As filed with the Securities and Exchange Commission on September __, 1999
Registration No.__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ISW INTERNATIONAL, INC.
(Name of Small Business Issuer in its charter)
Florida
(State or jurisdiction of ________________________
incorporation or organization) (Primary Standard Industrial
Classification Code Number)
59-3413904
(I.R.S. Employer Identification Number)
363 Atlantic Blvd., Suite 6
Atlantic Beach, FL 32233
(904) 247-2627
(Address, including zip code, and telephone number, including area code, of
principal executive offices and principal place of business)
Allen Weatherby
363 Atlantic Blvd., Suite 6
Atlantic Beach, FL 32233
(904) 247-2627
(Name, address, including zip code, and telephone number, including area code,
of agent for service)Copies to:
Gregory E. Lindley
Ray, Quinney & Nebeker
79 South Main, Suite 500
Salt Lake City, UT 84111
(801) 532-1500
Approximate date of proposed sale to the public: As soon as practicable
following effectiveness
of the Registration
Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------- ---------------------- ----------------------- ---------------------- --------------------
Proposed Proposed
Title of Each Maximum Maximum
Class of Securities Dollar Amount Offering Price Aggregate Amount of
to be Registered To be Registered Per Unit Offering Price Registration Fee
---------------- ---------------- -------- -------------- ----------------
<S> <C> <C> <C> <C>
Common Stock $1,500,000 $1.00 $1,500,000 $417*
- --------------------------- ---------------------- ----------------------- ---------------------- --------------------
</TABLE>
*Minimum Fee
The registrant may amend this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine. Disclosure Alternative used (check one): Alternative 1 __
Alternative 2 X
--
<PAGE>
PROSPECTUS
ISW International, Inc.
363 Atlantic Blvd., Suite 6
Atlantic Beach, FL 32233
(904) 247-2627
1,500,000 Shares of Common Stock
Price per security (share): $1.00 per share
Maximum Number of Minimum Number of
Securities Offered: Securities Offered:
1,500,000 shares 500,000 shares
Investing in ISW International, Inc. ("ISW International") involves
significant risks. Investors need to read the "Risk Factors" beginning on page
3.
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Offering Proceeds
Price to Public Commissions to Company
--------------- ----------- ----------
<S> <C> <C> <C>
Per Share $1.00 $0.08 $0.92
Total Minimum $500,000 $40,000 $460,000
Maximum $1,500,000 $120,000 $1,380,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
o At least 500,000 shares of common stock must be sold for this
offering to close. If at least 500,000 shares are not sold, the
offering will be terminated and all investor funds will be
refunded without interest or deduction of any kind.
o This offering is not underwritten. However, shares will be sold
through Travis Morgan Securities, Inc., as placement agent, at an
8% commission rate. Commissions apply only to shares actually sold
by the placement agent.
o The net proceeds to ISW International shown above is before
deduction of offering expenses estimated at $70,500, including
legal, accounting fees and printing costs.
o There is no public market for our common stock.
The date of this prospectus is September ___, 1999.
1
<PAGE>
PROSPECTUS SUMMARY
This is a brief summary of the information in this prospectus. We encourage
you to read the entire prospectus before you decide whether and how to invest in
the shares offered.
ISW International
- -----------------
ISW International, based in Atlantic Beach, Florida, was organized in
November 1995 and commenced operations in January 1996. We produce and market
Ice-Tech Advanced Polarized Sunglasses. We are one of approximately five
national all-polarized sunglasses companies and one of the few national
all-polarized companies offering glass-polarized lenses to enter the market in
the last five years.
Our Ice-Tech Advanced Polarized Lenses feature a "12-element" lens system,
where many of our competitors' polarized glasses feature only 8 layers or less.
We believe that this technology allows us to produce technically advanced
lenses. We have filed for protection of the Ice-Tech trademark and are filing
for patents for all of our proprietary designs and engineering from the US
Patent & Trademark office. The polarized sunglasses market grew during the
1990s. We hope to capture a portion of the polarized sunglasses market.
