, as a seller of
computer systems, the Company can offer its customers who wish to
have a custom made computer system a system of any configuration
they desire, using the specific components they wish to use in
their custom built system. The Company also offers printers,
notebook computers, monitors and scanners, computer cables and
related hardware, computer software and games.
Home Entertainment Computer
The Company introduced a product called HECTOR, or "Home
Entertainment Computer That Operates Remotely," on October 25,
1999. HECTOR really is not so much of a product as it is a
computer system that is designed for home entertainment. HECTOR
is assembled by the Company and shipped to customers who order it
directly from the Company, as opposed to being drop shipped from
its suppliers. HECTOR looks and performs like a regular home
computer, and is assembled by the Company from hardware
components which are readily available. However, HECTOR has
added features that don't come with most home computer systems.
It is intended to act in conjunction with a regular television
screen as a monitor. With HECTOR, which comes with a wireless
mouse and wireless computer keyboard, the user can play computer
games on his or her television; play DVD movies or CD's; record
television programs for later viewing with HECTOR's digital VCR;
edit video tapes and still photos, and send them by e-mail
through the Internet, and multi-task word processing and
television or Internet functions. HECTOR was intended as one
unit that would serve all of the functions of a home computer as
well as CD and DVD players and Video recorders (VCR's), which are
usually purchased as separate components.
The components of HECTOR consist of a computer processor; a video
card with DVD controller and TV tuner; a DVD player, a 10 GB hard
drive; a remote keyboard and mouse; a sound card; surround sound
speakers; and a 56K modem.
49 HECTOR units have been sold by the Company to date.
The Company obtained a large order for 10,400 HECTOR units from
Cal Tech Solutions, but Cal Tech cancelled the order after having
been contacted by Lee Jackson. See "Legal Proceedings."
Marketing
The Company was, until March 13, 2000, vigorously promoting
memberships in its "CostPlusFive.com Buying Club," which enables
members to purchase computers, peripherals and software at five
percent over Company cost. As of March 13, 2000, the Company had
sold 187 memberships, 155 of which were paid for. The Company
has decided to cease sales of new memberships, and emphasize
business to business sales of computer systems and computing
solutions.
The Company was featured on CNBC's .COM program which aired on
December 4, 1999, and repeated on BRAVO on December 6 and
December 10, 1999. The Company paid for this feature in order to
promote its web site and wholesale buying business model, but, in
management's opinion, the feature was not effective in improving
the Company's revenues.
The current operations of the Company are online and telephone
sales of computer systems and hardware. The Company currently
has three retail affiliate locations to support its Internet
sales program. These locations offer after market support and
repair services for the Company's customers.
The Company's management believes that the Company's emphasis is
better placed in marketing its products to businesses, which have
accounted for 70% of the Company's sales in the last year, and
the Company will seek to foster long term relationships and word
of mouth referrals through customer service. The Company
maintains a full time customer service toll free telephone
number, and service maintenance at its affiliated retail
locations. The Company has no ownership interest in the current
retail locations, which are owned by the officers and directors
of the Company, one of which bears the Company name by Company
consent.
As part of its effort to emphasize business to business commerce,
on March 19, 2000, the Company signed an exclusive agreement with
Specialized Leasing, Inc., a Company with directors who include
Russell Nordstrom, the public relations liaison for the
ComputerXpress, and George White, a shareholder of the
ComputerXpress, to be the exclusive supplier to Specialized
Leasing for desktop computer systems, laptop computers, digital
cameras and other electronic peripherals to medical, dental, and
real estate professionals in a special lease program. The Company
has linked its web site to Specialized Leasing's web site at
www.specializedleasing.com. Management is hopeful that this
agreement will bring revenue to the Company, but there can be no
assurance that it will.
Existing Affiliate Program
The Company has an established affiliate program, whereby
participating affiliates execute a standard Affiliate Operation
Agreement, and are paid quarterly commissions for every purchase
from an affiliate's website through a coded "link." Commissions
are paid on a scale of purchases made by the affiliates customer
through the coded link which are completed and delivered.
Affiliated Retail Locations
The Company currently has three affiliated locations. These
locations offer after market support and repair services for the
Company's customers. The Company originally had four retail
affiliate locations in Phoenix, Tuscon, Rockville, Maryland and
Bedford, Texas. The Bedford store was closed in September, 1999.
The current three retail locations are in Phoenix, Arizona, which
is owned by Don Smallman; in Tuscon, Arizona, which is owned by
Franklin Scivally; and in Rockville, Maryland, which is owned by
William Barker. The Company formerly had one other affiliate, in
Bedford, Texas, which was owned by former Company officer and
director, Mahlon Meier, was closed in August, 1999. The Tuscon
location operates under the name, "PC Exchange," and has been in
operation since September, 1996, and was formerly operated under
the name, "Cyber Exchange." The Rockville location operates
under the name, "Hytec Exchange," and has been in operation since
September, 1996, and was formerly operated under the trade name,
"Cyber Exchange." The Phoenix location operates under the name,
"ComputerXpress, from inside a PAC MAIL store, and has been in
operation since September, 1999. A prior Phoenix location at
4206 East Chandler Boulevard, which was in operation since 1996
under the former trade name, "Cyber Exchange," was closed in
September, 1999. The locations are as follows:
1. 5420 East Broadway Blvd., Suite 234, Tuscon, Arizona.
2. 12274-C Rockville Pike, Rockville, Maryland.
3. 3941 East Chandler Blvd., Ste. 106, Phoenix, Arizona.
The affiliates operate pursuant to the same standard operating
agreement, with an addendum that provides that they receive 50%
of gross profits from all sales of Company products. Affiliated
locations and kiosks receive 100% of all repair revenue charged
to customers. The Company will seek to expand its affiliated
retail locations in the future, by developing additional
locations through the use of approximately 100 square foot retail
kiosks strategically placed in existing businesses and shopping
centers. The kiosks will offer sales of all computer products
offered by the Company, and service. Operators of retail
location where the kiosks are located will split 50% of gross
profits from all sales. There is one test marketing of a retail
affiliate kiosk being performed in a PAK Mail franchise in
Phoenix, Arizona. However, there can be no assurance that this
test market will result in an affiliated kiosk location. The
Company is currently seeking affiliates interested in this type
of venture with the Company. There can be no assurance that the
Company will be successful in obtaining these proposed future
affiliated retail locations. All affiliates are authorized to
use the name "ComputerXpress" in conjunction with their own
trade name in the normal conduct of their business. Affiliates
are paid on the 15th day of each month for their share of
revenues generated during the previous month. Affiliates collect
any revenue for repairs made directly from the customer and are
entitled to 100% of all repair revenue.
The current affiliated locations owned by Company officers and
directors have the same agreement with the Company as offered to
other affiliates with regard to profit sharing, and are treated
in the same manner as other affiliates.
Patents
The Company holds no patents for its products. Its trade name
"ComputerXpress" is not a registered trademark. It owns the
right to the domain name, "CostPlusFive.com" for its website.
Raw Materials and Principal Suppliers and Vendors
The Company does not manufacture its products and, therefore,
does not utilize raw materials. Distribution is accomplished
through a drop-ship arrangement with Company suppliers. The
product is shipped directly from the supplier to the customer.
Suppliers are not affiliated with any officer, director or
principal shareholder. The Company's products and its suppliers
are as follows:
Computer Systems, Printers, and peripherals: Total peripherals,
Richardson, TX Computer Systems, Printers and Peripherals: Parts
2PC, Pasadena, CA
Computer Systems, Printers and Peripherals: Comtech Digital
Systems, Glendale, CA
Computer cables and related hardware: Cables Unlimited,
Concord, CA
Computer software and games: HC Distributors, Pflugerville, TX
The suppliers of the Company do not manufacture the individual
components which make up the computer systems the Company sells.
They integrate component parts obtained from various
manufacturers into the system ordered by the customer. This is
the only way to offer the Company's customers a wide range of
choices for custom built computer systems.
Competition
The business of providing wholesale and retail computer sales is
one of intense competition. Other companies with more affiliate
or retail locations than the Company have financial resources
superior to the Company, so there can be no assurance that the
Company's projected income will not be affected by its
competition. There are also many other companies with greater
financial resources that the Company who offer computer sales on
the Internet. However, the Company feels it is able to compete
adequately with these other companies, due to its unique pricing
of product at 5% above cost. However, there can be no assurance
that competing companies with greater buying power will not be
able to undercut the Company's pricing structure.
Employees
The Company's only employees are its four officers and directors.
Item 2. Management's Discussion and Analysis of Plan of
Operations
Results of Operations
The Company is engaged in the business of sales of high quality,
multimedia computer systems and peripherals through its web site
on the Internet, supported by two affiliated retail locations in
Arizona and Maryland. The Company sells its products at five
percent over wholesale price to its membership. However, as of
March 13, 2000, the Company is no longer issuing new memberships.
Its Members pay $39.95 per family or $139.95 per business per
year to receive these discounts on all products the company
sells. The Company will continue to sell to its members at five
percent above wholesale price, and will continue to sell products
to the general public who are not members, but will emphasize
providing business customers with computer hardware solutions to
their data processing, and computing needs. The Company has
financed its operations to date through the sale of its
securities. See Item 10 - "Recent Sales of Unregistered
Securities."
The Company was formerly known as Stop-N-Sock, Inc. The Company
owned a 32 acre unimproved and undeveloped site in the Coachella
Valley on Miles Avenue between Washington Boulevard near to
Highway 111 in Indian Wells. The driving range was in the
development stages, and never commenced operations. Management
had plans to erect a high-tech golf practice range and teaching
facility plus full pro shop, to feature 60 driving range stations
having climate compensating misters/heaters, full lighting for
night usage, automatic ball spotters, and computer aided video
swing analysis. However, the Company determined that it would be
in the best interests of the Company and its shareholders to
abandon the project and to sell the site, due to the fact that
management determined that the Company could not likely raise the
capital required to develop the site to its full potential. The
Company then put in a new management team and shifted its focus
to Internet sales of computer products.
The Company entered into an agreement on February 16, 1999, to
acquire the assets of Cost Plus Five.com, Inc., in exchange for
17 million shares. Cost Plus Five.com, Inc. is a Nevada
corporation, which was incorporated on January 25, 1999,
corporation number C1574-99. Enclosed herewith is a copy of the
articles of incorporation. The assets consisted of inventory,
equipment in retail computer stores; as follows: one store in
Rockville, Maryland, owned by Bill Barker; one store in Tuscon,
AZ, owned by Frank Scivally; two stores in Houston, Texas, owned
by Lee Jackson and Tom Mitchell, respectively; one store in
Boise, Idaho, owned by Paul Graham; one store in Grapevine,
Texas, owned by Mahlon Meier; one store in Bedford, Texas, owned
by John Fecteau; and one store in Phoenix, AZ, owned by Don
Smallman. On March 1, 1999, the Company issued 6,984,000 shares
in performance of the agreement. Shortly thereafter, the Company
discovered that the charter of this company had been revoked for
non payment of fees to the Secretary of the State of Nevada, and
that financial statements presented to the Company during the due
diligence process, falsely represented the stores owned by Lee
Jackson, Tom Mitchell, and John Fecteau had been falsified.
Thereupon, the Company rescinded the asset purchase agreement and
offered to enter into an agreement with the owners of the stores
to instead enter into an agreement to acquire the web site from
Frank Scivally and Don Smallman, and to acquire the trade and
domain name, Costplusfive.com, and affiliate with each of the
remaining store owners. Each store owner was to be issued 500,000
shares in exchange for a $125,000 promissory note payable to the
Company on demand. Frank Scivally, Don Smallman, Mahlon Meier,
and Bill Barker agreed, but Lee Jackson, Tom Mitchell, Paul
Graham and John Fecteau refused. 500,000 shares of restricted
shares were issued to Scivally, Barker, Meier and Smallman, for a
total of 2,000,000 shares. The Company canceled 1,240,000 shares
of the 6,984,000, and has placed stop transfer orders and is
seeking the return of the remaining 5,744,000 shares through
informal negotiations.
The Company only recently commenced operations in April, 1999.
The Company is now engaged in sales of computer systems through
its Internet website. During the last fiscal year ended March 31,
1999, the Company was a development stage corporation whose
activities involved raising capital to maintain its debt service
on real property it planned to develop into a golf driving range.
During the first quarter of the fiscal year ended March 31, 2000,
the Company changed its plan of operations from the development
of a driving range on unimproved real property to Internet
computer sales. Since March, 1999, the Company has expanded its
website to offer "e-commerce" capability, which enables the
Company to accept credit card sales over the Internet. It has
also improved the format of the website and increased the
information available on products offered by the Company. The
Company was vigorously pursuing sales of memberships in its
wholesale buying club until March 13, 2000, when the Board of
Directors determined that a shift in emphasis to business to
business commerce. Since the Company only recently began its
operations, it can only focus on its plans for the future, which
are summarized below. There can be no assurance that these plans
will be realized by the Company.
Liquidity and Capital Resources
At March 31, 1999, the Company had a working capital deficit of
$1,322,613. The Company attributes this working capital deficit
primarily to the liabilities attributable to the golf driving
range site, which was disposed of in March, 1999, and the Company
does not expect the deficit to reoccur. In fact, at December 31,
1999, the Company reported a working capital surplus of $158,032.
However, since the Company has just recently commenced
operations, it may continue to operate at a deficit, and will
depend not only upon revenue generated from operations, but also
upon sales of its common stock to satisfy its expenses.
Net cash used in operating activities was $2,732,332 for the year
ended March 31, 1999. The Company attributes this figure to the
golf driving range property. The Company's expenses from
continuing operations in Fiscal year 1999 were $2,299,875. The
Company attributes these expenses to the Company's former
business of development of a golf driving range site. The golf
driving range property was deeded to the secured lender in March,
1999, and the Company changed its business to that of Internet
computer sales. Therefore, the company does not anticipate that
these expenses will reoccur.
Plan of Operations
There are no known trends, events or uncertainties that have or
are reasonably likely to have a material impact on the Company's
short-term or long-term liquidity, other than the fact that the
Company expects, until it is able to raise additional equity
capital, that it will suffer from cash deficits. The Company has
no sources of liquidity at this time, other than revenues from
operations, which have only recently commenced, either internal
or external. Its operations have just recently commenced, and it
will depend on the raising of additional equity capital to
continue its operations. There are no material commitments for
capital expenditures, other than normal operating expenses, which
the Company intends to satisfy by additional equity financing.
There are no known trends, events or uncertainties that the
Company is aware of that have had or that are reasonably expected
to have a material impact on the net sales or revenues or income
from continuing operations. There are no significant elements of
income or loss that do not arise from the Company's continuing
operations. The most significant change in the financial
condition of the Company in the past 12 months has been the
change in operations from the development to a golf driving range
to selling computer systems over the Company's Internet web site,
which occurred in March, 1999. There are no seasonal aspects
that had a material effect on the financial condition or results
of operation that the Company is aware of.
The Company has cash requirements of approximately $180,000 for
the next 12 months. It estimates that it will be able to satisfy
its cash requirements for the next 12 months through private
placements of its common stock. However, there can be no
assurance that the Company will be successful in raising all of
the capital it needs to satisfy its cash requirements. The
Company intends to raise more capital to fund its operations by
private and public placements of its common stock. However,
there can be no assurance that the Company will be able to
successfully raise the capital required by additional issuance of
Company common stock. The Company does not manufacture its own
products; therefore it does not anticipate product research and
development costs in the next 12 months. It does not expect the
additional purchase or sale of significant equipment, and it does
not expect a significant change in the number of its employees
for the next 12 months.
The Company's plan of operations over the next 12 months includes
maintaining relationships with business customers it has
cultivated in the past twelve months, and emphasizing the
providing of computer systems solutions to businesses' computing
needs, as well as continuing to sell computer systems, and
peripherals via its Internet web site. The Company will seek to
foster long term relationships and word of mouth referrals
through customer service and its affiliated locations, and will
seek to expand the number of affiliated locations through the use
of approximately 100 square foot retail kiosks strategically
placed in existing businesses and shopping centers. The kiosks
will offer sales of all computer products offered by the Company,
and service. Operators of retail locations will split 50% of
gross profits from all sales and services.
The Company plans to seek joint venture or acquisition
opportunities which compliment the Company's expansion plans. In
other words, the Company is seeking to enter into business
arrangements with other companies with national retail locations
who may be interested in forming a venture with the Company
whereby the Company can offer a retail kiosk in the national
retail locations. The Company is also seeking acquisition
candidates with national retail locations who are interested in
possibly becoming a subsidiary of a publicly held OTC Bulletin
Board Company, in exchange for Company common stock.
Forward Looking Statements
This registration statement contains forward-looking statements.
The Company's expectation of results and other forward-looking
statements contained in this registration statement involve a
number of risks and uncertainties. Among the factors that could
cause actual results to differ materially from those expected are
the following: business conditions and general economic
conditions; competitive factors, such as pricing and marketing
efforts; and the pace and success of product research and
development. These and other factors may cause expectations to
differ.
Year 2000 Compliance With respect to Year 2000 compliance, the
Company has performed an audit of all of its computer hardware,
internal accounting and software applications and found all to be
Year 2000 compliant or capable. As of this date, the Company has
been given assurances from its banking institution and transfer
agent that they are in compliance. In the beginning of the
second quarter of 1999, the Company conducted an audit of its
vendors and suppliers to identify relevant Year 2000 issues, and
found them all to be Year 2000 compliant.
The worst case scenario would be the risk that the company's
transfer agent may not have complied adequately. However, the
transfer agent has assured the Company that it is Year 2000
compliant. The Company had nominal costs in becoming compliant,
consisting of employee labor and no actual costs to any third
parties. The Company does not anticipate any additional
remediation costs, as it is already Year 2000 compliant. The
Company's contingency plan to handle a Year 2000 crisis, if one
occurs, with it bank, transfer agent, or other third party, is to
seek an alternative bank, transfer agent or other third party
supplier who is compliant to substitute for the non compliant
party. The Company does not anticipate such a crisis to occur
and management believes the Year 2000 crises has passed.
Item 3. Description of Property
The Company leases executive offices on a month to month basis
from its former president, Robert T. Yarbray, pursuant to an oral
lease, at the rate of $800 per month. It owns no other property,
other than its website name and trade name, which is not a
registered trademark or service mark. The Company has no
ownership interest in the retail locations, which are owned by
the officers and directors of the Company, and which bear the
Company name by Company consent.
