U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
General Form For Registration of Securities of Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
EWRX INTERNET SYSTEMS INC.
(Name of Small Business Issuer in its charter)
NEVADA 980117139
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
#301-543 Granville Street
Vancouver, BC Canada V6C 1X8
---------------------------- ---------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, 604-669-6079
Securities to be registered under Section 12(b)
of the Act:
None
Securities to be registered under Section 12(g)
of the Act:
Common Stock
(Title of class)
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TABLE OF CONTENTS
Page
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Part 1 Item 1 Description of Business 1
Item 2 Management's Discussion and Analysis or
Plan of Operation 10
Item 3 Description of Property 14
Item 4 Security Ownership of Certain Beneficial Owners
and Management 16
Item 5 Directors, Executive Officers, Promoters
and Control Persons 17
Item 6 Executive Compensation 21
Item 7 Certain Relationships and Related Transactions 22
Part 2 Item 1 Market Price and Dividends of the Registrant's
Common Equity and Other Shareholder Matters 23
Item 2 Legal Proceedings 24
Item 3 Changes in and Disagreement with Accountants 24
Item 4 Recent Sales of Unregistered Securities 25
Item 5 Indemnification of Directors and Officers 26
Part F/S Financial Statements 26
Part 3 Exhibit Index 27
Signatures 28
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1
FORWARD LOOKING STATEMENTS
WHEN USED IN THIS REGISTRATION STATEMENT, THE WORDS "EXPECT,
"ANTICIPATE," "INTEND," "PLAN," BELIEVE," "SEEK," AND "ESTIMATE" OR SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. HOWEVER,
THIS REGISTRATION STATEMENT ALSO CONTAINS OTHER FORWARD-LOOKING STATEMENTS.
FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE
SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING, BUT NOT
LIMITED TO, THE FOLLOWING RISK FACTORS, WHICH COULD CAUSE THE COMPANY'S FUTURE
RESULTS AND STOCK VALUES TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD-LOOKING STATEMENT MADE BY OR ON BEHALF OF THE COMPANY. MANY SUCH FACTORS
ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT. READERS ARE CAUTIONED
NOT TO PUT UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS
ANY INTENT OR OBLIGATION TO UPDATE PUBLICLY ANY AND ALL FORWARD-LOOKING
STATEMENTS, WHETHER AS RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
ITEM 1. DESCRIPTION OF BUSINESS
Corporate Background
- --------------------
EWRX Internet Systems Inc. (the "Company", "Registrant" or "EWRX") is a
publicly traded company. Its primary businesses are destination community
Websites, electronic commerce projects (e-commerce) and Website development
focused in the Specialty Automotive Aftermarket defined below. EWRX was
incorporated in the State of Nevada on June 25, 1997. The shares of the Common
Stock of the Company trade on the OTC Bulletin Board under the trading symbol
"EWRX." The Website of the Company is ewrx.com and the logo of the Company is
"ewrx.com, Where the Net Works". The corporate office of EWRX is located at #301
- - 543 Granville Street, Vancouver, BC, Canada V6C 1X8 and its telephone and fax
numbers are (604) 669-6079 and (604) 669-6042.
Prior to 1999, the Company's sole business was in the resource sector and
the Company held certain mineral interests in the Ukraine. The interests were
held in a joint venture with a private Ukrainian company in the development and
production of marketing industrial garnets for abrasive applications. Due to
poor market conditions and the uncertainty of financing the development of
mineral properties located in Ukraine, the Company elected to abandon these
mineral interests in the fourth quarter of 1998.
In the first quarter of 1999, the Company made the strategic decision to
change its business focus. In particular, the Company implemented a new business
strategy to acquire, finance and operate Internet related companies that either
have existing Websites or Websites that are under development and are capable of
operating profitably. The Company believes that the substantial growth in
Internet commerce activities ("e-commerce") in recent years, when combined with
carefully selected acquisition and development opportunities, represents a
significant business opportunity. Effective May 14, 1999, shareholders approved
changing the name of the Company from Europa Resources Inc. to EWRX Internet
Systems Inc. (pronounced "e-works").
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2
Corporate Objective
- -------------------
The corporate objective of EWRX is to provide on the Internet services for
users within the Specialty Automotive Aftermarket with a online community where
customers can interact, acquire relevant information and have easier access to
the goods and services that are part of the Specialty Automotive Aftermarket
community.
The Specialty Automotive Aftermarket is defined as the market consisting of
automotive products added to a vehicle by choice and not need. This market
includes products to enhance the appearance, performance and enjoyment of
vehicles and excludes other products such as oil filters, sparkplugs and other
maintenance and repair items. The products sold in the market also include
customizing parts, apparel, scale models, repair books and instructions,
insurance, financing and travel services.
When evaluating the Specialty Automotive Aftermarket, EWRX found a growing
but fragmented industry made up of a large number of smaller markets that
together service millions of people who have a high degree of interest in the
products and services within this market. This market is estimated to be $20
billion per year according to SEMA (Specialty Automotive Equipment Marketing
Association), the largest automotive trade association in the world in its 1998
Market Report.
Acquisition of Classic Car Source and North Fork Publishing
- -----------------------------------------------------------
During the second quarter of 1999, the Company completed the first
acquisition as part of its new Internet-related business strategy. EWRX acquired
100% of the shares of Common Stock of Classic Car Source, Incorporated ("Classic
Car") and 100% of the shares of Common Stock of North Fork Publishing
Incorporated ("North Fork") by issuing 1.45 million shares of Common Stock of
the Company and paying $200,000 in cash. These companies were previously held
privately under common control by the principals of Classic Car and North Fork.
EWRX owns two Internet websites, Classicar.com and ClassicTruckshop.com,
("EWRX Websites") two of the larger destination Internet websites for classic
vehicle enthusiasts. Combined, the two sites average 7.5 million hits and 2.5
million page views per month. The sites contain more than 3,500 pages of content
and 93 chat groups and messages boards that are supervised by more than 30
volunteers across the United States. Users can share technical tips, information
and stories with other enthusiasts, classified advertising, monthly e-mail,
newsletters, buying and selling of parts and other products and services.
North Fork Webwrx, a Website developer provides design and consulting
services to clients in the Specialty Automotive Aftermarket. North Fork develops
and services over 70 websites and adds Website development capability to EWRX.
North Fork provides custom software and Website design services, Internet
database services and custom e-commerce software solutions to a variety of
businesses seeking to maximize the use of the Internet. North Fork provides
technical support services to Classic Car. Typically, North Fork retains the
ownership and rights to proprietary software and related systems that are
developed in conjunction with custom projects. The developed software is also
available to other users in the Internet business.
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Business Objectives
- -------------------
EWRX's primary objective is to capture a portion of the $20 billion a year
Specialty Automotive Aftermarket in the next twelve months. (Reference is SEMA's
1998 Market Report.)
To achieve the primary objective, EWRX has several short-term and
medium-term business objectives which must be completed.
1) Raise $3 million in capital for the immediate requirements in 1999.
EWRX intends to raise up to $3 million through a private placement in
1999 to be used for the re-development and re-programming of the
Classicar.com and Classictruckshop.com Websites, promotion of the EWRX
Websites and to increase the shareholder base of the Company.
2) Complete the re-development and re-programming of Classicar.com and
Classictruckshop.com by the fourth quarter of 1999.
This work will be accomplished in conjunction with the contract with
Xceed and includes full development of e-commerce capabilities preparing
the sites for the 21st Century.
3) Complete the development of MotorWrx.com in the first quarter of 2000.
MotorWrx.com provides a single gateway on the Internet to the EWRX
group of Websites located within the portal. EWRX intends MotorWrx.com to
be one of the largest single destination sites for the Specialty Automotive
Aftermarket on the Internet and it is planned to provide a single point
entry for automotive enthusiasts in the worldwide market.
4) Complete the development of BigBadCatalog.com, the major EWRX electronic
catalog, by mid 2000.
This work will be part of the Xceed contract for development and
programming. See Strategic Alliances and Affiliations. EWRX will be
integrating digitized standard printed catalogs for a large number of parts
manufacturers and distributors into BigBadCatalog.com. This will create a
centralized point where automotive parts can be purchased directly from
manufacturers and distributors.
5) Complete additional acquisitions, joint ventures and/or strategic alliances
of major Website-related companies by year-end 2000.
EWRX has identified and is in initial discussions and negotiations
with other Specialty Automotive Aftermarket Website companies that may be
potential acquisitions, joint venture partners or with whom to form
strategic alliances. The focus of these relationships will be to create or
acquire content-related Website communities for various aspects of the
Specialty Automotive Aftermarket. These communities are accessed through
the MortorWrx.com portal and will provide additional revenue streams.
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4
6) Increase brand awareness for the EWRX, Motorwrx.com, ClassicCar.com,
Classictruckshop.com and related Websites and brands.
EWRX has initiated a program to significantly increase overall brand
awareness of the various EWRX Websites through a national program with
co-sponsors and significant advertising effort. In addition EWRX is
participating as a major exhibitor and speaker at the November 1999 SEMA
show in Las Vegas.
7) Raise $25 million in capital for acquisitions, development of Websites and
e-commerce, advancement of Website development services and working
capital.
EWRX anticipates the undertaking of an offering in the public market
in the first half of 2000. The Company also anticipates that this offering
would be paralleled by an offering in Europe on a major European exchange
such as the Frankfurt or London exchanges. No assurance can be given that
any such offering shall occur.
8) North Fork WebWrx Projects:
North Fork Webwrx is a leading Internet solutions provider serving the
Specialty Automotive Aftermarket with high-end web site design, Internet
database programming, custom e-commerce applications and strategic Internet
marketing consulting. With public acceptance of the Internet surging, and
business to business commerce revolutionizing the traditional distribution
system, EWRX believes North Fork is well positioned for several years of
Internet development services.
North Fork has revenue-producing projects for a variety of clients in
the following areas:
Website development. This range of service represents the largest
revenue stream and includes the design, development, and maintenance
of a wide range of business to business commerce sites, Intranet
(internal business communications) and large-scale consumer sites.
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Online advertising. North Fork will continue to develop banner ads and
other online advertising projects for Classicar.com and
classictruck.com as well as the new sites within the motorwrx.com
portal (light-truck, off-road, racing, custom, etc.). In addition to
these sites demanding banner ads, there are other opportunities North
Fork is prepared for:
1. Online advertising. Banner ad development, banner placements and
other online advertising projects for other parties.
2. Market consulting. North Fork will continue to develop market
consulting, such as Internet launch strategies, site development
analysis and Internet marketing plans.
3. Web site hosting. North Fork currently host over 70 web sites for
classic car and classic truck related businesses and
organizations.
4. Special projects. North Fork has developed proprietary software
for high-end grocery kiosks and intends to generate more revenue
by distributing this software to a large chain grocery and a high
traffic consumer portal site.
Strategic Alliances and Affiliations
- ------------------------------------
Xceed, Inc.
In July 1999, EWRX signed a consulting agreement with Xceed, Inc., a
world leading Internet architect and e-commerce solution provider. Under
the terms of the agreement, Xceed was appointed as the Company's Internet
consultant and co-developer in connection with the redevelopment and
re-programming of EWRX Websites. The Company expects to have its Websites'
e-commerce operational in the fourth quarter of 1999. The EWRX affiliation
with Xceed will provide an accelerated development of its Websites and
enhance the visibility of EWRX on the Internet marketplace.
As part of the business relationship with Xceed, it may make an equity
ownership in the Company. Further, EWRX expects to build a partnership with
Xceed including business contacts and association among Xceed , EWRX and
their other Internet clients.
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6
Data Return Inc.
Data Return of Dallas-Ft. Worth, an Internet hosting facility has
provided Website hosting to EWRX, its subsidiaries and many of its clients
since January 1998. Data Return manages a remote data center with more than
350 Compaq ProLiant systems running the Microsoft Windows NT Server network
operating system. Data Return hosts business-critical Websites for
individual companies as well as for Internet service providers (ISPs),
Website developers, and telecommunications carriers. The firm's staff
consists of Microsoft-certified and Compaq-certified professionals.
All equipment is housed in multiple data centers in Dallas-Fort Worth
and connected to the Internet via a multi-backbone network with local
access to seven Tier-1 backbone providers. In layman's terms, this means
that Data Return provides seven redundant connectors to provide service
continuity. Further, Data Return utilizes two backup diesel generator
systems to supplement conventional power sources in the event of loss of
primary power.
Specialty Equipment Marketing Association (SEMA)
Since 1996, EWRX subsidiaries have been members of The Specialty
Equipment Marketing Association, the largest automotive aftermarket trade
association in the world. Dan Jondron, President of Classicar.com and North
Fork WebWrx, has been SEMA's primary instructor for Internet marketing
related topics since that time. At SEMA's request, EWRX has provided a
detailed proposal to construct what will become the primary
business-to-business Internet site for SEMA's 3,500 member companies.
Selection is in progress for this proposal and North Fork Webwrx is among
two other companies on the list for consideration for this project.
Markets and Marketing Plan
- --------------------------
Market Overview - Specialty Automotive Aftermarket
All references in this section are from SEMA's 1998 Market Report
The Specialty Automotive Aftermarket is made up of a large number of
smaller markets, with their own interests, products and services. This market is
strictly driven by buyers seeking specific products and services related to the
hobby aspects of vehicles as opposed to transportation and maintenance.
Because of market fragmentation and because the Internet is new to the
Specialty Automotive Industry, the public has not been exposed to the wide
variety of goods and services available to it from this market.
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Despite the fragmented market, it is a growing market. In 1997, the retail
sales of the Specialty Automotive Aftermarket, were $19.3 billion dollars and
the market has grown 57.4% since 1990, at a compounded annual growth rate of 8%
per year.
The consumers who make up this industry are predominately younger to middle
aged men. Over 55% are under the age of 44, and enjoy higher education and
higher income levels than the general population. On average these consumers own
2.9 vehicles and are willing to spend a significant amount of money
($1,000-$5,000 a year depending on the market niche) to improve the appearance
and performance of their vehicles
In general, the Market can be divided into three main segments.
1) Specialty Accessories and Appearance, (52.4% market share)
Includes all exterior or interior products that improve either
the comfort or looks of a vehicle.
2) Racing and Performance (22.9% market share)
Includes all products that improve performance and efficiency
(for example: carburetors, spark plugs, drive shafts and other
engine parts).
3) Wheels, tires and suspension components (24.7% market share)
Includes specialty products for wheels such as performance
shocks, struts, specialty high performance tires and brakes.
Out of these three main market segments, there are seven acknowledged and
well defined-sub-markets and one miscellaneous sub-market. These include:
Light-truck Market - parts and services that change the appearance,
performance, and/or handling of light trucks (pickups, vans and sports
utility vehicles).
Racing Market - products for "off-street" professional and amateur racing
or motorsports.
Off-road Market - products designed to modify the appearance, performance
and/or handling of vehicles for use off paved roads.
Restoration Market - products and services used in returning vehicles,
particularly classics, to their original manufactured condition.
Street Performance Market - products for the "muscle car or performance car
market used to change the appearance, performance and/or handling of
vehicles for street use.
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Restyling Market - products used to modify the exterior or interior styling
of vehicles after they have left the factory and are not found in other
market categories.
Street Rod and Custom Market - products and services used in the
construction, maintenance, and operation of street rods and customs.
Other Markets - products that do not neatly fit into the seven defined
market segments. Typically electronic or high-tech in nature such as radar
detectors and custom sound systems.
When evaluating the Specialty Automotive Aftermarket, EWRX recognized the
potential the Internet has to provide consumers in this marketplace with better
prices, more selection, greater availability and easier access to products and
services they desire. An industry and market of this size, with little overall
public awareness made up of a large group of viewers characterized as classic
vehicle enthusiasts who have a strong interest in the products and services
within this market, provides the Company with a unique opportunity. This
opportunity is one of establishing brand dominance in this marketplace by
creating an Internet portal through which all the market segments in this
industry enter and congregate.
Competition and Uncertainty of Market Acceptance
- ------------------------------------------------
The traditional marketplace for classic automobiles and related products
and services is well established and includes mail order, retail outlets, direct
customer advertising and private party transfers, all of which makes the market
for the Company's services highly competitive. In addition, many companies and
individuals are engaged in developing e-commerce using the Internet marketplace.
Many such companies have greater financial resources and larger technical staffs
than the Company, which could result in the Company being at a competitive
disadvantage. In addition, companies not currently in direct competition with
the Company may introduce competing products in the future.
Introducing e-commerce based upon the Internet marketplace remains an
emerging industry and is characterized by rapid technological changes and
introductions of new products and services. Demand for and market acceptance of
newly introduced services and products, such as those planned by the Company,
are subject to a high level of uncertainty.
Dependence on Key Customers, Suppliers and Strategic Relationships
- ------------------------------------------------------------------
The Company is in the development stage and has no material or critical
customers, the loss of whom would have a material impact on operations. The
Company does not anticipate that it will develop such relationships in the
future. In July 1999, the Company entered into an agreement with Xceed which has
agreed to act as the Company's Internet consultant and developer in connection
with the redevelopment and programming of the Classicar.com web page. While the
Company believes that other vendors can provide similar services, the loss of
the agreement with Xceed could have a material adverse effect on the Company by
delaying the redevelopment of its Websites, resulting in postponing
revenue-generating activities.
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Impact of Technological Change
- ------------------------------
The Internet as a whole is characterized by rapid technological changes,
innovations and frequent new product introductions. The Company's success will
depend to a substantial degree on its ability to design, develop and enhance its
web pages and related services and to successfully market such services and to
attract new customers. This will require the timely selection, development and
marketing of new products or services and enhancements on a cost-effective
basis. There can be no assurance that the Company will achieve these objectives
or that products or technologies developed by others will not render the
Company's web pages, products or technologies noncompetitive. A fundamental
technological change could have a material adverse effect upon the Company.
Governmental Approvals and Regulations
- --------------------------------------
The Company believes that no significant governmental approvals are
necessary for any of its products or services. Further, the Company believes
that compliance with federal, state and local laws or regulations which have
been enacted or adopted to regulate the environment has not had, nor will have,
a material effect upon the Company's capital expenditures, earnings, competitive
or financial position.
A major risk of Internet companies is the unknown but potential regulation
and taxation of Internet activities. The Internet industry is currently
unregulated primarily because it is an international business subject to
self-regulation by its participants who control websites in e-commerce. The
United States government is examining the merits and disadvantages of regulation
of content and taxation of e-commerce in the current year and in future years.
The Company has no way to determine what the action of the United States
government might have on its future activities and related revenues and profits.
Effect of Y2K and Risks of Year 2000 Compliance
- -----------------------------------------------
The Company has undertaken a program to protect its information technology
and systems against difficulties related to the year 2000 changeover. These
programs include preparedness activities in its computers, software, webserver
and telecommunications. The Company has very little control over other
companies, clients and Websites related to its business and cannot guarantee
that systems failure will not occur with these third parties. Should these third
parties not comply or correct problems associated with year 2000 compliance,
those problems and non-compliance could adversely affect the Company `s
businesses.
Employees
- ---------
At May 31, 1999, the Company employed nine people full time and three
consultants on a part-time basis.
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The future success of the Company depends to a significant extent upon
certain senior management, technical personnel and software development
personnel. The Company also believes that its future success will depend in
large part on its ability to hire and retain highly skilled technical,
managerial and marketing personnel, as well as to attract and retain
replacements for or additions to such personnel in the future. Demand for new,
specially trained and experienced personnel has increased worldwide. The loss of
certain key employees or the Company's inability to attract and retain other
qualified employees could have a material adverse effect on the Company's
business.
Reports to Security Holders
- ---------------------------
The public may read and copy any material files with the SEC at the SEC's
Public Relations Reference Room at 450 Fifth Street, N.W., Washington D.C. 20549
and/or obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. In addition, the Company is an electronic
filer and as such, all items filed by the Company with the SEC which contain
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, which site is available at
http://www.sec.gov. The Company also maintains an Internet site which contains
information about the Company.
The site is available at http://www.ewrx.com.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
Revenues and Financing
- ----------------------
The Company has minimal revenues from banner advertising and Website
consulting services from the Classic Car and North Fork operations. It intends
to derive its principal expanded revenues from these same sources and from the
electronic catalog, BigBadCatalog, and from premium memberships on its Websites.
It is anticipated that the Internet and related e-commerce will continue to
become more accessible and that the market opportunities for the Company will
continue to expand in North America and internationally. In order to maintain
sales growth, the Company intends to expand the content and to improve the
services on its Websites and where appropriate add new Websites that are
compatible with the exiting Websites, primarily related to the Specialty
Automotive Aftermarket.
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The Company has been funded to date through private placements of
approximately $750,000 in 1999, to acquire Classic Car and North Fork, initiate
work in these operations and for corporate administrative and sales costs. In
addition to the Harmonic Research Inc. agreement described below the Company
continues to investigate and solicit funding primarily through private
placements of its securities.
Operations for the Next Twelve Months
- -------------------------------------
The Company's intended operations for the next twelve months are set forth
in Item 1 - Business Objectives. It is the intention of the Company to complete
the re-design of its current Websites and implement banner advertising and gift
shop sales programs by the end of 1999. Development of its electronic catalog
will be completed in the first quarter of 2000. When the re-design of the
Websites is completed, solicitation and implementation of the premium
memberships for the Websites will begin and will be in place in early 2000.
These activities are the principal sources of expanded revenues for the Company.
The Company believes that revenues anticipated in the next twelve months
and the financing as described in Item 1 - Business Objectives will provide
sufficient cash flow for its operations in that twelve month period, However, no
assurance can be give that the types of revenues projected by the Company or the
financing contemplated by the Company will occur.
CAPITAL RESOURCES
On July 15, 1999, the Company entered into an agreement with Harmonic
Research, Inc. (Harmonic), an investment fund management company to sell by way
of a private placement of units consisting of 50,000 shares of Class A common
stock and one three-year warrant to purchase 50,000 shares of Class A common
stock at an exercise price to be set by the Company during the negotiations with
investors buying the private placement. Harmonic will also provide financial
advisory services. Harmonic compensation includes an initial fee of $15,000 for
the first 90 day period of the Agreement and an additional $15,000 for each
90-day period if the Agreement is extended by the Company. The Company has
granted Harmonic an option to purchase three-year warrants consisting of 300,000
shares of the Company's common stock at $1.00 per share, 150,000 as of July 15,
1999 and an additional 150,000 shares when the initial $500,000 of the financing
is complete. To date that option has not been exercised by Harmonic. The Company
will also pay Harmonic an additional fee for any financing (including the
initial $3,000,000) of 8% of the amount raised by Harmonic as a cash fee and 8%
of any securities related to that financing. Harmonic is also entitled to the
following fees should the Company enter into a merger, consolidation,
reorganization, business combination or acquire another company where Harmonic
was the finder:
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10% of the aggregate value of the transaction for the first $2,000,000
of the transaction
8% of the aggregate value of the transaction for the second $2,000,000
of the transaction
6% of the aggregate of the transaction for the third $2,000,000 of the
transaction, and
4% of the aggregate of the transaction remaining value of the
transaction
Proceeds from the sale of Common Stock will be used to pay offering costs
and to expand the brand recognition of the Company's websites through
advertising and marketing and to fund website redesign that will in turn enhance
the commercial value of Websites as previously discussed. Proceeds will also be
used for general working capital, and general and administrative purposes.
The Company is dependent upon the proceeds of its proposed offering of
Common Stock to implement its business plan and to finance its working capital
requirements. The Company expects that if only the minimum proceeds of $500,000
are raised, it will be sufficient for the Company to fund its operations through
the end of October 1999. In that event, the Company will be required to
immediately seek additional financing. Should the Company's plans or its
assumptions change or prove to be inaccurate or offering proceeds are
insufficient to fund the Company's operations, the Company would be required to
seek additional financing sooner than anticipated. The Company may determine,
depending upon available opportunities, to seek debt or additional equity
financing to fund the cost of continuing expansion or other acquisitions. To the
extent that the Company incurs indebtedness or issues debt securities, it will
be subject to risks associated with such indebtedness, including interest rate
fluctuations, collateral arrangements and the possibility that cash flows may
prove inadequate to repay such indebtedness. The Company has no current
arrangements with respect to, or sources of, additional financing. There can be
no assurance that additional financing will be available to the Company on
commercially reasonable terms or at all. If the Company is unable to obtain the
financing it requires, its ability to meet its current plans for expansion could
be materially adversely affected.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a development stage enterprise whose principal assets today
are its investments in Classic Car and North Fork. From inception to date, the
Company has incurred significant operating losses resulting in its working
capital deficit and stockholders' deficit.
From inception through December 1998, the Company's sole business was in
the resource sector and the Company held certain mineral interests in the
Ukraine. The Company's interests were held in a joint venture as discussed in
Note 2 of Notes to Financial Statements. Through 1998, the Company made payments
and advances to the joint venture that aggregated $662,532. Such payments were
principally funded by sales of common stock from inception through 1998. Due to
poor market conditions and the uncertainty of financing the development of
mineral properties located in Ukraine, the Company elected to abandon these
mineral interests in the fourth quarter of 1998, which represented substantially
all of the Company's assets at that time. As a result, the Company wrote-off its
entire unrecovered investment in and advances to the joint venture as of
December 31, 1998.
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During 1997, 1998 and for the five months ended May 31, 1999, the Company
did not generated any significant operating revenues. However, with the
completion of the purchase of Classic Car Source , Incorporated and North Fork
Publishing Group Incorporated, as discussed previously, the Company intends to
enter the e-commerce marketplace to generate future revenues. By using
proprietary information management software and by using the Internet as an
e-commerce marketplace, Classic Car believes that it can provide participants
with enhanced selection and pricing for automotive products and services. In
return, the Company plans to charge a fee, on a transaction-by-transaction
basis, for all business conducted by third parties using Classic Car's websites.
The Company also expects to generate additional revenues by selling advertising
on its websites to third parties, an historical source of free or low revenue
banner advertising for Classic Car Source. Further, the Company expects North
Fork to earn increased service revenues by continuing to provide custom software
and website design services, Internet database services and custom e-commerce
software solutions to a variety of businesses seeking to maximize the use of the
Internet.
Expenses, other than the loss from write-off of investment in joint venture
as described above, have been for salaries, including consultants, professional
fees and general office expenses. As discussed previously, in the first quarter
of 1999, the Company made the strategic decision to change its business focus to
acquire, finance and operate Internet related companies that either have
existing websites or websites that are under development and are capable of
operating profitably. The Company believes that the substantial growth in
Internet commerce activities ("e-commerce") in recent years, when combined with
carefully selected acquisition and development opportunities, represents a
significant business opportunity. As the Company funds and develops its
business, general and administrative expenses are expected to increase
significantly.
Development Stage Company
- -------------------------
The Company is in the development stage and has a limited operating history
upon which an evaluation of its future performance and prospects can be made.
The Company's prospects must be considered in light of the risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business in an emerging and evolving industry. Since inception, the
Company has generated no significant revenues and has incurred operating losses
resulting in a working capital deficit. Inasmuch as the Company will continue to
have a high level of operating expenses and will be required to make significant
up-front expenditures in connection with the proposed development of its
business, the Company anticipates that losses will continue for at least the
next 12 months or until such time as the Company is able to generate sufficient
revenues to finance its operations and the costs of continuing expansion. There
can be no assurance that the Company will be able to generate significant
revenues or achieve profitable operations.