2
<PAGE>
The Offering
- ------------
o Securities Offered: Up to 1,500,000 shares of ISW International
common stock.
o Use of Proceeds: Net proceeds from this offering of up to
$1,309,500 will be used for:
o general and administrative expenses
o marketing and promotion of products
o product purchases
o Escrow Account: Subscription proceeds will be deposited
into an escrow account pending receipt of
subscriptions totaling $500,000 or
termination of the offering.
o This Offering This offering will close whenever at least
Will Expire: 500,000 shares of common stock are sold, or
on February 15, 1999.
o Summary Financial We have been operating for about 3 1/2
Data: years and still have never shown a profit.
We had a net loss of $76,174 in the first
six months of 1999, a net loss of $212,946
in 1998 and a net loss of $250,138 in 1997.
o 8% Brokerage ISW International's shares will be sold
Commissions: through Travis Morgan Securities, Inc., at
at an 8% commission rate. Commissions apply
only to shares actually sold by the Travis
Morgan Securities, Inc.
3
<PAGE>
RISK FACTORS RELATING TO OUR INDUSTRY
o The demand for our products is subject to rapidly changing tastes and
preferences in the fashion industry.
Demand and market acceptance of high-end sunglasses is subject to
constantly changing fashions and economic conditions. Despite the high quality
level of Ice Tech lenses, style is an important consideration for sunglasses
consumers. Marketing an image for our sunglasses has been a major focus of our
operations. However, we have no assurances that the image and style of our
sunglasses will ever appeal to consumers. Even if our products do appeal to
consumers, because they may be considered luxury products by consumers, a
downward economic trend may negatively affect sales.
o We may not be able to compete successfully with larger, more established
sunglasses companies.
Competition in the sunglasses industry is significant. We will be competing
with numerous sizable brands of sunglasses that are sold both in the United
States and abroad, including Oakley, Ray-Ban, Bolle, Maui Jim, Costa Del Mar,
Revo, Giorgio Armani and Hobie, to name a few. Most of our competitors' brands
are owned by extremely large and financially healthy companies. They have a
substantial market share and name recognition, and easy access to marketing
outlets and capital. Many of these companies are able to frequently update and
expand products and services, introduce new products and services, and to
diversify product and service offerings. Moreover, other companies with
substantially greater financial, creative and marketing resources, and proven
histories, may decide to enter and effectively compete in this market.
o The market for polarized sunglasses may be limited.
The demand for polarized sunglasses has been growing since. However, the
increasing demand for polarized sunglasses may not continue. A stop in growth
could make it more difficult for us to compete with other more established
companies.
RISK FACTORS RELATING TO OUR BUSINESS
o ISW International is a development stage company and has a history of
operating losses.
We were organized in November 1995 and have been in operation since January
1996. To date, our activities have included establishing relationships with
suppliers and contract manufacturers, establishing a distribution network and
commencing our initial marketing and sales efforts. We have been in operation
for 3 1/2 years and have still never shown a profit. We had a net loss of
$76,174 in the first six months of 1999, a net loss of $212,946 in 1998 and a
net loss of $250,138 in 1997. We anticipate operating at a loss for a period of
at least several more months, until demand for our products increases and we
improve our retailer network for the marketing of our products. Therefore, we
face all of the risks inherent in the formation and operation of a growing
business, and there can be no assurance that our business will be developed
successfully, operate profitably or that we will be able to continue as a going
concern.
o The current financing may be insufficient to expand or continue the
business until we become profitable.
Our ability to continue business activities is dependent on obtaining
funding through this offering. The net proceeds from this offering will only be
sufficient to fund our operations for a period of two years, if the entire
offering is sold, and six months, if only the minimum offering is sold. While we
believe the funds from the offering will be sufficient to pay back loans,
purchase inventory, cover certain general and administrative expenses and
marketing costs, for a period of up to two years, the proceeds will be
insufficient to cover greatly expanded marketing efforts or to fund any of these
costs thereafter. Unless we achieve a positive cash flow from the sale of our
products within 6 months to 18 months from the date of this prospectus, we will
be in need of additional funds. We cannot be sure that such profitability will
be achieved, and unforeseen circumstances could occur which could compel us to
seek additional funds, particularly if only the minimum offering is sold. Even
if we do achieve a positive cash flow within 6 months to 18 months from the date
of this prospectus, we will have very limited funds available for expanded
operations. Additional financing may not be available if needed, or if
available, may not be available on favorable terms.
o We are primarily dependent upon a single individual for the success of our
business.