The Company owned a 32 acre unimproved and undeveloped site in
the Coachella Valley on Miles Avenue between Washington Boulevard
near to Highway 111 in Indian Wells. The driving range was in the
development stages, and never commenced operations. Management
had plans to erect a high-tech golf practice range and teaching
facility plus full pro shop, to feature 60 driving range stations
having climate compensating misters/heaters, full lighting for
night usage, automatic ball spotters, and computer aided video
swing analysis. However, the Company determined that it would be
in the best interests of the Company and its shareholders to
abandon the project and to sell the site, due to the fact that
management determined that the Company could not likely raise the
capital required to develop the site to its full potential. The
Company then put in a new management team and shifted its focus
to Internet sales of computer products.
The Company owns a proprietary website at
http://www.costplusfive.com, which is registered to the Company.
Item 4. Securities Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock of the Company
as of the end of the fiscal year, 1998, by (I) each person who is
known by the Company to be the beneficial owner of more than five
percent (5%) of the issued and outstanding shares of common
stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers as a
group.
Name and Address Number of Shares Percentage Owned
---------------- ---------------- ----------------
James L. Rather 1,035,000 4.10%
575 Anton Blvd., Suite 300
Costa Mesa, CA 92626
Donald Smallman 1,500,000 2.05%
11337 West Olive Drive
Avondale, AZ 85323
Franklin R. Scivally 1,500,000 2.05%
200 S. Hampton Hill Court
Tucson, AZ 85711
Robert T. Yarbray(2) 3,600,000 7.23%
46280 Manitou Drive
Indian Wells, CA 92210
Robert M. Daddio 10,010 .04%
973 Sherman Way
Pleasanton, CA 94566
George White 5,000,000 10%
1977 High Schylea Drive
Kamloops, BC V2E 1S2 Canada
AZ Professional Services, Inc.(3) 5,125,000 10.29%
268 West 400 South #300
Salt Lake City, UT 84101
Allan Wolfson(2) 5,125,000 10.29%
268 West 400 South #300
Salt Lake City, UT 84101
Officers and Directors
as a Group 4,045,010 **** 8.12%
----------
(1) This table is based upon 49,800,060 shares issued and
outstanding as of August 17, 2000.
(2) 1,500,000 shares are held by Desert Corporate Services, Inc.,
a company in which Mr. Yarbray is a beneficial owner.
(3) 625,000 of the 4,125,000 shares are owned by Allan Wolfson, a
principal of AZ Professional Services, and the remainder are
owned by AZ Professional Services. The 625,000 shares to Wolfson
and 1,500,000 shares issued to AZ Professional Services were
original issue from Company treasury. The Company demanded and
received back these 1,500,000 shares on the grounds of failure of
consideration. AZ acquired the remaining 3,000,000 shares in a
private transaction with shareholder George White.
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The Executive Officers of the Company, and their ages, are as
follows:
Name Age Position
---- --- --------
Donald R. Smallman 37 Secretary, Director
Franklin R. Scivally 47 President, Treasurer,
Director
James L. Rather 46 Director
Robert M. Daddio 50 Director
Donald Smallman. Mr. Smallman is employed as the Secretary and
Director of the Company, and has been since March 1, 1999. From
June, 1997 through March 1, 1999, he was the owner of a Cyber
Exchange franchise in Phoenix, Arizona. From April 1996 through
June, 1997, he was employed by CDI in Phoenix, Arizona as a
software engineer,/developer. From December, 1994 through
February, 1996, he was employed by First Approach - Energy -
River Bend Nuclear Generating Station, in St. Francisville,
Louisiana as a software engineer/developer, and from March, 1994
through November, 1994, he was employed by Atlantic Group, Inc.
Arizona Public Service Palo Verde Nuclear Generating Station in
Phoenix, Arizona, in various positions, including I&C Procurement
Engineer, Electrical Engineer, and I&C Engineer. He was
previously employed by Bechtel Power Corporation from May, 1991
through November, 1993 at the Palo Verde Nuclear Generating
Station in Phoenix, Arizona, and from August, 1990 through April,
1991, he served as Electrical Engineer for Advanced Technology,
Inc. At the Tennessee Valley Authority Watts Bar Nuclear Plant in
Chattanooga, Tennessee. From October, 1989 through August, 1990,
he was employed by Black & Veatch as an Electrical/I&C Design
Engineer at the Palo Verde Nuclear Generating Station, and from
September, 1982 through October, 1989, he was employed as an
Electrical/I&C Engineer at the Tennessee Valley Authority
Sequotah Nuclear Plant in Chattanooga, Tennessee.
Franklin R. Scivally. Mr. Scivally is the Treasurer and Director
of the Company and has been since March 1, 1999. He has been the
President of The Company since June 1, 1999. He is also the
owner of the CostPlusFive.com affiliated location in Tucson,
Arizona, and has been so employed since March 1, 1999. He is
also the President of Scivally Enterprises, LLC. From January,
1992 through December, 1997 he was employed by Questech, Inc. as
Project Manager. From December, 1997 through March 1, 1999, the
was employed as the owner of a Cyber Exchange franchise in
Tuscon, Arizona. From November, 1971 through December, 1971 he
was a Commissioned Officer in the United States Air Force, in
various positions, including Chief, Quality Assurance Division of
the Tomahawk Cruise Missile Wing, Maintenance Control Officer,
Minuteman & Ground, launch Cruise Missile Launch Officer,
Minuteman Weapon System Launch Analyst, Chief, Maintenance
Control, assignment through the Air Force Institute of Technology
to Hughes Aircraft Company, and Manufacturing Manager for the
MILSTAR program. He holds a Master of Arts/management &
Supervision from Central Michigan University, 1983, a Bachelor of
Science/Business Management, 1980 from the University of LaVerne,
and an Associate of Arts/Electronics, 1978 from Alan Hancock
College.
James L. Rather. Mr. Rather is a director of the Company, and
has served as such since his provisional appointment to the Board
of Directors on March 20, 2000. Since 1981, he has been self
employed as a practicing attorney. From 1974 through 1979 he was
employed as a Revenue Officer for the Internal Revenue Service.
Mr. Rather holds a B.A. from the University of Tennessee, 1974;
an LLM in Taxation from the University of San Diego, 1985; and a
J.D. from Southwestern University School of Law, 1981. He is
licensed to practice law in the states of California, Florida and
Tennessee.
Robert M. Daddio. Dr. Daddio has been a self employed practicing
dentist in the Silicon Valley since 1997. Dr. Daddio holds a
B.S. degree from College of Marin, 1971, and a D.D.S. from
University of the Pacific, 1976.
Item 6. Executive Compensation
The following table sets forth the cash and non-cash compensation
paid by the Company to its Chief Executive Officer and all other
executive officers for services rendered during the fiscal year
ended March 30. 1999. No salaries are being paid at the present
time. There were no grants of options or SAR grants given to any
executive officers during the last fiscal year.
Annual Compensation
-------------------
Name and Position Salary Bonus Annual Deferred Salary
----------------- ------ ----- ----------------------
None
Item 7. Certain Relationships and Related Transactions
On February 26, 1999, the Company signed an agreement for the
purchase of assets of a Nevada corporation by the name of Cost
Plus Five.com, Inc., which purported to own nine retail computer
stores, in exchange for 17 million shares, and issued 6,984,000
of those 17 million shares of its common stock to effectuate the
agreement. However, Shortly thereafter, the Company rescinded
the contract after it discovered that the state of Texas was
preparing to close two stores in Houston owned by Lee Jackson,
for non payment of taxes. The Company rescinded the asset
purchase contract because the discovery of the financial
discrepancies on the two Houston stores made all of the financial
statements suspect. It subsequently, on April 13, 2000, acquired
the proprietary website, "www.costplusfive.com" from its owners,
Frank Scivally, Mahlon Meier, William Barker and Don Smallman,
the directors of the Company, and changed the Company's business
direction to that of Internet computer sales. Out of the
6,984,000 shares, the Company has distributed 500,000 to Franklin
Scivally, 500,000 to Don Smallman, 500,000 to William Barker and
500,000 to Mahlon Meier, in exchange for their respective
interests in the Internet website and domain name, and in
exchange for a $125,000 note payable to the Company from each
officer. The Company intends to seek the cancellation of the
remaining 4,984,000 shares.
The related parties who own the current affiliate locations are
the officers and directors of the Company.
Robert T. Yarbray is the only person who may be considered to be
a promoter of the Company. On or about December 1, 1998, Robert
T. Yarbray, who was president of the Company at the time, was
issued 600,000 shares of Company common stock in exchange for and
as a retainer for his services as president. On or about April
13, 1999, outgoing president Robert T. Yarbray was hired as a
consultant to the Company, and compensated for monthly full time
consulting services the amount of 1,000,000 shares of company
common stock, in exchange for 12 months' worth of full time
consulting services. On or about March 9, 2000, Robert T.
Yarbray was issued an additional 750,000 shares of common stock,
in consideration of an annual retainer for consulting services
for the following year. The company leases office space from Mr.
Yarbray at $800 per month.
On April 15, 1999, 500,000 shares were sold to officer/director
William Barker in exchange for a note in the amount of $125,000,
a sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Mahlon Meier, in exchange for a note in the amount of $125,000, a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Franklin Scivally in exchange for a note in the amount of
$125,000; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Donald Smallman, in exchange for a note in the amount of
$125,000; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On May 23, 1999, 50,000 shares were issued to Kenneth Eade, in
exchange for legal services rendered the company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On September 28, 1999, the company issued 1,100,000 shares to
Farmland Corporation, a former secured creditor of the company,
as a result of the exercise of an option to convert debt to
common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On September 28, 1999, the company issued 1,500,000 to L.
Hollebrands, a former secured creditor of the company, as a
result of the exercise of an option to convert debt to common
stock; a sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On September 28, 1999, the company issued 1,400,000 shares to
D.C.S., a former secured creditor of the company, as a result of
the exercise of an option to convert debt to common stock; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On September 28, 1999, the Company issued 4,000,000 to George
White, a former officer, a former secured creditor of the
company, as a result of the exercise of an option to convert debt
to common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On September 29, 1999, the Company issued 1,400,000 shares to
Desert Corporate Services, Inc., for money owed for corporate and
clerical services rendered; a sophisticated investor who had
access to all corporate information, including the Company's most
recent offering circular and financial statements, pursuant to
Section 4(2) of the Securities Act of 1933, No underwriter was
used in the transaction.
On October 6, 1999, the Company issued 3,000,000 shares to Mike
Taradash, in consideration of the agreement to acquire all of the
shares of Beverly Associates, which agreement has been rescinded
and the shares returned to the Company for cancellation. Mr.
Tardash is a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On February 26, 1999, the Company entered into an asset purchase
and sale agreement with a Nevada corporation by the name of Cost
Plus Five.com, Inc., (the "Nevada corporation"), whereby the
Company was to acquire certain assets of the Nevada corporation,
in exchange for 17,000,000 shares of common stock. The Company
issued 6,984,000 shares of the 17,000,000 shares in furtherance
of the agreement. However, it became apparent to the Company
during a due diligence investigation that the Nevada corporation
had issued false and misleading financial statements severely
misstating its assets and liabilities, that its corporate charter
had been revoked by the state of Nevada, and that its nine retail
stores virtually had no assets. Therefore, the Company
terminated negotiations. It subsequently, on April 13, 2000,
acquired the proprietary website, "www.costplusfive.com" from its
owners, Frank Scivally, Mahlon Meier, William Barker and Don
Smallman, the directors of the Company, and changed the Company's
business direction to that of Internet computer sales. Out of
the 6,984,000 shares issued to consummate the terminated
acquisition agreement, the Company has distributed 500,000 to
Franklin Scivally, 500,000 to Don Smallman, 500,000 to William
Barker and 500,000 to Mahlon Meier, in exchange for their
respective interests in the Internet website and domain name, and
3,400,000 restricted shares to Bruce Dorfman and his related
corporate entities, which the Company is currently seeking to
cancel in the above-referenced lawsuit. The Company intends to
seek the cancellation of the remaining 4,984,000 shares.
On March 3, 2000, the Company issued 1,500,000 shares to Frank
Scivally, a corporate officer and director, in exchange for
services rendered; an sophisticated investor who had access to
all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 3, 2000, the Company issued 1,500,000 shares to Don R.
Smallman, a corporate officer and director, in exchange for
services rendered; an sophisticated investor who had access to
all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 5, 2000, the Company issued 750,000 shares to Star
Talent Management, a Company owned by counsel, Kenneth G. Eade,
in exchange for legal services rendered the Company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On March 31, 2000, the Company issued 1,000,000 shares to George
White, a former officer, a former secured creditor of the
company, as a result of the exercise of an option to convert debt
to common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
There have been no other transactions since the beginning of
fiscal year 1998, or any currently proposed transactions, or
series of similar transactions, to which the Company was or is to
be a party, in which the amount involved exceeds $60,000,
inclusive of cash and noncash transactions, and in which any of
the officers, or directors, or holders of over 5% of the
Company's stock have or will have any direct or indirect material
interest. The Company does not currently have any policy toward
entering into any future transactions with related parties.
Item 8.Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of common
Stock at a par value of $.001. The presently outstanding shares
of Common Stock are fully paid and non-assessable. There are
currently outstanding 49,835,060 shares of Common Stock. As of
the close of the fiscal year 1998, there were 19,482,000 shares
of common stock outstanding.
Holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders
generally. The approval of proposals submitted to stockholders
at a meeting other than for the election of directors requires
the favorable vote of a majority of the shares voting, except in
the case of certain fundamental matters (such as certain
amendments to the Articles of Incorporation, and certain mergers
and reorganizations), in which cases Nevada law and the Company's
Bylaws require the favorable vote of at least a majority of all
outstanding shares. Stockholders are entitled to receive such
dividends as may be declared from time to time by the Board of
Directors out of funds legally available therefor, and in the
event of liquidation, dissolution or winding up of the Company to
share ratably in all assets remaining after payment of
liabilities. The holders of shares of Common Stock have no
preemptive, conversion, subscription or cumulative voting rights.
There are no shares subject to outstanding options or warrants to
purchase, aor securities convertible into common equity of the
Company. As of April 15, 2000, there were 7,825,530 shares that
could be sold pursuant to Rule 144 under the Securities Act.
There are no shares which are being or are proposed to be
publicly offered by the Company at the present time.
Under current Nevada law, a shareholder is afforded dissenters'
rights which, if properly exercised, may require the Company to
purchase his shares. Dissenters' rights commonly arise in
extraordinary transactions such as mergers, consolidations,
reorganizations, substantial asset sales, liquidating
distributions, and certain amendments to the Company's
certificate of incorporation.
Part II.
Item 1 Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
The Company's Common Stock has been quoted on the NASD OTC
Bulletin Board ("Bulletin Board"),under the symbol "STSN" in
October, 1998. In March, 1999, it changed its symbol to "USAV."
For a short time, the symbol was "CPFV." On April 5, 2000, its
trading symbol was changed to "CPXP", and the NASD added an "E"
to the symbol, making it "CPXPE," indicating its inclusion on the
NASD's "eligibility list," since March 24, 2000. The Company's
quote on the Bulletin Board was deleted approximately 30 days
later, and it now trades ont he National Quotation Bureau's pink
sheets under the symbol "CPXP." The high and low sale prices of
company common stock were 1/8 and 2 1/4, respectively. During the
third and fourth quarters of fiscal year 1998, the high and low
sale prices of the Company's common stock were $.50 and $.16,
respectively. The Company considers its Common stock to be thinly
traded and that any reported bid or sale prices may not be a true
market-based valuation of the Common Stock. As of March 31,
1999, there were 93 record holders of the Company's Common Stock.
As of April 14, 2000, there were 110 record holders of the
Company's common stock. The Company has not paid any cash
dividends since its inception and does not contemplate paying
dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the
Company's business.
<TABLE>
The following table sets forth the range of high and low bid information for each full
quarterly period of the last fiscal year:
<S> <C> <C>
Period Reported Average High Bid Average Low Bid
Quarter ended December 30, 1998 No data available
Quarter ended March 31, 1999 $0.50 $0.16
Quarter ended June 30, 1999 $0.57 $0.30
Quarter ended September 30, 1999 $0.39 $0.20
Quarter ended December 31, 1999 $0.28 $0.20
Quarter ended March 31, 2000 No data available; last trade was $0.06
Quarter ended June 30, 2000 No data available; last trade was $0.06.
Source of Data: http://www.freerealtime.com
</TABLE>
Item 2. Legal Proceedings
On April 1, 1999, Mary Smith sued the Company and its former
President, Robert T. Yarbray, in the Superior Court of California
for the County of Riverside, Case No. INC 011613, alleging non
payment of a $25,000 promissory note. The Company believed that
the lawsuit has no merit, because the Company executed a first
deed of trust on its real property for $250,000 in exchange for
$225,000 of loan proceeds from Ms. Smith. Therefore, the $25,000
promissory note was extinguished by the subsequent promissory
note for $250,000, secured by a first deed of trust. The lawsuit
was dismissed on May 3, 1999.
On June 18, 1999, the Company filed a lawsuit in federal court
for the Central District of California, Case No. 99-
06010RAP(MANx), against Investor's Equity Corp., Wall Street
Trading Group, and others, seeking to cancel 3,400,000 common
shares the Company issued on a promissory note to the defendants,
who defaulted on the promissory note. Defendants filed a
counterclaim, alleging breach of contract, defamation, fraud and
securities violations.
On January 26, 2000, the lawsuit was settled, and the terms of
the settlement are confidential and may not be disclosed to any
third party. Both the complaint and counterclaim have been
dismissed.
On March 30, 2000, the Company filed a lawsuit, Case No.
RIC841013, in Riverside County, California Superior Court,
against Lee Jackson, Barbara Jackson, Tom Mitchell, Doran
Mitchell, John Facteau, Carol Facteau, Paul Graham, and Wendy
Graham, for fraud, negligent misrepresentation, negligence, trade
libel, tortuous interference with contractual relations, tortuous
interference with contractual relations, tortuous interference
with prospective economic advantage, abuse of process, conspiracy
and injunctive relief. The lawsuit alleges, among other things,
that the defendants defrauded the Company by misrepresenting the
value of the assets of Cost Plus Five.com, Inc., a Nevada
corporation, when the Company and said Nevada corporation entered
into the asset purchase agreement of February 26, 1999, and
defamed the Company by publishing false and misleading statements
on the Raging Bull, Inc.'s Internet message board, and on their
own Internet web site, www.geocities.com/ogravity99, and that the
defendants interfered with the Company's order for 10,400 HECTOR
units by contacting the Company's customer, Cal Tech Solutions,
and making false and misleading statements about the Company.