<PAGE>
14
Need for Additional Financing
- -----------------------------
The Company is dependent upon the proceeds of its proposed offering of
Common Stock to implement its business plan and to finance its working capital
requirements. Should the Company's plans or its assumptions change or prove to
be inaccurate or offering proceeds are insufficient to fund the Company's
operations, the Company would be required to seek additional financing sooner
than anticipated. Should Harmonic not be successful in securing the funds under
the terms of it agreement with EWRX, the Company will be required to find other
means and sources of funds.
There can be no assurances given that the Company will be successful in
generating sufficient revenues from its planned activities or in raising
sufficient capital to allow it to continue as going concern which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. These factors can affect the ability of the Company to
implement its general business plan including specific plans to re-design
Websites, to develop an on-line Specialty Automotive Aftermarket equipment
catalog, to implement a banner advertising sales program, to implement gift shop
sales and to implement a premium membership for its Website visitors, the
principal means of revenue generation for the Company's Internet markets.
ITEM 3. DESCRIPTION OF PROPERTY
Corporate Offices
- -----------------
Vancouver, British Columbia
The general corporate activities of EWRX are conducted in the Vancouver,
British Columbia office. The principal business office is #301 - 543 Granville
Street, Vancouver, BC, Canada V6C 1X8. These activities include financing,
investor relations, accounting, marketing and general corporate administration.
The Company has six full-time employees in Vancouver.
Bellingham, Washington
The Company's Internet operations are located in the Bellingham, Washington
office. Bellingham is strategically located near Seattle's major technological
and Internet employment base. The principal operations offices for Classic Car
Source , Incorporated and North Fork Publishing Inc. are located at 1200 Harris
Avenue, Suite 104, Bellingham, Washington 98225. The Company believes there are
sufficient technical personnel in this area as required for its business
activities. The activities in Bellingham include Website development and
maintenance, programming and Internet consulting and marketing services. There
are nine full-time employees in Bellingham.
<PAGE>
15
The Company's corporate and operations offices are leased facilities. The
Company's other property consists of office equipment, Website domains and
proprietary software.
Supporting Offices
- ------------------
The Company maintains an executive office in Denver, Colorado. This office
coordinates corporate governance, securities law compliance, legal and auditing
functions.
Trademarks and Domain Sites
- ---------------------------
The Company owns thirty-five (35) Websites domain names and adds new
domains as required with the expansion of its Web activities. Applications for
certain trademarks related to the domain names and the Company's Internet
business is anticipated in 1999. Currently the Company holds no trademarks.
<PAGE>
16
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 28, 1999,
regarding the record and beneficial ownership of the Common Stock with respect
to: (i) any individual or group of affiliated individuals or persons owning, of
record or beneficially, five per cent (5%) or more of the outstanding Common
Stock; (ii) the amount of shares of Common Stock owned by each executive officer
and director of the Company; and (iii) the number of shares of Common Stock
owned, of record or beneficially, by the directors of the Company as a group. No
shares of the Preferred Stock are issued and outstanding. Except as otherwise
indicated based upon information provided by such owners, the Company believes
that the beneficial owners listed below, have sole voting and investment power
with respect to such shares.
Shares of $0.001 Par Value
Name Common Stock Beneficially Owned Percent (1)
- ---- ------------------------------- -----------
Ronald C. Davis 1,667,832 (2) 12.99
Director, President &
Chief Executive Officer
2746 Yale Street
Vancouver, British Columbia
V5K 1C3
Richard P. Ott 350,000 (3) 2.69
Director & Treasurer
Vancouver, British Columbia
William R. Wilson 250,000 (4) 1.94
Director & Secretary
410 17th Street, Suite 1375
Denver, CO 80202
Dan Jondron 705,822 (5) 5.50
Director and President,
Classic Car Source, Inc.
1200 Harris Avenue, Suite 104
Bellingham, WA 98225
Carl LaFlamme 152,984 (6) 1.19
Vice President - Marketing
#301 - 543 Granville Street
Vancouver, British Columbia
V6C 1X8
Johnscott Lee 537,123 (7) 4.19
Classic Car Source, Inc.
1200 Harris Avenue, Suite 104
Bellingham, WA 98225
Peter Shepherd 1,459,000 11.53
2236 134th Street
Surrey, British Columbia
V4A 9T9
Directors and Officers as a group 3,588,761 28.50
(six persons)
<PAGE>
17
- ------------------------------
(1) In addition to 12,656,689 shares of common stock as of June 28, 1999, the
percentages noted in this section assume that 1,230,000 shares of Common
Stock pursuant to various option to existing management and directors which
may be issued in whole or in part within 60 days of the date of this
Registration Statement.
(2) Includes options to purchase 180,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
(3) Includes options to purchase 350,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
(4) Includes options to purchase 250,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
(5) Includes options to purchase 150,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
(6) Includes options to purchase 150,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
(7) Includes options to purchase 150,000 shares of Common Stock, which may be
exercised in whole or in part within 60 days of the Registration Statement.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS (1)
Directors, officers and key employees of the Company, their respective
positions and ages and the year in which each director was first elected, are
set forth in the following table. Additional information concerning each of
these individuals follows the table:
Director
Name Age Position Since
- ---- --- -------- -----
Officers and Directors
- ----------------------
Ronald C. Davis 48 President, Chief Inception in 1997
Executive Officer
and Director
Richard P. Ott (2) 64 Treasurer and Director December 1997
William R. Wilson (3) 56 Secretary and Director October 1998
Dan Jondron (4) 43 Director, President June 1999
Classic Car Source, Inc.
and North Fork
Publishing Group Inc.
<PAGE>
18
Name Age Position
- ---- --- --------
Other Key Employees
- -------------------
Johnscott Lee (5) 47 Vice President-Technology
Carl LaFlamme 40 Vice President, Marketing
Robert R. Gilmore 47 Acting Chief Financial Officer
- ------------------------------
(1) All Directors and Officers serve until their successors are elected.
(2) Mr. Ott provides part-time consulting services to the Company is addition
to his duties as a Director and officer.
(3) Mr. Wilson provides part-time consulting services to the Company is
addition to his duties as a Director and officer.
(4) Mr. Jondron has an Employment Agreement with the Company as President of
Classic Car Source and North Fork Publishing. See Employment and
Change-in-Control Arrangements.
(5) Mr. Lee has an Employment Agreement with the Company as Vice President. See
Employment and Change-in-Control Arrangements
Directors & Senior Officers of EWRX
- -----------------------------------
The four directors of EWRX Internet Systems Inc., Ronald C. Davis, Richard
P. Ott, William R. Wilson and Dan Jondron provide senior management for the
Company.
Mr. Davis, President and Chief Executive Officer, is responsible for
corporate operations, financing, legal, accounting and marketing. Mr. Ott
reviews corporate financing and business plans and participates in due
diligence. Mr. Wilson is responsible for market research, due diligence and
corporate governance. Mr. Jondron is responsible for overseeing the operations
of Classic Car and North Fork WebWrx.com.
<PAGE>
19
RONALD C. DAVIS, President and Chief Executive Officer
Mr. Davis with twenty-five years of corporate experience has headed
two high-technology companies and was the founder of EWRX. His experience
includes extensive work in corporate structure, financing, capital markets
and marketing.
In his career Mr. Davis has either directly been responsible for or
assisted a variety of public companies in the United States and Canada in
the high technology, biotech and industrial sectors. Mr. Davis maintains a
wide network of financial and investor contacts in North America and
Europe. Since 1997, Mr. Davis has been President and Chief Executive
Officer of the Company. From 1994 to 1997, he was a consultant to several
public technology companies.
RICHARD OTT, Director and Corporate Treasurer
Mr. Ott, has been chairman and president of PBK Engineering in
Vancouver, British Columbia, Canada, an international engineering company
active in International and Canadian industrial and resource development
projects. He currently is a director of a public entity and several private
entities and is a specialist in the development of business plans and
financial review of projects. Mr. Ott holds a B.Ap.Sc. from the University
of British Columbia.
From 1994 to present Mr. Ott has been a consultant to several public
and public resource and real estate companies. He serves as a director of
Banro Resource Corporation, a natural resource company listed on the
Toronto OTC (CDN).
WILLIAM R. WILSON, Director and Corporate Secretary
Mr. Wilson has been an executive officer in two public companies in
the United States and is the director of two public companies in Canada.
His specialties include merger and acquisitions, due diligence, marketing
and corporate governance. Mr. Wilson holds a Professional Degree in
Metallurgical Engineering from the Colorado School of Mines and MBA from
the University of Southern California.
Mr. Wilson serves as a director of Banro Resource Corporation and
Sheridan Reserve Incorporated listed on the Toronto OTC (CDN). From 1991 to
1997 he was Chairman of the Board of Gold King Consolidated Inc., traded on
the NASDAQ OTC (BB); from 1996 to 1997 he was Vice President - Operations
for Nevada Manhattan Mining Inc. traded on the NASDAQ OTC (BB); and from
1997 to 1999 he was President of Grant Reserve Corporation. All of the
above are natural resource companies.
<PAGE>
20
DAN JONDRON, Director, & President, Classic Car Source, Inc. and North Fork
Webwrx Inc.
In 1993, Mr. Jondron founded Classicar.com and developed the
associated company Classic Car Source a destination site on the Internet
for classic vehicle enthusiasts. In 1996, he created North Fork Publishing
Group to meet the expanding needs for custom web-to-database programming
and Website development. He added Classictruckshop.com in August of 1998.
Mr. Jondron has 13 years experience in the automotive aftermarket. As
a principal speaker and Internet marketing analyst for the Specialty
Equipment Marketing Association (SEMA), the world's largest automotive
aftermarket trade group, Jondron has been a major speaker at automotive
venues across the United States throughout the last four years.
JOHNSCOTT LEE, Vice President of Technology
Mr. Lee has 25 years of experience in software development and
programming. After earning a BS (1973) and an MS (1975) in Computer Science
from Purdue University, Lee was employed as a consultant and systems
analyst in industries that range from political consulting to radio
engineering. Previously, he held the position of Senior Analyst at FIServe
in Bellevue, Washington. In 1993, he Classicar.com and later North Fork
Publishing Group. He created e-commerce Websites for on-line ordering, user
registration, on-line inventory, audio and video, live chat and bulletin
boards. Through North Fork, he developed programs that allowed databases to
tie in directly with inventory, accounting and fulfillment systems and
software that collects marketing information from Website users. In his
position as Vice President of Technology, Mr. Lee oversees all Information
Systems and Information Technology issues.
CARL LAFLAMME, Vice President Marketing
Mr. LaFlamme oversees all advertising, marketing and public relations
for EWRX and its companies. His 20-year career has included advertising and
marketing.
Since 1994 Mr. LaFlamme has been a Marketing and Advertising
Consultant for businesses primarily in the internet industry, where he has
developed marketing strategies, consulted on Website development, and
provided creative development for several companies including EWRX's two
new acquisitions, Classic Car Source and North Fork Publishing Group.
<PAGE>
21
ROBERT R. GILMORE, Acting Chief Financial Officer
Mr. Gilmore has joined the EWRX as Chief Financial Officer and is
responsible for all areas of financial reporting. Mr. Gilmore has more than
twenty years of financial experience. He has served as audit partner for
the Denver office of Coopers & Lybrand, and during the last five years he
has served as Chief Financial Officer for Dakota Mining Corporation and as
an independent financial consultant..
There are no family relationships among directors or executive officers.
ITEM 6. EXECUTIVE COMPENSATION
Following is information regarding compensation paid during 1998 and from
inception to December 31, 1998 to the Chief Executive Officer of the Company. No
other director or executive officer received compensation in excess of $100,000
during either fiscal year.
Summary Compensation Table
--------------------------
Long-term Compensation
----------------------
Annual Compensation
---------------------- Restricted
Name and Position Year Salary Bonus Other Stock ($) Options(#)
- ----------------- ---- ------ ----- ----- ---------- ----------
Ronald C. Davis, 1998 $28,000 $0 $0 $0 0
President 1997 $ 0 $0 $ 0 $0 180,000
Chief Executive
Officer &
Director
Mr. Davis was issued 142,000 shares of Common Stock by the Company on
February 22, 1999 as debt repayment at a share price of $0.30 repaying the debt
to Mr. Davis of $42,600.
Aggregated Option Exercises and Fiscal Year-End Option Values
- ----------------------------------------------------------------
There were no exercise of the underlying stock options granted during 1998
by each executive named in the Summary Compensation Table.
<PAGE>
22
Compensation of Directors
- -------------------------
The Company does not currently pay any of its director's fees or any other
compensation for duties performed as directors, other than the options described
in Item 4. Mr. Davis and Mr. Jondron are salaried employees of the company with
Mr. Davis receiving a monthly salary in Canadian dollars equivalent to $6,700
and Mr. Jondron receiving a monthly salary of $7,083. Mr. Ott and Mr. Wilson
perform various consulting duties for the Company. Their services are reimbursed
at consulting fees consistent with similar services provided as consultants to
other companies with businesses comparable to EWRX.
Employment and Change-in-Control Arrangements
- ---------------------------------------------
The Company has employment agreements with Mr. Jondron and Mr. Lee. The
Company does not have an employment agreement with Mr. Davis but the directors
intend to provide to Mr. Davis a contract similar to the one it has with Mr.
Jondron.
Mr. Jondron has an Employment Agreement with the Company as President of
Classic Car Source and North Fork Publishing for three years ending May 4, 2002.
The Agreement contains certain non-compete clauses, benefits and termination
clauses. The Agreement provides for an annual salary of $85,000. The Agreement
has no "golden parachute" clause.
Mr. Lee has an Employment Agreement with the Company as President of
Classic Car Source and North Fork Publishing for three years ending May 4, 2002.
The Agreement contains certain non-compete clauses, benefits and termination
clauses. The Agreement provides for an annual salary of $75,000. The Agreement
has no "golden parachute" clause.
The Company has not re-priced any of the options it has granted since its
incorporation in 1997.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1998, $199,203 had been advanced to the Company by
certain shareholders, including the Chief Executive Officer of the Company. Of
the total, $199,203 was settled in the first quarter of 1999 through the
issuance of 664,010 Common Shares of the Company, representing a price of $0.30
per share, which was the approximate market price on date of issuance.
In connection with the joint venture holding certain mineral interest in
the Ukraine (refer to Management's Discussion and Analysis previously),
consulting fees of $21,208 were paid to Mr. Wilson, a Director of the Company.
There are no other transactions have taken place between the Company and
its directors and/or shareholders other than those disclosed in this
Registration Statement.
<PAGE>
23
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
- ------------
The Company is authorized to issue 100,000,000 shares of Common Stock with
a par value of $0.001 per share. As of August 27, 1999, there are currently
12,656,689 shares of Common Stock outstanding and options to purchase an
additional 1,600,000 shares of Common Stock at prices from $0.25 to $1.00 per
share. The holders of Common Stock are entitled to one vote for each share held
of record on each matter submitted to a vote of stockholders. There is no
cumulative voting for election of directors. Subject to the prior rights of any
series of Preferred Stock, which may from time to time be outstanding in the
future, the holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the board of directors out of funds legally
available therefor, and, upon the liquidation, dissolution or winding up of the
Company, are entitled to share ratably in all assets remaining after payment of
liabilities and payment of accrued dividends and liquidation preference on the
Preferred Stock, if any. Holders of Common Stock have no preemptive rights and
have no rights to convert their Common Stock into any other securities.
Preferred Stock
- ---------------
The Company is authorized to issue up to 500,000 shares of Preferred Stock
with a par value of $0.01 per share. The Preferred Stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by the
board of Directors, without further action by stockholders, and may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion, redemption rights and
sinking fund provisions.
PART 2
ITEM 1. MARKET PRICE AND DIVIDENDS OF THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The Common Shares of the Company trade on the NASD Over-the-Counter market
under the trading symbol "EWRX." From June 8, 1998 to May 25, 1999, the Common
Shares of the Company traded on the NASD Over-the-Counter market under the
trading symbol "ERRI". The following table sets forth for the period indicated
the high and low sale prices. The quotations below reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual
transactions. For current price information, EWRX shareholders are encouraged to
consult publicly available sources.
High Low
---- -----
1999
----
First Quarter $1.28 $0.23
Second Quarter $2.50 $1.125
1998
----
First Quarter (did not trade)
Second Quarter $2.00 $2.00
Third Quarter $2.00 $0.53
Fourth Quarter $0.6875 $0.14
1997 (did not trade in 1997)
----------------------------
<PAGE>
24
At June 28, 1999, the Company had 12,656,689 Common Shares outstanding and
had approximately sixty (60) shareholders of record.
The Company has no fixed dividend policy. The Board of Directors from time
to time having regard to operating results, capital requirements and general
financial condition and requirements will consider dividend distributions. The
Company has paid no dividends at any time. For the foreseeable future, it is
anticipated that the Company will use all available cash flows to finance its
growth and that dividends will not be paid to shareholders.
As of June 28, 1999, there are approximately 60 shareholders of record of
the Company's Common Stock. As of August 27, 1999 there are no shares of the
Company's Common Stock subject to outstanding options or warrants to purchase or
securities convertible into Common Stock of the Company other than that
disclosed under Item 2, Agreement to Sell Common Stock.
ITEM 2. LEGAL PROCEEDINGS
The Registrant is not a party to any pending legal proceeding nor is its
property the subject of any pending legal proceeding.
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
There have been no disagreements on accounting and financial disclosures
from the inception of the Company through to the date of this Registration
Statement.
On May 4, 1999, the Company's shareholders approved the appointment of
Jackson & Rhodes P.C. as the Company's auditors for the periods ending December
31, 1998 and December 31, 1999.
The Company's audited financial statements for the period ending December
31, 1997 and December 1998 and the un-audited financial statement for the period
May 31, 1999 are a part of this Registration Statement. These statements for the
years ending December 31, 1998 and 1997 were audited by Jackson & Rhodes, as
indicated in their report with respect hereto, and are included in reliance upon
the authority of said firm as experts in giving said report.
<PAGE>
25
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In January 1998, the Company issued 9,719,999 shares of Common Stock of the
Company to a group of investors representing sales of shares during the period
May 1997 through January 1998 under Section 504 of Regulation D as initial
capital for the Company. The company received $655,948.50 for those shares.
In February 1998, the Company issued 120,000 shares of Common Stock of the
Company to a group of investors under Section 504 of Regulation D as additional
capital for the Company. The company received $180,000 for those shares.
In July 1998, the Company issued 109,367 shares of Common Stock of the
Company to a group of investors under Section 504 of Regulation D as additional
capital for the Company. The company received $164,051 for those shares.
In February 1999, the Company issued 282,344 shares of Common Stock of the
Company to a group of investors for reduction of debt of $84,703.20 under Rule
504 of Regulation D. At the same time the Company issued 381,666 shares of
Common Stock of the Company to an affiliate for reduction of debt of $114,500
under Section 4(2) of the Securities Act of 1993.
In February 1999, the Company issued 299,999 shares of Common Stock of the
Company to a group of investors under Section 504 of Regulation D as additional
capital for the Company. The company received $214,489.80 for those shares.
In March 1999, the Company issued 1,217,600 shares of Common Stock of the
Company to a group of investors under Section 504 of Regulation D as additional
capital for the Company. The company received $426,250 for those shares.
In March 1999, the Company issued 64,286 shares of Common Stock of the
Company to Harmonic Research, Inc. as a finder's fee under Section 504 of
Regulation D as additional capital for the Company. The company recorded an
expense for this fee of $22,500.
In April 1999, the Company issued 281,428 shares of Common Stock of the
Company to a group of investors under Section 504 of Regulation D as additional
capital for the Company. The company received $197,250 for those shares.
In June 1999, the Company issued 1,450,000 shares of Common Stock of the
Company to the owners of CCI and North Fork as part of the acquisition of all of
the assets of these entities and 150,000 to a consultant as a finder fees for
that same acquisition under Section 4(2) of the Securities Act of 1933.
In June 1999, the Company issued 130,000 shares of Common Stock of the
Company to two consultants for finder's fees under Section 4(2) of the
Securities Act of 1933.
In July 1999, the Company cancelled 1,550,000 shares of Common Stock of the
Company received from consultants for incomplete consulting services previously
charges to the Company Section 504 of Regulation D.
<PAGE>
26
In addition to the above Common Share issuances, in 1997 the Company also
issued two million restricted Common Shares in connection with the acquisition
of its interest in the minerals joint venture in the Ukraine under Section 504
of Regulation D. In April 1999, the entire two million Common Share block was
cancelled by the Company in connection with relinquishing its interest in the
joint venture.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to its By-laws of the Company, Article VI, the Company has agreed
to indemnify its directors and officers, including payment of expenses as they
are incurred and in advance of the final disposition of any action, suit, or
proceeding. The Company as determined by the Board of Directors may similarly
indemnify employees, agents and other persons.
PART F/S FINANCIAL STATEMENTS
The financial statements for EWRX Internet Systems and Subsidiary, Classic
Car Source, Incorporated and North Fork Publishing Group, Inc. for the five
months ended May 31, 1999 (unaudited) and December 31, 1998 and 1997 are
presented on the following pages.
<PAGE>
EWRX INTERNET SYSTEMS INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
with
Independent Auditors' Report
EWRX INTERNET SYSTEMS INC.
AND SUBSIDIARY
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report for December 31, 1998 and 1997..................F-2
Consolidated Balance Sheets at May 31, 1999 (Unaudited)
and December 31, 1998 and 1997.............................................F-3
Consolidated Statements of Operations For the Five Months
Ended May 31, 1999 (Unaudited), the Year Ended
December 31, 1998, the Period from June 25, 1997
(Date of Inception) to December 31, 1997 and the
Cumulative Period from June 25, 1997 (Date of
Inception) to May 31, 1999 (Unaudited)................................F-4
Consolidated Statements of Changes in Stockholders'
Equity (Deficit) For the Five Months Ended May 31, 1999
(Unaudited), the Year Ended December 31, 1998 and the
Period from June 25, 1997 (Date of Inception)
to December 31, 1997........................................................F-5
Consolidated Statements of Cash Flows For the Five Months
Ended May 31, 1999 (Unaudited), the Year Ended
December 31, 1998 the Period from June 25, 1997
(Date of Inception) to December 31, 1997 and the
Cumulative Period from June 25, 1997 (Date of Inception)
to May 31, 1999 (Unaudited).................................................F-6
Notes to Consolidated Financial Statements...................................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
EWRX Internet Systems Inc.
We have audited the accompanying consolidated balance sheets of EWRX Internet
Systems Inc. (a Development Stage Company) and subsidiary as of December 31,
1998 and 1997, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the year ended December 31,
1998 and the period from June 25, 1997 (date of inception) to December 31, 1997.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of EWRX
Internet Systems Inc. (a Development Stage Company) as of December 31, 1998 and
1997, and the results of their operations and their cash flows for the year
ended December 31, 1998 and the period from June 25, 1997 (date of inception) to
December 31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant operating losses and its working
capital deficit raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
JACKSON & RHODES P.C.
Dallas, Texas
June 3, 1999
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Assets
<TABLE>
<CAPTION>
May 31, December 31,
------------
1999 1998 1997
--------- ---------- ---------
(Unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 352,275 $ - $ 302,982
Accounts receivable 6,836 6,264 -
Prepaids and other 4,489 1,815 6,432
--------- ---------- ----------
Total current assets 363,600 8,079 309,414
--------- ---------- ---------
Furniture and equipment, net of
depreciation 25,394 13,824 13,449
--------- ---------- ----------
Other assets:
Incorporation costs, net of
amortization - - 3,876
Investment in joint venture (Note 2) - - 300,000
--------- ---------- ----------
Total other assets - - 303,876
--------- ---------- ----------
$ 388,994 $ 21,903 $ 626,739
========== ============ ==========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Bank overdraft $ - $ 2,661 $ -
Accounts payable 26,158 93,731 13,930
Due to (from) related parties (10,114) 203,241 (2,531)
Agreement payable - - 44,000
--------- ---------- ----------
Total current liabilities 16,044 299,633 55,399
--------- ---------- ----------
Commitments and contingencies (Note 6) - - -
Stockholders' equity (deficit):
Preferred stock, $.01 par value,
500,000 shares authorized, none issued
and outstanding - - -
Common stock, $.001 par value, 50,000,000
shares authorized, 10,876,698 and 8,349,366
shares issued and outstanding 10,876 8,349 -
Additional paid-in capital 2,038,477 991,651 655,949
Deficit accumulated during development stage (1,673,614) (1,287,478) (84,609)
Accumulated other comprehensive income (2,789) 9,748 -
--------- ---------- ----------
Total stockholders' equity (deficit) 372,950 (277,730) 571,340
--------- ---------- ----------
$ 388,994 $ 21,903 $ 626,739
========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
Period from Period from
Five Months June 25, 1997 June 25, 1997
Ended Year Ended (Date of (Date of
Inception) Inception)
May 31, December 31, to December 31, to May 31,
1999 1998 1997 1999
------------- ------------ --------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
------------- ------------ --------------- -------------
Operating expenses:
Salaries 41,853 51,531 - 93,384
Consulting, management and
professional fees 58,273 147,173 68,982 274,428
Depreciation 1,836 4,165 1,846 7,847
General and administrative 284,174 337,468 13,781 635,423
------------- ------------ --------------- ------------
Total operating expenses 386,136 540,337 84,609 1,011,082
------------- ------------ --------------- ------------
Loss from operations (386,136) (540,337) (84,609) (1,011,082)
Loss from write-off of
investment (Note 2) - (662,532) - (662,532)
------------- ------------ --------------- ------------
Net loss $ (386,136) $ (1,202,869) $ (84,609) $ (1,673,614)
============= ============ =============== ============
Basic net loss per share $ (0.04) $ (0.15) $ (0.02)
============= ============ ===============
Weighted average common shares
outstanding 10,002,276 8,256,316 4,060,000
============= ============ ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Five Month Period Ended May 31, 1999 (Unaudited),
the Year Ended December 31, 1998
and the Period From June 25, 1997 (Date of Inception) to December 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated Accumulated
Additional During Other
Common Stock Unissued Paid-In Development Comprehensive
Shares Amount Stock Capital Stage Income Total
-------- --------- --------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net loss for the period - $ - $ - $ - $ (84,609) $ - $ (84,609)
Stock sold for cash (shares
unissued) at December 31, 1997 - - 655,949 - 655,949
--------- --------- --------- --------- ----------- ------------- -----------
Balance, December 31, 1997 - - 655,949 - (84,609) - 571,340
Issuance of shares 8,119,999 8,120 (655,949) 647,829 - - -
Sale of common stock for cash 229,367 229 - 343,822 - - 344,051
Net loss - - - - (1,202,869) - (1,202,869)
Currency translation income - - - - - 9,748 9,748
----------
Comprehensive income (loss) - - - - - - (1,193,121)
--------- --------- --------- --------- ----------- ------------- -----------
Balance, December 31, 1998 8,349,366 8,349 - 991,651 (1,287,478) 9,748 (277,730)
-
Sale of common stock for cash 1,863,313 1,863 - 688,796 - - 690,659
Stock issued on settlement
of debt 664,010 664 - 198,538 - - 199,202
Stock options issued as
compensation - - - 159,492 - - 159,492
Currency translation income - - - - - (12,537) (12,537)
Net loss - - - - (386,136) - (386,136)
----------
Comprehensive income (loss) - - - - - - (398,673)
--------- --------- --------- --------- ----------- ------------- ----------
Balance, May 31, 1999
(Unaudited) 10,876,689 $ 10,876 $ - $2,038,477 $(1,673,614) $ (2,789) $ 372,950
========== ========== =========== ========== =========== ============= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
Period from Period from
June 25, 1997 June 25, 1997
Five Months (Date of (Date of
Ended Year Ended Inception) Inception)
May 31, December 31 to December 31, to May 31,
1999 1998 1997 1999
------------ ------------ --------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net loss $ (386,136) $(1,202,869) $ (84,609) $ (1,673,614)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 1,836 4,165 1,846 7,847
Write-off of investment in joint venture - 662,532 - 662,532
Translation adjustment (12,537) 9,748 - (2,789)
Stock options compensation 159,492 - - 159,492
Changes in assets and liabilities:
Receivables (572) (6,264) - (6,836)
Prepaid expenses (2,674) 4,617 (6,432) (4,489)
Incorporation costs - 3,168 (4,228) -
Accounts payable (67,573) 79,801 13,930 26,158
------------ ------------ --------------- --------------
Net cash provided by (used in) operating
activities (308,164) (445,102) (79,493) (831,699)
------------ ------------ --------------- --------------
Cash flows from investing activities:
Investment in and advances to joint venture - (362,532) (300,000) (662,532)
Purchase of furniture and equipment (13,406) (3,832) (14,943) (33,241)
Advances from (to) shareholders (213,355) 205,772 (2,531) (10,114)
------------ ------------ --------------- --------------
Net cash used in investing activities (226,761) (160,592) (317,474) (705,887)
------------ ------------ --------------- --------------
Cash flows from financing activities:
Bank overdraft (2,661) 2,661 - -
Amount due on investment in joint venture - (44,000) 44,000 -
Issuance of convertible debt 199,202 - - 199,202
Common stock sold for cash 690,659 344,051 655,949 1,690,659
------------ ------------ --------------- --------------
Net cash provided by financing activities 887,200 302,712 699,949 1,889,861
------------ ------------ --------------- --------------
Net increase (decrease) in cash 352,275 (302,982) 302,982 352,275
Cash at beginning of year - 302,982 - -
------------ ------------ --------------- --------------
Cash at end of year $ 352,275 $ - $ 302,982 $ 352,275
============ ============ =============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
-----------------------
The Company was incorporated on June 25, 1997 in the State of Nevada. The
consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Europa Resources (Canada), Inc., a company
incorporated in British Columbia. Since the Company is in the development
stage of its existence, it has had no sa es since inception and has devoted
its efforts primarily to raising capital, exploring investment
opportunities, and administrative functions.