We will be particularly dependent on Allen Weatherby, President, in the
development and management of our business. Mr. Weatherby will devote
substantially all of his working hours to our affairs. While Mr. Weatherby has a
varied business background, he does not have extensive experience in the
particular business we are undertaking. We have not obtained keyman insurance on
his life, and do not intend to do so in the foreseeable future. The loss of his
services could have a substantial detrimental impact on our ability to continue
operating.
o We have no market research or other data to indicate that our products and
services will be accepted in the market place.
We have not conducted any formal independent research or market study to
ascertain whether, and to what extent, our products will be accepted by
consumers. Our business is being undertaken solely on management's evaluation
that we have a product which will be attractive to consumers in the sunglasses
market. We are not certain that our products will be well received in the
marketplace, or that we will be able to create, through our marketing efforts, a
demand for our products.
o We may have interruptions in supplies and services from our manufacturers,
suppliers or distributors.
We completely rely on outside manufacturers and suppliers to assemble and
package our products and accessories. We do not expect to have any long-term
purchase contracts with any of our suppliers or manufacturers and therefore
cannot be assured of a continued and uninterrupted supply of goods and services.
Alternative manufacturers and suppliers exist, but we cannot give any assurance
that supply or service relationships with alternative sources can be established
or that such relationships could provide timely and sufficient quantity or
quality of materials, or quality of service. In addition, we may incur
additional costs and business delays and interruptions, in obtaining supplies,
materials and products from alternative sources.
4
<PAGE>
o Our technology may be rendered inferior by further advances in the
sunglasses industry.
We believe our polarized sunglasses are the most technologically advanced
in the industry. However, as breakthroughs are constantly made we may be unable
to keep up with advances made by other companies.
GENERAL RISKS RELATING TO THIS OFFERING
o Investors may have to hold their stock indefinitely because there is no
public market for the stock.
At the present time, there is no public market for our securities. We do
not know if a public market for our common stock will develop following the
offering. As a result, purchasers of the common stock offered hereby may not be
able to liquidate their investment readily, if at all. We have not engaged the
services of an underwriter with respect to this offering and, as a result, there
is a greater risk that no market for our securities will develop following the
offering.
o Future sales of our common stock in the public market could adversely
affect our stock price and our ability to raise funds in new stock
offerings.
Presently, we have 5,784,456 shares of common stock outstanding. About a
quarter of the shares of our outstanding common stock, 1,520,055 shares, are not
restricted and may be resold at anytime. The remaining 4,264,401 shares of
outstanding common stock are "restricted securities" within the meaning of the
Securities Act of 1933. As such, if a public market for the common stock
develops in the future, a portion of this stock may be sold as early as August
31, 1999, in reliance on Rule 144 adopted under the Securities Act. Sales of
stock, under Rule 144 or otherwise, may cause our stock price to drop in any
market which may develop.
o Investors who purchase shares will suffer immediate dilution and the
management has a right to further dilute investors.
5
<PAGE>
Collectively, the existing stockholders now own 5,784,456 shares of our
common stock, for which they paid an aggregate total of $647,520, $34,222 of
which was for services and $87,500 was compensation to Allen Weatherby. If all
1,500,000 shares offered in this offering are sold, the current stockholders
will still own approximately 79.4% of the common stock, and the other purchasers
in this offering will own the other 20.6%, for which they will have paid
$1,500,000 cash. Moreover, our directors can issue additional stock, without
stockholder approval, which would result in stockholders owning an even smaller
percentage of our stock.
o The "penny stock" rules could make it more difficult for investors who want
to resell their shares.
Because ISW International's Common Stock may be construed to be a "penny
stock", sales of the Common Stock by stockholders may be subject to many
requirements. These requirements may discourage a stockholder's broker-dealer
from selling the stockholder's Common Stock and make it more difficult for a
stockholder to sell his or her shares into any secondary trading market for the
Common Stock.
o Because we have not engaged a broker-dealer to sell the stock we are
offering, we may not be able to sell all of the stock and raise all the
money we need.