The lawsuit has been served and the Company's management hopes
that it will have a chilling effect on the defendants' actions,
but there can be no assurance that it will.
Item 3.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The former accountant, Julius Otto resigned in January, 2000,
citing delays in receiving financial information from the Company
as his reasons for resignation. The Company appointed a new
independent accountant, Roger G. Castro, which decision was
approved by the Board of Directors, and was ratified by the
shareholders on May 12, 2000. There were no disagreements with
the former accountant on any matter of accounting principle, or
practice, financial statements disclosure or auditing scope or
procedure. The former accountant has indicated his agreement
with the statements made by the Company concerning the change in
the Company's independent accountant. The Company has fully
authorized the former accountant to respond fully to the
inquiries of the successor accountant concerning all of the
Company's financial reports and audits. The new accountant, Roger
G. Castro, was engaged on April 11, 2000.
Item 4. Recent Sales of Unregistered Securities
The Board of Directors, on July 17, 1997, authorized the sale and
issue of a total of $150,000 in convertible debentures which were
unsecured, bear interest at 10%, which is to be accrued and paid
on the first day of the thirteenth month after the day of
issuance. The debentures were sold to Beverly Duke, Sandra
Crosby, James Mitchem, John Slater, Les Peterson, Eleanor Mason,
Bud and Jackie Konard, R.J. DeRecat, William Lockett, Jr., Bill
Hefferman, Anthony Phillips, Richard Secrist, Robert Brunner,
Charles Bradley, and George De Salvo. The debentures, together
with the accrued interest, were convertible into 1,000 shares of
the Company's common stock for each $1,000 principal amount no
sooner than the sixth day of the thirteenth month of the date of
issuance. The debentures were issued in reliance upon the
exemption from registration provided in Section 4(2) of the
Securities Act of 1933, to accredited investors whose accredited
status was determined from referring to representations made on
investors questionnaires. Prior to March 31, 1999, $100,000 of
these debentures have been converted to common stock at the
aggregate purchase price of $.50 per share. The remainder have
been paid in full. The accredited investors' status were
determined as a result of information provided to the Company on
questionnaires completed by the investors.
On April 5, 1999, 1,000,000 common shares were sold to Arrow
Management in exchange for the sum of $100,000, a sophisticated
investor who had access to all corporate information, including
the Company's most recent offering circular and financial
statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
William Barker in exchange for a note in the amount of $125,000,
a sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Mahlon Meier, in exchange for a note in the amount of $125,000, a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Franklin Scivally in exchange for a note in the amount of
$125,000; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 500,000 shares were sold to officer/director
Donald Smallman, in exchange for a note in the amount of
$125,000; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On April 15, 1999, 10,000 shares were issued to William F. Roach
in exchange for administrative services rendered to the company;
a sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On May 23, 1999, 900,000 shares were issued to Richard Swift in
exchange for administrative services rendered the company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On May 23, 1999, 50,000 shares were issued to Kenneth Eade, in
exchange for legal services rendered the company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On May 25, 1999, 400,000 shares were issued to R. Nordstrom, in
exchange for public relations, press relations, and investor
relations full time services rendered the company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On June 1, 1999, 98,000 shares were issued to M. Williams in
exchange for the sum of $15,000; a sophisticated investor who
had access to all corporate information, including the Company's
most recent offering circular and financial statements, pursuant
to Section 4(2) of the Securities Act of 1933, No underwriter was
used in the transaction.
On June 11, 1999, 100,000 shares were issued to John Witkop, in
exchange for $17,000 in cash; a sophisticated investor who had
access to all corporate information, including the Company's most
recent offering circular and financial statements, pursuant to
Section 4(2) of the Securities Act of 1933, No underwriter was
used in the transaction.
On July 9, 1999, 200,000 shares were issued to R. Swift, in
exchange for administrative services; a sophisticated investor
who had access to all corporate information, including the
Company's most recent offering circular and financial statements,
pursuant to Section 4(2) of the Securities Act of 1933, No
underwriter was used in the transaction.
On July 21, 1999, 25,000 shares were issued to Brenda Mason, in
exchange for clerical services rendered the company; an investor
who had access to all corporate information, including the
Company's most recent offering circular and financial statements,
pursuant to Section 4(2) of the Securities Act of 1933, No
underwriter was used in the transaction.
On July 22, 1999, the Company issued 1,875,000 shares of its
common stock to an three independent contractor consultants;
625,000 to Richard Surber, 625,000 to Allan Wolfson, and 625,000
to Jon Roylance, in exchange for consulting services, pursuant to
Rule 701 of the Securities Act of 1933. There was no underwriter
involved in the transaction. The services rendered were
providing general financial advice to corporate management, and
assisting the company in locating, evaluating and effecting a
merger and/or acquisition.
On July 22, 1999, the Company issued 750,000 shares to Delman
Corp., 750,000 shares to Moore & Elrod, Inc. And 1,500,000 shares
to AZ Professional Services, corporations controlled by the
above-referenced independent contractor consultants, in exchange
for consulting services rendered the company; a sophisticated
investor who had access to all corporate information, including
the Company's most recent offering circular and financial
statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction. The exact
services provided were financial advice to management, and
assisting in locating, evaluating and effecting a merger and/or
acquisition.
On September 28, 1999, the company issued 1,100,000 shares to
Farmland Corporation, a former secured creditor of the company,
as a result of the exercise of an option to convert debt to
common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On September 28, 1999, the company issued 1,500,000 to L.
Hollebrands, a former secured creditor of the company, as a
result of the exercise of an option to convert debt to common
stock; a sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On September 28, 1999, the company issued 1,400,000 shares to
D.C.S., a former secured creditor of the company, as a result of
the exercise of an option to convert debt to common stock; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On September 28, 1999, the Company issued 4,000,000 to George
White, a former officer, a former secured creditor of the
company, as a result of the exercise of an option to convert debt
to common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On September 28, 1999, the Company issued 100,000 shares to M.
Williams, in exchange for the sum of $15,000; a sophisticated
investor who had access to all corporate information, including
the Company's most recent offering circular and financial
statements, pursuant to Section 4(2) of the Securities Act of
1933, No underwriter was used in the transaction.
On September 28, 1999, the Company 300,000 shares to R. Swift for
administrative services; a sophisticated investor who had access
to all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On September 29, 1999, the Company issued 1,400,000 shares to
Desert Corporate Services, Inc., in exchange for money owed for
corporate and clerical services. Desert Corporate Services, Inc.
is a company in which Robert T. Yarbray has a beneficial
ownership, a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On October 6, 1999, the Company issued 3,000,000 shares to Mike
Taradash, in consideration of the agreement to acquire all of the
shares of Beverly Associates, which agreement has been rescinded
and the shares returned to the Company for cancellation. Mr.
Tardash is a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 3, 2000, the Company issued 1,500,000 shares to Frank
Scivally, a corporate officer and director, in exchange for
services rendered; an sophisticated investor who had access to
all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 3, 2000, the Company issued 1,500,000 shares to Don R.
Smallman, a corporate officer and director, in exchange for
services rendered; an sophisticated investor who had access to
all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 31, 2000, the Company issued 1,000,000 shares to George
White, a former officer, a former secured creditor of the
company, as a result of the exercise of an option to convert debt
to common stock; a sophisticated investor who had access to all
corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 5, 2000, the Company issued 10,000 shares to Michael Ray
Campbell, in exchange for clerical services rendered the Company;
an investor who had access to all corporate information,
including the Company's most recent offering circular and
financial statements, pursuant to Section 4(2) of the Securities
Act of 1933, No underwriter was used in the transaction.
On March 5, 2000, the Company issued 750,000 shares to Robert T.
Yarbray, in exchange for consulting and administrative services
rendered the Company; a sophisticated investor who had access to
all corporate information, including the Company's most recent
offering circular and financial statements, pursuant to Section
4(2) of the Securities Act of 1933, No underwriter was used in
the transaction.
On March 5, 2000, the Company issued 750,000 shares to Star
Talent Management, a Company owned by counsel, Kenneth G. Eade,
in exchange for legal services rendered the Company; a
sophisticated investor who had access to all corporate
information, including the Company's most recent offering
circular and financial statements, pursuant to Section 4(2) of
the Securities Act of 1933, No underwriter was used in the
transaction.
On February 22, 1999, the Company sold 2,400,000 shares of its
common stock, to Bruce Dorfman, an unrelated accredited investor
and his two corporate entities, Wall Street Trading Group and
Investors Equity Corp., pursuant to the exemption set forth in
Regulation D, Rule 504, to an unrelated party in exchange for two
promissory notes at a price of $0.25 per share, for total
proceeds of $600,000. On April 6, 1999, the Company sold another
1,000,000 shares to the same unrelated party on a promissory
note, and sporadic payments were made on the notes until May,
1999. The notes were consolidated into one note on May 12,1999.
No underwriter was used in either transaction. The
investor/promisor defaulted on the second payment of the
consolidated note due May 31, 1999. On June 6, 1999, the Company
rescinded the transaction and issued stop transfers on the shares
of common stock sold. The investor failed to return the shares
for cancellation or pay for the shares, so the Company filed a
lawsuit in federal court in the Central District of Los Angeles,
California to obtain cancellation of the shares issued. The
Company requested the Court in the lawsuit to issue a temporary
restraining order prohibiting the investor from selling any more
of his free trading shares, which temporary restraining order was
denied by the Court. During the lawsuit, the Company discovered
that the investor had sold all of the free trading stock. The
lawsuit was settled in January, 2000, in a confidential
settlement, the terms of which the Company has been prohibited to
disclose.
On February 26, 1999, the Company entered into an asset purchase
and sale agreement with a Nevada corporation by the name of Cost
Plus Five.com, Inc., (the "Nevada corporation"), whereby the
Company was to acquire certain assets of the Nevada corporation,
in exchange for 17,000,000 shares of common stock. The Company
issued 6,984,000 shares of the 17,000,000 shares in furtherance
of the agreement. However, it became apparent to the Company
during a due diligence investigation that the Nevada corporation
had issued false and misleading financial statements severely
misstating its assets and liabilities, that its corporate charter
had been revoked by the state of Nevada, and that its nine retail
stores virtually had no assets. Therefore, the Company
terminated negotiations. It subsequently, on April 13, 2000,
acquired the proprietary website, "www.costplusfive.com" from its
owners, Frank Scivally, Mahlon Meier, William Barker and Don
Smallman, the directors of the Company, and changed the Company's
business direction to that of Internet computer sales. Out of
the 6,984,000 shares issued to consummate the terminated
acquisition agreement, the Company has distributed 500,000 to
Franklin Scivally, 500,000 to Don Smallman, 500,000 to William
Barker and 500,000 to Mahlon Meier, in exchange for their
respective interests in the Internet website and domain name, and
3,400,000 restricted shares to Bruce Dorfman and his related
corporate entities, which have been returned to the Company
treasury for cancellation. The Company is seeking the
cancellation of the remaining 4,984,000 shares informally, and
has issued a notice of rescission for them and placed stop
transfer orders with its transfer agent.
Item 5. Indemnification of Directors and Officers
Nevada Statutes
NRS 78.751 provides that the Company may provide in its articles
of incorporation, by laws or by agreement, to indemnify the
Company's officers and directors and affects their liability in
that capacity, for any and all costs incurred in defending a
civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation.
Articles of Incorporation
The Articles of Incorporation do not provide for indemnification
of officers or directors.
By Laws
Article X of the By Laws provide for indemnification of officers
and directors, as follows.
PART F/S
Financial Statements
REPORT OF INDEPENDENT AUDITOR REPORT
To Board of Directors and Shareholders ComputerXpress, Inc.
We have audited the accompanying balance sheets of
ComputerXpress.com, Inc., as of March 31, 2000, and the related
Statements of Operations, Shareholders' Equity cash flows for the
year then ended. These financial statements are the responsibil-
ity of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted my audits 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. I believe that my
audit provides a reasonable basis for my opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company, as of March 31, 2000, and the results of
their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note I to the financial statements, the Company has an
accumulated deficit at March 31, 2000. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
ROGELIO G. CASTRO
-----------------------
ROGELIO G. CASTRO, CPA
August 14, 2000
<TABLE>
<CAPTION>
ComputerXpress, Inc.
Balance Sheets
As of March 31, 2000 and 1999
<S> <C> <C>
2000 1999
---------- ----------
ASSETS
Current Assets:
Cash in banks $ 105,676 $ 210
Accounts receivable 33,701
Inventory 31,768
Prepaid expenses 4,924
---------- ----------
Total Current Assets 176,069 210
---------- ----------
Property and Equipment (net) 90,348 22,500
Other Assets:
Receivable from litigation 850,000
Land held for future use - 860,555
---------- ----------
Total Other Assets 850,000 860,555
TOTAL ASSETS $ 1,116,417 $ 883,265
---------- ----------
---------- ----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 53,077 $ 357,497
Accrued expenses 30,108
Notes payable 9,627 562,500
Advances from officers and stockholders - 352,826
Debentures 57,623 50,000
---------- ----------
Total Current Liabilities 150,435 1,322,823
---------- ----------
Stockholders' Equity:
Common stocks , $.001 par value
Authorized shares-50,000,000 and 25,000,000
Issued and oustanding shares-45,915,060 shares
and 19,842,000 shares, respectively 45,915 19842
Paid in capital 3,388,909 2,721,003
Stock subscription receivable (500,000) (525,000)
Retained deficit (1,968,842) (2,655,403)
Total Stockholders' Equity 965,982 (439,558)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,116,417 $ 883,265
</TABLE>
<TABLE>
<CAPTION>
ComputerXpress, Inc.
Statements of Operations
For the years ended March 31, 2000, 1999, 1998
<S> <C> <C> <C>
2000 1999 1998
---------- ---------- ----------
Sales $ 2,360,079 $ - $ -
Cost of sales 626,060 - -
---------- ---------- ----------
Gross profit 1,734,019 - -
Operating expenses:
General and administrative expenses 2,165,732 2,207,322 119,840
Interest expense 19,326 191,474 129,267
Depreciation 10,455 4,286 3,214
---------- ---------- ----------
Total Expenses 2,195,513 2,403,082 252,321
---------- ---------- ----------
Income (Loss) from operations $ (461,494) (2,403,082) $(252,321)
Other income
Recovery judgement from litigation 850,000 - -
Gain on disposition of land 298,055
Total Other Income 1,148,055 - -
Net income (loss) $ 686,561 (2,403,082) $(252,321)
Earnings (loss) per common shares -
basic and diluted $ 0.029 $ (2.34) $ (7.93)
Weighted average shares outstanding 23,469,445 1,028,844 31,804
</TABLE>
<TABLE>
<CAPTION>
ComputerXpress, Inc.
Statements of Cash Flows
For the years ended March 31, 2000, 1999, and 1998
<S> <C> <C> <C>
2000 1999 1998
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ 686,561 $ (2,403,082) (252,321)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation & amortization 10,455 4,286 3,214
Accounts receivable (33,701)
Inventory (31,768)
Prepaid expense (4,924)
Stocks issued for services 253,735 1,747,498
Receivable from litigation (850,000)
Accounts payable and accruals (266,689) 300,080 57,417
Advances from officers & shareholders (352,826) 323,841 28,985
NET CASH USED BY OPERATING ACTIVITIES (589,157) (27,377) (162,705)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (78,303) - (30,000)
Land - site for future development 860,555 - (860,555)
NET CASH USED BY INVESTING ACTIVITIES 782,252 (890,555)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable (245,873) (148,769) 861,269
Stocks cancelled (21,756)
Subscriptions receivable 25,000 (525,000)
Stocks issued for cash 155,000 691,400 201,947
NET CASH PROVIDED BY FINANCING ACTIVITIES (87,629) 17,631
1,063,216
INCREASE (DECREASE) IN CASH 105,466 (9,746) 9,956
BEGINNING CASH 210 9,956 -
ENDING CASH $ 105,676 $ 210 9,956
DISCLOSURE FROM OPERATING ACTIVITIES
Interest expense 19,326 $ 191,474 $ 98,563
NON CASH DISCLOSURE
14,994,000 shares of common stocks
issued for services 253,735 1,747,498
100,000 shares issued to convert
debentures payable 100,000
</TABLE>
<TABLE>
<CAPTION>
ComputerXpress, Inc.
Statement of Stockholders' Equity
As of March 31, 2000
<S> <C> <C> <C> <C> <C>
Number
of Common Additional Stocks Retained
Shares Stock Paid-In- Subscription Earinings
Outstanding at Par Value Capital Receivable (Deficit)
----------- ------------ ---------- ------------ --------
Balance at March 31, 1997 - $ - $ - $ - $ -
Net loss - March 31, 1998
Stocks issued for cash 1,850,000 1,850 200,097
----------- ------------ ---------- ------------ --------
Balance at March 31, 1998 1,850,000 1,850 200,097 (252,321)
Net loss - March 31, 1999 (2,403,082)
Shares issued for convertible
debentures payable 100,000 100 99,900
Shares issued for services 14,994,000 14,994 1,732,504
Shares issued in exchanged
for notes receivable 2,100,000 2,100 522,900
Shares issued for cash 300,000 300 74,700
Shares issued for cash 498,000 498 90,902
Common stocks subscribed (525,000)
----------- ------------ ---------- ------------ --------
Balance at March 31, 1999 19,842,000 $ 19,842 2,721,003 (525,000) (2,655,403)
Net income - March 31, 2000 686,561
Shares issued for cash 1,221,000 1,221 153,779
Shares issued for services 23,066,816 23,067 230,668
Shares cancelled (214,756) (215) (214,541)
Subscription receivable 525,000
Common stocks subscribed 2,000,000 2,000 498,000 (500,000)
Balance at March 31, 2000 45,915,060 45,915 3,388,909 (500,000) (1,968,842)
</TABLE>
[CAPTION]
ComputerXpress, Inc.
Consolidated Notes to Financial Statements
For the year ended March 31, 2000
NOTE A DESCRIPTION OF THE BUSINESS AND ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
ComputerXpress.Com, Inc. (formerly known as "CostPlusFive.com, Inc.") (The
Company) was incorporated under the laws of the state Nevada on January 15,
1997.