In 1998, the Company changed its name from Europa Resources, Inc. to EWRX
Internet Systems Inc. See Note 7 for information regarding acquisitions
subsequent to May 31, 1999.
Basis of Presentation
---------------------
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty. The Company is reporting cumulative net losses
since inception of $1,673,614 as of May 31, 1999. The following is a
summary of management's plan to raise capital and generate additional
operating funds.
Management intends to file a Form 10 with the Securities and Exchange
Commission ("SEC") in the third quarter of 1999. Management expects to file
an SB-2 registration statement with the SEC in conjunction with a private
placement financing for up to $3,000,000. The number of shares issued as
part of the private placement financing is dependent upon market prices.
The shares issued as part of the private placement will become
non-restricted shares upon Form SB-2 being declared effective by the SEC.
The funds raised through the private placements are intended to be used for
development of the various aspects of the Classic Car Source, Inc. and
North Fork Publishing Group, Inc. (Note 7) business and to be used for
general and administrative expenses for the balance of 1999 and in the
first quarter of 2000. Management intends to secure additional funding in
2000 through a secondary offering. The amount of that offering will be
dependent upon working capital requirements of the Company for the years
2000-2002 and as developed by management in the fourth quarter 1999.
F-7
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Presentation (Continued)
---------------------
On July 15, 1999, the Company entered into an agreement with Harmonic
Research, Inc. ("Harmonic"), an investment fund management company to sell,
on a best-efforts basis, by way of a private placement units consisting of
50,000 shares of Class A common stock and one three-year warrant to
purchase 50,000 shares of Class A common stock at an exercise price to be
set by the Company during the negotiations with investors buying the
private placement. Harmonic will provide other financial advisory services.
Harmonic compensation includes an initial fee of $15,000 for the first
90-day period of the Agreement and an additional $15,000 for each 90-day
period if the Agreement is extended by the Company. The Company has granted
Harmonic an option to purchase three-year warrants consisting of 300,000
shares of the Company's common stock at $1.00 per share, 150,000 as of July
15, 1999 and an additional 150,000 shares when the initial $500,000 of the
financing is complete. The Company will also pay Harmonic an additional fee
for any financing including the initial $3,000,000 of 8% of the amount
raised by Harmonic as a cash fee and 8% of any securities related to that
financing. Harmonic is also entitled to the following fees should the
Company enter into a merger, consolidation, reorganization, business
combination or acquire another company where Harmonic was the finder:
10% of the aggregate value of the transaction for the first $2,000,000
of the transaction,
8% of the aggregate value of the transaction for the next $2,000,000
of the transaction,
6% of the aggregate of the transaction for the next $2,000,000 of the
transaction, and
4% of the aggregate of the transaction for the remaining value of the
transaction.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany balances and transactions
are eliminated in consolidation.
Use of Estimates and Assumptions
--------------------------------
Preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
F-8
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIEs (Continued)
Cash and Cash Equivalents
-------------------------
The Company considers all liquid investments, with an original maturity of
three months or less when purchased, to be cash equivalents.
Furniture and Equipment
------------------------
Furniture and equipment are stated at cost. Depreciation is computed
principally by the straight-line method based on the estimated useful lives
of five to seven years.
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars. Foreign
denominated monetary assets and liabilities are translated to their United
States dollar equivalents using foreign exchange rates which prevailed at
the balance sheet date. Non-monetary items are translated at historical
exchange rates, except for items carried at market value, which are
translated at the rate of exchange in effect at the balance sheet date.
Revenue and expenses are translated at average rates of exchange during the
year. Exchange gains or losses arising on foreign currency translation are
included in the determination of operating results.
Net Loss Per Common Share
-------------------------
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128").
SFAS 128 provides a different method of calculating earnings per share than
was formerly used in APB Opinion 15. SFAS 128 provides for the calculation
of basic and diluted earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding
for the period. Dilutive earnings per share reflects the potential dilution
of securities that could share in the earnings of the Company. The Company
was required to adopt this standard in the fourth quarter of calendar 1997.
Because the Company's potential dilutive securities are antidilutive, the
accompanying presentation is only of basic loss per share.
F-9
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
------------------------
The Company has issued stock options. Compensation costs arising from such
options will be recorded as an expense. The measurement date for
determining compensation costs is the date of the grant. Compensation cost
is the excess, if any, of the market value of the stock at date of grant
over the amount the employee must pay to acquire the stock. The Company
measures compensation costs using the intrinsic value based method of
accounting for stock issued to employees.
Income taxes
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). The objective of the asset and liability method is to
establish deferred tax assets and liabilities for the temporary differences
between the financial reporting basis and the tax basis of the Company's
assets and liabilities at enacted tax rates expected to be in effect when
such amounts are realized or settled. Under SFAS 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
2. INVESTMENT IN JOINT VENTURE
In 1997, the Company acquired a 49% interest in the Granat Joint Venture
("Granat"), a Ukrainian-Canadian joint venture between the Company and
Ivaniv Special Quarry ("ISQ"), an open joint-stock company of the Ukraine.
The Granat interest was purchased from Aurora Pacific Consulting &
Development Corp. ("Aurora") for $300,000 and 2,000,000 restricted common
shares. Aurora is controlled by a former director of the Company. Granat
was formed for the purposes of mining, production and marketing of
industrial garnets and related products in the Ukraine. In addition, the
Company acquired control over 25% of the shares of ISQ.
During 1998 and 1997, the Company made payments toward the purchase of its
interest in Granat, the purchase of ISQ shares and advances to Granat as
follows:
For the period ended December 31, 1997 $ 300,000
For the period ended December 31, 1998 362,532
-----------
$ 662,532
===========
F-10
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
2. INVESTMENT IN JOINT VENTURE (Continued)
Subsequent to year end, as a result of a significant downturn in the
Ukrainian and Russian economics, the Company relinquished its interest in
Granat and ISQ to Aurora in return for the 2,000,000 restricted common
shares and a release from any ongoing obligations under the original
purchase agreement. Consequently, at December 31, 1998 the investment in
Granat has been written off, resulting in a loss of $662,532. Because the
2,000,000 common shares were held in escrow as a contingency, and
rescinded, and an additional 1,600,000 shares (Note 5) were also rescinded,
no accounting has been made for their issuance and rescission.
3. RELATED PARTY TRANSACTIONS
As of December 31, 1998, $203,241 has been advanced to the Company by
certain shareholders. The majority of this debt was settled subsequently by
the issuance of common shares.
During the year ended December 31, 1998, and the five months ended May 31,
1999, the following amounts were paid to directors and former directors of
the Company.
May 31, December 31
1999 1998
--------- ----------
Management fees and salaries $ 19,160 $ 52,057
Consulting fees on the Granat project 25,371 21,208
Expense reimbursements 26,432 22,139
--------- ----------
$ 70,963 $ 95,404
========= ==========
4. INCOME TAXES
There were no temporary differences between the Company's tax and financial
bases, except for the Company's net operating loss carryforwards amounting
to approximately $1,400,000, $1,125,000 and $75,000 at May 31, 1999 and
December 31, 1998 and 1997, respectively. These carryforwards will expire,
if not utilized, in 2012-2014.
The Company has deferred tax assets amounting to approximately $475,000,
$425,000 and $25,000 at May 31, 1999, and December 31, 1998 and 1997,
respectively, related to the net operating carryovers. The realization of
the benefits from these deferred tax assets appears uncertain due to going
concern questions. Accordingly, a valuation allowance has been recorded
which offsets the deferred tax assets at the end of each period.
F-11
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
5. CAPITAL STOCK
Subsequent to December 31, 1998, the 2,000,000 shares issued to Aurora
(Note 2) were returned to the Company and cancelled. An additional
1,600,000 shares related to Granat were also returned to the Company
subsequent to December 31, 1998 and cancelled.
The Company has issued compensatory stock options to employees and
directors. A summary of the status of stock options is set forth below:
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended
May 31, 1999 December 31, 1998 December 31, 1997
--------------------- ---------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Stock Options Shares Price Shares Price Shares Price
------------- -------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of period 500,000 $ 0.25 500,000 $ 0.25 - $ -
Granted 1,100,000 $ 0.57 - $ - 500,000 $ 0.25
Exercised - $ - - $ - - $ -
Forfeited/expired - $ - - $ - - $ -
--------- ------- ------- -------- ------- --------
Outstanding, end of period 1,600,000 $ 0.47 500,000 $ 0.25 500,000 $ 0.25
========= ======= =======
Options exercisable,
end of period 1,600,000 $ 0.47 500,000 $ 0.25 500,000 $ 0.25
========= ======= =======
</TABLE>
Fair value for the stock underlying stock options was determined using
information available from other stock sale transactions at or near the
grant date. In management's opinion, these transactions between willing
parties included the best information available at the time of grant to
estimate the market value of the common stock of the Company. These fair
values were used to determine the compensatory components of the stock
options granted during the year ended December 31, 1997 and the five months
ended May 31, 1999.
F-12
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
5. CAPITAL STOCK (Continued)
Compensation costs for employee options are recognized as an expense in an
amount equal to the excess of the fair market value of the stock at the
date of measurement over the amount the employee must pay. The measurement
date is generally the grant date. Under this method, compensation expense
amounted to $159,242 for the five months ended May 31, 1999. There is no
future compensation expense to be recorded in subsequent periods as of May
31, 1999. Using the fair value method, the fair value of each option grant
is estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted-average assumptions used for grants in
1999: dividend yield of 0.0 percent; expected volatility of 140 percent;
risk free interest rates of 4.5 percent; expected lives of one year. Using
the fair value method of FASB Statement 123 would have had no effect on the
Company's net loss for 1997, as the fair value of the options issued was
nominal. Using the fair value method of FASB Statement 123, net loss and
net loss per common share for the five months ended May 31, 1999 would have
been $(520,183) and $(.05), respectively.
6. COMMITMENTS AND CONTINGENCIES
Lease Commitments
-----------------
The Company leases office space under an operating lease which expires
December 31, 1999. Future minimum rental commitments for 1999 amount to
$13,000.
Rent expense for the five months ended May 31, 1999 and the years ended
December 31, 1998 and 1997 amounted to $13,387, $43,542 and $1,450,
respectively.
Fair Value of Financial Instruments
-----------------------------------
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities including
cash and cash equivalents and notes and accounts payable approximate
carrying value due to the short-term maturity of the instruments.
Concentration of Credit Risk
----------------------------
The Company invests its cash and certificates of deposit primarily in
deposits with major banks. Certain deposits, at times, are in excess of
federally insured limits. The Company has not incurred losses related to
its cash.
F-13
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
6. COMMITMENTS AND CONTINGENCIES (Continued)
Uncertainty Due to the Year 2000 Issue
--------------------------------------
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000 and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could impact the
Company's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 issue affecting the Company
will be fully resolved.
Employment Agreements
---------------------
The Company has employment agreements with two officers. Each agreement is
for three years beginning May 4, 1999 and contains certain non-compete
clauses, benefits, and termination clauses. The agreements provide for
aggregate salaries for the two officers of $160,000 annually.
7. SUBSEQUENT EVENTS
Acquisitions
------------
The Company entered into an agreement dated April 11, 1999, to acquire all
the issued and outstanding shares of Classic Car Source, Inc. ("CCS") and
North Fork Publishing Group, Inc. ("NFPG"). CCS is a privately-held, state
of Washington-based company which owns two websites, Classicar.com and
Classictruckshop.com, both of which are destination class websites on the
Internet. NFPG is an affiliated, privately-held, state of Washington-based
company which provides website design and Internet consulting services. The
Company has agreed to pay $133,333 cash plus 1,000,000 restricted common
shares for CCS and $66,667 cash plus 450,000 restricted common shares for
NFPG and 150,000 common shares as a finder's fee. The above transactions
closed on June 15, 1999.
The transaction will be accounted for as a purchase. Accordingly, the
Company's financial statements in 1999 will include the operations of CCS
and NFPG from the date of acquisition. Under purchase accounting, the total
purchase price will be allocated to the tangible and intangible assets and
liabilities of the acquirees based upon their respective estimated fair
values as of the closing date based upon valuations and other analyses. The
estimated purchase price and preliminary adjustments to the historical book
value of the acquirees are as follows:
Purchase price, based on value
of common stock issued plus cash paid $ 1,960,000
Book value of net liabilities acquired 17,345
-----------
Purchase price in excess of net liabilities acquired $ 1,977,345
===========
Goodwill $ 1,977,345
===========
F-14
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
7. SUBSEQUENT EVENTS (Continued)
Acquisitions (continued)
------------
The following unaudited pro forma consolidated information for the year
ended December 31, 1998 give effect to the transaction as if it had
occurred at the beginning of 1998. The unaudited pro forma consolidated
information is presented for informational purposes only and is not
necessarily indicative of the results of operations that would have been
achieved had the transaction been completed as of the beginning of that
year, nor are they indicative of the Company's future results of
operations.
Revenues $ 241,184
-----------
Loss from continuing operations $(1,425,271)
-----------
Net loss $(1,425,271)
-----------
Net loss per common share:
Basic $ (0.15)
-----------
Diluted $ (0.15)
-----------
Capital Stock
-------------
Subsequent to year end, the Company completed the following financings:
Price per
Issued for Cash Shares Share Value
--------------- --------- --------- --------
February 22, 1999 299,999 $ 0.30 $ 90,000
March 26, 1999 1,217,600 $ 0.35 426,160
Less stock issued for
finder's fee 64,286 $ 0.35 (22,500)
April 1, 1999 281,428 $ 0.70 196,999
--------- --------
1,863,313 $690,659
========= ========
Issued on settlement of
debt and shareholder
loans February 22, 1999 664,010 $ 0.30 $199,202
--------- --------
F-15
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
8. NEW ACCOUNTING PRONOUNCEMENTS
SFAS 129
--------
Statement of Financial Accounting Standards No. 129, Disclosure of
Information about Capital Structure ("SFAS 129"), effective for periods
ending after December 15, 1997, establishes standards for disclosing
information about an entity's capital structure. SFAS 129 requires
disclosure of the pertinent rights and privileges of various securities
outstanding (stock, options, warrants, preferred stock, debt and
participating rights) including dividend and liquidation preferences,
participant rights, call prices and dates, conversion or exercise prices
and redemption requirements. Adoption of SFAS 129 has had no effect on the
Company as it currently discloses the information specified.
SFAS 130
--------
Statement of Financial Accounting Standards (SFAS) 130, "Reporting
Comprehensive Income", establishes standards for reporting and display of
comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except
those resulting from investments by owners and distributions to owners.
Among other disclosures, SFAS 130 requires that all items that are required
to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements. The Company has
reflected its foreign currency translation adjustment as other
comprehensive income in the accompanying consolidated statement of changes
in stockholders' equity.
SFAS 131
--------
SFAS 131, "Disclosure about Segments of a Business Enterprise", establishes
standards for the way that public enterprises report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. This accounting
pronouncement has had no effect on the Company's financial statements for
the periods presented. The Company will consider its effect on the
consolidated financial statements in the future as a result of the
acquisitions described in Note 7.
F-16
<PAGE>
EWRX INTERNET SYSTEMS INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to Consolidated Financial Statements
Five Months Ended May 31, 1999 (Unaudited), Year Ended December 31, 1998
and the Period from June 25, 1997 (Date of Inception) to December 31, 1997
8. NEW ACCOUNTING PRONOUNCEMENTS (Continued)
SFAS 132
--------
Statement of Financial Accounting Standards (SFAS) 132, "Employers'
Disclosure about Pensions and Other Postretirement Benefits," revises
standards for disclosures regarding pensions and other postretirement
benefits. It also requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis. This statement does not change the measurement or recognition of
the pension and other postretirement plans. The financial statements are
unaffected by implementation of this new standard.
SFAS 133
--------
Statement of Financial Accounting Standards (SFAS) 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred
to as derivatives) and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as
(a) a hedge of the exposure to changes in the fair value of a recognized
asset or liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction, or (c) a hedge
of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for sale security,
or a foreign-currency-denominated forecasted transaction. Because the
Company has no derivatives, this accounting pronouncement has no effect on
the Company's financial statements.
F-17
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
FINANCIAL STATEMENTS
May 31, 1999 (Unaudited) and December 31, 1998 and 1997
with
Independent Auditors' Report
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report for December 31, 1998 and 1997...............F-2
Balance Sheets at May 31, 1999 (Unaudited)
and December 31, 1998 and 1997.......................................F-3
Statements of Operations for the Five Months Ended
May 31, 1999 (Unaudited) and for the Years Ended
December 31, 1998 and 1997...........................................F-4
Statements of Changes in Stockholders' Equity (Deficit)
for the Five Months Ended May 31, 1999 (Unaudited)
and the Years Ended December 31, 1998 and 1997.......................F-5
Statements of Cash Flows for the Five Months Ended
May 31, 1999 (Unaudited) and the Years Ended
December 31, 1998 and 1997...........................................F-6
Notes to Financial Statements.............................................F-7
F-1
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
Notes to Financial Statements
INDEPENDENT AUDITORS' REPORT
Board of Directors
Classic Car Source, Incorporated
We have audited the accompanying balance sheets of Classic Car Source,
Incorporated as of December 31, 1998 and 1997, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Classic Car Source,
Incorporated as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Jackson & Rhodes P.C.
Dallas, Texas
July 30, 1999
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets
May 31, December 31,
--------------------
1999 1998 1997
---------- -------- ---------
(Unaudited
<S> <C> <C> <C>
Current assets:
Cash $ 25,665 $ 4,187 $ 3,068
Accounts receivable 8,581 21,434 8,400
--------- --------- ---------
Total current assets 34,246 25,621 11,468
--------- --------- ---------
Property and equipment:
Furniture and fixtures 1,395 1,395 1,395
Computer equipment 18,044 18,044 20,599
--------- --------- ---------
19,439 19,439 21,994
Less accumulated depreciation (15,527) (14,745) (12,889)
--------- --------- ---------
Net property and equipment 3,912 4,694 9,105
--------- --------- ---------
Other assets:
Goodwill, net of amortization of
$3,482 and $1,900 respectively 15,518 17,100 -
--------- --------- ---------
$ 53,676 $ 47,415 $ 20,573
========= ========= =========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 36,816 $ 39,431 $ 45,434
Due to affiliates 29,936 - -
Notes payable - 4,444 1,844
--------- --------- ---------
Total current liabilities 66,752 43,875 47,278
Commitments and contingencies (Note 4)
Stockholders' equity (deficit):
Common stock, $1.00 par value, 100,000
shares authorized; 42,287, 42,789 and
49,074 shares issued and outstanding 42,287 42,789 49,074
Additional paid-in capital - - 53,486
Common stock to be issued (Note 5) 446,579 369,582 184,791
Accumulated deficit (501,942) (408,831) (314,056)
--------- --------- ---------
Total stockholders' equity (deficit) (13,076) 3,540 (26,705)
--------- --------- ---------
$ 53,676 $ 47,415 $ 20,573
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Five Months Years Ended
Ended May 31, December 31,
-------------------
1999 1998 1997
------------ -------- ---------
(Unaudited)
<S> <C> <C> <C>
Revenues:
Advertising $ 26,172 $ 86,021 $ 45,085
Design 1,250 40,233 28,100
Networking 2,537 30,105 11,875
-------- -------- --------
Total revenues 29,959 156,359 85,060
-------- -------- --------
Expenses:
Operating 27,916 36,440 42,404
General and administrative 90,452 213,431 249,193
-------- -------- --------
Total expenses 118,368 249,861 291,597
-------- -------- --------
Loss from operations (88,409) (93,502) (206,537)
Other income - 1,806 -
-------- -------- --------
Net loss $(88,409) $(91,696) $(206,537)
========= ======== =========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Five Months Ended May 31, 1999 and Years Ended
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Shares Accumulated
------------------------ To be
Shares Amount Capital Issued Deficit Total
---------- ----------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 47,915 $ 47,915 $ 43,055 $ - $(107,519) $ (16,549)
Common stock issued for services 264 264 2,376 - - 2,640
Common stock issued for contract fee 895 895 8,055 - - 8,950
Common stock to be issued for services
(Note 5) - - - 184,791 - 184,791
Net loss - - - - (206,537) (206,537)
------ -------- -------- ---------- --------- ---------
Balance, December 31, 1997 49,074 49,074 53,486 184,791 (314,056) (26,705)
Common stock issued for wages 96 96 864 - - 960
Common stock issued for contract fees 286 286 2,574 - - 2,860
Common stock issued for acquisition 1,900 1,900 17,100 - - 19,000
Common stock to be issued for services
(Note 5) - - - 184,791 - 184,791
Common stock redemptions (8,567) (8,567) (74,024) - (3,079) (85,670)
Net loss - - - - (91,696) (91,696)
------ -------- -------- ---------- --------- ---------
Balance, December 31, 1998 42,789 42,789 - 369,582 (408,831) 3,540
Common stock to be issued for services
(Note 5) - - - 76,997 - 76,997
Common stock redemptions (502) (502) - - (4,702) (5,204)
Net loss - - - - (88,409) (88,409)
------ -------- -------- ---------- --------- ---------
Balance, May 31, 1999 (unaudited) 42,287 $ 42,287 $ - $ 446,579 $(501,942) $ (13,076)
======= ======== ======== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Five Months
Ended
May 31, December 31,
--------------------
1999 1998 1997
--------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Net loss $ (88,409) $(91,696) $(206,537)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Common stock issued for services and fees 76,996 188,611 196,381
Depreciation and amortization 2,364 5,269 5,941
Changes in assets and liabilities:
Accounts receivable 12,853 (1,806) -
Income taxes receivable - (13,033) (7,050)
Accounts payable (2,615) (6,005) (733)
--------- -------- ---------
Net cash provided by (used in)
operating activities 1,189 81,340 (11,998)
--------- -------- ---------
Cash flows from investing activities:
Disposal (purchase) of furniture and
equipment - 2,848 (324)
Shareholder advances 25,493 2,601 15,702
--------- -------- ---------
Net cash provided by
investing activities 25,493 5,449 15,378
--------- -------- ---------
Cash flows from financing activities:
Common stock redemptions (5,204) (85,670) -
--------- -------- ---------
Net cash provided used in
financing activities (5,204) (85,670) -
--------- -------- ---------
Net increase in cash 21,478 1,119 3,380
Cash at beginning of year 4,187 3,068 (312)
--------- -------- ---------
Cash at end of year $ 25,665 $ 4,187 $ 3,068
========== ======== =========
</TABLE>
Non-cash transactions:
During 1998, the Company acquired Classic Truck Shop for 1,900 shares of
common stock valued at $19,000 (Note 3).
See accompanying notes to financial statements.
F-6
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The Company was incorporated on March 13, 1996, under the state of
Washington Business Corporation Act. The Company was established to create
a source of on-line publishing of information and entertainment for classic
vehicle collectors.
Use of Estimates and Assumptions
--------------------------------
Preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all liquid investments, with an original maturity of
three months or less when purchased, to be cash equivalents.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation is computed
principally by the straight-line method based on the estimated useful lives
of five to seven years.
Income Taxes
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). The objective of the asset and liability method is to
establish deferred tax assets and liabilities for the temporary differences
between the financial reporting basis and the tax basis of the Company's
assets and liabilities at enacted tax rates expected to be in effect when
such amounts are realized or settled. Under SFAS 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
2. RELATED PARTY TRANSACTIONS
As of December 31, 1998 and 1997, $4,444 and $1,844, respectively, has been
advanced to the Company by certain shareholders.
F-7
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
2. RELATED PARTY TRANSACTIONS (Continued)
During 1997, $28,667 was advanced from the Company to certain shareholders.
The following amounts were paid to shareholders of the Company:
May 31, December 31,
1999 1998 1997
------ ------ -----
Management fees $ 2,625 $ 1,200 $ 1,200
Consulting fees 19,137 19,384 15,583
-------- -------- --------
$ 21,762 $ 20,584 $ 16,783
======== ======== ========
As of May 31, 1999, the Company was indebted to NFPG and EWRX (see Note 7)
in the aggregate amount of $29,936.
3. ACQUISITION
In July 1998, the Company acquired a sole proprietorship, Classic Truck
Shop Online Magazine ("CTS") for 1,900 shares of common stock valued at
$19,000. The acquisition has been accounted for as a purchase. The entire
purchase price has been assigned to goodwill. Amortization of goodwill
amounted to $1,900 for 1998. No pro forma financial information, as if the
acquisition had been made as of the beginning of the year, has been made
since operations of CTS were nominal prior to acquisition.
4. COMMITMENTS AND CONTINGENCIES
Lease Commitments
-----------------
The Company leases office space under an operating lease which expires
April 30, 2000. Future minimum rental commitments for the remaining years
amounts to $9,803 in 1999 and $4,902 in 2000.
Rent expense amounted to $2,615 for the five month period ended May 31,
1999, and $4,290 and $4,155 for the years ended December 31, 1998 and 1997,
respectively.
F-8
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
4. COMMITMENTS AND CONTINGENCIES (Continued)
Fair Value of Financial Instruments
-----------------------------------
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities including
cash and cash equivalents and notes and accounts payable approximate
carrying value due to the short-term maturity of the instruments.