The stock we are offering will be sold by our officers. Because our
officers are not in the business of selling securities, they may be unable to
sell enough stock for us to meet the minimum, in which case, all investor funds
will be returned. They may also not be able to sell all of the stock and we will
only have enough money to operate for a approximately 6 months. We would then
have to try and raise additional funds, which we may not be able to do. If we
could not, we could not continue in operation.
6
<PAGE>
DILUTION
As of June 30, 1999, our net tangible book value (total tangible assets
less total liabilities) was negative ($49,453), or approximately negative
($0.009) per share. The following table sets forth the dilution to persons
purchasing shares in this offering without taking into account any changes in
our net tangible book value after June 30, 1999, except the sale of the minimum
and maximum number of shares offered at the public offering price and receipt of
the net proceeds therefrom. The value of our stock could be further diluted upon
the exercise of non-dilutive warrants to purchase currently unissued stock by
Invest Linc Consulting Corp. of up to 5% of our outstanding stock at an exercise
price of $0.33.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------- ------------------ -----------------
Assuming Assuming
Minimum Maximum
Shares Sold Shares Sold
- --------------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Public offering price per share $1.000 $1.000
Net tangible book value before offering(1) ($0.009) ($0.009)
Increase attributable to purchase of shares by new investors $0.06 $0.18
Pro forma net tangible book value after offering(2)(3) $0.05 $0.17
Dilution per share to new investors(4) $0.95 $0.83
Percent dilution to new investors 95% 83%
- --------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
(1) Determined by dividing the number of shares of common stock outstanding into
the net tangible book value.
(2) After deduction of offering expenses estimated at $70,500 and 8% placement
fee.
(3) These figures do not take into account any events after June 30, 1999.
(4) These figures do not take into account warrants held by Invest Linc
Consulting Corp. for the purchase of 304,445 shares of common stock at
$0.333 per share which equals 5.263% or 5%, non-diluted, of the ISW
International's current outstanding equity securities.
7
<PAGE>
COMPARATIVE DATA
The following chart illustrates percentage ownership held by the present
stockholders and by the public investors in this offering and sets forth a
comparison of the amounts paid by the present stockholders and by the public
investors.
<TABLE>
<CAPTION>
- --------------------------------------- ------------------------------ ---------------------------- -----------------
Total Shares Purchased Total Consideration Average
------------------------------ ---------------------------- Price
Number Percent Amount Percent Per Share
----------------- ------------ --------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Present Stockholders
Minimum Offering 5,784,456 92.0 $647,520 56.4 $0.1119
Maximum Offering 5,784,456 79.4 $647,520 30.2 $0.1119
New Investors
Minimum Offering 500,000 8.0 $500,000 43.6 $1.00
Maximum Offering 1,500,000 20.6 $1,500,000 69.8 $1.00
- --------------------------------------- ----------------- ------------ --------------- ------------ -----------------
</TABLE>
8
<PAGE>
USE OF PROCEEDS
We estimate net proceeds from the sale of all 1,500,000 shares of common
stock to be approximately $1,309,500, if the entire offering is sold, after
deducting expenses of this offering. If only the minimum offering is sold, we
will receive net proceeds of approximately $389,500, after deduction of such
offering expenses.
We propose to use the net proceeds from this offering in the following
general amounts and order of priority:
<TABLE>
<CAPTION>
- --------------------------------------------------------- ------------------------------ ----------------------------
Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
------------------------------ ----------------------------
Number Percent Amount Percent
----------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C> <C>
1. Investor relations and Public relations $ 30,000 8.0 $ 30,000 2.2
2. General administrative expenses, telephone, $ 89,875 23.0 $ 426,500 32.6
reproduction, loan repayments and general
office costs
3. Marketing and promotional costs $ 89,875 23.0 $ 426,500 32.6
4. Inventory $179,750 46.0 $ 426,500 32.6
-------- ---- --------- ----
TOTAL $389,500 100% $1,309,500 100%
- --------------------------------------------------------- ----------------- ------------ ---------------- -----------
</TABLE>
We have based these expenditures on our present intentions for the next six
months of our operations. We anticipate that these amounts may change as
dictated by market conditions and by the amount that we raise in this offering.