The purpose for which the Corporation is organized is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of the State of Nevada including, without limitation, to
engage in the business of selling computer products through electronic
commerce (e-commerce).
SIGNIFICANT ACCOUNTING POLICIES
1. The Company uses the accrual method of accounting.
2. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
3. Advertising Costs - The Company expenses the costs of advertising in the
periods in which those costs are incurred. Advertising expense was
approximately $105,080 for the year ended March 31, 2000
4. Earnings Per Share - The Company has adopted Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share."
Under SFAS 128, basic earnings per share is computed by dividing income
available to common stockholders by the
Weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to
basic earnings per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional common
shares were dilative.
5. Depreciation; the cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized) over the lesser of the length of the
related assets or the estimated lives of the assets. Depreciation is
computed on the straight-line method for reporting purposes and for tax
purposes.
ComputerXpress, Inc.
Notes to Financial Statements (continued)
For the year ended March 31, 2000
6. Estimates; The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
7. Income Taxes - The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. A
valuation allowance is provided for significant deferred tax assets when it
is more likely than not those assets will not be recovered.
8. Revenue Recognition - Sales of goods and services and the related cost of
sales are recognized when orders forms are received and goods are shipped or
services are delivered. Accounts receivable are periodically reviewed by
management to assess collectibility. As of March 31, 1999 and 1998, the
Company has recorded no reserve against accounts receivable as a result of
management's review.
NOTE B - PROPERTY AND EQUIPMENT
The Company capitalizes the purchased and fixtures for major purchases in
excess of $300 per item. Capitalized amounts are depreciated over the useful
life of the assets using the straight-line method of depreciation.
The following is a summary of property and equipment at cost, less
accumulated depreciation:
2000 1999
-------- --------
Furniture and equipment 105,089 $30,000
Less accumulated depreciation (14,741) (7,500)
------- -------
Total $ 90,348 $22,500
====== =======
NOTE C - CONVERTIBLE SUBORDINATED DEBENTURES PAYABLE
The Board of Directors, on July 17, 1997, authorized the sale and issue of a
total of $150,000 in convertible debentures are unsecured, bear interest at
10%, which is to be accrued and paid on the first day of the thirteenth month
after the day of issuance.
The debentures, together with the accrued interest, are convertible into
1,000 shares of the Company's common stock for each $1,000 principal amount
no sooner than the sixth day of the thirteenth month
of the date of issuance. Prior to March 31, 1999 $100,000 of these
debentures has been converted to common stock.
NOTE E - RELATED PARTY TRANSACTIONS
Related party payables include a $352,826 payable to a stockholder.
See Note D.
NOTE F - LEASE COMMITMENT AND CONTINGENCIES
The Company leases its office space under a month-to-month lease/rental
agreement. Total rental expense payments for the year ended March 31, 2000
was $56,854.
NOTE G GOING CONCERN
The Company has an accumulated deficit of $1,968,842 and nominal assets with
which to create operating capital. The Company seeks to raise operating
capital with which to seek business opportunities to utilize the technology
it has acquired via placements of its common stock. However, there can be no
assurance that such offering or negotiations for private capital will be
successful. Management plans to raise additional working capital in
subsequent private offerings of its common stock.
[CAPTION]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Board of Directors and Shareholders
ComputerXpress, Inc.
We have audited the accompanying consolidated balance sheets of
ComputerXpress, Inc. as of March 31, 2000 and the related statements of
operations, shareholders' equity, and cash flows for the year then ended.
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 audits.
The financial statements of ComputerXpress, Inc.(formerly CostPlusFive.com,
Inc.) as at March 31, 1999 and 1998 were audited by other auditor whose
report dated April 2, 1999, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of March 31, 2000, and the results of their operations and their
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as going concern. As discussed in Note I to the financial
statements, the Company has an accumulated deficit at March 31, 2000. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
ROGELIO G. CASTRO, CPA
Oxnard, California
August 14, 2000
Item 14. EXHIBITS, FINANCIAL STATEMENTS
(a) Report of Independent Certified Public Accountant dated
August 14, 2000
Financial Statements
Balance Sheets
Statement of Loss And Accumulated Deficit
Statements of Stockholder's Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements
(b)Reports on Form 8-K: Not Applicable
(c)Exhibits
Exhibit No. Description
----------- -----------
3(a) Articles of Incorporation
3(a)2 Amendment to Articles of Incorporation
3(a)3 Amendment to Articles of Incorporation
3(a)4 Amendment to Articles of Incorporation
3(a)5 Amendment to Articles of Incorporation
3(b) By-laws
4(a) Specimen certificate of common stock
10(a) Asset acquisition agreement
10(b) Affiliation agreement
10(c) Membership agreement
10(d) Minutes of April 13, 1999
1O(e) Agreement with Specialized Leasing
14 Report of Former Independent Accountant
16 Letter of Former Independent Accountant
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned,thereunto duly authorized.
Date: August 17, 2000
ComputerXpress.com, Inc.
FRANKLIN R. SCIVALLY
By____________________________________________
Franklin R. Scivally, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
FRANKLIN R. SCIVALLY
__________________________________________
Franklin R. Scivally, President and Director
Date: August 17, 2000
JAMES RATHER
___________________________________________
James Rather, Director
Date: August 17, 2000
DONALD R. SMALLMAN
___________________________________________
Donald R. Smallman, Treasurer and Director
Date: August 17, 2000
ROBERT DADDIO
___________________________________________
Robert Daddio, Secretary and Director
Date: August 17, 2000
[CAPTION]
Exhibit 3(a)1
ARTICLES OF INCORPORATION
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JANUARY 15 1997
NO. C594-97
STATE OF NEVADA
1. NAME OF CORPORATION: STOP-N-SOCK, LTD.
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in
Nevada where process may be served) Name of Resident Agent: Affordable
Business Services, Inc. Street Address: 1055 E. Flamingo Road, #1009A, Las
Vegas, NV 89119.
3. SHARES: (number of shares the corporation is authorized to issue) Number
of shares with par value: ) Par Value: 0 Number of shares without par value:
25,000.
4. Governing board: SHALL BE STYLED AS (CHECK ONE)1 Director Trustees.
The FIRST BOARD OF DIRECTORS shall consist of 1 members and the names and
addresses are as follows:
Name : Robert T. Yarbray
Address: 76803 Castle Court, Palm Desert, California.
5. PURPOSE: (optional-see reverse side) the purpose of the corporation shall
be:
6. PERSONAL LIABILITY (pursuant to NRS 78.037): Check one:
Accept xxx Decline
---
7. OTHER MATTERS: Any other matters to be included in these articles may be
noted on separate pages and incorporated by reference herein a part of
these articles: Number of pages attached:
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles (signatures must be)
Name : Robert T. Yarbray
Address : 76803 Castle Court, Palm Desert, CA 92211
Signature: ROBERT T. YARBRAY
Subscribed to me and sworn before me this 14th day of January, 1997.
DOUGLAS BECKLEY
_______________
Notary Public
(affix notary stamp or seal)
NOTARY PUBLIC
STATE OF NEVADA
COUNTY OF CLARK
My commission expires Oct. 2, 1997
9. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, Affordable Business Services, Inc. hereby accept as Resident Agent for
the above named corporation.
BY: SIGNATURE ILLEGIBLE
Signature of Resident Agent
January 14, 1997
[CAPTION]
Exhibit 3(a)2
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUNE 27 1997
NO. C594-97
STOP-N-SOCK, LTD.
Name of Corporation
We, the undersigned, ROBERT T. YARBRAY President or Vice President and ROBERT
T. YARBRAY Secretary or Assistant Secretary of STOP-N-SOCK, LTD., name of
Corporation, `do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the First day of June, 1997, adopted a resolution to amend the
original articles as follows:
Article 3 is hereby amended to read as follows:
SHARES: Number of shares with par value: 25,000,000 Par value: .001 The
number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 25,000; that the said change(s)
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon.
ROBERT T. YARBRAY
____________________________
ROBERT T. YARBRAY, President
State of Nevada
County of Clark
On June 28, 1997, personally appeared before me, a Notary Public, Robert T.
Yarbray, who acknowledge that they executed the above instrument.
//SIGNATURE ILLEGIBLE
Signature of Notary
Notary Public-State of Nevada
County of Clark
Thomas A. Baez
My Commission Expires
June 6, 1999
(Notary Stamp or Seal)
[CAPTION]
Exhibit 3(a)3
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAR 1 1999
NO. C594-97
STOP-N-SOCK, LTD.
__________________
Name of Corporation
We, the undersigned, ROBERT T. YARBRAY President or Vice President and ROBERT
T. YARBRAY Secretary or Assistant Secretary of STOP-N-SOCK, LTD., name of
Corporation, `do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the First day of March, 1999, adopted a resolution to amend the
original articles as follows:
Article 1 is hereby amended to read as follows:
NAME OF CORPORATION: CostPlusFive.com, Inc.
Article 3 is hereby amended to read as follows:
SHARES: Number of shares with par value: 50,000,000 Par value: .001 The
number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 13,848,000; that the said
change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
____________________________
ROBERT T. YARBRAY, President
____________________________
GEORGE WHITE, Secretary
State of Nevada
County of Clark
On March 1, 1999, personally appeared before me, a Notary Public, Robert T.
Yarbray, who acknowledge that they executed the above instrument.
//SIGNATURE ILLEGIBLE
Signature of Notary
Notary Public-State of Nevada
County of Clark
SEAL ILLEGIBLE
March 1, 1999
(Notary Stamp or Seal)
[CAPTION]
Exhibit 3a(4) Amendment to Articles of Incorporation
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After Issuance of Stock)
FILED IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAR 12 2000
STOP-N-SOCK, LTD.
__________________
Name of Corporation
We, the undersigned, FRANK R. SCIVALLY President and FRANK R. SCIVALLY
Secretary of STOP-N-SOCK, LTD., name of Corporation, `do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the First day of March, 2000, adopted a resolution to amend the
original articles as follows:
Article 1 is hereby amended to read as follows:
NAME OF CORPORATION: COMPUTERXPRESS.COM, INC.
Article 3 is hereby amended to read as follows:
SHARES: Number of shares with par value: 100,000,000 Par value: .001
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is ___________; that the said
change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
F.R. Scvially
____________________________
President or Vice President
F.R. Scivally
________________________________
Secretary or Assistant Secretary
State of Arizona
County of Pima
On 9 March 2000, personally appeared before me, a Notary Public, Franklin R.
Scivally, who acknowledge that they executed the above instrument.
Lori Knippen
____________________________
Signature of Notary
Notary Public-State of Nevada
County of Clark
(NOTARY SEAL)
[CAPTION]
Exhibit 3(a)5 Amendment to Articles of Incorporation
DEAN HELLER
SECRETARY OF STATE
101 NORTH CARSON STREET, SUITE 3
CARSON CITY, NEVADA 89701-4786
(775)6845708
FILED #C-594-97
MAR 15 2000
IN THE OFFICE OF
DEAN HELLER
DEAN HELLER SECRETARY OF STATE
CERTIFICATE OF AMENDMENT (PURSUANT TO NRS 78.385 AND 78.390)
Important: Read attached instructions before completing form
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION FOR NEVADA PROFIT
CORPORATIONS (PURSUANT TO NRS 78.385 AND 78.390-AFTER ISSUANCE OF STOCK)
REMIT IN DUPLICATE
__________________
1. Name of Corporation: COMPUTERXPRESS.COM, INC.
2. The articles have been amended as follows: (provide article numbers, if
available):
ARTICLE 3
SHARES: Number of shares with par value: 100,000,000 Par value: .001
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a
vote by classes or series, or as may be required by the provisions of the
articles of incorporation have voted in favor of the amendment is 42,000,000.
4. Signatures (Required):
F.R.Scvially
____________________________
President or Vice President
Donald Smallman
____________________________
Secretary or Assistant Secretary
If any proposed amendment would alter or change any preference or any
relative or other right given to any class or series of outstanding shares,
then the amendment must be approved by the vote, in addition to the
affirmative vote otherwise required, of the holders of shares representing a
majority of the voting power of each class or series affected by the
amendment regardless of limitations or restrictions on the voting power
thereof.
IMPORTANT: Failure to include any of the above information and remit the
proper fees may cause this filing to be rejected.
[CAPTION]
Exhibit 3.3
BY-LAWS -OF-
STOP-N-SOCK, LTD.
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City and State
designated in the Articles of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as
the Board of Directors may, from time to time determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held
within five months after the close of the fiscal year of the Corporation, for
the purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the shareholders may be called at any time by the Board
of Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten per cent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise
required under the provisions of the Business Corporation Law.
Section 3 - Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waives of notice of such meetings.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, and such other officers, including a Chairman of the
Board of Directors, and one or more Vice Presidents, as the Board of
Directors may from time to time deem advisable. Any officer other than the
Chairman of the Board of Directors may be, but is not required to be, a
director of the Corporation. Any two or more offices may be held by the same
person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have
been elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors
or by such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these by-laws, or may from time to time be specifically conferred or imposed
by the Board of Directors. The president shall be the chief executive
officer of the Corporation.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing the shares of the Corporation shall be in
such form as shall be adopted by the Board of Directors, and shall be
numbered and registered in the order issued. They shall bear the holder's
name and the number of shares, and shall be signed by (I) the Chairman of the
Board of the Present or a Vice President, and (ii) the Secretary or
Treasurer, or any Assistant Secretary or Assistant Treasurer, and shall bear
the corporate seal.
(b) No certificate representing shares shall be issued until the full amount
of consideration therefor has been paid, except as otherwise permitted by
law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the
holder to exercise voting rights, receive dividends and participate in
liquidating distributions, in corporation to the fractional holdings; or it
may authorize the payment in cash of the fair value of fractions of a share
as of the time when those entitled to receive such fractions are determined;
or it may authorize the issuance, subject to such conditions as may be
permitted by law, of scrip in registered or bearer form over the signature of
an officer or agent of the Corporation, exchangeable as therein provided for
full shares, but such scrip shall not entitle the holder to any rights of a
shareholder, except as therein provided.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation may issue a new
certificate in the place of any certificate theretofore issued by it, alleged
to have been lost or destroyed. On production of such evidence of loss or
destruction as the Board of Directors in its discretion may require, the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate, or his legal representatives, to give the Corporation
a bond in such sum as the Board may direct, and with such surety or sureties
as may be satisfactory to the Board, to indemnify the Corporation against any
claims, loss, liability or damage it may suffer on account of the issuance of
the new certificate. A new certificate may be issued without requiring any
such evidence or bond when, in the judgement of the Board of Directors, it is
proper so to do.
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such sum,
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all
property, funds or securities of the Corporation which may come into his
hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other corporation,
any right or power of the Corporation as such shareholder (including the
attendance, acting and voting at shareholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf
of the Corporation by the President, any Vice President, or such other person
as the Board of Directors may authorize.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid of any funds
available therefor, as often, in such amounts, and at such time or times as
the Board of Directors may determine.
ARTICLE VII-FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors
from time to time, subject to applicable law.
ARTICLE VIII-CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal, and
new by-laws may be made, by the affirmative vote of shareholders holding of
record in the aggregate at least a majority of the outstanding shares
entitled to vote in the election of directors at any annual or special
meeting of shareholders, provided that the notice or waiver of notice of such
meeting shall have summarized or set forth in full therein, the proposed
amendment.
Section 2 -By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, by-laws of the Corporation; provided, however,
that the shareholders entitled to vote with respect thereto as in this
Article IX above-provided may alter, amend or repeal by-laws made by the
Board of Directors, except that the Board of Directors shall have no power to
change the quorum for meetings of shareholders or the Board of Directors, or
to change any provisions of the by-laws with respect to the removal of
directors or the filling of vacancies in the Board resulting from the removal
by the shareholders. If any by-law regulating an impending election of
directors is adopted, amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of directors, the by-law so adopted, amended or repealed, together
with a concise statement of the changes made.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share
records of the Corporation only by the holder of record thereof, in person or
by his duly authorized attorney, upon surrender for cancellation of the
certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed,
with such proof of the authenticity of the signature and of authority to
transfer and of payment of transfer taxes as the Corporation or its agents
may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise expressly provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty days, or less than
ten days, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, or to
consent to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of
any rights, or for the purpose of any other action. If no record date is
fixed, the record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
no notice is given, the day on which the meeting is held; the record date for
determining shareholders for any other purpose shall be at the close of
business on the day on which the resolution of the directors relating thereto
is adopted. When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided
for herein, such determination shall apply to any adjournment thereof, unless
the directors fix a new record date for the adjourned meeting.
Section 13 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they
deem desirable, each consisting of three or more members, with such powers
and authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE X - INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or intestate representative is or was a
director, officer of employee of the Corporation, or of any Corporation in
which he served as such at the request of the Corporation, shall be
indemnified by the Corporation against the reasonable expenses, including
attorney's fees, actually and necessarily incurred by him in connection with
the defense of such action, suit or proceedings, or in connection with any
appeal therein, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding, or in connection with any appeal
therein that such officer, director or employee is liable for negligence or
misconduct in the performance of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be entitled
apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in any case
where there is no disinterested majority of the Board available, the amount
shall be fixed by arbitration pursuant to the then existing rules of the
American Arbitration Association.
The undersigned incorporator certifies that he has adopted the foregoing by-
laws as the first by-laws of the Corporation.
Dated: January 15, 1997
ROBERT T. YARBRAY
-------------------------
Incorporator
[CAPTION]
Exhibit 4.1 SPECIMEN OF COMMON STOCK CERTIFICATE COSPLUSFIVE.COM., INC.
[________]NUMBER SHARES[________]INCORPORATED UNDER THE LAWS OF THE STATE OF
NEVADA 50,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE
COMMON STOCK CUSIP 22161W 10 8
SEE REVERSE FOR CERTAIN
DEFINITIONS
THIS CERTIFIES THAT
Is the RECORD HOLDER OF SHARES OF FULLY PAID AND NON-ASSESSABLE
SHARES OF COMMON STOCK OF COSTPLUSFIVE.COM, INC.