Concentration of Credit Risk
----------------------------
The Company invests its cash and certificates of deposit primarily in
deposits with major banks. Certain deposits, at times, are in excess of
federally insured limits. The Company has not incurred losses related to
its cash.
Revenue Concentration
---------------------
One customer comprised approximately 10% of the Company's revenues in 1998.
Uncertainty Due to the Year 2000 Issue
--------------------------------------
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000 and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could impact the
Company's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 issue affecting the Company
will be fully resolved.
5. COMMON STOCK
During June 1999, the Company issued 24,267 shares to certain employees and
a consultant as compensation for services over the previous 29 months. The
Company has valued the shares at $18.40 each, aggregating $446,578 and has
accounted for the shares as an expense during 1997, 1998 and 1999 as common
stock to be issued.
F-9
<PAGE>
CLASSIC CAR SOURCE, INCORPORATED
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
6. INCOME TAXES
There were no material temporary differences between the Company's tax and
financial bases, except for the Company's net operating loss carryforwards
amounting to approximately $500,000, $400,000 and $300,000 at May 31, 1999
and December 31, 1998 and 1997, respectively. These carryforwards will
expire, if not utilized, in 2012-2014.
The Company has deferred tax assets amounting to approximately $170,00,
$135,000 and $102,000 at May 31, 1999, and December 31, 1998 and 1997,
respectively, related to the net operating carryovers. The realization of
the benefits from these deferred tax assets appears uncertain due to going
concern questions. Accordingly, a valuation allowance has been recorded
which offsets the deferred tax assets at the end of each period.
7. SUBSEQUENT EVENTS
All of the Company's outstanding common shares and all the outstanding
common shares of North Fork Publishing Group, Inc. ("NFPG"), an affiliated
company were acquired in June 1999 by EWRX Internet Systems Inc. ("EWRX").
EWRX has agreed to pay $133,333 cash plus 1,000,000 restricted common
shares for the Company and $66,667 cash plus 450,000 restricted common
shares for NFPG and 150,000 common shares as a finders fee. The above
transactions closed on June 15, 1999.
F-10
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
FINANCIAL STATEMENTS
May 31, 1999 (Unaudited) and December 31, 1998 and 1997
with
Independent Auditors' Report
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report for December 31, 1998 and 1997............F-2
Balance Sheets at May 31, 1999 (Unaudited)
and December 31, 1998 and 1997....................................F-3
Statements of Operations
for the Five Months Ended May 31, 1999 (Unaudited) and
for the Years Ended December 31, 1998 and 1997....................F-4
Statements of Changes in Stockholders' Equity (Deficit)
for the Five Months Ended May 31, 1999 (Unaudited) and
for the Years Ended December 31, 1998 and 1997....................F-5
Statements of Cash Flows for the Five Months Ended
May 31, 1999 (Unaudited) and the Years Ended
December 31, 1998 and 1997........................................F-6
Notes to Financial Statements..........................................F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
North Fork Publishing Group, Inc.
We have audited the accompanying balance sheets of North Fork Publishing Group,
Inc. as of December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of North Fork Publishing Group,
Inc. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Jackson & Rhodes P.C.
Dallas, Texas
July 30, 1999
F-2
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
BALANCE SHEETS
Assets
<TABLE>
<CAPTION>
May 31, December 31,
------------------------
1999 1998 1997
------------ --------- --------
(Unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 20,537 $ 11,383 $ 123
Accounts receivable 3,185 13,818 1,850
Due from shareholders - 2,450 950
---------- -------- -------
$ 23,722 $ 27,651 $ 2,923
========== ======== =======
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 15,077 $ - $ 346
Due from affiliates 12,914 - -
---------- -------- -------
Total current liabilities 27,991 - 346
Commitments and contingencies
(Note 2) - - -
Stockholders' equity (deficit):
Common stock, no par value,
50,000 shares authorized
7,350 shares issued and
outstanding 735 735 735
Common stock to be issued
(Note 3) 183,134 151,560 75,780
Retained earnings (deficit) (188,138) (124,644) (73,938)
---------- -------- -------
Total stockholder's equity
(deficit) (4,269) 27,651 2,577
---------- -------- -------
$ 23,722 $ 27,651 $ 2,923
========== ======== =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Five Months
Ended Years Ended
May 31, December 31,
----------------------------
1999 1998 1997
------------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Revenues:
Advertising $ 2,222 $ 4,064 $ 55
Networking 3,550 10,725 300
Programming 34,051 70,037 21,350
----------- ---------- ----------
Total revenues 39,823 84,825 21,705
----------- ---------- ----------
Expenses:
Operating 74,940 124,626 94,505
General and administrative 29,777 10,905 888
----------- ---------- ----------
Total expenses 104,717 135,531 95,393
----------- ---------- ----------
Loss from operations (64,894) (50,706) (73,688)
Other income 1,400 - -
----------- ---------- ----------
Net loss $ (63,494) $ (50,706) $ (73,688)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Five Months Ended May 31, 1999 and Years Ended
December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock Shares Accumulated
------------------------ To be
Shares Amount Issued Deficit Total
---------- ----------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 7,350 $ 735 $ - $ (250) $ 485
Common stock to be issued for services
(Note 3) - - 75,780 - 75,780
Net loss - - - (73,688) (73,688)
------ -------- ---------- --------- ---------
Balance, December 31, 1997 7,350 735 75,780 (73,938) 2,577
Common stock to be issued for services
(Note 3) - - 75,780 - 75,780
Net loss - - - (50,706) (50,706)
------ -------- ---------- --------- ---------
Balance, December 31, 1998 7,350 735 151,560 (124,644) 27,651
Common stock to be issued for services
(Note 3) - - 31,574 - 31,574
Net loss - - - (63,494) (63,494)
------ -------- ---------- --------- ---------
Balance, May 31, 1999 (unaudited) 7,350 $ 735 $ 183,134 $(188,138) $ ( 4,269)
====== ======== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
May 31, December 31,
---------------------------
1999 1998 1997
----------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Net loss $ (63,494) $ (50,706) $ (73,688)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Common stock to be issued for
services 31,574 75,780 75,780
Changes in assets and liabilities:
Accounts receivable 10,633 (11,968) (1,850)
Accounts payable 15,077 (346) 346
------------ ---------- -----------
Net cash provided by (used in)
operating activities (6,210) 12,760 588
------------ ---------- -----------
Cash flows from financing activities:
Advances (to) from shareholder 15,364 (1,500) (950)
------------ ---------- -----------
Net increase (decrease) in cash 9,154 11,260 (362)
Cash at beginning of period 11,383 123 485
------------ ---------- -----------
Cash at end of period $ 20,537 $ 11,383 $ 123
============ ========== ===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
-----------------------
The Company was incorporated on March 13, 1996, under the state of
Washington Business Corporation Act. The Company was established to provide
internet marketing, design and internet database services on a contract
basis to selected clients.
Use of Estimates and Assumptions
--------------------------------
Preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all liquid investments, with an original maturity of
three months or less when purchased, to be cash equivalents.
Property, Equipment and Depreciation
------------------------------------
Property and equipment are stated at cost. Depreciation is computed
principally by the straight-line method based on the estimated useful lives
of five to seven years.
Income Taxes
------------
The Company has elected under the Internal Revenue Code to be an S
Corporation. In lieu of corporate income taxes, the stockholders of the
Company are taxed on their proportionate share of the Company's taxable
income. Accordingly, no provision or liability has been recognized for
federal income tax purposes for those periods as taxes are the personal
responsibility of the Company's stockholders.
F-7
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
2. COMMITMENTS AND CONTINGENCIES
Lease Commitments
-----------------
The Company leases office space under an operating lease which expires
November 30, 1999. Future minimum rental commitments for the remaining
years amount to $8,811.
Rent expense for the year ended December 31, 1998 amounted to $2,643. The
Company incurred no rent expense during 1997.
Fair Value of Financial Instruments
-----------------------------------
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities including
cash and cash equivalents and notes and accounts payable approximate
carrying value due to the short-term maturity of the instruments.
Concentration of Credit Risk
----------------------------
The Company invests its cash and certificates of deposit primarily in
deposits with major banks.
Revenue Concentration
---------------------
One customer comprised approximately 10% of the Company's revenues in 1998.
Uncertainty Due to the Year 2000 Issue
--------------------------------------
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 issue
may be experienced before, on, or after January 1, 2000 and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could impact the
Company's ability to conduct normal business operations. It is not possible
to be certain that all aspects of the Year 2000 issue affecting the Company
will be fully resolved.
F-8
<PAGE>
NORTH FORK PUBLISHING GROUP, INC.
Notes to Financial Statements
May 31, 1999 (Unaudited) and
December 31, 1998 and 1997
3. COMMON STOCk
During June 1999, the Company issued 3,556 shares to an employee and a
consultant as compensation for services over the previous 29 months. The
Company has valued the shares at $51.50 each, aggregating $183,134 and has
accounted for the shares as an expense during 1997, 1998 and 1999 as common
stock to be issued.
4. SUBSEQUENT EVENTS
All of the Company's outstanding common shares and all the outstanding
common shares of Classic Car Source, Incorporated ("CCS"), an affiliated
company, were acquired in June 1999 by EWRX Internet Systems Inc.("EWRX").
EWRX has agreed to pay $133,333 cash plus 1,000,000 restricted common
shares for CCS and $66,667 cash plus 450,000 restricted common shares for
the Company and 150,000 common shares as a finder's fee. The above
transactions closed on June 15, 1999.
5. RELATED PARTY TRANSACTIONS
As of May 31, 1999, the Company was indebted to EWRX and CCS in the
aggregate amount of $12,914.
F-9
<PAGE>
27
PART III
Item 1. INDEX TO EXHIBITS
Exhibit
Number Description
- --------- -----------
2.1 (i) "STOCK PURCHASE AND SALE AGREEMENT" (April 11, 1999)
2.1 (ii) "MERGER AGREEMENT AND PLAN OF REORGANIZATION" (June 15, 1999)
2.3 (i) Agreement with Optima Promotions (September 1, 1998).
2.3 (ii) Agreement with Harmonic Research Inc. (July 12, 1999)
3.1 Articles of Incorporation of the Registrant. (June 24, 1999)
3.2 By-laws of the Registrant. (June 25, 1999)
3.3 Specimen certificate for Common Stock, $0.001 par value.
10.1 (i) Employment agreement with Johnscott Lee. (May 4, 1999)
10.1 (ii) Employment agreement with Dan Jondron. (May 4, 1999)
10.4 Letter of Intent - EWRX Internet Systems Inc. & Xceed, Inc.
(July 6, 1999)
10.5 (i) Stock Option Plan of the Registrant. (August 18, 1999)
10.5 (ii) Stock Option Agreements (May 6, 1999)
22.1 (i) Subsidiaries of the Registrant.
22.1 (ii) COMPANY STRUCTURE
24.1 Consent of Independent Auditors
27 Financial Data Schedule
<PAGE>
28
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
EWRX INTERNET SERVICES INC.
(Registrant)
August 31, 1999
----------------------------------
(Date)
/s/ Ronald C. Davis
----------------------------------
Ronald C. Davis
Director, President and
Chief Executive Officer
/s/ Richard P. Ott
----------------------------------
Richard P. Ott
Director and Treasurer
EXHIBIT 2.1 (i)
Page 1
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE ("Agreement") is entered into effective
April 11, 1999, by and among Europa Resources, Inc., a Nevada corporation
("Buyer"), and all shareholders of Classic Car Source, Inc., (collectively
referred to as "CCS Seller"), who sign this Agreement and all the shareholders
of North Fork Publishing Group, Inc., (collectively referred to as "NFPG
Seller") who sign this Agreement
RECITALS
A. CCS Seller wishes to sell to Buyer and Buyer wishes to
purchase from CCS Seller 100% of the common stock ("CCS
Stock") of Classic Car Source, Inc., a Washington corporation
("CCS"), on the terms and conditions set forth herein.
B. NFPG Seller wishes to sell to Buyer and Buyer wishes to
purchase from NFPG Seller 100% of the common stock ("NFPG
Stock") of Northfork Publishing Group, Inc., a Washington
corporation ("NFPG"), on the terms and conditions set forth
herein.
Therefore, the parties agree as follows:
AGREEMENT
1. Merger
(a) CCS Seller shall sell and Buyer shall purchase Sixty Seven Thousand
Nineteen (67,019) shares of the authorized, issued and outstanding
common stock of CCS that is now held by CCS Seller.
1.02. NFPG Seller shall sell and Buyer shall purchase One Thousand Three
Hundred Fifty Two (1,352) shares of the authorized, issued and
outstanding common stock of NFPG that is now held by NFPG Seller.
2. Purchase Price for CCS Stock
(a) Upon execution of this Agreement, Buyer shall pay to CCS Seller Twenty
Five Thousand and No/100 Dollars ($25,000.00) in cash. It is expressly
understood and agreed to by the parties that this cash payment is
refundable. In the event the transaction contemplated herein does not
close, Buyer is entitled to the return of the Twenty Five Thousand and
No/100 Dollars ($25,000.00) cash payment.
(b) At Closing:
<PAGE>
Page 2
(i) Buyer shall pay CCS Seller One Hundred Eight Thousand Three
Hundred Thirty Three and 37/100 Dollars ($108,333.37) in cash
($133,333.37 minus the $25,000.00 payment set forth in Section
2(a).
(ii) Buyer shall convey to CCS Seller One Million (1,000,000)
shares of the outstanding common stock of Buyer, registered
with the Securities and Exchange Commission as R144 Stock
("R144 Stock").
(iii) Buyer shall deliver to CCS Seller a copy of the fully executed
resolution of Buyer's Board of Directors authorizing the
issuance and transfer of the R144 Stock as set forth on
Exhibit A.
(iv) Buyer shall deliver to CCS Seller a copy of the fully executed
irrevocable instructions to Buyer's Transfer Agent, Signature
Stock Transfer, Inc., authorizing and directing the issuance
and transfer of the R144 stock as set forth on Exhibit A. The
transfer Agent shall mail such shares directly to the CCS
Sellers at the addresses set forth on Exhibit A.
3. Purchase Price for NFPG Stock
(a) Upon execution of this Agreement, Buyer shall pay to NFPG
Seller Twenty Five Thousand and No/100 Dollars ($25,000.00) in
cash. It is expressly understood and agreed to by the parties
that this cash payment is refundable. In the event the
transaction contemplated herein does not close, Buyer is
entitled to the return of the Twenty Five Thousand and No/100
Dollars ($25,000.00) cash payment.
(b) At Closing:
(i) Buyer shall pay NFPG Seller Forty One Thousand Six
Hundred Sixty Six and 66/100 Dollars ($41,666.66) in
cash ($66,666.66 minus the $25,000.00 payment
identified in Section 3(a)).
(ii) Buyer shall convey to NFPG Seller Four Hundred Fifty
Thousand (450,000) shares of the outstanding common
stock of Buyer, registered with the Securities and
Exchange Commission as R144 Stock ("R144 Stock").
(iii) Buyer shall deliver to NFPG Seller a copy of the
fully executed resolution of the Buyer's Board of
Directors authorizing the issuance and transfer of
the R144 Stock as set forth on Exhibit B.
<PAGE>
Page 3
(iv) Buyer shall deliver to NFPG Seller a copy of the
fully executed irrevocable instructions to Buyer's
Transfer Agent, Signature Stock Transfer, Inc.,
authorizing and directly the issuance and transfer of
the R144 Stock as set forth on Exhibit B. The
Transfer Agent shall mail such shares directly to the
NFPG Sellers at the addresses set forth on Exhibit B.
4. Retirement of CCS Debt
At Closing, Buyer shall pay NFPG Nine Thousand and No/100 Dollars
($9,000.00) and CCS Thirty One Thousand and No/100 Dollars ($31,000.00)
to retire outstanding credit card balances in the name of Dan Jondron
incurred on behalf of NFPG and CCS.
5. Conditions to Closing
(a) The negotiation and execution at closing of employment
agreements between Buyer and Dan Jondron and between Buyer and
Johnscott Lee ("Employment Agreements").
(b) Buyer, CCS Seller and NFPG Seller shall have Thirty (3) days
from the Effective Date of this Agreement to conduct
reasonable due diligence. A party's obligation to close the
transaction contemplated herein is expressly conditioned upon
such party's good faith acceptance of and satisfaction with
the results of its due diligence process.
(c) Buyer must purchase both the CCS Stock and the NFPG Stock.
(d) The obligations of Buyer, CCS Seller and NFPG Seller under
this Agreement are subject to the representations and
warranties set forth in Sections 7 and 8 being true at and as
of the Closing Date as though such representations and
warranties were then again made.
(e) Dan Jondron is nominated to become a Director of Buyer.
6. Closing.
Closing of this Agreement shall take place at the offices of Europa
Resources, Inc., 543 Granville Street, No. 301, Vancouver, B.C. V6C
1X8, on or before April 30, 1999 (the "Closing Date").
<PAGE>
Page 4
(a) At Closing, Buyer shall deliver to CCS Seller and NFPG Seller
(i ) the cash payments in certified funds due pursuant to
Sections 2(b) and 3(b); (ii) a copy of the fully executed
resolution of Buyer's Board of Directors authorizing the
issuance and transfer of the R144 Stock as set forth on
Exhibits A and B; (iii) a copy of the fully executed
irrevocable instructions to the Buyer's Transfer Agent,
Signature Stock Transfer, Inc., authorizing and directing the
issuance and transfer of the R144 Stock as set forth on
Exhibits A and B; and (iv) Minutes of the Board of Directors,
or a committee thereof, nominating Dan Jondron to become a
Director of Buyer. Buyer shall also deliver to CCS and NFPG
the cash payments in certified funds due pursuant to Section
4.
(b) At Closing, CCS Seller and NFPG Seller shall deliver to Buyer
(i) the CCS Stock and the NFPG Stock, respectively, duly
endorsed for immediate transfer to Buyer, and (ii) the
Employment Agreements for execution.
7. Representations and Warranties of Buyer. Buyer represents and warrants that:
(a) Buyer owns good and marketable title to the R144 Stock.
(b) The R144 Stock is owned by Buyer free and clear of any liens, charges,
pledges and encumbrances of any sort whatsoever.
8. Representations and Warranties of CCS Seller and NFPG Seller. CCS Seller and
NFPG Seller represent and warrant that:
(a) CCS Seller and NFPG Seller own good and marketable title to
the CCS Stock, and the NFPG Stock, respectively, and such
shares set forth on Exhibits A and B represent one hundred
percent (100%) of issued and outstanding shares of CCS and
NFPG.
(b) The CCS Stock and the NFPG Stock is owned free and clear of
any liens, charges, pledges and encumbrances of any sort
whatsoever.
(c) CCS and NFPG agree not to make any changes in capital
structure, incur any substantial debt or issue any new shares
prior to Closing without the consent of Buyer, except CCS and
NFPG may issue certificate shares of common stock in amounts
shown on Exhibits A and B. These certificates are for shares
previously issued to shareholders but certificates were not
delivered.
<PAGE>
Page 5
9. Business Plan. Buyer recognizes and acknowledges that a substantial portion
of the consideration for the CCS Stock and NFPG Stock is in the form of
common stock of the Buyer. In order to maximize the value of the
consideration that CCS Seller and NFPG Seller have received, Buyer agrees
that it shall in good faith exercise its best efforts to develop a full
range of products and services for the businesses of CCS and NFPG. After
Closing of this Agreement, Buyer and Dan Jondron and Johnscott Lee in their
capacity as employees of Buyer, shall prepare a business plan setting forth
the business strategy for CCS and NFPG, including the specific products and
services to be provided and/or developed along with the capital and human
resources required to implement the business plan. Buyer shall in good
faith implement the business plan once it is approved by Buyer's board of
directors.
10. Survival. All representations, warranties and acknowledgments shall survive
the Closing.
11. Additional Documents.
(a) The parties will, at any time before, at or after the Closing,
execute and deliver or cause others to do so, all documents
and instruments necessary to consummate the transaction
contemplated by this Agreement.
(b) The parties acknowledge that Buyer's goal is to purchase 100%
of the common shares of CCS and 100% of the common shares of
NFPG, but that it will proceed so long as control is acquired
even if a few shareholders cannot be located or decline to
sell. The parties agree to negotiate in good faith to make
minor modifications to this Agreement prior to Closing,
provided the amount of money to be paid to CCS and NFPG
Sellers who do sign this Agreement will not be reduced and the
number of Buyer's shares of common stock to be issued to CCS
and NFPG Sellers who do sign will remain the same. (see
Exhibit A and Exhibit B for amounts and numbers not to be
changed.)
12. Brokers and Finders. Each party represents, covenants and warrants to
the other that he or she has employed no broker or finder in connection
with this Agreement, other than 150,000 shares of common stock of Buyer
to be issued to Richard Silas by Buyer.
13. Amendments, Modifications. This Agreement may not be amended or
modified except by an instrument in writing signed by the parties.
14. Integration. This Agreement constitutes the entire agreement between
the parties with respect to its subject matter and supercedes all prior
negotiations, discussions, writings, and agreements.
<PAGE>
Page 6
15. Successors. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the personal representatives, heirs,
devisees and assigns of the parties hereto.
16. Captions. Captions of this Agreement are for the convenience of
reference only and shall not define or limit any of its provisions.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Nevada.
18. Counterparts. This Agreement may be executed in any number of
counterparts, transmitted by facsimile, each of which shall be an
original, but such counterparts shall together constitute one and the
same instrument.
19. Attorneys' Fees. In the event of any dispute arising out of the
interpretation or enforcement of the terms of this Agreement, which
dispute is referred by either party to an attorney for resolution, the
parties hereto agree that the prevailing party shall be entitled to
recover all costs and attorneys' fees expended in connection therewith,
whether or not litigation is actually commenced.
Dated effective the day and year first above written.
BUYER:
EUROPA RESOURCES, INC.
A Nevada corporation
By: /s/ RONALD C. DAVIS
----------------------
Ronald C. Davis, President & CEO
<PAGE>
Page 7
NFPG SELLER:
NORTHFORK PUBLISHING GROUP, INC.
a Washington corporation
_/S/___________________________ _/S/___________________________
Daniel R. Jondron, Shareholder Johnscott Lee, Shareholder
/s/____________________________ /s/____________________________
David Flanagan, Shareholder Jesse Joiner, Shareholder
<PAGE>
Page 8
CCS SELLER:
CLASSIC CAR SOURCE, INC.
a Washington corporation
_/s/___________________________________ _/s/________________________________
Daniel R. Jondron, Shareholder Johnscott Lee, Shareholder
_/s/___________________________________ _/s/________________________________
Robert Klengler, Shareholder David Flanagan, Shareholder
_/s/___________________________________ _/s/________________________________
Carl LaFlamme, Shareholder Dan Huntington, Shareholder
_/s/___________________________________ _/s/________________________________
Elizabeth Polasek, Shareholder Daniel Bolstad, Shareholder
_/s/___________________________________ _/s/________________________________
Susanne Ryan, Shareholder Diana Boyd, Shareholder
_/s/___________________________________ _/s/________________________________
Edward Boyd, Shareholder Terri Eveland, Shareholder
_/s/___________________________________ _/s/________________________________
Bryan Hughes, Shareholder Jesse Joiner, Shareholder
_/s/___________________________________ _/s/________________________________
Jan Killam, Shareholder Jacque Mouchlino, Shareholder
_/s/___________________________________ _/s/________________________________
Dawn Neale, Shareholder Pat Newman, Shareholder
_/s/___________________________________ _/s/________________________________
Kris Whipple, Shareholder Ted Welch, Shareholder
<PAGE>
Page 9
CCS SELLER:
CLASSIC CAR SOURCE, INC.
a Washington corporation
_/s/__________________________________ _/s/______________________________
Daniel R. Jondron, Shareholder Johnscott Lee, Shareholder
_/s/__________________________________ _/s/______________________________
Robert Klengler, Shareholder David Flanagan, Shareholder
_/s/__________________________________ _/s/______________________________
Carl LaFlamme, Shareholder Dan Huntington, Shareholder
_/s/__________________________________ _/s/______________________________
Elizabeth Polasek, Shareholder Daniel Bolstad, Shareholder
_/s/__________________________________ _/s/______________________________
Susanne Ryan, Shareholder Diana Boyd, Shareholder
_/s/__________________________________ _/s/______________________________
Edward Boyd, Shareholder Terri Eveland, Shareholder
_/s/__________________________________ _/s/______________________________
Bryan Hughes, Shareholder Jesse Joiner, Shareholder
_/s/__________________________________ _/s/______________________________
Jan Killam, Shareholder Jacque Mouchlino, Shareholder
_/s/__________________________________ _/s/______________________________
Dawn Neale, Shareholder Pat Newman, Shareholder
_/s/__________________________________ _/s/______________________________
Kris Whipple, Shareholder Ted Welch, Shareholder
<PAGE>
Page 10
EXHIBIT A
SHAREHOLDERS OF CCS
FIRST NAME LAST NAME NO. OF CCS SHARES CASH DUE R144 SHARES DUE
- ---------- --------- ----------------- -------- ---------------
Daniel Bolstad 478 $950.97 7,132
4286 W. Maplewood
Bellingham, WA 98225
###-##-####
Diana Boyd 446 $887.31 5,655
1026 N. Forest Avenue
Bellingham, WA 98225
###-##-####
Ed Boyd 27 $53.72 403
32005 NE 138th Street
Duvall, WA 98019
###-##-####
Terri Eveland 60 $119.37 895
2528 Humboldt Street
Bellingham, WA 98225
###-##-####
David Flanagan 5732 $11,403.73 85,528
2525 Franklin Street
Bellingham, WA 98225
###-##-####
Bryan Hughes 74 $147.22 1,104
1804 E. Maryland Street
Bellingham, WA 98226
###-##-####
Daniel Huntington 179 $356.12 2,671
3303 K. Avenue
Anacortes, WA 98221
###-##-####
Sub-total 6,996 $13,918.44 104,388
<PAGE>
Page 11
EXHIBIT A
SHAREHOLDERS OF CCS
FIRST NAME LAST NAME NO. OF CCS SHARES CASH DUE R144 SHARES DUE
- ---------- --------- ----------------- -------- ---------------
Jesse Joiner 8,120 $16,154.63 121,160
3401 Redwood Avenue, #8
Bellingham, WA 98225
###-##-####
Dan Jondron 27,103 $53,921.04 404,408
1200 Harns Avenue, #104
Bellingham,WA 98225
###-##-####
Jan Killam 1,438 $2,860.88 21,457
143 1/2Van Ness
Ashland, OR 97520
###-##-####
Rob Klenger 3,537 $7,036.81 52,776
2525 Franklin
Bellingham, WA 98225
###-##-####
Carl LaFlamme 200 $397.90 2,984
P.O. Box 8110-699
Blaine, WA 98231
###-##-####
JS Lee 15,797 $31,427.91 235,709
P.O. Box 103
Marblemount, WA 98267
###-##-####
Jacques Mouchlino 300 $596.85 4,476
HCRI Box 5713
Keaau, HI 96749
###-##-####
Sub-total 56,495 $112,396.12 842,970
<PAGE>
Page 12
EXHIBIT A
SHAREHOLDERS OF CCS
FIRST NAME LAST NAME NO. OF CCS SHARES CASH DUE R144 SHARES DUE
- ---------- --------- ----------------- -------- ---------------
Dawn Neale 274 $545.12 4,033
1307 Carolina
Bellingham, WA 58225
###-##-####
Pat Newman 64 $127.33 955
2525 Franklin
Bellingham, WA 98225
###-##-####
Liz Polasek 41 $81.57 612
1005 Elwick Lane
Sedro Woolley, WA 98284
###-##-####
Suzanne Ryan/Wayne 1,000 $1,989.49 14,921
4657 Garden Street
Seattle, WA 98118
###-##-####
Kris Whipple 27 $53.72 403
1211 38th Street
Bellingham, WA 98226
###-##-####
Ted Welch 2,122 $4,221.69 31,563
9362 Washford Court
Sacramento, CA 95829
###-##-####
Sub-total 3,528 $7,019 31,563
TOTAL 67,019 $133,333.37 1,000,000
<PAGE>
Page 13
EXHIBIT B
SHAREHOLDERS OF NFPG
FIRST NAME LAST NAME NO. OF NFPG SHARES CASH DUE R144 SHARES DUE
- ---------- --------- ----------------- -------- ---------------
Dan Jondran 500 $24,554.33 166,420
1200 Harns Avenue, #104
Bellingham, WA 98225
###-##-####
David Flanagan 176 $8,678.50 58,580
2525 Franklin
Bellingham, WA 98225
###-##-####
Jesse Joiner 176 $8,678.50 58,580
3401 Redwood Avenue, #8
Bellingham, WA 98225
###-##-####
JS Lee 500 $24,654.83 166,420
P.O. Box 103
Marblemount, WA 98267
###-##-####
TOTAL 1,352 $66,666.66 450,000
- --------------------------------------------------------------------------------
REVISION OF 5/6/99: FINAL
DAN JONDRAN 3,680 $22,431.58 151,414
DAVID FLANAGAN 1,778 $10,901.75 73,586
JESSE JOINER 1,778 $10,901.75 73,586
JS LEE 3,670 $242,431.58 151,414
-------------------------------------------
TOTAL 10,906 $66,666.66 450,000
Page 1
Exhibit 2.1(ii)
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF RECORGANIZATION is the First
Amendment to a Stock Purchase and Sale Agreement dated April 11, 1999
("Agreement") and is made and effective as of the (15th) day of June, 1999 by
and among EWRX Internet Systems, Inc., a Nevada corporation ("EWRX"), Classic
Car Source, Inc., a Washington corporation ("CCS"), North Fork Publishing Group
Incorporated, a Washington corporation ("NFPG"), CCS Acquisition Corporation, a
Nevada corporation ("CCS Acquisition"), NFPG Acquisition Corporation, a Nevada
corporation ("NFPG Acquisition") and all of the shareholders of CCS and NFPG set
forth in the Agreement (respectively the "CCS Shareholders" and "NFPG
Shareholders").