The net proceeds from this offering will fund operations for a period of up
to two years. If only the minimum offering is sold, the net proceeds will fund
ISW International for a period of up to six months. Therefore, within a few
months from the completion of the offering, if only the minimum offering is
raised, we will either need to be operating profitably so as to fund our
operations from cash flow, or be required to seek additional debt or equity
capital. In addition, financial circumstances could occur that could compel us
to seek additional funds even sooner. Moreover, we will need additional capital
should we decide to significantly expand operations. We cannot be certain that
additional funds will be available when needed, or if available, on favorable
terms.
We do not intend to become an investment company under the Investment
Company Act of 1940 and, therefore, may be limited in the temporary investments
we can make with the proceeds of this offering. To the extent that the net
proceeds of this offering are not utilized immediately, they will be invested in
money market accounts, savings deposits, short-term obligations of the United
States government, or other temporary interest bearing investments in commercial
financial institutions.
9
<PAGE>
BUSINESS
General
- -------
ISW International, based in Atlantic Beach, Florida, was organized in
November 1995 and commenced operations in January 1996. We produce and market
Ice-Tech Advanced Polarized Sunglasses. Our Ice-Tech Advanced Polarized Lenses
have a "12-element" lens system, where many of our competitors' polarized
glasses use only 8 layers or less. We believe that this technology allows us to
produce technically advanced lenses. We have filed for protection of the
Ice-Tech trademark and are filing for patents for our proprietary designs and
engineering from the US Patent & Trademark office. The polarized sunglasses
market grew during the 1990s. We hope to initially capture a portion of the
polarized sunglasses market. However, we may not be successful in any of these
efforts. We still have a minute market share and have no history of profitable
operations.
Plan of Operations
- ------------------
We have completed the development of our initial products, and have
produced an inventory of our products. We plan to devote our efforts in the next
twelve months to increasing our sales network, marketing and promoting our
products for the purpose of establishing our products in the marketplace, and
maintaining, to the extent our funds allow, the production of our sunglasses to
meet anticipated demand. Most of our product distribution is via independent
sales representatives who take orders for Ice-Tech products. To date, we have
distributed our sunglasses in the United States directly to specialty
independent sunglasses retailers, independent optical retailers, and specialty
sport retailers. We anticipate that inventory expansion will allow us to pursue
both small and large multi-store operators in specialty sunglasses retailers
such as Sunglass Hut, optical retailers such as Lens Crafters or optometrists,
and specialty sport retailers such as bicycle shops and outdoor recreation
stores. We plan to continue our efforts to expand these distribution channels
and add direct company sales representatives exclusively representing the
Ice-Tech line.
10
<PAGE>
If the maximum offering is completed, we believe we will have sufficient
funding to satisfy our cash requirements for the next two years. We may need to
seek additional debt or equity capital to meet our cash requirements unless net
revenue from sales of products generates sufficient capital. Revenue from
operations may not be sufficient to provide us with funds to meet our cash
requirements.
Industry and Market Overview
- ----------------------------
Total sales in the polarized sunglasses industry is hundreds of millions of
dollars annually. Although we have not conducted any formal market studies or
analyses of the polarized sunglasses industry in undertaking our business, our
management believes there is a growth trend. The polarized sunglasses industry
in general has enjoyed growth in the past five years and it appears that it will
continue to grow. Consequently, management believes that sale of polarized
sunglasses has legitimate profit potential.
The rapid growth trend in the polarized sunglasses industry is recent and
not easy to predict. The polarized sunglasses market is subject to changing
consumer demands and trends and while sales of polarized sunglasses have grown
significantly over the past several years, there can be no assurance that such
growth will continue or that these trends will not be reversed. Our success will
depend on our ability to anticipate and respond to changing consumer demands and
trends and other factors affecting the polarized sunglasses industry. Failure to
respond to such factors in a timely manner could have a material adverse effect.
11
<PAGE>
Products
- --------
We manufacture our sunglasses through a contract manufacturer. After we
design the frames in house, we develop the tooling necessary to produce the
designs with the contract manufacturer. Our primary supplier is responsible for
manufacturing, edging and insertion of the lenses. Our products are manufactured
in various parts of Asia. The frames and lenses are manufactured in Japan, while
the cases for the sunglasses are manufactured in China. All marketing support
materials are manufactured and printed in the United States. These materials
include product displays, sales literature, etc.