TRANSFERABLE ON THE BOOKS OF THE CORPORATION IN PERSON OR BY DULY AUTHORIZED
ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS
CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE LAWS OF THE
STATE OF NEVADA, AND TO THE CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
CORPORATION, AS NOW OR HEREAFTER AMENDED. THIS CERTIFICATE IS NOT VALID
UNTIL COUNTERSIGNED BY THE TRANSFER AGENT.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
Dated:
[SEAL OF COSTPLUSFIVE.COM,INC.]
FRANKLOIN SCIVALLY DONALD SMALLMAN
------------------------ ---------------------
President Secretary
COUNTERSIGNED
PACIFIC STOCK TRANSFER COMPANY
P.O. Box 93385
Las Vegas, NV 89193
By: ^^Illegible Signature^^
5899 south State Street
Salt Lake City, UT 84107
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
____Custodian____ TEN ENT - as tenants by the entireties (Cust)
(Minor)____________________________________________
JT TEN - as joint tenants with right under Uniform Gifts to Minors
_____________ of survivorship and not as _________ Act
________________________ tenants in common
(State)
Additional abbreviation may also be used though not in above list.
FOR VALUE RECEIVED, _________hereby sell, assign and transfer
unto ___________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------
---------------------------------------
_________________________________________________________________
(Please print or typewrite name and address including zip code of assignee)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Shares of the capital stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
_________________________________________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
Exhibit 10. Acquisition Agreement
Exhibit 10(a)EXHIBIT 10(b) Standard Affiliate Agreement
AFFILIATE OPERATION AGREEMENT
This agreement contains the complete terms and conditions between us,
CostPlusFive.com Inc., and you, the applicant, regarding your application
to participate in the CostPlusFive.com Affiliate Network Program (the
"Program").
Upon our acceptance of your application and your execution of this
agreement in the place provided below, this will be a legally binding
agreement between you and us.
1. Enrollment in the Program
To become a participant in the Program, you must properly complete a
Program application and submit the application to us via our website, and
we must accept your application. We will review all applications and
will notify you of our decision in a timely manner. We will have the
right to accept or reject your application at our sole discretion, with
or without reason. Applications will not be accepted from any of our
vendors or employees or from any applicant operating a website that
contains any of the following: (i) sexually explicit, obscene or
pornographic content (whether in text or graphics), (ii) speech or images
that are offensive, profane, hateful, threatening, harmful, defamatory,
libelous, harassing or discriminatory (whether based on race, ethnicity,
creed, religion, gender, sexual orientation, physical disability or
otherwise), (iii) graphic violence (which may include certain types of
game sites), (iv) content related to liquor, tobacco, guns or firearms,
drugs, gambling, crime or death, (v) politically sensitive or
controversial issues (e.g., euthanasia, abortion, capital punishment) or
other political content (e.g., lobbyists, PAC sites, political
campaigns), or (vi) any unlawful behavior or conduct. If we reject your
application, you are welcome to reapply to the Program at any time.
2. Commission Determination and Payment
On a quarterly basis in accordance with Section 3 below, we agree to pay
you commissions in accordance with the table set forth below on Purchase
Amounts derived from Affiliate-Generated Purchases. An "Affiliate-
Generated Purchase" occurs when a customer follows a properly coded Link
(as defined below) from your site to our site, selects and purchases a
product from our site using our ordering system, accepts delivery of the
product at the shipping destination, and remits full payment to us. An
Affiliate-Generated Purchase will not include any products that are added
to a customer's "Shopping Cart" on our site after the customer has exited
and reentered our site (other than through a properly coded Link from
your site to our site), even if the customer previously followed a Link
from your site to our site. Purchases of gift certificates are eligible
to earn commissions. "Purchase Amount" means the gross sales of your
Affiliate-Generated Purchases minus shipping charges, gift-wrapping
charges, taxes, coupons or other discounts and product returns related to
such gross sales. Our determinations of the commissions payable to you
will be final and binding on you.
Following is the schedule for commissions on Affiliate-Generated
Purchases:
Purchase Amount from
Affiliate-Generated
Purchases in a Quarter
Commission Payable to
You (Expressed as a
Percentage of Purchase
Amount)
Under $1,000
$1,000 to $5,000
$5,000.01 to $10,000
over $10,000
1.5%
1.75%
+2.%
2.5%
In addition, on a quarterly basis in accordance with Section 3 below, you
will receive a bonus of $5 for each "New Member" that makes an Affiliate-
Generated Purchase on our site. A New Member is defined as an
CostPlusFive.com customer who has never previously purchased at our
site, as determined by us in our sole discretion based on a comparison of
our existing customer database with each customer's name, e-mail address,
billing address, credit card number and such other factors as we may
determine. Our determination of whether a customer qualifies as a New
Customer will be final and binding upon you. Your commissions and
bonuses are for your use only and therefore may not be offered, directly
or indirectly, in whole or in part, to our customers in the form of
rebates, coupons, commissions, refunds or other manner.
3. Commission Payment
We will pay your commission and bonus on a quarterly basis. Within
approximately 30 days following the end of each calendar quarter, we will
send you a check for the commission earned on the Purchase Amount for
products that were shipped during that quarter and any bonus amount for
New Customers that made Affiliate-Generated Purchases during that
quarter. If the commissions and bonus payable to you for any calendar
quarter are less than $20.00, we will hold those commissions and bonuses
until the next calendar quarter. The following calendar quarter the
commission and bonus payment will be made regardless of its amount. If a
product sale that generated a commission or bonus payment is returned by
the customer, we will deduct the corresponding commission and/or bonus
from your next quarterly payment or, if there is no subsequent payment,
we will send you a bill for the amount we overpaid you, which will be
payable promptly upon receipt.
4. Grant of Limited License by CostPlusFive.com to Affiliate; Promotion
of Affiliate Relationship
During the Term, you agree that you will place on your website or place
of business one of the graphics or textual links approved by us and made
available to you via our Program website ("Links"), and you will code all
Links to our website in the manner specified by us. During the Term (as
defined below) of this agreement, we grant to you a nonexclusive,
revocable, non- transferable, non-sublicenseable right and license to use
within the United States (a) the Links for the sole purpose of
displaying the Links on your website with the URL specified in your
application in order to connect that site to our site and (b) our other
names, marks or symbols (the "Licensed Materials") for the sole purpose
of advertising, promoting or marketing your affiliate relationship with
us. Prior to using any of the Licensed Materials, you will submit to us
for approval a draft of all proposed material that incorporates the
Licensed Materials (e.g., publicity copy, artwork and layout), together
with a brief statement setting forth the proposed use of such materials
and any other background or supporting material reasonably requested by
us to allow us to make an informed judgment. All such materials will be
submitted to us at least ten (10) days prior to the date of first
intended use. We will notify you of our approval or disapproval of such
materials within five (5) business days of our receipt of all information
required to be submitted. The approval or disapproval of such materials
will be in our sole discretion. Any materials not receiving our specific
written preliminary approval will be deemed disapproved.
You will use the Links and the Licensed Materials only in the exact form,
style and type approved by us, and you will include with the Links and
the Licensed Materials such copyright, trademark or other notices as may
be required by law or requested by us. We will have the right to alter,
modify or discontinue the use of any of the Links or the Licensed
Materials or the form, style or type thereof at any time in our sole
discretion. In addition to the foregoing control measures, we may
implement additional control measures to protect our intellectual
property rights in the Links and the Licensed Materials, and you agree
to cooperate with us in our efforts to protect such intellectual property
rights. You further agree to maintain a level of quality in connection
with your use of the Links and the Licensed Materials that is consistent
with general industry standards, and you acknowledge that we will
periodically monitor your use of the Links and the Licensed Materials to
confirm your maintenance of such quality levels. You acknowledge that,
except for the license expressly granted in this agreement, you have not
acquired and will not acquire any right, interest or title to the Links
or the Licensed Materials by reason of this agreement or through the
exercise of any rights in the Links or the Licensed Materials granted to
you hereunder. You further acknowledge that all proprietary rights in
the Links and the Licensed Materials and the goodwill associated
therewith are solely owned by and belong to us, and that all additional
goodwill associated with the Links and the Licensed Materials created
through their use by you will inure to our sole benefit. As between you
and us, we will be considered the creator of the Links and the Licensed
Materials, and all rights in the Links and the Licensed Materials will be
our property. In addition, you hereby grant, assign and convey to us any
and all rights you may now have or may be deemed to have in the future
with respect to the Links and the Licensed Materials or any portion of
them. You agree not to register or attempt to register any brand, names,
marks, or other elements of the Links or the Licensed Materials as a
trademark, service mark, Internet domain name, trade name, or any similar
trademarks or name, with any domestic or foreign governmental or quasi-
governmental authority which would be likely to cause confusion with any
of the Links or the Licensed Materials. You agree not to commit any act
that would cause any of the Links or the Licensed Materials to vest in
the public domain anywhere in the United States or Canada. Other than as
set forth in this agreement, you shall make no use of the Links or the
Licensed Materials or of any designation confusingly similar to any of
the Links or the Licensed Materials without our prior written consent.
You further agree that you will not have the right to, and you will not,
(a) use any method other than the Links for the purpose of identifying
your site as a member of the Program and establishing a link from your
site to ours; (b) use the Links or the Licensed Materials in any manner
that suggests an endorsement or validation of any product or service
other than our site; (c) use the Links or the Licensed Materials in
connection or association with any matter that falls within any of the
categories listed in subclauses (I) through (vi) of Section 1 of this
agreement; (d) use the Links or the Licensed Materials or any other
names, marks, symbols, copyrights, logos, fanciful or other characters,
designs, representations, figures, drawings, photographs, ideas or other
proprietary designations or properties owned, developed, licensed or
created by us, except as expressly permitted by this agreement; (e) use
the Links or the Licensed Materials as your own property; or (f) use the
Links or the Licensed Materials in connection with, in any manner or
form, the names, marks, signs, symbols, products, services, logos or
other proprietary designations or properties of any third parties. You
further agree that you will not post, mail or distribute our coupons,
gift certificates or other discount mechanisms in any way without first
obtaining our written consent, nor will you in any way misrepresent our
offers, policies or product availability. You shall promptly report to
us if you become aware of (a) any infringement of our intellectual
property rights relating to the Links or the Licensed Materials by any
third party, (b) any infringement by any such third party of any right
granted under this agreement and (c) any unauthorized copying or
distribution of the Links or the Licensed Materials or any component
thereof by any third party.
5. Obligations of Affiliate
You agree that you will be solely responsible for, and that you will
defend, indemnify and hold us and our officers, directors, agents,
employees and representatives harmless from and against, any and all
claims, suits, damages, losses, liabilities, obligations, penalties and
expenses, including legal fees and expenses, relating to or based on the
development, operation and maintenance of your site, including all
materials that appear on your site; the technical operation of your site
and all related equipment; creating and posting product reviews,
descriptions and references on your site and linking those descriptions
to our site; the accuracy and propriety of materials posted on your
site; the sale or offering for sale, use or consumption of any products
on your site; and ensuring that materials posted on your site do not
violate or infringe upon the rights of any third party and are not
libelous or otherwise illegal.
6. Term of the Agreement
The "Term" of this agreement will begin upon our acceptance of your
Program application and will end on the date this agreement is terminated
by either party. Either you or we may terminate this agreement at any
time, with or without cause, by giving the other party two days' written
notice of termination. Upon the termination of this agreement for any
reason, you will immediately cease use of, and remove from your site, all
Links and Licensed Materials and any other names, marks, symbols,
copyrights, logos, fanciful or other characters, designs,
representations, figures, drawings, photographs, ideas or other
proprietary designations or properties owned, developed, licensed or
created by us and/or provided by or on behalf of us to you pursuant to
this agreement or in connection with the Program. You will not receive
any commissions or bonuses on product sales occurring following the end
of the Term, and commissions and bonuses earned through the end of the
Term will remain payable only if the related orders are not canceled or
returned. We may withhold your final payment for a reasonable time to
ensure that the correct amount is paid.
7. Modification
We may modify any of the terms and conditions contained in this
agreement, at any time and in our sole discretion, by posting a change
notice or a new agreement on our site. Modifications may include, for
example, changes in the commission schedule, the bonus payments, payment
procedures and Program rules. IF ANY MODIFICATION IS UNACCEPTABLE TO YOU,
YOUR ONLY RECOURSE IS TO TERMINATE THIS AGREEMENT. YOUR CONTINUED
PARTICIPATION IN THE PROGRAM FOLLOWING OUR POSTING OF A CHANGE NOTICE OR
NEW AGREEMENT ON OUR SITE WILL CONSTITUTE BINDING ACCEPTANCE OF THE
CHANGE.
8. Limitation of Liability
We will not be liable for indirect, special or consequential damages (or
any loss of revenue, profits or data) arising in connection with this
agreement or the Program, even if we have been advised of the possibility
of such damages. Further, our aggregate liability arising with respect
to this agreement and the Program will not exceed the total commissions
and bonuses paid or payable to you under this agreement.
9. Disclaimers
We make no express or implied warranties or representations with respect
to the Program or any products sold through the Program (including,
without limitation, warranties of fitness, merchantability,
noninfringement, or any implied warranties arising out of a course of
performance, dealing, or trade usage). In addition, we make no
representation that the operation of our site will be uninterrupted or
error-free, and we will not be liable for the consequences of any
interruptions or errors.
10. Independent Investigation
YOU ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT, HAVE HAD AN
OPPORTUNITY TO CONSULT WITH YOUR OWN LEGAL ADVISORS IF YOU SO DESIRED,
AND AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH HEREIN. YOU AGREE
THAT, IN INTERPRETING THIS AGREEMENT, NO WEIGHT SHALL BE PLACED UPON THE
FACT THAT THIS AGREEMENT HAS BEEN DRAFTED BY US, AND YOU SHALL NOT
ASSERT THAT THIS AGREEMENT IS UNENFORCEABLE OR INVALID ON THE GROUNDS
THAT IT IS A CONTRACT OF ADHESION, THAT IT IS UNCONSCIONABLE OR ANY
SIMILAR THEORY. YOU UNDERSTAND THAT WE MAY AT ANY TIME (DIRECTLY OR
INDIRECTLY) SOLICIT CUSTOMER REFERRALS ON TERMS THAT MAY DIFFER FROM
THOSE CONTAINED IN THIS AGREEMENT OR OPERATE WEB SITES THAT ARE SIMILAR
TO OR COMPETE WITH YOUR WEB SITE. YOU HAVE INDEPENDENTLY EVALUATED THE
DESIRABILITY OF PARTICIPATING IN THE PROGRAM AND ARE NOT RELYING ON ANY
REPRESENTATION, GUARANTEE OR STATEMENT OTHER THAN AS SET FORTH IN THIS
AGREEMENT.
11. Miscellaneous
The provisions contained in this agreement constitute the entire
agreement between the parties with respect to the subject matter of this
agreement, and no statement or inducement with respect to such subject
matter by any party which is not contained in this agreement shall be
valid or binding between the parties. You may not assign or transfer
this agreement or any interest herein, nor shall the same be assignable
by operation of law, without our prior written consent. For this
purpose, "assignment" shall include any sale of a majority of the voting
power of your capital stock or any merger, consolidation or other
comparable transaction following which you are not the surviving
corporation.
This agreement shall be governed by, and construed in accordance with,
the laws of the State of California. Any legal proceeding of any nature
brought by either party against the other to enforce any right or
obligation under this agreement, or arising out of any matter pertaining
to this agreement, shall be submitted for trial, without jury, before the
federal or state courts located in the city of Los Angeles, California.
The parties consent and submit to the jurisdiction of any such court and
agree to accept service of process inside or outside the State of
California in any matter to be submitted to any such court pursuant
hereto. No release, discharge or waiver of any provision of this
agreement will be enforceable against or binding upon either party unless
in writing and executed by the party granting such release, discharge or
waiver. Neither the failure to insist upon strict performance of any of
the agreements, terms, covenants or conditions hereof, nor the acceptance
of monies due hereunder with knowledge of a breach of this agreement,
shall be deemed a waiver of any rights or remedies that either party may
have or a waiver of any subsequent breach or default in any of such
agreements, terms, covenants and conditions. If any term or provision of
this agreement shall be found to be void or contrary to law, such term or
provision shall, but only to the extent necessary to bring this agreement
within the requirements of law, be deemed to be severable from the other
terms and provisions hereof, and the remainder of this agreement shall be
given effect as if the parties had not included the severed term herein.
As used in this agreement, "dollars" or "$" refers to United States
dollars.
[CAPTION]
Exhibit 5(c) Form of Membership Agreement
CostPlusFive.com is dedicated to providing our members the best possible
prices on state-of- the-art, open architecture, computer systems, through
the use of the fastest growing medium ever known to man, the Internet.
Unlike other Internet based companies, we are also dedicated to providing
our members the best possible service and support, through our
continuously growing chain of outlet stores. CostPlusFive.com is
committed to continuously updating our business model to ensure that we
stay competitive and maximize our shareholders return on investment.
CostPlusFive.com, Inc. will ensures that:
Our customers get the lowest prices possible.
Our prices are based on today's component costs, not last weeks, or last
months.
Our computers meet with the highest standards of quality.
Your computer is shipped within 3 business days.
We continue to bring you more products based on the CostPlusFive.com
concept.
THE CONCEPT
The concept is simple. CostPlusFive.com is a Wholesale Buying Club on
the Internet. Our members pay only 5% above our costs to purchase any of
our computer systems, guaranteed. Members pay a membership fee of only
$39.95 per year for an Family Membership, or $139.95 per year for a
Business Membership and in turn, save hundreds to thousands of dollars on
the purchase of our products. You will save more than that on your first
computer purchase. CostPlusFive.com invites you to join the most unique
wholesale club ever! This exclusive is the greatest value for your
dollar anywhere top quality, national name brand computer systems &
components, delivered right to your door; along with advice on how to use
them. CostPlusFive.com offers you the same quality components that you
see in every major publication.
CostPlusFive.com, Inc.
4206 East Chandler Blvd., Suite 8
Phoenix, Arizona 85048-8873
COMPUTERS
BUSINESS REPLY MAIL
MEMBER BENEFITS
As a member of CostPlusFive.com, you will receive all of the following
benefits (Worth Over $129.00), Plus hundreds of dollars in savings, all
for a nominal annual membership fee of $39.95 for a Family Membership and
$139.95 for a Business Membership.
FREE Y2K EVALUATION & SPRING CLEANING on one computer during the first
month of your membership. The evaluation includes a complete hardware
and software evaluation relating to problems caused by the change to the
year 2000.