RECITALS
C. EWRX (formerly known as Europa Resources, Inc.), and all of
the shareholders of CCS and NFPG respectively have previously
entered into the Agreement.
D. The parties desire to consummate the transaction as a double
"reverse triangular merger" intended to qualify as a
reorganization within the meaning of ss. 368 of the Internal
Revenue Code.
E. The parties desire CCS and NFPG to remain as viable business
entities after the merger due to the existence of various
contract rights owned by CCS and NFPG. The parties further
desire that through the reorganization the business of CCS and
NFPG continue with the support of EWRX's access to funding.
F. In order to satisfy securities law disclosure and other
similar requirements, the parties have agreed that certain
individual shareholders will retain the services of purchaser
representatives to assist them in the evaluation of the merits
and risks of the proposed merger and other transactions
contemplated by the Agreement and to act on behalf of such
shareholder in connection with consummation of the proposed
merger.
NOW, THEREFORE, the parties mutually agree to amend the Agreement as follows:
<PAGE>
Page 2
ARTICLE I
MERGER
1.01 Merger
(a) In accordance with the terms and provisions of this Agreement and the
applicable corporate laws of Nevada and Washington, as applicable, at
the Closing (hereinafter defined), CCS Acquisition shall be merged with
and into CCS and, concurrently, NFPG Acquisition shall be merged with
and into NFPG. CCS and NFPG shall be, and are hereinafter sometimes
referred to as the individually as "CCS Surviving Corporation" and
"NFPG Surviving Corporation" respectively, and collectively as
"Surviving Corporations." CCS, NFPG, CCS Acquisition and NFPG
Acquisition shall be, and are hereinafter sometimes referred to as the
"Constituent Corporations."
(b) From and after the Effective Time of the Merger:
(1) the Certificate of Incorporation and the By-laws of CCS shall
continue in full force and effect as the Certificate of
Incorporation and the By-laws of the CCS Surviving
Corporation, and the Certificate of Incorporation and the
By-laws of NFPG shall continue in full force and effect as the
Certificate of Incorporation and the By-laws of NFPG Survivor;
and
(2) the directors of CCS Survivor shall be: Dan Jondron and Ronald C.Davis.
(3) The directors and offices of NFPG Survivor shall be: Dan Jondron and
Ronald C. Davis.
(c) Except as hereinafter specifically set forth, the identity, existence,
corporate organization, purposes, powers, objects, franchises,
privileges, rights and immunities of CCS Acquisition shall be merged
with and into CCS, and CCS shall be fully vested therewith. Except as
hereinafter specifically set forth, the identity, existence, corporate
organization, purposes, powers, objects, franchises, privileges, rights
and immunities of NFPG Acquisition shall be merged with and into NFPG,
and NFPG shall be fully vested therewith. The separate existence and
the corporate organization of CCS Acquisition and NFPG Acquisition
respectively, except insofar as they may continue by statute, shall
cease as of the Effective Time of the Merger.
(d) The Merger shall not become effective until, and shall become effective
at, the point in time at which Article of Merger (the "Articles of
Merger") in accordance with the terms of this Agreement and applicable
corporate laws in the States of Nevada and Washington respectively
shall have been executed and acknowledged by the Constituent
Corporations and filed with the Secretaries of State and the States of
Nevada and Washington respectively. The time when the Merger shall
become effective is herein called the "Effective Time of the Merger".
The parties hereto shall cause the Articles of Merger to be executed
and filed as aforesaid on the Closing Date upon the satisfaction of the
conditions contained in Article II hereof.
<PAGE>
Page 3
(e) As of the Effective Time of the Merger:
(1) each share of the Common Stock of CCS held by the CCS
Shareholders shall be automatically converted into the right
to receive an amount per share (in cash and shares of EWRX)
determined by dividing the CCS Merger Consideration by the
number of shares of Common Stock of CCS outstanding as of the
Effective Time of the Merger; and all shares of the capital
stock of CCS held by the CCS Shareholders shall be thereupon
canceled and shall be without further rights or obligations,
except that the holders of such shares shall be entitled to
surrender such shares in exchange for the CCS Merger
Consideration; and
(2) each share of the capital stock of CCS Acquisition shall be
automatically converted into an equal number of shares of
the Common Stock of CCS; and
(3) each share of the Common Stock of NFPG held by the NFPG
Shareholders shall be automatically converted into the right
to receive an amount per share (in cash and shares of EWRX)
determined by dividing the NFPG Merger Consideration by the
number of shares of Common Stock of NFPG outstanding as of the
Effective Time of the Merger; and all shares of the capital
stock of NFPG held by the NFPG shareholders shall be thereupon
canceled and shall be without further rights or shares in
exchange for the NFPG Merger Consideration; and
(4) each share of the capital stock of NFPG Acquisition shall be
automatically converted into an equal number of shares of the
Common Stock of NFPG.
(f) The stock transfer books of CCS and NFPG shall be closed, as of the
Effective Time of the Merger, and no transfer of shares of the capital
stock of CCS or NFPG shall be made or consummated thereafter except by
the Surviving Corporations.
1.02. Merger Consideration
(a) The "CCS Merger Consideration" shall be (I) the cash amount of
$133,333.33 (U.S.) $25,000.00 of which was paid as a refundable deposit
upon signing of the Agreement, and (ii) One Million (1,000,000) shares
of common stock of EWRX. The CCS Merger Consideration (less that
portion thereof which has been previously paid) shall be payable in
cash on the Closing Date by wire transfer to an account in the United
States designated by CCS to EWRX. The share component of the CCS Merger
Consideration shall be delivered to the CCS Shareholders, according to
their interest, as soon as practicable after Closing.
<PAGE>
Page 4
(b) The "NFPG Merger Consideration" shall be shall be (I) the cash amount
of $66,666.67 (U.S.) $25,000.00 of which was paid as a refundable
deposit upon signing of the Agreement, and (ii) Four Hundred Fifty
Thousand (450,000) shares of common stock of EWRX. The NFPG Merger
Consideration (less that portion thereof which has been previously
paid) shall be payable in cash on the Closing Date by wire transfer to
an account in the United States designated by NFPG to EWRX. The share
component of the NFPG Merger Consideration shall be delivered to the
NFPG Shareholders, according to their interest, as soon as practicable
after Closing.
(c) (1) Simultaneously with the execution and delivery of the
Agreement, EWRX paid to CCS $25,000 (U.S.)(the "CCS
Deposit") and to NFPG $25,000.00 (U.S.) (the "NFPG
Deposit").
(2) In the event that the closing shall occur, the CCS Deposit and
the NFPG Deposit [(together with any interest and income accrued
or earned thereon)] shall be delivered pro rata to the CCS
Shareholders and NFPG Shareholders respectively to be applied
against the applicable portion of the CCS and NFPG Merger
Consideration.
(3) In the event that the Closing shall not occur for any reason then
the CCS Deposit and NFPG Deposit shall be delivered to EWRX
within three Business Days following any valid termination of the
Agreement.
1.03 Post-Closing Access to Books, Records and Files of CCS and NFPG and
Cooperation: Etc.
(a) From and after the Closing Date:
(1) CCS and NFPG shall give to EWRX and its officers, employees and
advisers reasonable access, during normal business hours to the
facilities and property of CCS and NFPG and to their respective
books, files and records (and the right to make copies thereof
and the expense of EWRX) existing as of or prior to the Closing
Date (or with respect to any period which includes the Closing
Date) as EWRX shall from time to time reasonably request in
connection with any reasonable purpose.
(2) CCS and NFPG shall cooperate with and assist, and shall cause its
officers and employees to cooperate with and assist, EWRX and its
officers, employees and advisors in connection with:
<PAGE>
Page 5
(A) the preparation of any tax return, report or filing for any
period (or portion thereof) ending on or before (or including)
the Effective Time of the Closing;
(B) the preparation of any financial statements for (or including)
any period (or portion thereof) ending on or before the Effective
Time of the Closing: or
(C) the investigation, prosecution, or defense of any actions, suits,
claims or proceedings commenced by any other person or CCS or
NFPG.
ARTICLE II
CONDITIONS OF CLOSING
In addition to the conditions to closing set forth in the Agreement,
the following conditions shall be applicable:
2.01 Merger Conditions
(a) This Agreement, as amended, and the Merger and the other transactions
contemplated by the Agreement amended shall have been duly authorized
by the Board of Directors and the stockholders of CCS and NFPG
respectively and CCS Acquisition and NFPG Acquisition respectively; and
the Agreement, as amended, has been duly executed and delivered by CCS
and NFPG and their respective shareholders, CCS Acquisition and NFPG
Acquisition and shall constitute the legal, valid and binding
obligation of such parties enforceable against them in accordance with
its terms, except:
(1) as may be limited by bankruptcy, reorganization, insolvency
and similar laws of general application relating to or
affecting the enforcement of creditors rights or the relief of
debtors; and
(2) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefore may be brought.
(b) The execution, delivery and performance of the Agreement, as amended,
and the consummation of the mergers by CCS and CCS, NFPG, CCS
Acquisition and NFPG Acquisition will not:
(1) constitute a violation of the Articles of Incorporation (or like
charter document) or the By-laws, as amended, of any entity;
(2) conflict with, result in the breach of or constitute a default under
any material contract of a party;
(3) constitute a material violation of any law applicable or relating to
any party; or
(4) result in the creation of any lien upon any of the assets of any
party.
<PAGE>
Page 6
(c) The necessary filings of Articles of Merger and any other documents
necessary to accomplish the mergers as required by applicable corporate
laws of the States of Nevada and Washington respectively shall have
been made by the respective corporate parties.
(d) The corporate parties shall have received the opinion of counsel of the
other corporate parties dated the Closing Date, in form and substance
reasonably satisfactory, concerning the matters in paragraphs (a)-(c)
above.
(e) The corporate parties shall have furnished, or caused to be furnished,
to the other corporate parties, in form and substance reasonably
satisfactory, such certificates and other instruments as may be
reasonably requested as to the satisfaction of the conditions contained
in this Section 2.01 and as to such other matter as may be reasonably
requested.
(f) The authorization and consent of EWRX to the merger is obtained.
2.02 Other Condition
CCS Shareholders, NFPG Shareholders and Purchaser Representatives shall
have delivered the Purchaser Representative Acknowledgement Form and Power of
Attorney to EWRX.
ARTICLE III
CLOSING
3.01 Closing
The Closing shall occur at the offices of EWRX in Vancouver. B.C. as
soon as practicable after completion of the conditions to Closing.
3.02 CCS. NFPG. CCS Shareholders and NFPG Shareholders Deliveries
At Closing, CCS, NFPG and the CCS Shareholders and NFPG Shareholders
will deliver:
(a) The certificates, instruments and documents necessary to
evidence satisfaction of the conditions to closing relating to
the mergers.
(b) The documents required by Section 2.02.
(c) The opinions required by Section 2.01(d).
<PAGE>
Page 7
3.03 EWRX, CCS Acquisition and NFPG Acquisition Deliveries
At closing, EWRX, CCS Acquisition and NFPG Acquisition will deliver:
(a) The certificates, instruments and documents necessary to
evidence satisfaction of the conditions to closing relating to
the mergers.
(b) The opinions required by Section 2.01(d).
(c) The CCS Merger Consideration and the NFPG Merger Consideration.
ARTICLE IV
EFFECT OF AMENDMENT: OTHER MATTERS
4.01 Amendment Effect
Except as specifically modified in this Amendment, the Agreement shall
continue in full force and effect as originally written.
4.02 Further Actions
From time to time, as and when requested by any party hereto, the other
parties shall execute and deliver, or cause to be delivered, such documents and
instruments and shall take, or cause to be taken, such further or other actions
as may reasonably request in order to:
(a) carry out the intent and purposes of this Agreement;
(b) effect the mergers (or to evidence the foregoing); and
(c) consummate and give effect to the other transactions, covenants and
agreements contemplated by this Agreement.
4.03 Expenses
Except as otherwise specifically provided herein, each party shall bear
their own legal fees and other costs and expenses with respect to the
negotiation, execution and the delivery of the Agreement, as amended, and the
consummation of the transactions thereunder.
4.04 Entire Agreement
The Agreement, as amended, contains the entire agreement between the
parties with respect to the transactions contemplated by it, and, except as
expressly provided herein, supercedes all prior arrangements or understandings
with respect thereto.
<PAGE>
Page 8
4.05 Amendment to Exhibit B
Exhibit B to the Agreement is amended in the form attached hereto.
4.06 Amendment to Exhibit A
Exhibit A to the Agreement is amended by deleting the addresses of the
following shareholders and replacing them with the addresses in the form
attached hereto: Daniel Bolstad, Diana Boyd, Ed Boyd, Terri Eveland, Carl
LaFlamme, Jacques Mouchlino, Pat Newman, Kris Whipple.
4.07 Counterparts
This Amendment may be executed in multiple counterparts, all of which,
taken together, shall constitute one and the same agreement.
Dated effective the date first written above.
EWRX INTERNET SYSTEMS, INC. CLASSIC CAR SOURCE, INC.
By:/s/ RONALD C. DAVIS By:/s/ DANIEL R. JONDRON
NORTH FORK PUBLISHING GROUP CCS ACQUISITION CORPORATION
INCORPORATED
By:/s/ DANIEL R. JONDRON By: /s/ RONALD C. DAVIS
NFPG ACQUISITION CORPORATION.
By: /s/ RONALD C. DAVIS
<PAGE>
Page 9
NFPG SELLERS:
_/S/_____________________________ _/S/___________________________
Daniel R. Jondron, Shareholder Johnscott Lee, Shareholder
/s/_______________________________ /s/___________________________
David Flanagan, Shareholder Jesse Joiner, Shareholder
CCS SELLERS:
_/s/______________________________ _/s/____________________________
Daniel R. Jondron, Shareholder Johnscott Lee, Shareholder
_/s/______________________________ _/s/____________________________
Robert Klengler, Shareholder David Flanagan, Shareholder
_/s/_____________________________ _/s/____________________________
Carl LaFlamme, Shareholder Dan Huntington, Shareholder
_/s/_____________________________ _/s/____________________________
Elizabeth Polasek, Shareholder Daniel Bolstad, Shareholder
_/s/____________________________ _/s/_____________________________
Susanne Ryan, Shareholder Diana Boyd, Shareholder
_/s/____________________________ _/s/_____________________________
Edward Boyd, Shareholder Terri Eveland, Shareholder
_/s/____________________________ _/s/_____________________________
Bryan Hughes, Shareholder Jesse Joiner, Shareholder
_/s/____________________________ _/s/_____________________________
Jan Killam, Shareholder Jacque Mouchlino, Shareholder
_/s/___________________________ _/s/______________________________
Dawn Neale, Shareholder Pat Newman, Shareholder
_/s/__________________________ _/s/_______________________________
Kris Whipple, Shareholder Ted Welch, Shareholder
<PAGE>
Page 10
Exhibit A Amendment:
Daniel Bolstand (after 6/13/99)
107 Royal Drive
Slidell, LA 70460
Diana Boyd
204 15th St
Blaine, WA 98230
Ed Boyd
Onyx Software
310 120th Ave NE
Bellevue, WA 98005
Terri Eveland
900 N Hills Blvd, Suite 303
Reno, NV 89506
Carl LaFlamme
EWRX Internet Systems, Inc.
301-543 Granville St
Vancouver, BC V6C 1X8
CANADA
Jacques Mouchlino
Classic Car Source, Inc.
1200 Harris Ave Suite 104
Bellingham, WA 98225
Pat Newman
P.O. Box 69
Hallidays Point
NSW 2430
AUSTRALIA
Kris Whipple (After 6/15)
P.O. box 811
Troy, MT 59935
<PAGE>
Page 11
EXHIBIT B
SHAREHOLDERS OF NFPG
FIRST NAME LAST NAME NO. OF NFPG SHARES CASH DUE R144 SHARES DUE
- ---------- --------- ------------------ -------- ---------------
Dan Jondron 500 $24,654.83 166,420
1200 Harns Avenue, #104
Bellingham,WA 98225
###-##-####
David Flanagan 175 $8,678.50 58,580
2525 Franklin
Bellingham, WA 98225
708-882-527
Jesse Joiner 175 $8,678.50 58,580
3401 Redwood Avenue, #8
Bellingham, WA 98225
###-##-####
JS Lee 500 $24,654.83 166,420
TOTAL 1,352 $66,666.66 450,000
- --------------------------------------------------------------------------------
REVISION OF 5/6/99: FINAL
DAN JONDRAN 3,680 $22,431.58 151,414
DAVID FLANAGAN 1,778 $10,901.75 73,586
JESSE JOINER 1,778 $10,901.75 73,586
JS LEE 3,670 $22,431.58 151,414
TOTAL 10,906 $66,666.66 450,000
Exhibit 2.3(i)
Page 1
CONSULTING AGREEMENT
BETWEEN: EUROPA RESOURCES, INC. of Vancouver, BC, Canada, and
OPTIMA PROMOTIONS of River Edge, New Jersey, USA.
PURPOSES: To retain OPTIMA PROMOTIONS to:
o Assist EUROPA RESOURCES with its current offering memorandum.
o Introduce EUROPA RESOURCES to appropriate market makers,
brokers, investment bankers, and professional investors;
as well as arrange meetings for EUROPA RESOURCES and
provide liaison follow up.
o Assist EUROPA RESOURCES in its raise of an additional $4.5
million dollars -such documents and terms, unstructured as yet.
TERMS OF AGREEMENT: Six (6) months.
COMMENCEMENT: Effective date: Sept. 1, 1998
*MONTHLY FEE: $3,500.00 (US) the first month, due upon engagement and each
month, 30 days thereafter.
CANCELLATION: Ninety (90) days post engagement with 30 days written notice
required.
ADDITIONAL COMPENSATION:
EQUITY: 100,000 common shares (144 stock) of EUROPA RESOURCES to be
issued on the date this agreement takes effect (see commencement
section)
INCENTIVE COMPENSATION TO BE PAID TO OPTIMA PROMOTIONS:
50,000-144 restricted stock and 25,000 free trading for every $1
million (US) dollars raised by OPTIMA PROMOTIONS, it's agents, brokers
or investors.
In addition, a total of 4% of the gross proceeds from the sale of EUROPA common
shares (private placements) will be paid to OPTIMA PROMOTIONS as a finders fee.
EXPENSES: Full accountable - mailings, meetings, travel and entertainment,
etc., all by mutual agreement and consent between EUROPA
RESOURCES and OPTIMA PROMOTIONS.
ACTIVITY RECORDS: See attached form, to be submitted weekly, in addition to
phone updates.
ADDITIONAL FUNDING(S): Arrangements relevant to each form of funding.
<PAGE>
Page 2
EUROPA RESOURCES and OPTIMA PROMOTIONS agree to provide each other with complete
diligence materials and all communications, representations & transmittals,
relevant to interested parties, pursuant hereto.
SUBMITTED BY: /s/____ DATE: 8/17/98
Coille Ferreira, T/A
OPTIMA PROMOTIONS, CONSULTANT(S)
-AND-
Richard G. Clark, _/s/_____________
Co-Consultant
ACCEPTED BY: _/s/_____DATE: 8/24/98
Ronald C. Davis, President & CEO
EUROPA RESOURCES, INC.
Exhibit 2.3 (ii)
Page 1
July 12, 1999
Ronald C. Davis
President & CEO
EWRX Internet Systems, Inc.
#301-543 Granville Street
Vancouver, B.C. V6C 1X8
CANADA
Dear Mr. Davis:
We are pleased to set forth in this agreement (the "Agreement") the terms of the
retention of Harmonic Research, Inc. ("HR") by EWRX Internet Systems, Inc., its
affiliates, successors, subsidiaries or assigns (collectively, "the Company").
1) Services: HR will assist the Company as its non-exclusive financial
advisor. In connection with HR's activities on the Company's behalf, HR
will familiarize itself with the business, operations, properties and
financial condition and prospects of the Company. HR's services on a
best effort basis shall include:
a) Raising $1,500,000 up to $3,000,000 financing through a
private placement of units, each unit consisting of 50,000
shares of Class A common stock and one three-year warrant to
purchase 50,000 shares of Class A common stock at an exercise
price per share to be determined at the time of Financing (the
"Financing"),
b) Introducing the Company to the broker/dealer financial community
as well as to potential strategic partners,
c) Such other investment banking services as may be mutually agreed
upon by HR and the Company.
2) Information: In connection with HR's activities on the Company's
behalf, the Company will cooperate with HR and will furnish HR with all
information and data concerning the Company and other parties as
appropriate (the "Information") which HR deems appropriate and will
provide HR with access to the Company's officers, directors, employees,
independent accountants and legal counsel. The Company represents and
warrants that all Information made available to HR by the Company will
be complete and correct in all material respects and will not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading
in the light of the circumstances under which such statements are made.
The Company acknowledges and agrees that, in rendering its services,
hereunder, HR will be using and relying on the Information without
independent verification thereof by HR or independent appraisal by HR
of any of the Company's assets. HR does not assume responsibility for
the accuracy or completeness of the Information or any other
information regarding the Company (or any other party as appropriate).
<PAGE>
Page 2
3) Retention: In consideration of our services as set forth above, HR
shall be entitled to receive, and the Company agrees to pay HR, the
following compensation: a) An initial fee of $15,000.00 payable upon
execution of this Agreement as advance payment for the 90 day
consulting period commencing on the date of execution of this
Agreement, and
b) Thereafter, the Company will continue to retain HR for a fee of
$15,000.00 per quarter for a period of no less than 90 days
payable in advance.
c) As compensation for HR's services hereunder (in addition to
section3(a) & 3(b) above}, the Company shall grant to HR and its
designees three-year warrants (the "Warrants") to purchase a
total of 300,000 shares (the "Shares") of the Company's common
stock at $1.00 per share, 150,000 upon signing and 150,000 upon
closing of at least $500,000 of the Financing.
4) Financing Compensation:
a) As compensation for raising funds for the company, whether as
capital or as debt and whether in the form of cash, securities
or other property (hereinafter, a "Financing"), HR will
receive a cash fee equal to 8% of the amount of funds raised
by HR (as defined below) plus a like-kind fee consisting of 8%
of any securities sold by HR in connection with the Financing.
b) Fees shall be based on the total amount of funds raised by HR
from a Source and the total amount of securities sold by HR in
connection with the financing, whether or not the Financing is
fully funded at the initial closing. Fees are payable as funds
are received by the Company or as securities are issued by the
Company. These fees shall also apply to any subsequent
Financing from a Source if such Financing is the result of an
agreement between the Company and the Source which is executed
within three-years of the date of this Agreement.
c) For the purposes of this Agreement, a "Source" shall include
and all investors, agents, investment bankers, and other
providers of capital introduced to the Company, directly by
HR. The Company is not obligated to accept any financing from
any Source introduced by Harmonics.
<PAGE>
Page 3
d) The securities issued to HR in satisfaction of its
compensation shall be registered within 30 days of a closing
on the Financing and the Company shall use its best effort to
have the registration statement declared effective as soon as
possible thereafter.
5) Transaction Compensation:
a) If, at any time within three years after the date of this
Agreement, the Company reaches an agreement to enter into any
Transaction (as defined below) with any person or any
corporation, partnership or other entity identified to the
Company by HR during the term of this Agreement (an "Introduced
Party"), then the Company shall pay HR at the time of and from
the proceeds of the initial closing of such Transaction
Compensation equal to 10% of the first $2 million value of such
Transaction, 8% of the next $2 million Aggregate Consideration of
such Transaction, 6% of the next $2 million Aggregate
Consideration of such Transaction,, and 4% of the remaining
Aggregate Consideration of such Transaction. Transaction
Compensation shall also be payable, according to the same
formula, and under the same terms and conditions, in the event of
any subsequent Transaction between the Company and the Introduced
Party which is the result of an agreement between the Company and
the Introduced Party which is executed within three years of the
date of this Agreement.
6) Transaction: As used in this Agreement, the term "Transaction" shall
include, but not be limited to,
a) any merger, consolidation, reorganization, recapitalization,
business combination, or other transaction pursuant to which the
Introduced Party acquires, is acquired by, or combines with, the
Company,
b) the acquisition, directly, in whole or part
i) by the Company of the assets or securities of the Introduced
Party or
ii) by the Introduced Party of the assets or securities of the
Company, or
c) any other business transaction which involves an exchange of
assets, goods, or services between the Company and the
Introduced Party other than a funding described in paragraph 5
above.
<PAGE>
Page 7
7) Aggregate Consideration: For purposes of this Agreement, "Aggregate
Consideration" shall mean the total value of all cash, securities,
other property, and any other consideration, including, without
limitation, any contingent fees or payments earned, any amounts paid in
connection with a non-competition, consulting or similar agreement, or
any other consideration, paid or payable, directly or in connection
with a Transaction.