We do not currently have, and do not expect to have, any long term
contracts with any manufacturers, suppliers or other sources of polarized
sunglasses, cases or support materials. We cannot give any assurance that our
relationships with any manufacturers, suppliers or other sources of polarized
sunglasses, cases or support materials will continue or that alternative sources
can be established.
Marketing
- ---------
We believe the popularity of motor sports is increasing and are targeting
the motor sports audience with athletes, racecar drivers and teams endorsing and
wearing Ice-Tech sunglasses. We currently do not have any endorsement contracts.
This year, our products will be exposed to over four million people personally
attending motor sports events and millions more on television. Motorsports are
frequently televised on networks and cable stations. In 1998, over 50 major
events were televised. By targeting the motor sports arena, we hope to increase
our market share. Advertising will begin with magazines in low volume
publications that have a target market readership. As we grow and expand, we
intend to commence television advertising targeted to motor sports programming.
There is no assurance that we will be successful in our efforts to
establish sales through celebrity endorsement, print and television advertising
or distribution channels, as described. Due to our extremely limited resources,
we may not be able to pursue many of these marketing strategies simultaneously
without substantial additional capital.
12
<PAGE>
Pricing and Profit
- ------------------
The retail price for the Ice-Tech line ranges from $99 to $349. We will
attempt to price our products so as to achieve a gross profit margin of at least
50%.
Distribution
- ------------
Distribution in the United States is accomplished by a combination of
direct relationships with larger national accounts and other key small accounts
that we can cover directly. In addition to ISW International's direct sales
force, key independent sales representatives will handle certain accounts. These
sales representatives will call on established accounts in the following three
categories of trade:
o Specialty sunglasses locations
o Optical retailers
o Specialty sport retailers
We initially intend to distribute our products in the United States, Canada
and Australia. Distribution in Europe will be attempted if these markets become
established.
Domestically, we will market our products through traditional retail
channels. We currently use several independent sales representatives and one
direct Ice-Tech sales representative to distribute our products. If funds allow,
we intend to add additional direct Ice-Tech sales representatives. The Ice-Tech
line has already been introduced to several retailers with some positive
results.
We intend to make Ice-Tech products available at a discounted price to
foreign distributors because we do not plan to incur the expense of any
additional advertisements outside of the United States.
Competition
- -----------
Competition in the polarized sunglasses industry is intense. We will be
competing with a number of sizable companies marketing polarized sunglasses in
the United States and abroad, which are extremely large and financially healthy
companies, that have substantial market share, name recognition, easy access to
marketing outlets and access to capital. Many of these companies are able to
frequently update and expand products, introduce new products, and to diversify
product offerings. Because of the growth in the polarized sunglasses market, we
believe there is a good possibility that we will be able to initially capture a
portion of this market. However, there can be no assurance that other companies
with substantially greater financial, creative and marketing resources, and
proven histories, will not effectively compete in this market.
Employees
- ---------
We presently employ Allen Weatherby, and certain clerical staff on an "as
needed" basis. As our business grows, we anticipate that we will need to employ
additional salaried clerical staff and sales personnel.
Offices
- -------
We presently lease approximately 1,000 square feet of office space. The
monthly lease rate is $935 plus common area maintenance. We believe this office
space and related equipment is adequate for our foreseeable needs.
13
<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION
Overview of Business Plan
- -------------------------
We have completed the development of our initial products, and have
produced an inventory of our products. We plan to devote our efforts in the next
twelve months to increasing our sales network, marketing and promoting our
products for the purpose of establishing our products in the marketplace, and
maintaining, to the extent our funds allow, the production of our products to
meet anticipated demand. Our marketing efforts will focus on using various motor
sports personalities, such as NASCAR drivers, to endorse our products. Our
intent is for these celebrity endorsements to create a positive image and demand
for our sunglasses.
Results of Operations
- ---------------------
The following discussion and analysis should be read in conjunction with
ISW International's Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The discussion of results, causes and trends
should not be construed to imply any conclusion that such results or trends will
necessarily continue in the future. For purposes of the following discussion,
ISW International's results for the six months ended June 30, 1998, as reflected
in its unaudited financial statements for the period then ended, have been
compared with its unaudited, interim results for the six months ended June 30,
1999.