FREE PRODUCTS? YES FREE! Through our revolutionary Member Referral
Program, you will receive a $10 product credit for every new family
member you refer that joins and a $35 product credit for every new
business member you refer that joins. You can be proud to refer your
friends and family. They get the best computers for the lowest prices
and you earn free products for yourself. (Use your credit toward any of
our awesome products and services.)
QUALITY COMPUTER SYSTEMS AND COMPONENTS AT WHOLESALE PRICES!
Family Membership Business Membership
NAME _________________________________________________
STREET ADDRESS _______________________________________
CITY ___________________________ ST_____ ZIP ____________
PHONE ( )_________________ FAX ( )________________
EMAIL ADDRESS ________________________________________
REFERRED BY
COMPUTERS
The Swap Shop is your electronic trading post (not an auction house),
where you can list and sell almost any item you have. List your item(s)
at the Swap Shop and when someone is interested in purchasing it, they
can click on your name next to your item and send you an email.
CostPlusFive.com assumes NO responsibility for the validity of any item
or person selling items at the Swap Shop. It is the buyer and sellers'
responsibility to do their due diligence and verify as much information
about the other person prior to consummating a transaction. The Swap
Shop will revoke the membership and listing privileges of anyone known to
have committed a fraudulent act against another person at the Swap Shop.
Insertion Fees:
- When you list an item at the Swap Shop, you will be charged an
insertion fee only. There are no additional charges when your item
sells. List your item as many times as you want.
- Member Fees - Members of CostPlusFive.com can post any item that meets
the criteria set forth in the "Guidelines", for a period of ten (10)
days, for only $1.00.
- Non Member Fees - Non Members of CostPlusFive.com can post any item
that meets the criteria set forth in the "Guidelines", for a period of
ten (10) days, for only $2.00.
QUALITY COMPUTER SYSTEMS AND COMPONENTS AT WHOLESALE PRICES!
TELL US ABOUT YOU!
I USE MY COMPUTER FOR:
I ENJOY
x INTERNET
x COMPUTERS
x GRAPHICS
x SPORTS
x GAMES
x READING
x BUSINESS APPLICATIONS
x SOFTWARE
x OTHER
[CAPTION]
Exhibit 1.4
BILL OF SALE
The undersigned, president of COST PLUS FIVE.COM, INC. ("Seller") for
valuable consideration, the receipit and sufficieny of which are hereby
acknowledged, does hereby sell, assign, transfer and convey to Stop-N-
sock, Ltd. A Nevada Corporation ("Buyer") all Seller's right, title and
interest in and to the Assets, as set forth in the Inventory (as such
terms are defined in the Asset ppurcahse and sale agreement, dated as of
February 26, 1999 by and between Seller and Buyer.)
Dated: February 26, 1999
COST PLUS FIVE.COM, Inc.
By_________________
Name_______________
Title______________
[CAPTION]
EXHIBIT 10(a) Acquisition Agreement (Asset Purchase and Sale
Agreement)
This Asset Purchase and Sale Agreement ("Agreement") is made and entered
into asof February 26, 1999, by and between STOP-N-SOCK, Ltd., a Nevada
corporation("Buyer"), and COST PLUS FIVE.COM, INC., a Nevada corporation
("Seller").
RECITALS
WHEREAS, Seller owns all right, title and interest in and to the tangible
and intangible assets listed on Schedule one attached hereto (the
"Assets"); and,
WHEREAS, Seller owns desires to forever sell, assign, grant, convey and
transfer to Buyer, and Buyer desires to acquire from Seller, all right,
title and interest in and to the Assets including the name "COST PLUS
FIVE.COM", under the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereafter set
forth, and for good and valuable consideration, the receipt and
sufficiency which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. For the purposes of this Agreement, the
following terms hall have the following meanings:
1.1 Affiliates means any past, present or future subsidiaries,
officers, directors, control persons, employees, shareholders, agents,
representatives, attorneys, heirs, successors, beneficiaries, assigns,
executors, administrators or any other affiliated individual,
corporation, limited liability company, association, partnership, joint
venture, trust or other entity or organization.
1.2 Assets means the tangible and intangible assets owned by the
eller as of the date hereof, or acquired by the Seller prior to the
closing date hereof, or acquired by the Seller prior to the closing Date
and set forth on schedule One attached hereto.
1.3 Assignment means the assignment to be duly executed and
delivered by the Seller in accordance with this Agreement conveying to
Buyer all of seller's right, title and interest in the contracts, and any
other intangible assets as set forth in Exhibit 1.3.
1.4 Bill of Sale means the Bill of Sale, to be duly executed and
delivered by Seller in accordance with this Agreement, conveying to the
Buyer all right, title and interest in and to the tangible assets. The
Bill of Sale hall be substantially in the form of, and upon the terms
contained in , Exhibit 1.4 attached hereto and incorporated herein by
this reference.
1.5 Closing means the closing of the purchase and sale of the
Assets in accordance with the terms of this Agreement on the Closing
Date.
1.6 Closing Date means February 26, 1999 provided: (i) that all
conditions hereunder have been satisfied or waived in accordance with
this Agreement; (ii) that all applicable periods have run under
applicable Bulk ales Notice laws or Bulk Sales Notice has been waived;
(iii) that Seller delivers the Tax Clearance Certificates to the Buyer,
if requested.
Goodwill means the Seller's right, title and interest in and to the
goodwill of the Seller and his Names, including, without limitation, any
and all trade names, service marks, trademarks, logos, copyrights and all
other rights of intellectual property, whether or not claimed or asserted
by Seller, and the use, application and exclusive right to exploit such
rights of intellectual property, and all similar assets, owned by the
Seller as of the date hereof, or acquired by the Seller prior to the
Closing Date.
1.8 Inventory means the written inventory of the Seller
described in Exhibit 1.8 attached hereto and incorporated herein by this
reference.
1.9 Liabilities means any and all of Seller's past, present and
future debts, obligations, claims, demands, liens, costs, expenses,
penalties, judgments, damages, accounts payable, agreements, contingent,
known, unknown, matured or unmatured.
1.10 Purchase Price means 17,000,000 shares of common stock of
Stop-N- ock., a Nevada corporation, to be delivered to Seller at Closing,
and 7,100,000 additional shares issuable to the persons listed on Exhibit
1.10.
2. Purchase and Sale: Closing
2.1 Conveyance of Assets. On the Closing Date and subject to
the terms and conditions as set forth in this Agreement, Seller shall
forever sell, assign, grant, convey and transfer to the Buyer, free and
clear of any and all Liabilities (except those liabilities set forth in
the financial statements of seller attached hereto as Exhibit 2.1), and
the Buyer shall purchase and acquire from the Seller, all of the
exclusive right, title and interest in, to and under all of the Assets,
including, without limitation, the following corporeal and incorporeal
incidents thereof.
(a) All Goodwill therein, including, without limitation, all
copyright interests, trademarks and any other intellectual property
interests owned or claimed by Seller, including, without limitation, the
U.S. Copyright and/or Trademark or Tradenames Registrations together with
all other interests accruing by reason of copyright, trademark or
tradenames laws or conventions, as set forth on th4e schedule attached as
Exhibit 2.1(a), attached hereto and incorporated herein by this
reference;
(b) All right, title and interest of Seller in and to the trade
secrets and any and all inventions, discoveries, improvements, ideas,
trade secrets, know-how, confidential information, and all other
intellectual property owned or claimed by Seller in the Assets;
(c) All right, title and benefit of Seller in, to, and under all
agreements, contracts and licenses, entered into by Seller, or having
Seller as a beneficiary, and pertaining to the Assets, as set forth on
the schedule attached as Exhibit 2.1(c) and;
(d) All rights, title, interest and benefit of the name "COST
PLUS FIVE.COM throughout the world.
2.2 Possession. Simultaneously with the Closing, Seller shall
deliver possession and enjoyment of the Assets to Buyer and Buyer shall
thereupon have the immediate right to possess, develop, use, sell,
encumber and/or transfer the Assets, or any part thereof for its own
account to the total exclusion of seller.
2.3 Closing Date. The Closing Date for the consummation of the
transaction contemplated by this Agreement is Friday, February 26, 1999
and hall take place at Smith & Associates, 1925 Century Park East, 16th
Floor, Los Angeles, CA 90067, or such other place as mutually agreeable
between the parties, at a time to be designated between the parties.
2.4 Real Estate. That certain parcel of real estate presently
owned by Buyer described on Exhibit 2.4 attached hereto (the "Real
Estate") which is subject to trust deeds in favor of valid creditors of
the Company. The Real Estate is not part of the assets of the Buyer, and
will be sold for the benefit of, or conveyed to, creditors of the Company
and the proceeds will not be received by the Company nor will the Company
have any right or claim thereto. Should the Real Estate be sold and the
proceeds paid to such creditors then the present management of the
Company will obtain releases from the creditors respecting the
liabilities of the Company to them.
3. Deliveries at Closing.
3.1 Deliveries by Seller. At the Closing, Seller shall deliver
into the Closing the following:
(a) The original Bill of Sale and the original Assignment duly
executed by Seller; and
(b) Possession of the Assets, including Seller's entire
inventory and the documents evidencing the registration transfer of the
copyrights, trademarks and tradenames; and
(c) Such resolutions, authorizations, certificates of good
standing and/or other corporate documents relating to Seller as are
reasonably required by Buyer to evidence the sale and transfer in
connection with the transactions contemplated under this Agreement.
3.2 Deliveries by Buyer. At the Closing, Buyer shall deliver into
Closing the following original documents, duly executed by the Buyer;
(a) Such resolutions, authorizations, certificates of good
standing and/or other corporate documents relating to Buyer as are
reasonably required by seller to evidence the sale and transfer in
connection with the transactions contemplated under this Agreement; and
(b) The 17,000,000 shares of stock of Buyer,
(c) The 7,100,000 shares of stock of Buyer to those shareholders
listed on Exhibit 1.10 attached hereto.
3.3 Deliveries by Buyer and Seller. Buyer and Seller will each
deposit uch other instruments consistent with this Agreement as are
reasonably required to effectuate the transactions contemplated under
this Agreement.
4. Payment of Purchase Price.
4.1 Purchase Price. Buyer agrees to pay to Seller the total
Purchase Price, to be delivered to Seller on the Closing Date.
4.2 Taxes. The amount payable to Seller by Buyer under this
Section 4 is inclusive of any national, state or local sales, use, value-
added or other taxes, customs duties, or similar tariffs and fees which
Seller may be required to pay or collect upon the delivery of the Assets.
5. Representations and Warranties.
5.1 (a) To the best knowledge and belief the Buyer shall
receive, pursuant to this Agreement as of the Closing Date, complete and
exclusive right, title, and interest in and to the Assets and all
tangible and intangible property rights existing in the copyrights,
trademarks and tradenames.
(b) The copyrights, trademarks and tradenames ARE ORIGINAL AND
DO NOT INFRINGE ANDY PATENT, COPYRIGHT, OR TRADE SECRET OF ANY THIRD
PARTY.
(c) Seller, as a shareholder in Buyer, shall be subject to the
terms and conditions applicable to the shareholders of the Buyer,
pursuant to its Articles of Incorporation, By-Laws, shareholder
agreement, or any other such instruments, now promulgated, or as may be
promulgated in the future, relating to the ownership of such equity
interests in Buyer, and understands that such hares are to be issued with
restrictive legend under Rule 144.
(d) Seller operates and does business under the laws of the
State of Nevada and has all requisite power and authority to own, lease
and operate its properties and to carry on its business known as COST
PLUS FIVE.COM as now being conducted or contemplated. Seller has all
requisite power and authority to execute and deliver this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby.
(e) The execution, delivery and performance by Seller, and the
consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary action on the part of Seller. This
Agreement has been duly and validly executed and delivered by Seller and,
when executed and delivered in accordance with its terms, shall
constitute the valid and binding obligations of Seller, enforceable in
accordance with the terms thereof. Neither the executi9on, delivery or
performance by Seller of this Agreement nor the consummation by Seller of
the transactions contemplated hereby, nor compliance by Seller with any
provision hereof will (i) violate or result in a breach of any provisions
of the Fictitious Business Name Certificate of Seller, as in effect of
the date hereof, (ii) conflict with any law, statute, ordinance, rule
regulation, order, writ, judgment, injunction, award, decree, concession,
grant, franchise, restriction or agreement of, from or with any
governmental authority applicable to Seller. No permit, consent or
approval of or by, or any notification of or filing with, any person or
entity is requ8ired in connection with the execution, delivery or
performance by Seller, or the consummation of the transactions
contemplated hereby.
(f) There are no outstanding orders, judgments, injunctions,
awards or decrees of any court or other governmental authority or
arbitration tribunal against Seller. Seller is not in default of any
such order, judgment, injunction, award or decree. Other than the
litigation with the CEFC, there are no actions, suits, claims,
investigations or legal, administrative or arbitration proceedings
pending or threatened against Seller, whether at law or in equity,
whether civil or criminal in nature, or whether before or by an court or
other governmental authority.
(g) Except as disclosed in Exhibit 2.1 attached hereto, Seller
has no Liabilities or obligations of any nature, whether absolute,
accrued, contingent or otherwise, and whether due or to become due
(including, without limitation, any liability for taxes and interest,
penalties and other charges payable with respect to anysuch liability or
obligation) which would affect the Buyer or the Assets or become the
obligatino of the Buyer as a result of the transactions consummated
hereby.
5.2 Buyer's Representations and Warranties. Buyer hereby
represents and warrants to Seller that:
(a) Buyer is, or will be on the Closing Date, duly incorporated,
validly existin and in good standing under the laws of the State of
Nevada and has all requisite power and authority to own, lese and operate
its properties and to carry on its business as now being conducted or
contemplated. Buyer ahs all requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Buyer, and the
consummation of the trasnactions contemplated hereby, have been duly and
validly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly and validly executed and delivered
by Buyer and, when executed and delivered in accordance with its terms,
shall constitute the valid and binding obligations of Buyer, enforceable
in accordance with the terms thereof. Neither the execution, delivery or
performance by Buyer of this Agreement nor the consummation by Buyer of
the transactions contempoated hereby, nor compliance by Buyer with any
provision hereof will (i) violate or result in a breach of any provision
of the Articles of Incorporation or Bylaws of Buyer, in each case as in
effect of the date hereof, (ii) conflict with any law, tatute, ordinance,
rule, regulation, order, writ, judgment, injunction, award, decree,
concession, grant, franchise, restriction or agreement of from or with
any governmental authority applicable to Buyer. No permit, consent or
approval of or by, or any notification of or filing with, any person or
entity is required in connection with the execution, delivery or
performance by Buyer, or the consummation of the transactions
contemplated hereby.
6. Existing Agreements.
6.1 No Third Party Rights. Seller hereby represents and
warrants to Buyer that there have been no rights in and to the Assets
granted to any third parties.
6.2 Representations and Warranties. Seller hereby
represents and warrants to Buher that each agreement is in full force and
effect in accordance with its terms, without modification or amendment
and without default by either party thereto; that, to the extent required
to have been performed as of the Closing Date, have ben performed in
full; and that each Agreement is freely assignable to and assumable by
Buyer pursuant to this Agreement, without the requirement of obtaining
any consent or approval, giving any prior or subsequent notice, paying
any furrher royalty or fee to any party thereto or to any other third
party, or performing any duty that has not already been fully performed
by seller.
6.3. Assignment of Existing Agreements. Seller hereby assigns,
transfers, and conveys all of the agreements identified in Exhibit 6.3 to
Buyer, and Buyer hereby asumes the obligations set forth in such
Agreements and agrees to indemnify and hold harmless Seller and its
Affiliates from and against any failure of Buyer to perform its
obligations under the agreements in accordance with their terms. Seller
and Buyer shall jointly notify all parties to the agreements of the
foregoing assignment and assumption. It is mutually agreed that Seller
shall retain all amounts previouisly paid to Seller under the agreement
and that, to the extent further payments may be made thereunder, Buyer
hall be entitled to receive them directly from such contracting parties,
and, if such payments noneteless are made to Seller, Seller shall remit
such payments to Buyer immediately.
6.4 Liabilities Assumed. Anything contained in this Agreement
to the contrary notwithstanding, the Buyer is assuming, and shall be
responsible for, any liability, cost or expense of the Buyer or its
Affiliates, provided such liability, cost or expense relates to the
agreements identified in Exhibit 6.4, which were incurred prior to the
Closing Date, become the responsibility of the Buyer. Any other
liabilities not disclosed on or in Exhibit 2.1 or Exhibit 6.4 hall be the
sole responsibility of Seller and Seller shall indemnify and hold Buyer
and its Affiliates harmless and against any liability, claim, cost or
expense, including reasonable attorneys' fees (whether incurred before or
after the entry of judgment) arising therefrom.
7. Further Assurances.
7.1 Execution of Documents. Seller shall execute and deliver
such further conveyance instruments and take such futher actions as may
be necessary or desirable to evidence more fully the transfer of
ownership of the Assets to Buyer. Seller therefore agrees:
(a) To execute, acknowledge, and deliver any affidavits or
documents or assisgnment and conveyance regarding the Assets;
(b) To provide testimony in connection with any proceeding
affecting the right, title or interest of Buyer in the Assets; and
(c) To perform any other acts deemed necessary by Buyer to carry
out the intent of this Agreement.
7.2 Power of Attorney. Seller hereby appoints Buyer as his
attorney- in-fact, irrevocably and coupled with an interest, with all
right of substitution and delegation to execute or file any documents, or
take any actions to perfect, protect or assert the right in and to the
Assets conveyed hereunder to Buyer by Seller.
8. Protection of Trade Secrets/Non-Competition.
8.1 Confidentiality. The parties agree to hold each other's
Confidential Information confidential for a period of five (5) years
following the Closing Date of this Agreement. The parties agree, that
unless required by law, they shall not make each other's Confidential
Information available in any form to any third party or to use each
other's Confidential Information for any purpose other than the
implementation of this Agreement. Each party agrees to take all
reasonable steps to ensure that Confidential Information is not disclosed
or distributed by his or its Affiliates in violation of the terms of this
Agreement. A party's "Confidential Information" shall not include
information that: (a) is or becomes a part of the public domain through
no act or omission of the other party; (b) was in the other party's
lawful possession prior to the disclosure and had not been obtained by
the other party either directly or indirectly from the disclosing party;
(c) is lawfully disclosed to the other party by a third party w8ithout
restriction on disclosure; (d) is independently developed by the other
party; or (e) is required to be disclosed by any judicial or governmental
requirement or order (provided that recipient timely advises the
disclosing party of the governmental demand for disclosure).