The fair market value of any securities (whether debt or equity) shall
be determined by the closing or last sales price of such securities on
the date of the consummation of the Transaction, provided, that if any
securities are a class of newly issued, publicly-traded securities,
then the fair market value thereof shall be the average of the closing
prices for the 20 trading days subsequent to the fifth trading day
after the consummation of the Transaction. If no public market exists
for any securities issued in the Transaction, then the fair market
value thereof, as well as the fair market value of any other property
included in the Aggregate Consideration but not sold on an organized
market or exchange, shall be mutually agreed upon by the Company's
Board of Directors and HR in good faith. In the event of a dispute with
respect to the fair market value of any property included in the
Aggregate Consideration, all such property shall be evaluated by a
third party acceptable to both the Company and HR, and if no such third
party can be identified, then pursuant to the arbitration provisions of
paragraph 16.
Aggregate Consideration shall also be deemed to include the principal
value of any indebtedness, including, without limitation, pension
liabilities, guarantees and other obligations assumed, directly in
connection with, or which survives the closing of the Transaction.
If the Transaction involves a sale of all or a substantial part of the
operating assets of the Company, the term Aggregate Consideration shall
include (x) the value of any current assets not sold, minus (y) the
value of any current liabilities not assumed by the Buyer.
If the Aggregate Consideration receivable in the Transaction is subject
to increase by contingent payments related to future events, HR's fee
shall be calculated on the basis of the maximum considerations
receivable, and the entire amount of such fee shall be payable at the
closing of the Transaction.
If the Aggregate Consideration receivable in the Transaction is subject
to decrease related to future events, or any such portion of such
Aggregate Consideration is placed in escrow or otherwise withheld by
any source(s) of capital awaiting the outcome of future events, HR's
fee shall be proportionately escrowed provided however that HR shall be
paid proportionately as funds are released from escrow.
If the Aggregate Consideration to be paid is computed in any other
foreign currency, the value of such foreign currency shall, for
purposes hereof, be converted into US Dollars at the prevailing
exchange rate on the date or dates on which such consideration is
payable.
<PAGE>
Page 5
8) Prior Notice: The Company hereby agrees to give a 15 day prior written
notice to HR before the consummation of any Financing or Transaction of
the Company with an Introduced Party and consents to inform HR of the
time and place of settlement of such Financing(s) or Transaction(s) and
permit attendance.
9) Reimbursements: In addition to the fees described above, the Company
agrees to reimburse HR for non-accountable expenses (including fees and
disbursements of counsel, and of other consultants and advisors
retained by HR for the Company's benefit) incurred in connection with
HR's acting for the Company pursuant to this Agreement. Such expenses
shall be equal to a maximum of 2% of the Financing.
10) Indemnification: Recognizing that Financings and Transactions of the
type contemplated by this engagement sometimes result in litigation and
that HR's rule is limited to acting as the Company's financial advisor,
the Company agrees to indemnify HR (and its directors, officers,
agents, employees, and controlling persons) to the full extent lawful
against any and all claims, losses and expenses as incurred (including
all reasonable fees and disbursements of HR's and such persons counsel
and all out-of-pocket expenses incurred in any connection with
investigation of any preparation for any such pending or threatened
claims and any litigation or other proceedings arising therefrom, such
fees, disbursements and expenses to be reimburse quarterly as incurred)
arising out of any actual or proposed Financing or Transaction or HR's
engagement hereunder (provided, however, there shall be excluded from
such indemnification of any such claim, loss or expense that is found
in a final judicial determination, or a settlement tantamount thereto,
to constitute willful misconduct on the part of HR). The foregoing
agreement shall be in addition to any rights that any indemnified party
may have a common law.
11) Term: The term of this Agreement shall be for a period of three months
from the date of execution hereof and shall automatically renew for
additional 90 day periods unless terminated in writing by either party
prior to the end of each 90 day period. Paragraphs 4, 5, 9, 10 and 15
of this Agreement shall survive the termination thereof.
12) Independent Contractor: HR shall at all times act as and be an
independent contractor, and in no event shall either HR or any of its
employees, agents, or representatives be deemed to be an employee of
the Company. HR shall have no authority to bind the Company to any
obligation, express or implied to any third party.
13) HR's Right to Conduct Business with Competitors: HR may at all times
enter into any other agreement of any kind with any third party,
whether or not such party may be a competitor or otherwise adverse to
the Company provided that HR shall maintain the confidentiality of all
information concerning the Company which it receives from the Company
unless such information is or becomes available to the public. HR shall
devote such time as it deems necessary as to the performance of its
duties hereunder and without any direct supervision of the Company.
<PAGE>
Paage 6
14) Validity: The validity and interpretation of this Agreement shall be
governed by the law of the State of New York application to agreements
made to and be fully performed therein.
15) Arbitration: Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
Arbitration in New York, NY in accordance with the Commercial
Arbitration Rules of the American Arbitration Association before one
neutral arbitrator. The arbitrator may ward the successful party
recovery of its expenses incurred in connection with the arbitration,
including reasonable attorney's fees. The parties hereto agree that
they will abide by and perform any award rendered by the arbitrator(s)
and that judgement upon any such award be entered into any court, state
or federal, having jurisdiction over the party against whom the
judgement is being entered. Any arbitration demand, summons, complaint,
other process, notice of motion or other application to an arbitration
panel, court or judge, and any arbitration award or judgement may be
served upon any party hereto by registered or certified mail, or by
personal service, provided a reasonable time for appearance or answer
is allowed.
16) Assigns: The benefits of this Agreement shall inure to the respective
successors and assigns of the parties hereto and of the indemnified
parties hereunder and their successors and assigns and representatives
and the obligations and liabilities assumed in this Agreement by the
parties hereto shall be binding upon their representative successors
and assigns.
17) Suitability: HR makes no representations or warranty with respect to
the condition (financial or otherwise), investment or credit history,
background or any other suitability of any potential investor.
18) Counterparts: For the convenience of the parties hereto, any number of
counterparts of this Agreement may be executed by the parties hereto.
Each such counterpart shall be, and shall be deemed to be, an original
instrument, but all such counterparts taken together shall constitute
one and the same Agreement. This Agreement may not be modified or
amended except in writing signed by the parties hereto.
19) Miscellaneous: This Agreement constitutes the entire agreement of the
parties pertaining to the subject matter hereof, and the parties have
made no agreements, representations or warranties relating to the
subject matter of this Agreement that are not set forth herein.
<PAGE>
Page 7
If the foregoing correctly sets forth our Agreement, please sign the enclosed
copy of this letter in the space provided and return it to us.
Very truly yours,
Harmonic Research, Inc.
By: /s/
Mason Sexton
Chairman
AGREED TO AND ACCEPTED:
EWRX Internet Systems, Inc., hereby accepts the terms provisions of, and agrees
to be bound by the terms and provisions of the foregoing letter, as of this 15
day of July, 1999.
EWRX Internet Systems, Inc.
By: signature on file
Ronald C. Davis
President and CEO
Exhibit 3.1
Page 1
ARTICLES OF INCORPORATION
OF
EUROPA RESOURCES INC.
ARTICLE I
NAME
The name of the corporation is Europa Resources Inc. (the "Corporation".)
ARTICLE II
AUTHORIZED CAPITAL
The amount of total authorized capital stock which the Corporation
shall have authority to issue is 50,000,000 shares of Common Stock, each with
$0.001 par value and 500,000 shares of Preferred Stock with $.01 par value. To
the fullest extent permitted by the laws of the State of Nevada (currently set
forth in NRS 78.195), as the same now exists of may hereafter be amended or
supplemented, the Board of Directors may fix and determine the designations,
rights, preferences or other variations of each class or series within each
class of capital stock of the Corporation.
Common Stock. After the requirements with respect to preferential
dividends on the preferred stock, if any, shall have been met, and after the
Corporation shall have compiled with all the requirements, if any, with respect
to the setting aside of sums as sinking funds or redemption or purchase
accounts, then, and not otherwise, the holders of the common stock shall be
entitled to receive such dividends as may be declared from time to time by the
Board of Directors of the Corporation.
After distribution in full of the preferential amount, if any, to be
distributed to the holders of the preferred stock in the event of voluntary or
involuntary liquidation, distribution, or sale of assets, dissolution, or
winding-up of the Corporation, the holder of the common stock shall be entitled
to receive all of the remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to shareholders, ratably
in proportion to the number of shares of the common stock held by them
respectively.
Preferred Stock. Shares of preferred stock may be divided into such
series as may be established, from time to time, by the Board of Directors. The
Board of Directors, from time to time, may fix and determine the relative rights
and preferences of the shares of any series so established.
<PAGE>
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ARTICLE III
BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by a Board
of Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The initial Board of Directors shall consist of one
member. The name and address of the person who shall serve as the director until
the first annual meeting of stockholders and until his successor is duly elected
and qualified is as follows:
Name Address
---- -------
Ronald Clifford Davis 2746 Yale Street
Vancouver, B.C. V5K 1C3
Canada
ARTICLE IV
LIMITATION ON DIRECTOR LIABILITY
To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.0370), as the same now exists or may hereafter be
amended or supplemented, no director or officer of the Corporation shall be
liable to the Corporation or to its stockholders for damages for breach of
fiduciary as a director or officer.
A director of the Corporation shall not be personally liable to the
Corporation or to its shareholders for monetary damages for breach of fiduciary
duty as a director; except that this provision shall not eliminate or limit the
liability of a director to the Corporation or to its shareholders for monetary
damages otherwise existing for ( i ) any breach of the director's duty of
loyalty to the Corporation or to its shareholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) acts specified in Section 78.300 of the Nevada General Corporation
Law; or (iv) any transaction from which the director directly or indirectly
derived any improper personal benefit. If the Nevada General Corporation Law is
hereafter amended to eliminate or limit further the liability of a director,
then in addition to the elimination and limitation of liability provided by the
preceding sentence, the liability of each director shall be eliminated or
limited to the fullest extent permitted by the Nevada General Corporation Law so
amended. Any repeal or modification of this Article IV shall not adversely
affect any right or protection of a director of the Corporation under this
Article IV, as in effect immediately prior to such repeal or modification, with
respect to any liability that would have accrued, but for this Article IV, prior
to such repeal or modification.
<PAGE>
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ARTICLE X
SUPERMAJORITY VOTING
Any action required or permitted to be taken by the shareholders of the
Corporation with respect to provisions governing approval of mergers, sale of
assets, and dissolution shall be taken only upon the affirmative vote of at
least eighty percent (80%) of the shares of the Corporation issued and
outstanding entitled to vote thereon and, in the case of any matter on which the
holders of shares of any class or series shall be entitled to vote as a class or
each such series, as the case may be.
ARTICLE XI
RESIDENT AGENT
The initial resident agent of the Corporation shall be the Corporation
Trust Company of Nevada, whose street address is One East First Street, Reno,
Nevada 89501.
ARTICLE XII
INCORPORATOR
The name and address of the incorporator of the Corporation is Lori Ann
Y. Fujioka, 455 Sherman Street, Suite 300, Denver, Colorado 80203.
ARTICLE XIII
NONAPPLICABLE PROVISIONS
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to
the Corporation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 24th day of June, 1997.
By ___/s/________
Lori Ann Y. Fujioka
Incorporator
<PAGE>
Page 4
STATE OF COLORADO )
CITY AND )ss.
COUNTY OF DENVER )
Personally appeared before me this 24th day of June, 1997, Lori Ann Y.
Fujioka who, being first duly sworn, declared that she executed the foregoing
Articles of Incorporation and that the statements therein are true and correct
to the best of my knowledge and belief.
Witness my hand and official seal.
/s/______
Notary Public
My commission Expires:
9/9/2000
Address:
455 Sherman Street, Suite 300
Denver, CO 80203
Exhibit 3.2
EUROPA RESOURCES, INC.
BYLAWS
-----------------------
Adopted as of June 25, 1997
<PAGE>
Page ii
EUROPA RESOURCES, INC.
BYLAWS
TABLE OF CONTENTS
Section Page
ARTICLE I
Offices
1.1 Registered Office....................................... 1
1.2 Principal Office........................................ 1
ARTICLE II
Stockholders
2.1 Annual Meeting.......................................... 1
2.2 Special Meeting......................................... 1
2.3 Place of Meeting........................................ 2
2.4 Notice of Meeting....................................... 2
2.5 Adjournment............................................. 2
2.6 Organization............................................ 2
2.7 Closing of Transfer Books or Fixing of Record Date...... 2
2.8 Quorum.................................................. 2
2.9 Proxies................................................. 3
2.10 Voting of Shares........................................ 3
2.11 Action Taken Without a Meeting.......................... 3
2.12 Meetings by Telephone................................... 4
<PAGE>
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Section Page
ARTICLE III
Directors
3.1 Board of Directors; Number; Qualifications; Election.... 4
3.2 Powers of the Board of Directors; Generally............. 4
3.3 Committees of the Board of Directors.................... 4
3.4 Resignation............................................. 4
3.5 Removal................................................. 5
3.6 Vacancies............................................... 5
3.7 Regular Meetings........................................ 5
3.8 Special Meetings........................................ 5
3.9 Notice.................................................. 5
3.10 Quorum.................................................. 5
3.11 Manner of Acting........................................ 5
3.12 Compensation............................................ 5
3.13 Action Taken Without a Meeting.......................... 6
3.14 Meetings by Telephone................................... 6
ARTICLE IV
Officers and Agents
4.1 Officers of the Corporation............................. 6
4.2 Election and Term of Office............................. 6
4.3 Removal................................................. 6
4.4 Vacancies............................................... 7
4.5 President............................................... 7
4.6 Vice Presidents......................................... 7
4.7 Secretary............................................... 7
4.8 Treasurer............................................... 8
4.9 Salaries................................................ 8
4.10 Bonds................................................... 8
<PAGE>
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Section Page
ARTICLE V
Stock
5.1 Certificates............................................ 8
5.2 Record.................................................. 9
5.3 Consideration for Shares................................ 9
5.4 Cancellation of Certificates............................ 10
5.5 Lost Certificates....................................... 10
5.6 Transfer of Shares...................................... 10
5.7 Transfer Agents, Registrars, and Paying Agents......... 10
ARTICLE VI
Indemnification of Officers and Directors
6.1 Indemnification; Advancement of Expenses............... 10
6.2 Insurance and Other Financial Arrangements Against
Liability of Directors, Officers, Employees and Agents... 11
ARTICLE VII
Acquisition of Controlling Interest
7.1 Acquisition of Controlling Interest........................ 11
ARTICLE VIII
Execution of Instruments; Loans, Checks and Endorsements;
Deposits; Proxies
8.1 Execution of Instruments............................. 11
8.2 Loans................................................ 11
8.3 Checks and Endorsements.............................. 12
8.4 Deposits............................................. 12
8.5 Proxies.............................................. 12
8.6 Contracts............................................ 12
<PAGE>
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Section Page
ARTICLE IX
Miscellaneous
9.1 Waivers of Notice................................. 12
9.2 Corporate Seal.................................... 13
9.3 Fiscal Year....................................... 13
9.4 Amendment of Bylaws............................... 13
9.5 Uniformity of Interpretation and Severability..... 13
9.6 Emergency Bylaws.................................. 13
Secretary's Certification.................................... 13
<PAGE>
Page 1
BYLAWS
OF
EUROPA RESOURCES INC.
ARTICLE I
Offices
1.1......Registered Office. The registered office of the Corporation
required by the General Corporation Law of Nevada, Nevada Revised Statutes, 1957
("NRS"), Chapter 78, to be maintained in Nevada may be, but need not be,
identical with the principal office if in Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
1.2......Principal Office. The Corporation may have such other office
or offices either within or outside of the State of Nevada as the business of
the Corporation may require from time to time if so designated by the Board of
Directors.
ARTICLE II
Stockholders
2.1 ....Annual Meeting. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within 18 months after the date on which
the Corporation first has stockholders, and each successive annual meeting shall
be held on a date that is within 18 months after the preceding annual meeting.
2.2 ....Special Meeting. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or the
holders of at least 10% of all of the shares entitled to vote at such a meeting.
Any holder or holders of not less than 10% of all the outstanding shares of the
Corporation who desire to call a special meeting pursuant to this Section 2 of
Article II shall notify the president that a special meeting of the stockholders
shall be called. Within 30 days after notice to the president, the president
shall set the date, time, and location of a stockholders' meeting. The date set
by the president shall be not less that 30 nor more than 120 days after the date
of notice to the president. If the president fails to set the date, time, and
location of special meeting within the 30-day time period described above, the
stockholder or stockholders calling the meeting shall set the date, time, and
location of the special meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other that that stated in the
notice of the meeting.
<PAGE>
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2.3 ....Place of Meeting. The Board of Directors may designate any
place, either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no designation
is made, or if a meeting shall be called otherwise than by the Board, the place
of the meeting shall be the Company's principal offices, whether within or
outside the State of Nevada.
2.4 ....Notice of Meeting. Written notice signed by an officer
designated by the Board of Directors, stating the place, day, and hour of the
meeting and the purpose foe which the meeting is called, shall be delivered
personally or mailed postage prepaid to each stockholder of record entitled to
vote at the meeting not less than 10 nor more days than 60 days before the
meeting. If mailed, such notice shall be directed to the stockholder at his
address as it appears upon the records of the Corporation, and notice shall be
deemed to have been given upon the mailing of any such notice, and the time of
the notice shall be deemed to have been given upon the mailing of any such
notice, and the time of the notice shall begin to run from the date upon which
the notice is deposited in the mail for transmission to the stockholder.
Personal delivery of any such notice to any officer of a corporation or
association, or to any member of a partnership, constitutes delivery of the
notice to the corporation, association or partnership. Any stockholder may waive
notice of any meeting by a writing signed by him, or his duly authorized
attorney, either before of after the meeting.
2.5 ....Adjournment. When a meeting is for any reason adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, any business may be transacted which might have
been transacted at the original meeting.
2.6 ....Organization. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
Corporation, any person appointed by the chairman shall act as secretary of such
meeting. An appropriate number of inspectors for any meeting of stockholders may
be appointed by the chairman of such meeting. Inspectors so appointed will open
and close the polls, will receive and take charge of proxies and ballots, and
will decide all questions as to the qualifications of voters, validity of
proxies and ballots, and the number of votes properly cast.
2.7 ....Closing of Transfer Books or Fixing of Record Date. The
directors may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the Corporation
may be made, or may fix a day not more than 60 days before the holding of any
such meeting as the day as of which stockholders entitled to notice of and to
vote at such meetings must be determined. Only stockholders of record on that
day are entitled to notice or to vote at such a meeting.
<PAGE>
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2.8 ....Quorum. Unless otherwise provided by the Articles of
Incorporation, one-third of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders. If fewer than one-third of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting without further notice for a period not to exceed 60 days at any one
adjournment. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of stockholders so that less than a quorum remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law of the Articles of Incorporation.
2.9 ....Proxies. At all meetings of stockholders, a stockholder may
vote by proxy, as prescribed by law. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after 6 months from the date of its creation, unless it is
coupled with an interest, or unless the stockholder specifies in it the length
of time for which it is to continue in force, which may not exceed 7 years from
the date of its creation.
2.10 ...Voting of Shares. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
stockholders, except as may be otherwise provided in the Articles of
Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution for more or less than one vote per share
for any class or series of shares on any matter, every reference in the Articles
of Incorporation, these Bylaws and the General Corporation Law of Nevada to a
majority or other proportion or number of shares shall be deemed to refer to a
majority or other proportion of the voting power of all of the shares or those
classes or series of shares, as may be required by the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the Articles of Incorporation, or the General Corporation Law of Nevada.
Cumulative voting shall not be allowed. Unless the General Corporation Law of
Nevada, the Articles of Incorporation, or these Bylaws provide for different
proportions, an act of stockholders who hold at least a majority of the voting
power and are present at a meeting at which a quorum is present is the act of
the stockholders.
2.11 ...Action Taken Without a Meeting. Unless otherwise provided in
the Articles of Incorporation or these Bylaws, any action required or permitted
to be taken at a meeting of the stockholders may be taken without a meeting if a
written consent thereto is signed by stockholders holding at least a majority of
<PAGE>
Page 4
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. In no instance where action is authorized by written
consent need a meeting of stockholders be called or notice given. The written
consent must be filed with the minutes of the proceedings of the stockholders.
2.12 ...Meetings by Telephone. Unless other restricted by the Articles
of Incorporation or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes presence
in person at the meeting.
ARTICLE III
Directors
3.1......Board of Directors; Number; Qualifications; Election. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least of 18 years of age. Directors need not be residents of
the State of Nevada or stockholders of the Corporation. The number of Directors
of the Corporation shall be not less than one nor more than twelve. Subject to
such limitations, the number of directors may be increased or decreased by
resolution of the Board of Directors, but no decrease shall have the effect of
shortening the term of any incumbent director. Subject to the provisions of
Article III of the Corporation's Articles of Incorporation, each director shall
hold office until the next annual meeting of shareholders or until his successor
has been elected and qualified.
3.2 .....Powers of the Board of Directors: Generally. Subject only to
such limitations as may be provided by the General Corporation Law of Nevada or
the Articles of Incorporation, the Board of Directors shall have full control
over the affairs of the Corporation.
3.3 .....Committees of the Board of Directors. The Board of Directors
may, by resolution or resolutions passed by a majority of the whole Board
designate one or more committees, each committee to consist of one or more
directors which to the extent provided in the resolution or resolutions or in
these Bylaws shall have and may exercise the powers of the Board of Directors in
the management of the business of the Corporation, and may have the power to
authorize the seal of the Corporation to be affixed to all papers on which the
Corporation desires to place on a seal. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Articles of Incorporation or these Bylaws
provide otherwise, the Board of Directors may appoint natural persons who are
not directors to serve on committees.
<PAGE>
Page 5
3.4 .....Resignation. Any director of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors, the
president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office.
3.5 ....Removal. Except as otherwise provide in the Articles of
Incorporation, any director may be removed, either with or without cause, at any
time by the vote of the stockholders representing not less than two-thirds of
the voting power of the issued and outstanding stock entitled to voting power.
3.6......Vacancies. All vacancies, including those caused by an
increase in the number of directors, may be filled by a majority of the
remaining directors, though less that a quorum, unless it is otherwise provided
in the Articles of Incorporation. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. A director elected
to fill a vacancy caused by an increase in the number of directors shall hold
office until the next annual meeting of stockholders and until his successor has
been elected and has qualified.
3.7......Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice then this Bylaw immediately after and at the
same place as the annual meeting of stockholders. The Board of Directors may
provide by resolution the time and place, either within or outside the State of
Nevada, for the holding of additional regular meetings without other notice than
such resolution.
3.8......Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the president or a one-third of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or outside
Nevada, as the place for holding any special meeting of the Board of Directors
called by them.
3.9......Notice. Notice of any special meeting shall be given at least
two days previously thereto by written notice delivered personally or mailed to
each director at his business address. Any director may waive notice of any
meeting. A director's presence at a meeting shall constitute a waiver of notice
of such meeting if the director's oral consent is entered on the minutes or by
taking part in the deliberations at such a meeting without objecting. Neither
the business to be transacted at, nor the purpose of , any regular or special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
3.10.....Quorum. A majority of the number directors elected and
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but is
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
<PAGE>
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3.11.....Manner of Acting. If a quorum is present, the affirmative vote
of a majority of the directors present at the meeting and entitled to vote on
that particular matter shall be the act of the Board, unless the vote of a
greater number is required by law or by the Articles of Incorporation.
3.12.....Compensation. By resolution of the Board of Directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at such a meeting; or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
3.13.....Action Taken Without a Meeting. Unless otherwise provided in
the Articles of Incorporation or these Bylaws, any action required or permitted
to be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if, before or after the action, a written consent must
be filed with the minutes of the proceedings of the Board or committee.
3.14.....Meetings by Telephone. Unless other restricted by the Articles
of Incorporation or these Bylaws, member of the Board of Directors or any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of a telephone conference or similar method of communication
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at the meeting.
ARTICLE IV
Officers and Agents
4.1......Officers of the Corporation. The Corporation shall have a
president, a secretary, and a treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint one or more vice
presidents and other such officers, assistant officers, committees, and agent,
including a chairman of the board, assistant secretaries, and assistant
treasurers, as they may consider necessary, who shall be chosen in such a manner
and hold their offices for such terms and have such authority and duties as from
time to time may be determined by the Board of Directors. One person may hold
any two or more offices. The officers of the Corporation shall be natural
persons 18 years of age or older. In all cases where the duties of any officer,
agent, or employee are not prescribed by the Bylaws or the Board, such officer,
agent, or employee shall follow the orders and instructions of (a) the
president, and if a chairman of the board has been elected, then (b) the
chairman of the board.
4.2......Election and Term of Office. The officers of the Corporation
shall be elected by the Board of Directors annually at the first meeting of the
Board held after each annual meeting of the stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
<PAGE>
Page 7
thereafter as may be convenient. Each officer shall hold office until the first
of the following occurs: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until he
shall have been removed in the manner hereinafter provided.
4.3......Removal. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgement the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
4.4......Vacancies. A vacancy in an office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
4.5......President. The president shall, subject of the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him, or shall execute, on behalf of the Corporation,
written instruments appointing a proxy or proxies to represent the Corporation,
at all meetings of the stockholders of any other corporation in which the
Corporation shall hold any stock. He may, on behalf of the Corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or proxy as aforesaid, may vote the stock so held by
the Corporation and may execute written consents and other instruments with
respect to such stock and may exercise any and all rights and powers incident to
the ownership of said stock, subject however to the instructions, if any, of the
Board of Directors. The President shall have custody of the treasurer's bond, if
any. If a chairman of the board has been elected, the chairman of the board
shall have, subject to the direction and modification of the Board of Directors,
all the same responsibilities, rights, and obligations as described in these
Bylaws for the president.
4.6......Vice Presidents. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
have the powers and perform the duties of the president. If no such designation
shall be made, all vice presidents may exercise such powers and perform such
duties.
4.7......Secretary. The secretary shall perform the following: (a) keep
the minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors; (b) see that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and affix the seal to all
documents when authorized by the Board of Directors; (d) keep, at the
Corporation's registered office or principal place of business within or outside
Nevada, a record containing the names and addresses of all stockholders and the
<PAGE>
Page 8
number and class of shares held by each, unless such a record shall be kept at
the office of the Corporation's transfer agent or registrar; (e) sign with the
president or vice president, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation, unless the Corporation has a transfer agent; and (g) in general,
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the Board of
Directors. Assistant secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
4.8......Treasurer. The treasurer shall be the principal financial
officer of the Corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness, and other personal property of the
Corporation and shall deposit the same in accordance with the instructions of
the Board of Directors. He shall receive and give receipts and acquittances for
monies paid in or on the account of the Corporation, and shall pay out of the
funds on hand bills, payrolls, and other just debts of the Corporation of
whatever nature upon maturity. He shall perform all other duties incident to the
office of the treasurer and, upon request of the Board, shall make such reports
to it as may be required at any time. He shall, if required by the Board, give
the Corporation a bond in such sums and with such sureties as shall be
satisfactory to the Board, conditioned upon the faithful performance of his
duties and for the restoration to the Corporation of all the books, papers,
vouchers, money, and other property of whatever kind in his possession or under
his control belonging to the Corporation. He shall have such other powers and
perform such other duties as may be from time to time prescribed by the Board of
Directors or the president. The assistant treasurers, if any shall have the same
powers and duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state, and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the president and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
4.9......Salaries. Officers of the Corporation shall be entitled to
such salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10.....Bonds. If the Board of Directors by resolution shall so
require, any officer or agent of the Corporation shall give bond to the
Corporation in such amount and with such surety as the Board of Directors may
deem sufficient, conditioned upon the faithful performance of that officer's or
agent's duties and offices.
