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) Identification 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., the Company changed 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 the other Nevada corporation which was named "Cost Plus Five.com,
Inc." for 17 million shares of Company common stock. The Nevada corporation
was a corporation, separate and apart from the Company, which was
incorporated on January 25, 1999 as number C1574-99. 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
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, 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, the Company still liked the idea of the Internet website, so it
conceived of another plan to salvage the deal without acquiring each store,
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, Mashlon 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
cancelled 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 CostPlusTive
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 the
Nevada corporation in February, 1996, 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 State,
and 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., to reflect a change in its business focus, and
also because Lee Jackson and Tom Mitchell discovered that the Company's
amemdment 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 excahnge 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 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 memberships in the
Company's wholesale buying club, 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 Industry
Retail sales in computer hardware products is a relatively new industry,
which is in a constant state of change, due to the advancess 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 opinon and now feels that it is the
Company's service and product support which accounts for most of the repeat
business. Management also belives 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 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.
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. 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 managment'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 some common officers and directors, 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 partcipating
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
affliates customer through the coded link which are completed and delivered.
Affiliated Retail Locations
The Company curently 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 memberships in the Company's wholesale buying
club, 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
affliated kisok 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. It 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, Mashlon 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 cancelled 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.
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 atrributes 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 recenlty 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 attirbutes 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 Cmopany'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 complaiant. 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 1,010,000 4.10%
575 Anton Blvd., Suite 300
Costa Mesa, CA 92626
Donald Smallman 500,000 2.05%
11337 West Olive Drive
Avondale, AZ 85323
Franklin R. Scivally 500,000 2.05%
200 S. Hampton Hill Court
Tucson, AZ 85711
Robert M. Daddio 10,010 .04%
973 Sherman Way
Pleasanton, CA 94566
Officers and Directors
as a Group 2,000,000 8.20%
- ----------
(1) This table is based upon 49,835,060 shares issued and outstanding as of
April 14, 2000.
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 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 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 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.
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. 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 9. 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. If the Company
fails to resolve the comments to this form 10 Registration Statement by
April 20, 1000, its quotation on the Bulletin Board will be deleted. In the
event that the Company's common stock quotation is deleted from the Bulletin
Board, the Company intends to have its market makers apply for a quotation
on the National Quotation Bureau's "pink sheets" ("pink sheets"). There is
no assurance that the Company's quotation will not be deleted from the
Bulletin Board, and no assurance that the Company's securities will be
quoted on the pink sheets. Since the Company's initial quotation on the
Bulletin Board, 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.
The following table sets forth the range of high and low bid information for
each full quarterly period of the last fiscal year:
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
Source of Data: http://www.freerealtime.com
Item 10. 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, 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. Prior to March 31, 1999
$100,000 of these debentures have been converted to common stock. The
remainder have been paid in full.
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 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 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, 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 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.
Item 11. 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.
Item 12. 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 the indemnification of
officers or directors.
By Laws
Article X of the By Laws provide for indemnification of officers and
directors, as follows.
Item 13. Financial Statements
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
Independent Auditor's Report dated April 2, 1999
Financial Statements
Balance Sheet
Statement of Operations
Statements of Cash Flows
Stateme
nt 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)
[CAPTION]
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.
Item 14. EXHIBITS, FINANCIAL STATEMENTS
(a) Report of Independent Certified Public Accountant dated
April 2, 1999 and September 15, 1999
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(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
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.
CostPlusFive.com, Inc.
FRANKLIN R. SCIVALLY
By_____________________________________________
Franklin R. Scivally, President and Director
Date: April 14, 2000
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: April 14, 2000
JAMES RATHER
___________________________________________
James Rather, Director
Date: April 14, 2000
DONALD R. SMALLMAN
___________________________________________
Donald R. Smallman, Treasurer and Director
Date: April 14, 2000
ROBERT DADDIO
___________________________________________
Robert Daddio, Secretary and Director
Date: April 14, 2000
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
IMPORTANT: READ INSTRUCTIONS ON REVERSE SIDE BEFORE COMPLETING THIS FORM
TYPE OR PRINT (BLACK INK ONLY)
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. YarbrayAddress: 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
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
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 % was held of the date and at the place above written
for the purpose of reorganizing the % and Officers of this company and
restructuring its capital funding priorities.
Roll call was made by the secretary. In attendance were Robedrt 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
April 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.
____________________________
Donald R. Smallman, Secretary
[CAPTION]
BY LAWS OF STOP-N-SOCK, LTD.
Stop-N-Sock, Ltd., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Innovative
Tracking
Solutions Corporation, resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and resolution setting forth the proposed
amendment is as follows:
RESOLVED: That the Certificate of incorporated of this corporation be
amended by deleting the Heading,. Article(s) Ninth and changing Article(s)
Fourth, Seventh, and Eighth so that the document shall read as follows:
FOURTH: The amount of the total authorized capital stock of this
corporation is (ten million) 10,000,000 shares of $.001 Par Value.
SEVENTH: The Directors shall have power to make and to alter or
amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders
of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of
the stockholders; and no stockholder shall have any right of inspecting any
account, or book or document of this corporation, except as conferred by the
law or the By-Laws or by resolution of the stockholders or directors, except
as otherwise required by the laws of the State of Delaware.
It is the intention that the objects, purposes and powers specified
in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any purpose and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded as
independent objects, purposes and powers.
EIGHTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
[CAPTION]
Exhibit 3(a)4
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 oOfficers of this company and restructuring its capital funding priorities.
Roll call was made by the secretary. In attendance were Robedrt 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 Sharedholders of this corporation,
held on Apri 12, 1999 be waived for reading nd 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 unamously accepted by the board.
The Chairman then appointed Mahlon Meyer "Temporary Chariman" and passed the
gavel to him. The board immediately elected Mr. Meyer, chairman of the
Board by unamous 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.
____________________________
Donald R. Smallman, Secretary
(seal)
[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.]
ROBERT T. YARBRAY G.R. WHITE
- - ----------------------- ---------------------
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
__________________________________________
CUT ON THE DOTTED LINE - THEN PHONE IT, FAX IT OR MAIL IT IN!
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
attorneh- in-fact, irrevocably and coupled with an interest, with all right
of ubstitution 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 writin and will be given by personal delivery, national overnight
courier ervice, 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, 16th
Fl.
Bermuda Dunes, California 92201 Los Angeles, California 90067
Facsimile: 706.345.9932 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.
EXHIBIT 1.8
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 accoubnts, 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 % was held of the date and at the place above
written for the purpose of reorganizing the % 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 nd approval at the next Special
or Regular meeting of the %. Motion carried.
The Chairman ten read resignations from the % 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.
____________________________
Donald R. Smallman, Secretary
(seal)