8.2 Trade Secrets. Seller hereby agrees that from and after the
Closing Date, and for so long thereafter as the data or information
remains Trade Secrets, Seller shall not use, disclose, or permit any
person not authorized by Buyer to obtain any Trade Secrets (whether or
not the Trade secrets are in written or tangible form), except as
specifically authorized by Buyer.
8.3 Non-Competition. Seller hereby expressly acknowledges and
recognizes the highly competitive nature of the development, marketing,
manufacturing and distribution in the computer hardware and software
industry in general, and the goodwill in the copyrights, trademarks and
trade names which have been developed through and by the Seller.
Accordingly, in consideration of the premises contained herein, and as a
material inducement to the Buyer to enter into this Agreement, without
which the Buyer would not have entered into this Agreement, Seller
expressly agrees, for himself, and his Affiliates (which Affiliates the
Seller represents and warrants shall be bound under this paragraph), the
he will not, for a period of five (5) years following the Closing Date,
and throughout the universe, (i) directly or indirectly engage in,
represent, or in any way be connected with, and business or activity
which is in direct or indirect competition with the business of the Buyer
as it relates, in any manner, to the business of marketing computer
hardware and software related products and services ("Competing
Business"), whether such engagement shall be as a sales broker or agent,
independent contractor, officer, director, shareholder, owner, employee,
consultant, partner, affiliate or other participant, (ii) assist others
in engaging in any Competing Business in the manner described in the
foregoing clauses, (iii) directly or indirectly induce the customers or
suppliers of the Seller (prior to the consummation hereof), (iv) directly
or indirectly interfere with the business of the Buyer, or (v) induce any
employees, officers, sub-brokers or agents or independent contractors of
the Seller to terminate or discontinue their relationship with the Buyer
following the consummation hereof, or engage in any Competing Business.
Seller expressly understands that the foregoing restrictions may limit
his ability to earn a livelihood in the business of marketing computer
hardware and software or related products and services, but he
nevertheless believes that he has received sufficient consideration and
other benefits, as provided hereunder, to clearly justify such
restrictions.
9. Acknowledgement of rights. In furtherance of this Agreement,
Seller hereby acknowledges that, from and after the Closing Date, Buyer
has acceded to all of Seller's right, title. and standing to:
(a) Receive all rights and benefits pertaining to the Assets and
the agreements identified in Exhibit 9(a).
(b) Institute and prosecute all suits and proceedings and take
all actions that Buyer, in its sole discretion, may deem necessary or
proper to collect, assert, or enforce any claim, right, or title of any
kind in and to any and all of the Assets, and the agreements identified
in Exhibit 9(b).
(c) Defendant and compromise any and all such action, suits, or
proceedings relating to such transferred and assigned rights, title,
interest, and benefits and perform all other such acts in relation
thereto as Buyer, in its sole discretion, deems advisable.
10. Limited Warranty: Support. Seller hereby represents and
warrants that the Inventory conforms in all material respects to the
functional specifications et forth in Exhibit 10. With that sole
exception, SELLER ASSIGNS THE INVENTORY TO BUYER "AS IS," AND SELLER
DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED WITH RESPECT TO THE ASSETS,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. Buyer's exclusive remedy for breach of the
foregoing warranty shall be to require Seller to correct any material
nonconformance to such specifications or, at Seller's option, to receive
repayment in full of the Purchase Price, together with any and all
unrecouped costs and expenses relating to the Assets incurred by Buyer as
of such repayment date.
11. Indemnity.
11.1 Indemnification. Seller will hold Buyer harmless and
defend Buyer, at Seller's sole cost and expense, any claim, suit or
proceeding brought against Buyer or its Affiliates (or appeal following
the entry of any judgment) which is based upon a claim that (i) the
Seller infringes any patent, copyright, or trade secret of any third
party, or any other right of any third party in the Assets (including,
without limitation, any right asserted by Seller or its Affiliates,
provided Buyer gives Seller written notice within thirty (30) calendar
days of receiving such claim, suit or proceeding. Seller will pay any
damages and costs assessed against Buyer (or payable by Buyer pursuant to
a settlement agreement) in connection with such proceeding.
12. Miscellaneous.
12.1 Binding. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto, together with their respective
legal representatives, successors and assigns.
12.2 Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the United and the State of
Nevada, as applied to agreements entered into and to be performed
entirely within Nevada between the parties.
12.3 Notices. Any notices given by either party hereunder
will be in writing and will be given by personal delivery, national
overnight courier service, or by U.S. mail, certified or registered,
postage prepaid, return receipt requested, to Seller or Buyer at the
following addresses:
If to Buyer, to: with a copy to:
Robert T. Yarbray, President John Holt Smith, Esq.
top-N-Sock, Ltd. Smith & Associates
79811 A Country Club Drive 1925 Century Park East,
Bermuda Dunes, California 92201 16th Fl.
Facsimile: 706.345.9932 Los Angeles, CA 90067
Facsimile: 310.286.1816
If to Seller, to:
Mahlon Meier, President
COST PLUS FIVE.COM, Inc.
2250 Airport Freeway, Suite 300
Bedford, TX 76022
Facsimile:
or to such other address as the party to whom notice is to be given may
have furnished to each other party in writing in accordance herewith.
All notices will be deemed effective upon personal delivery or five (5)
days following deposit in th4e U.S. mail, or two (2) business days
following deposit with any national overnight courier service.
12.4 Entirety and Amendment. This Agreement and all exhibits
hereto which are incorporated herein constitute the entire agreement and
understanding between the parties with respect to the subject matter
hereof and supersede all other prior or contemporaneous agreements, any
representations or communications, whether written or oral, between the
parties. The terms of this agreement may not be amended except by a
writing executed by both parties.
12.5 Assignment. This Agreement may not be assigned by
either part hereto without the prior written consent of the other party
to this Agreement.
12.6 Severability. It is the desire and intent of the
parties hereto that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies applied
in each jurisdiction in which enforcement is sought. Accordingly, if any
provisions of this Agreement shall be adjudicated to be invalid, illegal
or unenforceable in any respect in any jurisdiction, such provision shall
be automatically deemed amended, but only to the extent necessary to
render such provision valid, legal and enforceable in such jurisdiction,
such amendment to apply only with respect to the operation of such
provision in such jurisdiction, and the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
12.7 Construction.
Inventory
All right, title and interest in any and all of the property asn assets
of Seller, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located, including without limitation,
the following:
(I) All equipment and fixtures, including without limitation, furniture,
vehicles and other machinery and office equipment, together with all
additions and accessions thereto, replacements therefor, products thereof
and documents therefor.
(ii) All inventory, including without limitation (a) all raw materials,
work in process and finished goods, and (b) all such goods which are
returned to or repossessed by Seller, together with all additions and
accessories thereto, replacements therefor, products thereof and
documents therefor.
(iii) All accounts, chattel paper, contract rights and rights to the
payment of money.
(iv) All general intangibles, including without limitation (a) customer
and supplier lists and contracts, books and records, insurance policies,
tax refunds, contracts for the purchase of real or personal property, and
(b) all goodwill of Seller.
(v) All copyrights, including (a) all original works of authorship fixed
in any tangible medium of expression, all right, title and interest
therein and thereto, and all registrations and recordings thereof,
including all applications, registrations and recordings in the Copyright
Officer or in any similar office or agency of the Untied States, and
state thereof, or any foreign country or any political subdivision
thereof, all whether now or owned or hereafter acquired by Seller, and
(b) all extensions or renewals thereof and all licenses thereof
(collectively, the "Copyrights"). (vi) All patentable inventions, patent
rights, shop rights, letters patent of the United States or any other
country, all right, title and interest therein and thereto, and all
registrations and recordings thereof, including (a) all patent
registrations and recordings in the Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any
foreign country or political subdivision thereof, all whether now owned
or hereafter acquired by Seller, and (b) all reissues, continuations in
part or extensions thereof and all licenses thereof (collectively the
patents)
(vii) All trademarks, tradenames, trade styles and service marks, and all
prints and labels on which said trademarks, tradenames, trade styles and
service marks have appeared or appear, and all designs and general
intangibles of like nature, now existing or hereafter adopted or
acquired, all right, title and interest therein and thereto, all
registrations and recordings thereof, including (a) all applications,
registrations, and recordings in the Patent and Trademark Office or in
any similar office or agency of the United States, any state thereof, or
any foreign country or any political subdivision thereof, all whether now
owned or hereafter acquired by Seller, and (b) all reissues, extensions
or renewals thereof and all licenses thereof (collectively, the
trademarks) (viii) All goodwill of Seller's business symbolized by the
Trademarks and all customer lists and other records of Seller relating to
the distribution of products or provision of services bearing or covered
by the Trademarks.
(ix) All information, including formulas, patterns, compilations,
programs, devices, methods, techniques or processes, that derives
independent economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by other
persons who can obtain economic value from its disclosure or use, all
whether now owned or hereafter acquired by seller (collectively, the
trade secrets)
(X) all claims by seller against any person for past, present or future
infringement of the patents, trademarks, copyrights, or trade secrets.
(Xi) All deposit accounts, money, certified securities, uncertified
securities, instruments and documents.
In addition, the property covered hereby shall include, without
limitation, all of the following, whether now owned or hereafter
acquired, whether now existing or hereafter arising and wherever located:
(A) all attachments, accessions, accessories, tools, parts, supplies,
increases and additions to and all replacements of and substitutions for
any property described.
(B) All products of any of the property described herein
(C) All accounts, contract rights, general intangibles, instruments,
rents, monies, payments and all other rights, arising out of a sale,
lease or other disposition of any of the property described herein.
(D) All proceeds, including insurance proceeds, from the sale, license,
destruction, loss or other disposition of any of the property described
above.
(E) All records and data relating to any of the property described
herein, whether in the form of a writing, photograph, microfilm,
microfiche or electronic media, together with all of seller's right,
title and interest in and to all computer software acquired to utilize,
create, maintain, and process any such records or data on electronic
media.
[CAPTION]
EXHIBIT 2.1
LIABILITIES EXISTING OR ASSUMED
1. Business Loans:
Date of Loan Lender original amount present balance date due
2. Other liabilities
EXHIBIT 2.1(A)
EXHIBIT 2.1(C)
EXHIBIT 2.4
EXHIBIT 6.3
EXHIBIT 6.4
LIABILTIES EXISTING OR ASSUMED
2. Business loans;
Date of loan lender original amount present balance date due
2. Other liabilities
[CAPTION]
EXHIBIT 9(A)
[CAPTION]
EXHIBIT 9(B)
[CAPTION]
EXHIBIT 10
[CAPTION]
Exhibit 10(d) Minutes of the Company April 13, 1999
Minutes of Special Meeting
of The Board of Directors of
CostPlusFive.com, Inc.
(a Nevada corporation)
April 13, 1999 - 4:00 P.M.
79811 "A" Country Club Drive, Bermuda Dunes, CA 92201
A SPECIAL MEETING of the Board of Directors was held of the date and at
the place above written for the purpose of reorganizing the Board of
Directors and Officers of this company and restructuring its capital
funding priorities.
Roll call was made by the secretary. In attendance were Robert T.
Yarbray, President/Chairman, Donald R. Smallman, Frank Scivally, Mahlon
Meyer and Bill Barker. George R. White Secretary/Treasurer/Director was
in attendance via conference call.
Motion was duly made, seconded and carried that the reading of the
minutes of the previous Special Meeting of the Shareholders of this
corporation, held on Apri 12, 1999 be waived for reading and approval at
the next Special or Regular meeting of the Board of Directors. Motion
carried.
The Chairman ten read resignations from the Board of Directors and
Officers capacities from
himself, Robert T. Yarbray and also George R. White. The resignations
were
unanimously accepted by the board.
The Chairman then appointed Mahlon Meyer "Temporary Chairman" and passed
the gavel to him. The board immediately elected Mr. Meyer, chairman of
the Board by unanimous vote. Mr. Meyer than called the meeting to order
under his direction and Chairmanship.
The first order of business was to elect new officers of this
corporation. The following slate of Officers was elected:
Mahlon Meyer, President and CEO
Donald Smallman, Secretary
Frank Scivally, Treasurer
William Barker, Vice-President
The next order of business was the signing of Waivers of Notice of this
Special meeting. All present signed. George White agreed to sign via
fax.
A Resolution was then unanimously adopted to cancel stock certificates
No's 1163 X724,000; 1164 X 500,000; 1165 X 1,240,000; and 1166 X
1,240,000, issued to Al Kau, Cherry Kau, Christina C. Hannaman and Arthur
Pryor, respectfully. A copy of the Resolution is to be attached to and
made a permanent part of these minutes.
A Resolution was unanimously adopted to authorize the officers of this
corporation t9o sell up to one million (1,000,000) shares of common stock
to qualified investors under SEC Rule 144. A copy of the Resolution is
to be attached to and made a permanent part of these minutes.
A Resolution was unanimously adopted to authorize this corporation to
accept the ownership of the web site known as www.costplusfive.com and
domain name of CostPlusFive.com from Frank Scivally and Donald Smallman
for ten ($10.00) consideration.
There being no further business to come before this Special Meeting, it
was adjourned at 6:30 P.M.
DATED this 13th day of April, 1999.
[CAPTION]
Exhibit 10(e). Agreement with Specialized Leasing
ASSET ACQUISITION AGREEMENT
THIS AGREEMENT (hereinafter "the agreement"), is made and
entered into as of the 20th day of March, 2000, by and between
COMPUTERXPRESS.COM, INC., a Nevada corporation (hereinafter "CPXP"), and
SPECIALIZED LEASING, INC., a Nevada Corporation, (hereinafter "SPLI"),
provides as follows:
1. RECITALS:
This agreement is made and entered into with reference to
the following facts and circumstances:
A. SPLI is a newly formed corporation which intends to
engage in the business of leasing computer systems to medical, dental
and real estate professionals, and is interested in
B. CPXP is in the business of selling computer systems and
is interested in becoming the exclusive supplier of SPLI.
2. EXCLUSIVE RIGHT TO SUPPLY COMPUTERS AND SYSTEMS
SPLI hereby grants to CPXP, the exclusive right to supply
SPLI with "Mobile office computer systems" for its medical, dental and
real estate clients. These mobile systems are comprised of a package for
each medical, dental or real estate professional, consisting of :
1. One desktop computer, built to specifications of
SPLI;
2. One laptop computer
3. Digital camera
4. Digital cellular telephone; and
5. Optional electronic peripherals, such as palm top
computers.
3. REPRESENTATIONS AND WARRANTIES OF SPLI.
SPLI hereby represents and warrant to CPXP as follows:
A. SPLI. is a corporation duly formed and validly existing
and in good standing under the laws of the state of Nevada, and has all
necessary corporate powers to own its properties and carry on its
business as now owned and operated by it, and is in good standing in
every jurisdiction in which failure to qualify would have a material
adverse affect on its business and financial condition, and has the
corporate power to enter into and perform this agreement.
B. SPLI has the full corporate power, right and authority to
make, execute, deliver and perform this Agreement and all other
instruments and documents required or contemplated hereunder, and to take
all steps and to do all things necessary and appropriate to consummate
the transactions contemplated herein. Such execution, delivery and
performance of this Agreement and all other instruments and documents to
be delivered hereunder have been duly authorized by all necessary
corporate action on the part of SPLI, and will not contravene or violate
or constitute a breach of the terms of either of its Articles of
Incorporation, founding documents, or By-Laws, or conflict with, result
in a breach of, or entitle any party to terminate or call a default with
respect to any instrument or decree to which either is bound or any
contract or any instrument, judgment, order, decree, law, rule or
regulation applicable to it. Neither SPLI, nor their shareholders is a
party to, or subject to, or bound by any judgment, injunction, or decree
of any court or governmental authority or agreement which may restrict or
interfere with its performance of this Agreement. This Agreement has
been duly executed and delivered and constitutes, and the other
instruments and documents to be delivered by SPLI and The Comedy Magazine
hereunder will constitute, the valid and binding obligations of both of
them, enforceable against it in accordance with their respective terms.
C. Except as otherwise set forth herein, no consent of any
party to any contract or arrangement to which SPLI is a party or by which
either is bound is required for the execution, performance, or
consummation of this Agreement.
D. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to either SPLI, threatened against
either one of them, at law or in equity, or before any federal, state or
other governmental body.
E. The representations and warranties contained in this
Section will be accurate, true and correct, in all respects, on and as of
the date of Closing as though made at such date in identical language.
F. Neither SPLI, nor any of its officers and directors has
ever been convicted of any felony or misdemeanor offense involving moral
turpitude; nor have they been the subject of any temporary or permanent
restraining order resulting from unlawful transactions in securities; nor
are they now, or have they ever been, a defendant in any lawsuit alleging
unlawful business practices or the unlawful sale of securities; nor have
they been the debtor in any proceedings, whether voluntary or
involuntary, filed in the U.S. Bankruptcy Court.
G. The execution, delivery and performance of this
agreement by SPLI does not require the consent, waiver, approval, license
or authorizations of any person or public authority which has not been
obtained, does not violate, with or without the giving of notice or the
passage of time or both, any law applicable to either SPLI and does not
conflict with or result in a breach or termination of any provisions of,
or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any of the property or assets of SPLI or The
Comedy Magazine.
H. SPLI have complied with all laws, ordinances,
regulations and orders which have application to their respective
businesses, the violation of which might have a material adverse effect
on their respective financial condition or results of operations, and
possesses all governmental licenses and permits material to and necessary
for the conduct of their respective business, the absence of which might
have a material adverse effect on their respective financial condition or
results of operations. All such licenses and permits are in full force
and effect, no violations are or have been recorded in respect of any
such licenses or permits, and no proceeding is pending or threatened to
revoke or limit any such licenses or permits.
6. REPRESENTATIONS AND WARRANTIES OF CPXP
CPXP hereby represents and warrants as follows:
A. CPXP is a corporation duly formed and validly existing
and in good standing under the laws of the state of Nevada, it has all
necessary corporate powers to own its properties and carry on its
business as now owned and operated by it, and is in good standing in
every jurisdiction in which failure to qualify would have a material
adverse affect on its business and financial condition, and has the
corporate power to enter into and perform this agreement, subject only to
the approval of its shareholders.