<PAGE>
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ARTICLE V
Stock
5.1......Certificates. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by its
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary, and shall be sealed with the seal of
the Corporation, or with a facsimile thereof. Whenever any certificate is
countersigned or otherwise authenticated by a transfer agent or transfer clerk,
and by a registrar, then a facsimile of the signatures of the officers or
agents, the transfer agent or transfer clerk or the registrar of the Corporation
may be printed or lithographed upon the certificate in lieu of the actual
signatures. If the Corporation uses facsimile signatures of its officers and
agents on its stock certificates, it cannot act as the registrar may be
identical if the institution acting in those dual capacities countersigns or
otherwise authenticates any stock certificates in both capacities. In case any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
delivered by the Corporation the certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed the certificates, or whose facsimile signature has been used thereon, had
not ceased to be an officer of the Corporation. If the Corporation is authorized
to issue shares of more than one class or more than one series of any class,
each certificate shall set forth upon the face or back of the certificate or
shall state that the Corporation will furnish to any stockholder upon request
and without charge a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and
determined, and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organizations; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate represents; the par value of each
share represented by such certificate or a statement that the shares are without
par value. Certificates of stock shall be in such form consistent with law as
shall be prescribed by the Board of Directors. No certificate shall be issued
until the shares represented thereby are fully paid.
5.2......Record. A record shall be kept of the name of each person or
other entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in such case of cancellation, the date of cancellation.
The person or other entity in whose name shares of stock stand on the books of
the Corporation shall be deemed the owner thereof, and thus a holder of record
of such shares of stock, for all purposes as regards the Corporation.
<PAGE>
Page 10
5.3......Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from the time by the Board of Directors. That part of the surplus
of a corporation which is transferred to stated capital upon the issuance of
such dividend shares. Such consideration may consist, in whole or in part, of
money, promissory notes, other property, tangible or intangible, or in labor or
services actually performed for the Corporation, contracts for services to be
preformed or other securities of the Corporation.
5.4......Cancellation of Certificates. All certificates surrendered to
the Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
5.5......Lost Certificates. In case of the alleged loss, destruction,
or mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6......Transfer of Shares. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book if the Corporation which shall be kept as its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of any share of
stock as the holder in fact thereof, and accordingly shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or not it shall have
express or other notice thereof, except as may be required by the laws of
Nevada.
5.7......Transfer Agents, Registrars, and Paying Agents. The Board may
at its discretion appoint one or more transfer agents, registrars, and agents
for making payment upon any class of stock, bond, debenture, or other security
of the Corporation. Such agents and registrars may be located either within or
outside Nevada. They shall have such rights and duties and shall be entitled to
such compensation as may be agreed.
ARTICLE VI
Indemnification of Officers an Directors
6.1......Indemnification; Advancement of Expenses. To the fullest
extent permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented, the
<PAGE>
Page 11
Corporation shall indemnify its directors and officers, including payment of
expenses as they are incurred and in advance of the final disposition of any
action, suit, or proceeding. Employees, agents and other persons may be
similarly indemnified by the Corporation, including advancement of expenses, in
such case or cases and to the extent set forth in a resolution or resolutions
adopted by the Board of Directors. No amendment of this Section shall have any
effect on indemnification or advancement or expenses relating to any event
arising prior to the date of such amendment.
6.2......Insurance and Other Financial Arrangements Against Liability
of Directors, Officers, Employees, and Agents. To the fullest extent permitted
by the Laws of the State of Nevada (currently set forth in NRS 78.752 ), as the
same now exists or may hereafter be amended or supplemented, the Corporation may
purchase and maintain insurance and make other financial arrangements on behalf
of any person who is or was a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, for any
liability asserted against such person and liability and expense incurred by
such person in its capacity as a director, officer, employee, or agent, or
arising out of such person's status as such, whether or not the Corporation has
the authority to indemnify such person against such liability and expenses.
ARTICLE VII
Acquisition of Controlling Interest
7.1......Acquisition of Controlling Interest. The provisions of the
General Corporation Law of Nevada pertaining to the acquisition of a controlling
interest ( currently set forth NRS 78.378 to 78.3793, inclusive), as the same
now exists or may hereafter be amended or supplemented, shall not apply to the
Corporation.
ARTICLE VIII
Execution of Instruments; Loans, Checks and Endorsements;
Deposits; Proxies
8.1......Execution of Instruments. The president or any vice president
shall have the power to execute and deliver on behalf of and in the name of the
Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the execution
and delivery thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Unless authorized to do so by
these Bylaws or by the Board of Directors, no officer, agent, or employee shall
have any power or authority to bind the Corporation in any way, to pledge its
credit, or to render it liable peculiarly for any purpose or in any amount.
8.2......Loans. The Corporation may lend money to, guarantee the
obligations of, and otherwise assist directors, officers, and employees of the
Corporation, or directors of another corporation of which the Corporation owns a
majority of the voting stock, only upon compliance with the requirements of the
General Corporation Law of Nevada.
<PAGE>
Page 12
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
8.3......Checks and Endorsements. All checks, drafts, or other orders
for the payment of money, obligations, notes, or other evidences of
indebtedness, bills of lading, warehouse receipts, trade acceptances, and other
such instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board
of Directors, which resolution may provide for the use of facsimile signatures.
8.4......Deposits..........All funds of the Corporation not otherwise
employed shall be deposited from time to time to the Corporation's credit in
such banks or other depositories as shall from time to time be determined by
resolution of the Board of Directors, which resolution may specify the officers
or agents of the Corporation who shall have the power , and the manner in which
such power shall be exercised, to make such deposits and to endorse, assign, and
deliver for collection and deposit checks, drafts, and other orders for the
payment of money payable to the Corporation or its order.
8.5......Proxies. Unless otherwise provided by resolution adopted by
the Board of Directors, the president or any vice president may from time to
time appoint one or more agents or attorneys-in- fact of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the Corporation
may be entitled to cast as the holder of stock or other securities in any other
corporation, association, or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of stock or other
securities of such other corporation, association, or other entity or to consent
in writing, in the name of the Corporation as such holder, to any action by such
other corporation, association, or entity, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on behalf or
the Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
8.6......Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
<PAGE>
Page 13
ARTICLE IX
Miscellaneous
9.1......Waivers of Notice. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these Bylaws,
a waiver thereof in writing signed by the Director, stockholder, or the other
person entitled to said notice, whether before, at, or after the time stated
therein, or his appearance at such meeting in person or (in the case of a
stockholder's meeting) by proxy, shall be equivalent to such notice.
9.2......Corporate Seal. The Board of Directors may adopt a seal
circular in form and bearing the name of the Corporation, the state of its
incorporation, and the word "Seal" which, when adopted, shall constitute the
seal of the Corporation. The seal may be used by causing it or a facsimile of it
to be impressed, affixed, manually reproduced, or rubber stamped with indelible
ink.
9.3......Fiscal Year The Board of Directors may, by resolution, adopt
a fiscal year for the Corporation.
9.4......Amendment of Bylaws. The provisions of these Bylaws may at any
time, and from time to time, be amended, supplemental or repealed by the Board
of Directors.
9.5......Uniformity of Interpretation and Severability. These Bylaws
shall be so interpreted and construed as to conform to the Articles of
Incorporation and the laws of the State of Nevada or of any other state in which
conformity may become necessary by reason of the qualification of the
Corporation to do business in such state, and where conflict between these
Bylaws, the Articles of Incorporation or the laws of such a state has arisen or
shall arise, these Bylaws shall be considered to be modified to the extent, but
only to the extent, conformity shall require. If any provision hereof or the
application thereof shall be deemed to be invalid by reason of the foregoing
sentence, such invalidity shall not affect the validity of the remainder of
these Bylaws without the invalid provision or the application thereof, and the
provisions of these Bylaws are declared to severable.
9.6......Emergency Bylaws. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
SECRETARY'S CERTIFICATION
The undersigned Secretary of Europa Resources Inc.(the "Corporation")
hereby certifies that the foregoing Bylaws are the Bylaws of the Corporation
adopted by the Sole Director as of the 25th day of June, 1997.
By /s/
------------------------------------------
. Ronald Clifford Davis, Secretary
Exhibit 3.3
SPECIMEN COMMON STOCK CERTIFICATE
Number Shares
- --------- ---------
EWRX INTERNET SYSTEMS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
PAR VALUE $0.001 CUSIP NO. 26927N 10 4
COMMON STOCK
THIS CERTIFIES THAT
Is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE OF $0.001 OF
EWRX INTERNET SYSTEMS, INC.
Transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
(facsimile signature) DATED:
President/CEO
Countersigned and Registered:
(facsimile signature)
Treasurer SIGNATURE STOCK TRANSFER, INC.
(Dallas, Texas) Transfer Agent
By
Authorized Signature
(Corporate Seal -
EWRX Internet Systems, Inc.
Nevada)
Exhibit 10.1 (i)
Page 1
EMPLOYMENT AGREEMENT
EWRX Internet Systems, Inc.
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), is dated effective as of May 4,
1999, and is between John Scott Lee ("Employee"), a resident of the State of
Washington, and EWRX Internet Systems, Inc., a Nevada corporation ("EWRX").
WHEREAS, EWRX desires to employ and retain the experience, ability and
services of Employee, and Employee desires to accept employment with EWRX on the
terms and conditions hereinafter provided:
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. EWRX hereby employs Employee in the position of
Vice President. The term of employment shall commence on the date hereof and,
subject to the termination provisions of section 5, end on the third anniversary
date of this Agreement in 2002. Employee shall devote full time services, skill
and ability to the fulfillment of Employee's duties during normal working hours.
2. Compensation: EWRX shall pay Employee a total of $50,000 as a
bonus for signing this Agreement. Such bonus shall be paid in two equal
installments of $25,000 - one installment upon signing this Agreement and the
second installment on July 1, 1999. In consideration of the services to be
rendered by Employee hereunder, EWRX shall pay Employee a salary of $75,000.00
per year in 12 equal monthly installments. EWRX shall comply with all applicable
employment, state and federal income tax withholding requirements, including
FICA and FUTA, related to Employee's employment hereunder. Employee has had the
opportunity to consult with his own tax advisor regarding this Agreement and the
income tax and other tax effects hereof.
3. Benefits. Employee shall receive two-two week vacations
annually on a schedule to be approved by EWRX. Such vacation shall be scheduled
so that Employee and Dan Jondron (who is the other key employee who worked at
and was an officer of Classic Car Source Inc.) will not take vacations during
the same time period. Employee shall be eligible to participate in all employee
benefit programs which now or in the future are made generally available to
employees of EWRX, on and subject to the terms of those programs. Such programs
shall include insurance, 401(k) plans, and health and dental programs, if such
programs are made available to other employees based in the United States.
<PAGE>
Page 2
4. Business Expenses. Employee shall be reimbursed for all
reasonable business expenses upon presentation to EWRX of an itemized accounting
therefor, together with such receipts, vouchers and other verifications as EWRX
may reasonably require. From time to time Employee may be required to travel in
the performance of duties under this Agreement. Employee shall be reimbursed for
all reasonable hotel, meal, airfare, and vehicle rental costs.
5. Termination of Employment.
(a) Termination by Employee. Employee may terminate this
Agreement without cause on the third anniversary date
hereof in 2002 by providing written notice of
termination to EWRX at least 60 days prior to such
termination. If Employee voluntarily terminates this
Agreement at any time before such date, Employee
waives the right to any compensation not yet earned
at the time of such termination and shall be entitled
only to such earned at the time of such termination
and shall be entitled to such severance benefits, if
any, as may be provided under the standard employee
policies of EWRX.
(b) Termination by EWRX. During the term of this
Agreement, EWRX may terminate Employee's employment
under this Agreement only for cause. Termination of
Employee's employment by EWRX other than for cause
shall obligate EWRX to pay to Employee an amount
equal to the number of full months salary remaining
in this Agreement as of the effective date of such
termination. For purposes of this section 5,
termination for "cause" shall have a meaning
consistent with the interpretation given that phrase
by courts in the State of Nevada.
(c) Termination as the Result of Non-delivery of Shares.
EWRX is obligated to deliver R 144 shares of EWRX stock
to Employee and others who signed the Stock Purchase
and Sale Agreement dated April 11, 1999. If for any
reason EWRX does not instruct the Stock Transfer Agent
to deliver and such shares are not mailed to an
individual CCS and DFPG Sellers (as such terms are
defined in the April 11, 1999 Stock Purchase and Sale
Agreement) on or before June 7, 1999, Employee may
terminate this Agreement on or before June 14, 1999.
Stock certificates mailed and returned as undelivered,
or where the current address of a CCS or NFPG
shareholder cannot be determined, shall be retained by
EWRX for later delivery. The existence of such "lost"
shareholders shall not give rise to Employee's right of
termination. Both parties shall use reasonable efforts
to locate any lost shareholders.
6. Proprietary Information. Employee agrees not to directly or indirectly,
publish, disclose, or make available to anyone other than EWRX, its agents,
representatives or employees, any confidential information relating to the
<PAGE>
Page 3
development of concepts, operations, business or affairs of EWRX. Employee
shall, upon termination of this Agreement, surrender to EWRX any and all
confidential information, date, documents or other papers or records in his
possession or under his control relating to the development of concepts,
operations, business or affairs of EWRX or Employee's employment hereunder. For
the purposes of this section, "confidential information" shall include, but not
be limited to, all information relating to EWRX and the business of EWRX which
is proprietary, from which EWRX derives economic or other benefit, or which EWRX
otherwise attempts to keep confidential as a matter of company policy and
practice, unless the same is generally known and available to the public.
Employee's agreement not to disclose or use such confidential information shall
be effective during the full term of Employee's employment hereunder, regardless
of whether the full term is completed, and for an additional two years
thereafter.
7. Noncompetition during term of Employment. In the event
Employee's employment hereunder is terminated by Employee without cause, or
terminated by EWRX for cause, from the effective date of such termination
through the scheduled term of this Agreement, Employee shall not, without the
prior written consent of EWRX, directly or indirectly, engage in or perform any
services on a full-time, part-time, consulting or advisory basis, or become an
employee of or financially interested in any business or undertaking that is,
directly or indirectly, competitive with the business, operations or affairs of
EWRX or its subsidiaries at the time of termination in such business, operations
or affairs conducted by EWRX. Employee agrees that the remedy at law for any
breach of the foregoing agreement not to compete and any injury resulting to
EWRX therefrom may be inadequate and that if such a breach and injury are
proven, EWRX shall, in addition, to monetary damages, be entitled to injunctive
relief for any such breach.
8. Noncompetition during Term of Employment. Employee also agrees
that, for two years after Employee's employment, Employee shall not acquire,
directly or indirectly, any interest in any business, concept or idea about
which Employee gained or had access to confidential information in connection
with his employment with EWRX. For purposes of this section 8, the phrase
"acquire, directly or indirectly, any interest" shall include, but not be
limited to, participating as an officer, director, employee, agent,
representative or consultant or being a shareholder, partner, joint venturer or
similar relationship of any entity or person involved in the acquisition of such
business concept or idea. For purposes of this section 8, "EWRX" shall include
EWRX Internet Systems, Inc. and all of its subsidiaries.
9. Amendments. This Agreement may not be changed, waived
discharged or terminated orally. Such change, waiver, discharge or termination
may be only by an instrument in writing, signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
10. Successors. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
other, except that this Agreement shall be binding upon and inure to the benefit
<PAGE>
Page 4
of any successors or assigns of EWRX, whether by merger, consolidation, sale of
assets or otherwise. Reference herein to EWRX shall be deemed to include any
such successors or assigns.
11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Nevada.
12. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to be duly given if personally
delivered, or if mailed by prepaid mail addressed to the address shown on the
signature page of this Agreement, or to such other address as the addressee of
the notice shall have directed in writing.
13. Arbitration. In the event of a dispute under this Agreement,
the parties agree to negotiate in good faith for the satisfactory resolution of
such dispute. Failing satisfactory resolution within a reasonable time, either
party may submit the matter to binding arbitration by a single arbitrator.
Arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and shall be held at a place
selected by the arbitrator unless the parties agree otherwise. The costs and
expenses of arbitration, including the reasonable attorneys' fees of both
parties, shall be borne by the party which does not prevail, unless the
arbitrator rules otherwise.
14. Captions. The captions applied to the paragraphs of this
Agreement are for convenience only and shall not control nor affect the
meaning or construction of any of the provisions of this Agreement.
15. Waiver. The failure of either party to insist in any one or
more instances upon performance of any terms or conditions of this Agreement
shall not be construed as a waiver of future performance of any such term,
covenant or condition, but the obligation of either party with respect thereto
shall continue in full force and effect.
16. Entire Agreement. This Agreement shall supersede and be in lieu
of all other agreements and understandings, whether written or oral, and
contains the entire agreement of the parties relating to the employment of
Employee by EWRX.
<PAGE>
Page 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EWRX Internet Systems, Inc.
___/s/______________ By:__/s/__________________
Employee Ronald C. Davis, President & CEO
Employee's Address for notice
John Scott Lee EWRX Internet Systems, Inc.
#301-543 Granville Street
P.O. Box 103 Vancouver, B.C.
-----------------------------
Canada V6C 1X8
Marblemount, WA Attn.: President
Phone: 604-669-6079
Da98267 Fax: 604-669-6042
Phone: 360-873-4567
Fax: 360-738-4815
Exhibit 10.1 (ii)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), is dated effective as of May 4,
1999, and is between Dan Jondron ("Employee"), a resident of the State of
Washington, and EWRX Internet Systems, Inc., a Nevada corporation ("EWRX").
WHEREAS, EWRX desires to employ and retain the experience, ability and
services of Employee, and Employee desires to accept employment with EWRX on the
terms and conditions hereinafter provided:
NOW, THEREFORE, the parties hereto agree as follows:
1........Employment. EWRX hereby employs Employee in the position of
President of Classic Car Source/North Fork Publishing. The term of employment
shall commence on the date hereof and, subject to the termination provisions of
section 5, end on the third anniversary date of this Agreement in 2002. Employee
shall devote full time services, skill and ability to the fulfillment of
Employee's duties during normal working hours.
2........Compensation: EWRX shall pay Employee a total of $50,000 as a
bonus for signing this Agreement. Such bonus shall be paid in two equal
installments of $25,000 - one installment upon signing this Agreement and the
second installment on July 1, 1999. In consideration of the services to be
rendered by Employee hereunder, EWRX shall pay Employee a salary of $85,000.00
per year in 12 equal monthly installments. EWRX shall comply with all applicable
employment, state and federal income tax withholding requirements, including
FICA and FUTA, related to Employee's employment hereunder. Employee has had the
opportunity to consult with his own tax advisor regarding this Agreement and the
income tax and other tax effects hereof.
3........Benefits. Employee shall receive two-two week vacations
annually on a schedule to be approved by EWRX. Such vacation shall be scheduled
so that Employee and John Scott Lee (who is the other key employee who worked at
and was an officer of Classic Car Source Inc.) will not take vacations during
the same time period. Employee shall be eligible to participate in all employee
benefit programs which now or in the future are made generally available to
employees of EWRX, on and subject to the terms of those programs. Such programs
shall include insurance, 401(k) plans, and health and dental programs, if such
programs are made available to other employees based in the United States.
<PAGE>
Page 2
4........Business Expenses. Employee shall be reimbursed for all
reasonable business expenses upon presentation to EWRX of an itemized accounting
therefor, together with such receipts, vouchers and other verifications as EWRX
may reasonably require. From time to time Employee may be required to travel in
the performance of duties under this Agreement. Employee shall be reimbursed for
all reasonable hotel, meal, airfare, and vehicle rental costs.
5. Termination of Employment.
(a) Termination by Employee. Employee may terminate this
Agreement without cause on the third anniversary date
hereof in 2002 by providing written notice of
termination to EWRX at least 60 days prior to such
termination. If Employee voluntarily terminates this
Agreement at any time before such date, Employee
waives the right to any compensation not yet earned
at the time of such termination and shall be entitled
only to such earned at the time of such termination
and shall be entitled to such severance benefits, if
any, as may be provided under the standard employee
policies of EWRX.
(b) Termination by EWRX. During the term of this
Agreement, EWRX may terminate Employee's employment
under this Agreement only for cause. Termination of
Employee's employment by EWRX other than for cause
shall obligate EWRX to pay to Employee an amount
equal to the number of full months salary remaining
in this Agreement as of the effective date of such
termination. For purposes of this section 5,
termination for "cause" shall have a meaning
consistent with the interpretation given that phrase
by courts in the State of Nevada.
(c) Termination as the Result of Non-delivery of Shares.
EWRX is obligated to deliver R 144 shares of EWRX stock
to Employee and others who signed the Stock Purchase
and Sale Agreement dated April 11, 1999. If for any
reason EWRX does not instruct the Stock Transfer Agent
to deliver and such shares are not mailed to an
individual CCS and DFPG Sellers (as such terms are
defined in the April 11, 1999 Stock Purchase and Sale
Agreement) on or before June 7, 1999, Employee may
terminate this Agreement on or before June 14, 1999.
Stock certificates mailed and returned as undelivered,
or where the current address of a CCS or NFPG
shareholder cannot be determined, shall be retained by
EWRX for later delivery. The existence of such "lost"
shareholders shall not give rise to Employee's right of
termination. Both parties shall use reasonable efforts
to locate any lost shareholders.
<PAGE>
Page 3
6. Proprietary Information. Employee agrees not to directly or
indirectly, publish, disclose, or make available to anyone other than EWRX, its
agents, representatives or employees, any confidential information relating to
the development of concepts, operations, business or affairs of EWRX. Employee
shall, upon termination of this Agreement, surrender to EWRX any and all
confidential information, date, documents or other papers or records in his
possession or under his control relating to the development of concepts,
operations, business or affairs of EWRX or Employee's employment hereunder. For
the purposes of this section, "confidential information" shall include, but not
be limited to, all information relating to EWRX and the business of EWRX which
is proprietary, from which EWRX derives economic or other benefit, or which EWRX
otherwise attempts to keep confidential as a matter of company policy and
practice, unless the same is generally known and available to the public.
Employee's agreement not to disclose or use such confidential information shall
be effective during the full term of Employee's employment hereunder, regardless
of whether the full term is completed, and for an additional two years
thereafter.
7. Noncompetition during Term of Employment. In the event Employee's
employment hereunder is terminated by Employee without cause, or terminated by
EWRX for cause, from the effective date of such termination through the
scheduled term of this Agreement, Employee shall not, without the prior written
consent of EWRX, directly or indirectly, engage in or perform any services on a
full time, part time, consulting or advisory basis, or become an employee of or
financially interested in any business or undertaking that is, directly or
indirectly, competitive with the business, operations or affairs of EWRX or its
subsidiaries at the time of termination in such business, operations or affairs
conducted by EWRX Employee agrees that the remedy at law for any breach of the
foregoing agreement not to compete and any injury resulting to EWRX therefrom
may be inadequate and that if such breach and injury are proven, EWRX shall, in
addition, to monetary damages, be entitled to injunctive relief for any such
breach.
8. Noncompetition after Term of Employment. Employee also agrees that,
for two years after Employee's employment, Employee shall not acquire, directly
or indirectly, any Interest in any business, concept or idea about which
Employee gained or had access to confidential information in connection with his
employment with access to EWRX. For purposes of this section 8, the phrase
"acquire, directly or indirectly, any interest" shall include, but not be
limited to, participating as an officer, director, employee, agent,
representative or consultant or being a shareholder, partner, joint venturer or
similar relationship of any entity or person involved in the acquisition or such
business concept or idea. For purposes of this section 8, EWRX shall include
EWRX Internet Systems, Inc. and all of its subsidiaries.
9. Amendments. This Agreement may not be changed, waived discharged or
terminated orally. Such change, waiver, discharge or termination may be only by
an instrument in writing, signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
<PAGE>
Page 4
10. ..Successors. Neither this Agreement nor any rights or obligations
hereunder may be assigned by one party without the consent of the other, except
that this Agreement shall be binding upon and inure to the benefit of any
successors or assigns of EWRX, whether by merger, consolidation, sale of assets
or otherwise. Reference herein to EWRX shall be deemed to include any such
successors or assigns.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Nevada.
12.......Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to be duly given if personally
delivered, or if mailed by prepaid mail addressed to the address shown on the
signature page of this Agreement, or to such other address as the addressee of
the notice shall have directed in writing.
13.......Arbitration. In the event of a dispute under this Agreement,
the parties agree to negotiate in good faith for the satisfactory resolution of
such dispute. Failing satisfactory resolution within a reasonable time, either
party may submit the matter to binding arbitration by a single arbitrator.
Arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and shall be held at a place
selected by the arbitrator unless the parties agree otherwise. The costs and
expenses of arbitration, including the reasonable attorneys' fees of both
parties, shall be borne by the party which does not prevail, unless the
arbitrator rules otherwise.
14. ....Captions. The captions applied to the paragraphs of this
Agreement are for convenience only and shall not control nor affect the
meaning or construction of any of the provisions of this Agreement.
15. ....Waiver. The failure of either party to insist in any one or
more instances upon performance of any terms or conditions of this Agreement
shall not be construed as a waiver of future performance of any such term,
covenant or condition, but the obligation of either party with respect thereto
shall continue in full force and effect.
16.......Entire Agreement. This Agreement shall supersede and be in
lieu of all other agreements and understandings, whether written or oral, and
contains the entire agreement of the parties relating to the employment of
Employee by EWRX.
<PAGE>
Page 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EWRX Internet Systems, Inc.
___/s/______________ By:__/s/__________________
Employee Ronald C. Davis, President & CEO
Employee's Address for notice
1200 Harris Ave #104 EWRX Internet Systems, Inc.
--------------------
#301-543 Granville Street
Bellingham, WA 98225 Vancouver, B.C.
Canada V6C 1X8
_______________________ Attn.: President
Phone: 604-669-6079
_______________________ Fax: 604-669-6042
Phone: 360-303-2316
Fax: 360-738-4815
Exhibit 10.4
Page 1
LETTER OF INTENT - EWRX INTERNET SYSTEMS INC. & XCEED, INC.
EWRX Internet Systems, Inc. ("EWRX") is interested in retaining Xceed, Inc. to
provide certain Internet development consulting services for its two
subsidiaries, Classic Car Source, Incorporated and North Fork Webwrx
Incorporated. The intent of both parties is to immediately complete a contract
for the development of Classic Car Source, initiate work on the Classic Car
Source contract and complete a definitive services agreement to define long-term
services and business relationships.
The terms of this letter of intent are as follows:
1. Xceed, Inc. will provide a project scope of work, detailed spec sheets
of all work to be performed by Xceed and Northfork, project schedule
(milestones), work plan, estimate of cost for each of the items
provided in their Appendix A: Budget and Schedule and a definitive
contract.
2. The priority items for the work for the Classicar.com site are:
Back end database: MS SQL Server 7.0 Solution, including site license,
database development, implementation
Programming and Implementation: Bulletin boards, event posting, chat,
etc.
Administration areas:
Password protected areas for site administrators and moderators For
easy In-house updates, including programming, implementation and
training
3. EWRX anticipates that as part of the initial $50,000 of expenditures by
EWRX, Xceed, Inc. will provide the project scope of work, project
schedule, work plan and estimate of cost for $20,000 and initiate and
complete portions of the work items in Item 2 in this letter (as
defined and agreed to Item 1 above), for the remaining $30,000.