B. CPXP has the full corporate power, right and authority
to make, execute, deliver and perform this Agreement and all other
instruments and documents required or contemplated hereunder, and to take
all steps and to do all things necessary and appropriate to consummate
the transactions contemplated herein. Such execution, delivery and
performance of this Agreement and all other instruments and documents to
be delivered hereunder have been duly authorized by all necessary
corporate action on the part of CPXP, and will not contravene or violate
or constitute a breach of the terms of either of its Articles of
Incorporation, founding documents, or By-Laws, or conflict with, result
in a breach of, or entitle any party to terminate or call a default with
respect to any instrument or decree to which either is bound or any
contract or any instrument, judgment, order, decree, law, rule or
regulation applicable to it. CPXP is not a party to, or subject to, or
bound by any judgment, injunction, or decree of any court or governmental
authority or agreement which may restrict or interfere with its
performance of this Agreement. This Agreement has been duly executed and
delivered and constitutes, and the other instruments and documents to be
delivered by CPXP hereunder will constitute, the valid and binding
obligations of it, enforceable against it in accordance with their
respective terms, subject to the approval of its shareholders.
C. Except as otherwise set forth herein, no consent of any
party to any contract or arrangement to which CPXP is a party or by which
either is bound is required for the execution, performance, or
consummation of this Agreement.
D. The representations and warranties contained in this
Section will be accurate, true and correct, in all respects, on and as of
the date of Closing as though made at such date in identical language.
E. Neither CPXP, nor any of its officers and directors has
ever been convicted of any felony or misdemeanor offense involving moral
turpitude; nor have they been the subject of any temporary or permanent
restraining order resulting from unlawful transactions in securities; nor
are they now, or have they ever been, a defendant in any lawsuit alleging
unlawful business practices or the unlawful sale of securities; nor have
they been the debtor in any proceedings, whether voluntary or
involuntary, filed in the U.S. Bankruptcy Court.
F. The execution, delivery and performance of this
agreement by CPXP does not require the consent, waiver, approval, license
or authorizations of any person or public authority which has not been
obtained, does not violate, with or without the giving of notice or the
passage of time or both, any law applicable to CPXP, and does not
conflict with or result in a breach or termination of any provisions of,
or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any of the property or assets of CPXP.
G. CPXP has complied with all laws, ordinances, regulations
and orders which have application to its business, the violation of which
might have a material adverse effect on its financial condition or
results of operations, and possesses all governmental licenses and
permits material to and necessary for the conduct of its business, the
absence of which might have a material adverse effect on their respective
financial condition or results of operations. All such licenses and
permits are in full force and effect, no violations are or have been
recorded in respect of any such licenses or permits, and no proceeding is
pending or threatened to revoke or limit any such licenses or permits.
4. NOTICES
Any notices called for in this agreement shall be effective
upon personal service or upon service by first class mail, postage
prepaid, to the parties at such addresses to be designated by the
parties in writing.
5. MISCELLANEOUS PROVISIONS:
This agreement shall be construed in accordance with the
laws of the State of Nevada.
This agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their beneficiaries, heirs,
representatives, assigns, and all other successors in interest.
Each of the parties shall execute any and all documents
required to be executed and perform all acts required to be performed in
order to effectuate the terms of this agreement.
This agreement contains all of the agreements and
understandings of the parties hereto with respect to the matters referred
to herein, and no prior agreement or understanding pertaining to any such
matters shall be effective for any purpose.
Each of the parties hereto has agreed to the use of the
particular language of the provisions of this Agreement, and any question
of doubtful interpretation shall not be resolved by any rule of
interpretation against the party who causes the uncertainty to exist or
against the draftsman.
This agreement may not be superseded, amended or added to
except by an agreement in writing, signed by the parties hereto, or their
respective successors-in-interest.
Any waiver of any provision of this agreement shall not be
deemed a waiver of such provision as to any prior or subsequent breach of
the same provision or any other breach of any other provision of this
agreement.
If any provision of this agreement is held, by a court of
competent jurisdiction, to be invalid, or unenforceable, said provisions
shall be deemed deleted, and neither such provision, its severance or
deletion shall affect the validity of the remaining provisions of this
agreement, which shall, nevertheless, continue in full force and effect.
The parties may execute this agreement in two or more
counterparts, each of which shall be signed by all of the parties; and
each such counterpart shall be deemed an original instrument as against
any party who has signed it.
The parties shall use their reasonable best efforts to
obtain the consent of all necessary persons and agencies to the transfer
of shares provided for in this agreement.
IN WITNESS WHEREOF, the parties have executed this agreement
as of the day and year first above written.
COMPUTERXPRESS.COM, INC.
FRANKLIN SCIVALLY
By__________________________________
FRANKLIN SCIVALLY
Secretary
SPECIALIZED LEASING, INC.
GEORGE R. WHITE
By_________________________________
GEORGE R. WHITE,
President
____________________________
Donald R. Smallman, Secretary
[CAPTION]
Exhibit 14. Report of Former Independent Accountant
Independent Auditor's Report dated April 2, 1999
Financial Statements
Balance Sheet
Statement of Operations
Statements of Cash Flows
Statement of Changes in Stockholder's Equity
Notes to Financial Statements
The Board of Directors
CostPlusFive.com, Inc.
(Formerly Stop-N-Sock, Ltd.)
Bermuda Dunes, California
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying balance sheet of CostPlusFive.com, Inc.,
a Development Stage Company (Formerly Stop-No-Sock, Ltd.) as of March 31,
1999 and 1998, and the related Statements of Operations, Cash Flows,
Changes in Shareholders' Equity and Loss and Accumulated Deficit for the
years then ended. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CostPlusFive.com,
Inc., a Development Stage Company(Formerly Stop-N-Sock, Ltd.) As of March
31, 1999 and 1998, the results of its operations, and its cash flows, for
the two years ended March 31, 1999 in conformity with generally accepted
accounting principles.
JULIUS OTTO
Julius A. Otto
Monterey Park, California
April 2, 1999
(except as to Notes A,C,D,G,H, and I,
the date of which is September 15, 1999)
COSTPLUSFIVE.COM, INC.
(A Development Stage Company)
Comparative Balance Sheets
As of March 31, 1999 and 1998
<TABLE>
March 31,
March 31,
1999 1998
<S> <C>
<C>
ASSETS
Current Assets:
Cash in banks $ 210
$ 210
_________
__________
Total Current Assets $ 210
$ 210
_________
__________
Property and Equipment (net) 22,500
26,786
Other Assets:
Land held for future use 860,555
860,555
_________
__________
Total Other Assets 860,555
860,555
_________
__________
TOTAL ASSETS 883,265
897,297
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses $357,497
57,417
Notes payable $562,500
711,269
Advances from officers and stockholders 352,826
28,985
Debentures 50,000
150,000
_________
__________
Total Current Liabilities 1,322,823
947,671
_________
__________
Stockholders' Equity:
Common stocks, $.001 par value
Authorized shares-50,000,000 and 25,000,000
Issued and outstanding shares-19,842,000 shares
and 1,850,000 shares, respectively 19,842
1,850
Paid in capital 2,721,003
200,097
Deficit accumulated during the development stage 2,655,403
(252,321)
Total Stockholders' Equity _________
__________
85,442
(50,374)
_________
__________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 249,524
897,297
========
==========
</TABLE>
[CAPTION]
COSTPLUSFIVE.COM, INC.
(A Development Stage Company)
Comparative Statement of Loss and Accumulated Deficit
For the years ended March 31, 1999 and 1998
<TABLE>
Cumulative
During
Development March 31,
March 31, Stage 1999
1998
<S> <C> <C>
<C>
Revenue $ $
$
Cost and Expenses:
General and administrative expenses 2,327,162 2,207,322
119,840
Interest expense 320,741 191,474
129,267
Depreciation 7,500 4,286
3,214
__________
___________ ________
Total Expenses 2,655,403 2,403,082
252,321
__________
___________ ________
Net Loss 2,655,403 2,403,082
252,321
__________
___________ ________
Loss Per Share $ $
$
Weighted average shares outstanding
(.012) (.014)
</TABLE>
[CAPTION]
COSTPLUSFIVE.COM, INC.
(A Development Stage Company)
Comparative Statements of Cash Flows
For the period January 7, 1997 (inception) to March 31, 1999
<TABLE>
Cumulative
During
Development March
31, March 31,
Stage 1999
1998
<S> <C> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (2,655,403)
(2,403,082) (252,321)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation & amortization 7,500 4,286
3,214
Services paid by stocks - -
-
Notes receivable (525,000)
(525,000)
Accrued expenses (525,000) 357,497 300,000
57,417
Advances from officers & shareholders 352,826 323,841
28,985
__________
__________ __________
NET CASH USED BY OPERATING ACTIVITIES (2,462,580)
(2,299,875) (162,705)
__________
__________ __________
NET CASH FROM INVESTING ACTIVITIES
Acquisition of property and equipment (30,000) -
(30,000)
Land - site for future development (860,555) -
(860,555)
__________
__________ __________
NET CASH USED BY INVESTING ACTIVITIES (860,555) -
(860,555)
__________
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable 712,500
(148,769) 861,269
Proceeds from issuance of common stock 2,640,845
2,438,898 201,947
__________
__________ __________
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,353,345
2,290,129 1,063,216
__________
__________ __________
INCREASE (DECREASE) IN CASH 210
(9,746) 9,956
BEGINNING CASH -
9,956 -
__________
__________ __________
ENDING CASH $ 210 $
210 $ 9,956
==========
========== ==========
DISCLOSURE FROM OPERATING ACTIVITIES
Interest expense $ 191,474
98,563
NON CASH DISCLOSURE
</TABLE>
[CAPTION]
COSTPLUSFIVE.COM, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
For the period January 5, 1997 (inception) to March 31, 1999
<TABLE>
Deficit
Accumulated Number of
Common Additional
During Shares
Stock@ Paid-In
Development Outstanding Par
Value Capital
Stage
----------- ----------- ---
----- -----------
<S> <C> <C> <C>
<C>
Balance at September 23, 1996
(inception) - $ - $ -
$ -
Net loss - March 31, 1998
(252,321)
Stocks issued for cash 1,850,000 1,850
200,097
----------- ---------- ------
- -----------
Balance at March 31, 1998 1,850,000 1,850
200,097 (252,321)
Net loss - March 31, 1999 (2,403,082)
Shares issued for services 14,994,000 14,994
1,732,504
Shares issued for cash 2,998,000 2,958
788,402
Shares issued for cash at
$2.00 per share
----------- ---------- ------
- -----------
Balance at March 31, 1999 19,842,000 19,842
2,721,003 (2,655,403)
</TABLE>
CostPlusFive.com, Inc.
(A Development Stage Company)
Consolidated Notes to Financial Statements
NOTE A DESCRIPTION OF THE BUSINESS AND ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
CostPlusFive.com, Inc. formerly known as "Stop-N-Sock, Ltd." (the
Company) was incorporated under the laws of the state Nevada on January
15, 1997.
The purpose for which the Corporation is organized is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Nevada including, without
limitation, to engage in the business of selling computer products
through electronic commerce (e-commerce).
The Company has been in the development stage since its inception on
January 15, 1997. Planned principal operations have yet not commenced
since then. There were no activities from its inception date through
March 31, 1999.
SIGNIFICANT ACCOUNTING POLICIES
1. The Company uses the accrual method of accounting.
2. Revenues and directly related expenses are recognized in the period
when the goods are shipped to the customers.
3. The Company considers all short term, highly liquid investments that
are readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
4. Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
5. Depreciation; The cost of property and equipment is depreciated over
the estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized) over the lesser of the length of
the related assets or the estimated lives of the assets. Depreciation is
computed on the straight-line method for reporting purposes and for tax
purposes.
6. Estimates; The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates
NOTE B - PROPERTY AND EQUIPMENT
The Company capitalizes the purchased and fixtures for major purchases in
excess of $300 per item. Capitalized amounts are depreciated over the
useful life of the assets using the straight-line method of depreciation.
The following is a summary of property and equipment at cost, less
accumulated depreciation:
1999 1998
-------- --------
Furniture and equipment $30,000 $30,000
Less accumulated depreciation (7,500) (3,214)
-------- --------
Total $22,500 $26,786
======= =======
NOTE C - NOTES RECEIVABLE
On February 22, 1999, the Company sold 2,400,000 shares of its common
stock, to an unrelated accredited investor, pursuant to the exemption set
forth in Regulation D, Rule 504, to an unrelated party in exchange for
two promissory notes at a price of $0.25 per share, for total proceeds of
$600,000. On April 6, 1999, the Company sold another 1,000,000 shares to
the same unrelated party on a promissory note, and sporadic payments
were made on the notes until May, 1999. The notes were consolidated into
one note on May 12,1999. NO underwriter was used in either transaction.
The promisor defaulted on the second payment of the consolidated note due
May 31, 1999. On June 6, 1999, the Company rescinded the transaction and
issued stop transfers on the shares of common stock sold. The promisor
on the consolidated note failed to return the shares for cancellation or
pay for the shares, so the Company filed a lawsuit in federal court in
the Central District of Los Angeles, California to obtain cancellation of
the shares issued.
Neither of the notes mentioned above bear interest and interest has not
been imputed since they are currently payable.
NOTE D - OTHER NOTES PAYABLE
Notes payable consist of the following: Note Payable to a Stockholder in
the amount of $250,000 secured by a first trust deed on the golf driving
range site, payable interest only monthly in the amount of $3,125,
interest at 15% per annum, all due and payable September 26, 2000.
Note payable in the original amount of $148,769 for the acquisition of
the land, secured by a second trust deed on the golf driving range site.
This note, plus significant foreclosure costs were paid by certain
stockholders of the Company. The new note has not been recorded with the
County Recorder, repayment terms have not been determined but the
principal amount is approximately $336,000, which amount represents the
cash advanced to payoff this note, plus foreclosure costs and to bring
the note payable to a stockholder(described in the next paragraph),
secured by a third trust deed in the principal amount of $312,500
current. Included also in the $336,000 are amounts advanced to the
company to settle certain lawsuits that arose out of the initial purchase
of the real property. Such additional costs have been charged to
interest expense and foreclosure costs. See also Note A wherein these
stockholders were given title to the land.
Note Payable to a Stockholder in the amount of $312,500, secured by a
third trust deed on the golf driving range site, payable interest only
quarterly, from May 20, 1997 at 7.25% (quarterly payment is $5,664) all
due and payable October 18, 1999.
NOTE E - CONVERTIBLE SUBORDINATED DEBENTURES PAYABLE
The Board of Directors, on July 17, 1997, authorized the sale and issue
of a total of $150,000 in convertible debentures are unsecured, bear
interest at 10%, which is to be accrued and paid on the first day of the
thirteenth month after the day of issuance.
On the date of issuance there was no determinable market value for the
common stock of the Company and it is solely up to the debenture holder
to determine conversion.
The debentures, together with the accrued interest, are convertible into
1,000 shares of the Company's common stock for each $1,000 principal
amount no sooner than the sixth day of the thirteenth month of the date
of issuance. Prior to March 31, 1999 $100,000 of these debentures have
been converted to common stock. The remainder are due and payable during
the months of April and May 1999.
NOTE F - RELATED PARTY TRANSACTIONS
During the period from May20, 1997 (date that development plans commenced
for the golf driving ranger land site) through march 31, 1999, there were
certain transactions with related parties. These transactions were the
acquisition of the rights to acquire the land from the limited
partnership by the issued of common stock disclosed in the notes to these
financial statements, notes payable executed to certain stockholders to
finance the acquisition of the land, common stock issued to acquire the
furniture and equipment used by the Company, and the issue of the
original restricted "founders" stock.
There were not other relater party transactions except for occasional
minor loans to the Company by its President prior to March 1, 1999. Such
minor loans were repaid as cash became available.
NOTE G - LEASE COMMITMENT AND CONTINGENCIES
The Company leases its office space under a month to month lease/rental
agreement. Monthly rental expense payments are $800.
NOTE H - LEGAL PROCEEDINGS
On June 18, 1999, the Company filed a lawsuit in federal court for the
Central District of California, Case No. 99-06010RAP(MANx), against
Investor's Equity Corp., Wall Street Trading Group, and others, seeking
to cancel 3,400,000 common shares the Company issued on a promissory note
to the defendants, who defaulted on the promissory note. Defendants
filed a counterclaim, alleging breach of contract, defamation, fraud and
securities violations. The Company is confident that it will be
successful in obtaining the cancellation of the shares or their value,
due to the fact that the shares were not paid for by defendants. The
Company also believes that the counterclaim is without merit, because the
defendant/cross complainant was given full access to all corporate
information when he entered into the transaction and has no loss or
damage. This belief is based on the fact that the shares were not paid
for. However, the lawsuit is being vigorously defended by the promisor
and there can be no assurance that the Company will win. The outcome of
the lawsuit depends upon many factors, such as the Judge's decisions in
the case.
NOTE I - SUBSEQUENT EVENTS
Prior to March 1, 1999, the principal activity of the Company was its
plan to develop the land it had acquired through the issue of common
stock, to Stop-N-Sock Seed, Ltd. (a limited partnership) in the states
amount of $155,036 to acquire the rights and obligations of the ownership
of land held by that partnership, the execution of notes payable in the
amount of $686,503, which were recorded as liens against the land on
which the golf driving range site was to be built and the payment of
$19,016 in engineering and archaeological costs. total capitalized cost
for the land was thus $860,555.
During the month of March, 1999 the costs to maintain the office
facilities and study the new direction of the Company were minor and have
not been broken out in the accompanying statement of operations.
[CAPTION]
Exhibit 16. Letter from Former Independent Accountant
Julius Otto
Certified Public Accountant
2845 West Valley Boulevard
Alhambra, CA 91803-1818
August 16, 2000
Securities Exchange Commission
Washington, D.C. 20549
Re: ComputerXpress.com, Inc.
Gentlemen:
The undersigned is the former independent accountant for
ComputerXpress.com, Inc., formerly known as CostPlusFive.com, Inc. I
have read the facts set forth in Item 3 of the Company's Form 10SB,
amendment number 3, and agree with the circumstances of my replacement as
set forth therein.
Sincerely yours,
Julius Otto
-----------------------
JULIUS OTTO
August 16, 2000
Alhambra, California