4. EWRX will pay Xceed, Inc. $20,000 upon signing this letter of intent
and release additional portions of the $30,000 from an account held by
a third-party as Xceed, Inc. provides evidence of work completed.
5. EWRX will also release additional funds as part of the total estimate
of $300,000 to $350,000 to provide continuity of work, regardless of
whether the definitive services contract has been consummated. Such
work will be based on the schedule and work plan developed under Item 1
of the letter and payment will be made upon evidence of completion of
such work.
<PAGE>
Page 2
6. The intent of EWRX and Xceed, Inc. us also to develop a strategic
alliance to provide Internet consulting services and design between
Xceed, Inc. and North Fork Webwrx Incorporated. As part of the
alliance, Xceed Inc. will have first right of refusal to provide
services to EWRX and subsidiaries on a competitive basis similar to
those included in this letter of Intent and the definitive services
contract and both companies will use the alliance to promote their
individual businesses and companies.
7. The intent of EWRX is to include Xceed, Inc. as a financial partner of
EWRX including equity ownership in EWRX by Xceed, Inc. and to
participate in other business partnerships, acquisitions and business
development. Upon mutual agreement between EWRX and Xceed, Inc., EWRX
will issue shares of common stock of the company up to a total value of
$150,000 for services provided by security regulations. EWRX will
provide piggyback rights to any such issuance and add a warrant
consideration as an added incentive. These shares shall be a part
payment for the services provided for in the definitive agreement.
8. As a result of this letter of Intent EWRX and Xceed, Inc. agree to
consummate a definitive services contract on at timely basis based on
this letter of Intent and subject to approval of the respective Board
of Directors of each company. The general format of the agreement
provided by Xceed, Inc. on June 11, 1999 is agreeable to EWRX with each
company providing applicable changes as a result of this letter of
Intent and advice of legal counsel.
Agreed to this day of July, 1999
--------------------------
For EWRX Internet Systems Inc.
Ronald C. Davis
President and CEO
For Xceed, Inc.
James Altucher
Co-CEO/President
Exhibit 10.5 (i)
EWRX INTERNET SYSTEMS INC.
Stock Option Plan
ARTICLE I - GENERAL
1.01. Purpose. The purposes of this Stock Option Plan (the "Plan") are
to: (1) closely associate the interests of the management of EWRX Internet
Systems Inc. and its Subsidiaries and Affiliates (collectively referred to as
the "Company") with the shareholders by reinforcing the relationship between
participants' rewards and shareholder gains; recognizing that such persons will
be largely responsible for the future growth and success of the Company, (2)
provide management with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; (4) provide an incentive to directors,
management and other key employees for continuous employment with the Company
and (5) provide alternative types of stock options: incentive stock options
("ISO") and Non-Qualified stock options ("NQO"). ISO's are intended to have the
rights and limitations set forth in Internal Revenue Code ss. 422.
1.02. Administration.
(a) The Plan shall be administered by a Compensation Committee
appointed by the Board of Directors of the Company (the
"Committee"), as constituted from time to time.
(b) The Committee shall have the authority, in its sole discretion
and from time to time to:
(i) designate the individuals eligible to
participate in the Plan;
(ii) grant awards provided in the Plan in such
form and amount as the Committee shall
determine;
(iii) impose the price at which the option may be
exercised and such limitations, restrictions
and conditions upon any such award as the
Committee shall deem appropriate; and
(iv) interpret the Plan, adopt, amend and rescind
rules and regulations relating to the Plan,
and make all other determinations and take
all other action necessary or advisable for
the implementation and administration of the
Plan.
<PAGE>
Page 2
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be
conclusive.
(d) An option granted hereunder shall be clearly identified as an ISO
or NQO.
(e) Notwithstanding the foregoing provisions, nothing herein shall be
deemed to prohibit (i) the full Board of Directors from approving
grants of options, or (ii) a majority of voting shareholders of
the Company from approving or ratifying grants of options at a
duly called meeting (in the case of ratfication, held no later
than the date of the next annual meeting of shareholders). It is
the intention of this paragraph to permit grants of options under
this Plan to have the full benefit of the provisions of Rule
16b-3 under the Securities Exchange Act of 1934, as applicable.
1.03. Eligibility for Participation. Participants in the Plan shall be
selected by the Committee from the directors, officers, managers, and other key
employees of the Company who occupy responsible managerial or professional
positions, may also include outside consultants, all of whom have the capability
of making a substantial contribution to the success of the Company. In making
this selection and in determining the form and amount of awards, the Committee
shall consider any factors deemed relevant, including the individual's
functions, responsibilities, value of services to the Company and past and
potential contributions to the Company's profitability and sound growth.
1.04.Types of Awards Under Plan. Awards under the Plan may be in the
form of any one or more of the following:
(i) Non-Qualified Stock Options, as described in Article II; and
(ii) Incentive Stock Options, as described in Article III.
1.05. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of the Company's
Common Stock ("Common Stock"). The maximum number of shares of
Common Stock, which may be issued under the Plan, shall be
1,584,360 shares, subject to increases approved by the
shareholders of the Company.
(b) Any shares of Common Stock subject to a Non-Qualified Stock
Option or Incentive Stock Option which for any reason is
terminated unexercised or expires shall again be available for
issuance under the Plan.
1.06 Effective Date and Term of Plan.
(a) The Plan shall become effective on the date approved by the
holders of a majority of the shares of Common Stock present in
person or by proxy and entitled to vote at duly called meeting of
Shareholders of the Company to be called to consider and vote
upon the Plan.
(b) No awards shall be made under the Plan after the last day of the
Company's fiscal year ending in 2008 provided, however, that the
Plan and all awards made under the Plan prior to such date shall
remain in effect until such awards have been satisfied or
terminated in accordance with the Plan and the terms of such
awards.
<PAGE>
Page 3
ARTICLE II -NON-QUALIFIED STOCK OPTIONS
2.01. Award of Non-Qualified Stock Options. The Committee may from time
to time, and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
one or more options to purchase for cash the number of shares of Common Stock
("NQO") allocated by the Committee. The date an NQO is granted shall mean the
date selected by the Committee as of which the Committee allocates a specific
number of shares to a participant pursuant to the Plan.
2.02. Stock Option Agreements. The grant of an NQO shall be evidenced
by a written Stock Option Agreement, executed by the Company and the holder of
options (the "Optionee"), stating the number of shares of Common Stock subject
to the Stock Option evidenced thereby, and in such form as the Committee may
from time to time determine.
2.03. Stock Option Price. The option price per share of Common Stock
deliverable upon the exercise of an NQO shall be set by the Board of Directors
based on Fair Market Value at the time options are granted by the Board of
Directors.
2.04. Term and Exercise. Each NQO shall be fully exercisable for a
period designated by the Committee not to exceed five years from the date of
grant thereof (the "option term"). No NQO shall be exercisable after the
expiration of its option term.
2.05. Manner of Payment. Each Stock Option Agreement shall set forth
the procedure governing the exercise of the Stock Option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of Common Stock
subject thereto, the Optionee shall pay to the Company, in full, the option
price for such shares with cash or good funds.
2.06. Delivery of Stock Certificates. As soon as practicable after
receipt of cash payment or good funds as full payment, the Company shall deliver
to the Optionee a certificate or certificates for such shares of Common Stock.
The Optionee shall become a shareholder of the Company with respect to Common
Stock represented by share certificates so issued and as such shall be fully
entitled to receive dividends, to vote and to exercise all other rights of a
shareholder.
<PAGE>
2.07. Death of Optionee.
(a) Upon the death of an Optionee, any rights which have become
exercisable on or before the date of death may be exercised by
the Optionee's estate, or by a person who acquires the right to
exercise such Stock Option by bequest or inheritance following
the death of the Optionee, provided that such exercise occurs
within both the remaining effective term of the Stock Option and
one year after the Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the
fact that the Optionee's employment may have terminated prior to
death, but only to the extent of any rights which were
exercisable on the date of death.
<PAGE>
2.08. Retirement or Disability. Upon termination of the Optionee's
employment by reason of retirement or permanent disability (as each is
determined by the Committee), the Optionee may, within 36 months from the date
of termination, exercise any NQO's to the extent such options had become
exercisable on or before such termination of employment.
2.09. Termination for Other Reasons. Except as provided in Sections
2.07 and 2.08, or except as otherwise determined by the Committee, all
unexercised NQO's shall terminate 30 days after the termination of the
Optionee's employment or contractual arrangement with the Company.
ARTICLE III - INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options. The Committee may, from time to
time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any officer, director or key
employee in the Plan one or more "Incentive Stock Options" (intended to qualify
as such under the provisions of section 422 of the Internal Revenue Code of
1986, as amended ("ISO") to purchase for cash the number of shares of Common
Stock allotted by the Committee. The date an ISO is granted shall mean the date
selected by the Committee as of which the Committee allots a specific number of
ISO's to a participant pursuant to the Plan.
3.02. Incentive Stock Option Agreements. The grant of an ISO shall be
evidenced by a written Incentive Stock Option Agreement, executed by the Company
and "Optionee"), stating the number of shares of Common Stock subject to the ISO
evidenced thereby, and in such form as the Committee may from time to time
determine.
3.03. Incentive Stock Option Price. The option price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option shall be
100% of the Fair Market Value of a share of Common Stock on the date the
Incentive Stock Option is granted or 110% of such value if granted to a person
owning in excess of 10% of the Company's outstanding stock.
3.04. Term and Exercise. Each ISO shall be fully exercisable one month
from the date of its grant and unless a longer period is provided by the
Committee and may be exercised during a period of determined by the Committee
from the date of grant thereof, (not to exceed five years) (the "Option Term")
or less if so specified by the Committee. No ISO shall be exercisable after the
expiration of its Option Term.
3.05. Maximum Amount of Incentive Stock Option Grant. The aggregate
fair market value (determined on the date the option is granted) of Common Stock
subject to an ISO granted to an Optionee which may be exercised for the first
time by such Optionee in any calendar year shall not exceed $100,000.
<PAGE>
3.06. Death of Optionee.
(a) Upon the death of the Optionee, any ISO which had become
exercisable on or before the date of death may be exercised by the Optionee's
estate or by a person who acquires the right to exercise such ISO by bequest or
inheritance following the death of the Optionee, provided that such exercise
occurs within both the remaining option term of the ISO and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to death, but
only to the extent of any ISO which were exercisable on the date of death.
3.07. Retirement or Disability. Upon the termination of the Optionee's
employment by reason of permanent disability or retirement (as each is
determined by the Committee), the Optionee may, within 36 months from the date
of such termination of employment, exercise any ISO's to the extent such ISO's
had become exercisable on or before the date of such termination of employment.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Internal Revenue Code of 1986 upon the exercise of an ISO will not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
12 months after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of employment due
to retirement.
3.08. Termination for Other Reasons. Except as provided in Sections
3.06 and 3.07 or except as otherwise determined by the Committee, all Incentive
Stock Options shall terminate 30 days after the termination of the Optionee's
employment or contractual arrangement with the Company.
3.09. Applicability of Stock Options Sections. Sections 2.05 and 2.06
shall also apply to Incentive Stock Options. Said Sections are incorporated by
reference in this Article III as though fully set forth herein.
ARTICLE IV - MISCELLANEOUS
4.01. General Restriction. Each award under the Plan shall be subject
to the requirement that, if at any time the Committee shall determine that (i)
the listing, registration or qualification of the shares of Common Stock subject
or related thereto upon any securities exchange or under any state or Federal
law, or (ii) the consent or approval of any government regulatory body, or (iii)
an agreement by the grantee of an award with respect to the disposition of
shares of Common Stock, is necessary or desirable as a condition of, or in
connection with, the granting of such award or the issue or purchase of shares
of Common Stock thereunder, such award may not be consummated in whole or in
part unless such listings, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee. The certificates evidencing ownership of shares of
Common Stock acquired upon exercise of any Stock Option or Incentive Stock
Option awarded under the Plan shall bear such legends as the Committee shall
approve as necessary or desirable to conform to applicable laws and regulations
relating to the sale of securities.
<PAGE>
4.02. Non-Assignability. No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution. During the life of the recipient, such award shall be
exercisable only by such person or by such person's guardian or legal
representative.
4.03. Withholding Taxes. Whenever the company proposes or is required
to issue or transfer shares of Common Stock under the Plan, the Company shall
have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Alternatively, the Company may issue or transfer such shares of Common
Stock net of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.
4.04. Right to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or effect any right which
the Company may have to terminate the employment of such participant.
4.05. Non-Uniform Determinations. The Committee's determinations under
the Plan (including without limitation determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions of
such awards and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
4.06. Rights as a Shareholder. The recipient of any award under the
Plan shall have no rights as a shareholder with respect thereto unless and until
certificates for shares of Common Stock are issued to him.
4.07. Definitions. In this Plan the following definitions shall apply:
(a) "Subsidiary" means any corporation of which, at the time more than 50% of
the shares entitled to vote generally in an election of directors are owned
directly or indirectly by EWRX Internet Systems Inc. or any subsidiary thereof.
(b) "Affiliate" means any person or entity which directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with EWRX Internet Systems Inc.
<PAGE>
(c) "Fair Market Value" as of any date and in respect of any share of Common
Stock means the average of the closing price for the late five trading date or
on the next business day, if such date is not a business day, of a share of
Common Stock on any stock exchange or any stock market upon which the Common
Stock may then be listed or traded, or if the Common Stock is not so listed or
traded then the fair market value of shares of Common Stock shall be as
determined by the Committee in such other manner as it may deem appropriate. In
no event shall the fair market value of any share of Common Stock be less than
its par value.
(d) "Option price" means the purchase price per share of Common Stock
deliverable upon the exercise of a Stock Option or Incentive Stock Option.
(e) "Optionee" means the holder of a stock option as described in Article II or
in Incentive Stock Option as described in Article III.
(f) "Optioned Shares" means the number of shares the Optionee is entitled as a
result of his being granted options in the Stock Option Plan.
(g) "Non-Qualified Stock Option" refers to non-qualified stock options under
Article II.
(h) "Incentive Stock Option" refers to stock options under Article III.
4.08. Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of any award. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine (i) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan and (ii) the impact, if
any, of any such leave of absence on awards under the Plan theretofore made to
any recipient who takes such leave of absence.
4.09. Newly Eligible Employees. The Committee shall be entitled to make
such rules, regulations, determinations and awards as it deems appropriate in
respect of any employee who becomes eligible to participate in the Plan or any
portion thereof after the commencement of an award or incentive period.
4.10. Adjustments.
Effect of Take-over Bid
If a bona fide offer ("the Offer") for Shares is made to
shareholders generally or to a class of shareholders which includes the
Optionee, which Offer, if accepted in whole or in part, would result in
<PAGE>
the offeror exercising control over the Company within the meaning of
Nevada Statutes, then the Company shall, immediately upon receipt of
the notice of the Offer, notify shareholders with full particulars
thereof. Such Option may be exercised in whole or in part by the
Optionee so as to permit the Optionee to tender the Optioned Shares
pursuant to the Offer if the offer is completed.
Effect of Amalgamation, Consolidation or Merger
If the Company amalgamates, consolidates or with or merges
with into another company any Shares receivable on the exercise of an
Option shall be converted into securities or cash which the Optionee
would have received upon such amalgamation, consolidated or merger if
the Optionee had exercised his Option immediately prior to the record
date applicable to such amalgamation, consolidation or merger, and the
option price shall be adjusted appropriately by the Board.
Adjustment in Shares Subject to the Plan
If there is any change in the shares through or by means of a
declaration of stock dividends of Shares of consolidations,
subdivisions or reclassification of Shares, or otherwise, the number of
Shares available under the Plan, the Shares subject to any Option, and
the purchase price thereof shall be adjusted appropriately by the
Committee and such adjustment shall be effective and binding for all
purposes of the Plan.
4.11. Amendment of the Plan.
(a) The Committee may, without further action by the shareholders and
without receiving further consideration from the participants, amend this Plan
or condition or modify awards under the Plan in response to changes in
securities or other laws or rules, regulations or regulatory interpretations
(b) The Committee may at any time and from time to time terminate or modify
or amend the Plan in any respect, except that without shareholder approval the
Committee may not (i) increase the maximum number of shares of Common Stock
which may be issued under the Plan, (ii) extend the period during which any
award may be granted or exercised or (iii) change the persons eligible to
receive ISO's. The termination or any modification or amendment of the Plan,
except as provided in subsection (a), shall not, without the consent of a
participant, affect a participant's rights under an award previously granted.
4.12. No Representations or Warranty
The Company makes no representation or warranty as to the future market
value of any shares issued in accordance with the provisions of the Plan.
<PAGE>
4.13. Interpretation
The Plan will be governed by and construed in accordance with the laws
of the State of Nevada.
4.14. Compliance with Applicable Law
If any provision of the Plan or any agreement entered into pursuant to
the Plan contravenes any law or any order, policy, by-law or regulation of any
regulatory body or stock exchange having authority over the Company or the Plan,
then such provision shall be deemed to be amended to the extent required to
bring such provision into compliance therewith.
4.15 Stock Appreciation Rights, Etc.
The grant of Options hereunder may be accompanied by grant of stock
appreciation rights, rights to have stock withheld or rights to deliver stock
already owned in payment of the exercise price of an option. The terms and
conditions of such rights shall be set forth in the agreement evidencing such
Options or amendments thereto.
Exhibit 10.5(ii)
EWRX INTERNET SYSTEMS INC.
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE STOCK OPTION PLAN
(ADOPTED MAY 6, 1999)
May 6, 1999
Name
Address
Dear---------:
We are pleased to inform you that the Board of Directors of EWRX
Internet Systems Inc. ("the Company") has selected you to receive an option to
purchase a total of ____________ shares of the Company's common stock, $0.001
par value (the "Common Stock"). This option is granted pursuant to, and subject
to the terms of the Company's Stock Option Plan (the "Plan") adopted May 6,
1999, as amended, and the terms of the Plan are incorporated into this
Agreement. The Company intends to file and will provide you a copy of a
Registration Statement on Form S-8 to register shares to be issued under the
Plan.
You are advised to consult your tax adviser regarding the tax effects
of accepting this option, of exercising this option, or of disposing of any of
the shares acquired pursuant to this option.
Without limiting the specificity of the terms of the Plan, some of the
terms of your option are summarized as follows:
1. Number of Shares. This option entitles you to purchase up to
____________ shares of Common Stock of the Company.
2. Exercise Price. _________ per share.
3. Date of Grant. _________________
4. Term of the option. This option must be exercised by
______________(five years from the date of this option) unless
it is sooner terminated in accordance with the provisions
below.
5. Type of Option-Conditions.This option will be an "Incentive Stock
Option" as that term is defined in Section 422A of the Internal
Revenue Code of 1986, as amended. The Optionee acknowledges
receipt of a copy of the Plan, a copy of which is annexed hereto,
and represents that he is familiar with the terms and provisions
thereof. The Optionee hereby accepts this Option subject to all
the terms and provisions of the Plan. The Optionee hereby agrees
<PAGE>
to accept as binding, conclusive, and final all decisions and
interpretations of the Board of Directors and, where applicable,
the Compensation Committee, upon any questions arising under the
Plan. As a condition of issuance of shares of Common Stock of the
Company under this Option, the Optionee authorizes the Company to
withhold in accordance with applicable law from any regular cash
compensation payable to him any taxes required to be withheld by
the Company under federal, state or local law as a result of his
exercise of this Option.
6. Vesting. One-quarter of this option is vested effective
immediately. A further one-quarter of this option will become
vested on __________ (1 year), another one-quarter vested on
___________ (2 years) and the final quarter, to complete vesting
on _______________ (3 years). Vesting shall cease immediately
upon termination of employment.
7. Termination of Option. A number of events, such as death or
termination of your employment by retirement or for any other
reason, can cause termination of this option. This option
terminates according to the Plan, the time of such termination
depending upon whether such termination is for cause,
retirement or by death.
8. Non-transferability of Option. This option cannot be
transferred, except by will or under the applicable laws of
descent and distribution.
9. Purchase for Investment. This Option may not be exercised if
the issuance of shares of Common Stock of the Company upon
such exercise would constitute a violation of any applicable
federal or state securities or other law or valid regulation.
The Optionee, as a condition to his exercise of this option,
represents to the Company that the shares of the Common Stock
of the Company that he acquires under this Option are being
acquired by him for investment and not with a view to
distribution or resale. The Optionee further represents that
he has substantial knowledge and experience in financial and
business matters and has sufficient knowledge and information
with respect to the affairs of the Company from which to make
an informed investment decision with respect to the Option
herein granted
Very truly yours,
By:____________________
Ronald C. Davis
President & CEO
EWRX Internet Systems Inc.
Accepted:
By:______________________________
CC: William R. Wilson
<PAGE>
EWRX INTERNET SYSTEMS INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE STOCK OPTION PLAN
(ADOPTED MAY 6, 1999)
May ----- 1999
A. A Non-Qualified Stock Option for a total __________ shares of Common Stock,
par value $0.001, of EWRX Internet Systems Inc., a Nevada corporation (herein
the "Company") is hereby granted to _____________ (herein the "Optionee"),
subject in all respects to the terms and provisions of the Stock Option Plan of
the EWRX Internet Systems Inc. (herein known as the "Plan"), which has been
adopted by the Company on May 6, 1999, as amended, and which is included herein
by reference.
B. The Option price is _____ per share.
C. This Option may not be exercised if the issuance of shares of Common Stock of
the Company upon such exercise would constitute a violation of any applicable
federal or state securities or other law or valid regulation. The Optionee, as a
condition to his exercise of this option, represents to the Company that the
shares of the Common Stock of the Company that he acquires under this Option are
being acquired by him for investment and not with a view to distribution or
resale. The Optionee further represents that he has substantial knowledge and
experience in financial and business matters and has sufficient knowledge and
information with respect to the affairs of the Company from which to make an
informed investment decision with respect to the Option herein granted.
D. The Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that he is familiar with the terms and provisions
thereof. The Optionee hereby accepts this Option subject to all the terms and
provisions of the Plan. The Optionee hereby agrees to accept as binding,
conclusive, and final all decisions and interpretations of the Board of
Directors and, where applicable, the Compensation Committee, upon any questions
arising under the Plan. As a condition of issuance of shares of Common Stock of
the Company under this Option, the Optionee authorizes the Company to withhold
in accordance with applicable law from any regular cash compensation payable to
him any taxes required to be withheld by the Company under federal, state or
local law as a result of his exercise of this Option.
E. This Option may not be transferred in any manner otherwise than by will or
the laws of descent and distribution, any may be exercised during the lifetime
of the Optionee only by him. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors, and assigns of the Optionee.
F. This Option shall terminate in accordance with the provisions relating to
Non-Qualified Options in the Plan, and in any event five years from the date
hereof. This Option shall be exercised prior to such date only in accordance
with the terms of the Plan.
Dated effective ______, 1999.
EWRX Internet Systems Inc.
A Nevada Corporation
By:___________________________
"OPTIONEE"
- -----------------------------
Name
Exhibit 21.1 (i)
EWRX INTERNET SYSTEMS INC.
WHOLLY-OWNED SUBSIDIARIES
Classic Car Source, Incorporated
C/O Dan Jondron, President
1200 Harris Avenue, Suite 104
Bellingham, Washington 98225
1-800-945-4077
(360) 738-4815 FAX
Incorporated in the State of Washington, March 13, 1996
Dba as Classicar.com
North Fork Publishing Group Incorporated
C/O Dan Jondron, President
1200 Harris Avenue, Suite 104
Bellingham, Washington 98225
1-800-945-4077
(360) 738-4815 FAX
Incorporated in the State of Washington, March 13, 1996
Dba as North Fork WebWrx
EWRX Internet Systems (Canada) Inc.
Ronald C. Davis, President
#301 - 543 Granville Street
Vancouver, BC Canada V6C 1X8
(604) 669-6079
(604) 669-6042 FAX
Incorporated in British Columbia, June 1,1999
COMPANY STRUCTURE
Following is a written explanation of a flow chart of the structure of EWRX
Internet Systems Inc. and developmental status of each element of the structure.
EWRX INTERNET SYSTEMS INC.
EWRX is the public vehicle that provides and oversees finance, management,
administration, marketing, operations, support, legal, accounting and technical
development and programming services for all subsidiaries and/or divisions.
(fully operational)
OPERATIONS
Provides day to day operational, technical and programming services to the EWRX
network and works closely with EWRX strategic partner Xceed Inc. and the EWRX
Internet Advisory Board.
(fully operational)
NORTH FORK WEBWRX
The website development and maintenance arm of EWRX. It is involved in the
day-to-day sales and marketing of all EWRX Internet websites-Banner Ads, etc. As
well as building websites for clients from the Automotive Aftermarket.
(operational)
SPECIAL PROJECTS DIVISION
Is within North Fork Webwrx and specializes in Internet related projects,
website development, programming etc. for clients which are outside the
Automotive Aftermarket.
(operational)
MOTORWRX.COM
This is the main gateway (Portal) to the Specialty Automotive Aftermarket
community being built by EWRX. Motorwrx.com provides easy access to the millions
of enthusiasts worldwide.
(under construction)
CLASSICAR.COM
Classicar.com is the cornerstone of Motorwrx.com and provides stability and
millions of viewers to the network
(fully operational)
<PAGE>
CLASSICTRUCKSHOP.COM
Another cornerstone of Motorwrx.com. Provides stability and millions of viewers
to the network.
(fully operational)
MOTORHOOD.COM
A new website just launched by EWRX. The Motorhood is focused on aggregating the
thousands of hobbyists who have developed valuable automotive content sites that
are currently hosted by such companies as Geocities, Angelfire and Tripod. As in
the case of these other companies, The Motorhood will allow users to build
substantial websites for free. EWRX will realize significant revenues by selling
banner advertising on these hobbyist sites. Motorhood will create large amounts
of traffic to Motorwrx.com through a natural cross-pollination from one site to
another.
(under construction)
TRAVELWRX.COM
Travelwrx.com will provide Motorwrx.com users with discount travel packages for
Industry related special events such as races, trade shows, live auctions,
automotive "flea markets", car club meets etc.
(in negotiations to be acquired)
BIG BAD CATALOGUE.COM
Will be the home to hundreds of digitized Automotive Parts Catalogues from a
wide variety of Specialty Automotive Aftermarket companies. From Classicar parts
to custom car and full racing parts, Big Bad Catalogue.com represents a major
division of EWRX. It is presently under development and is generating
substantial interest from a number of large part manufacturers and wholesalers.
(under construction)
OFF-ROAD.NET
Preliminary negotiations have commenced regarding the purchase of an established
off-road website. The off-road , four-wheel drive market is a primary segment of
the Specialty Automotive Aftermarket.
(in preliminary discussions)
ROD & CUSTOMS
Presently Classicar.com Website has an existing Rod & Custom section. However,
this section must be segmented from Classicar.com into its own Website. This
particular site may be enhanced by acquisition or can be built up from within
the EWRX network.
(under construction)
RACING & STREET PERFORMANCE
This market segment represents 24% of the Specialty Automotive Aftermarket and
is a primary segment to Motorwrx.com. Several acquisitioned targets are being
evaluated. Because of the size of this market, a joint venture with an
established website may be considered as opposed to an outright acquisition.
(under evaluation)
The Board of Directors
EWRX Internet Systems, Inc.
We consent to the use of our reports included herein.
Jackson & Rhodes P.C.
Dallas, Texas
July 30, 1999
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