14
<PAGE>
Results of Operations - Six Month Periods Ended June 30, 1998 and 1999
- ----------------------------------------------------------------------
Sales Revenues
- --------------
Sale revenues for the six months ended June 30, 1999 were $12,690, a
decrease of $6,768, or 34.8% from $19,458 for the six months ended June 30,
1998. This decrease is attributable to our failure to allocate funds toward
marketing our products, and possibly, a decline in consumer interest in our
sunglasses.
Management anticipates that future sales will be dependent upon ISW
International increasing inventory, expanding marketing efforts, hiring
additional full-time sales personnel and establishing relationships with
retailers.
Cost of Goods Sold
- ------------------
Cost of goods sold decreased by $10,696, or 73%, to $4,060 in the 1999
six-month period from $14,756 in the 1998 six-month period. This decrease is
primarily due to decreased sales and better control of expenses. Cost of goods
sold as a percentage of product sales decreased to 32% in the 1999 period from
75.8% in the 1998 period. This dramatic decrease in the cost of goods sold
should not be viewed as a definite trend as our low sales during these periods
prohibit the use of this information for predictive purposes. The cost of goods
sold has been a larger percentage of sales during our formative years due to the
fact that certain non recurring costs and fixed costs have been included. These
costs become a much smaller percentage of sales as the number of sunglasses sold
increases. . We believe that the cost of goods sold will be approximately 50% of
sales as non recurring costs and fixed costs become a much less significant
percentage of the cost of goods.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses decreased by $10,931, or14.3%,
to $75,244 in the 1999 six-month period from $86,175 in the 1998 six-month
period. This decrease is primarily due to a decrease in marketing efforts and
travel as ISW International's cash reserves became depleted.
Depreciation
- ------------
Depreciation was unchanged at $3,820.
15
<PAGE>
Interest Expense
- ----------------
Interest expense was unchanged at $5,740 due to no new debt creation.
Net Loss
- --------
The net loss for the 1999 period decreased by $14,859, or 16.3%, to a net
loss of $76,174 in the 1999 period from a net loss of $91,033 in the 1998
period. This decrease is primarily due to a decrease in operating expenses.
Results of Operations - Twelve Month Periods Ending December 1997 and 1998
- --------------------------------------------------------------------------
Sales Revenues
- --------------
Sales revenues for 1998 were $58,188, a decrease of $26,145, or 31%, from
revenues of $84,333 for 1997. This decrease is partially attributable to the
incomplete development of our new technology frame system and primarily caused
by our lack of capital which resulted in lower inventory levels and decrease in
marketing efforts in 1998.
Cost of Sales
- -------------
Cost of sales decreased by $16,377, or 36.2%, to $28,887 in 1998 from
$45,264 in 1997. This decrease is primarily due to decreased product sales. In
addition, cost of sales as a percentage of product sales decreased to 49.6% in
1998 from 53.6% in 1997.Cost of goods sold has been a larger percentage of sales
during our formative years due to the fact that certain non recurring costs and
fixed expenses have been included. These non recurring costs have been ongoing
since 1996 as the brand image was being established. These unrecorded non
recurring costs and the promotional items will be a smaller percentage of sales
if our sales increase.
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses decreased by $58,815, or
20.8%, to $223,126 in 1998 from $281,941 in 1997. This decrease is primarily due
to a 40% decrease in travel expenses in 1998, no expenditures at trade shows in
1998, (which cost $28,798 in 1997), and the reduction in office staff.
Depreciation
- ------------
Depreciation remained substantially the same in 1998, increasing by $547,
or 7%, to $7,641 in 1998 from $7,094 in 1997.
Net Loss
- --------
The net loss for 1998 was $212,946, which represented a decrease of $37,192
or 14.8%, as compared to the net loss of $250,138 for 1997. To date, we have
operated at a loss as a result of heavy marketing and travel costs and low
product sales. Management anticipates that the proceeds of this offering will
facilitate acquisition of additional inventory, marketing efforts and
distribution ability resulting in increased revenues. There can be no assurance,
however, as to whether, and to what extent, ISW International will actually
experience additional revenues from additional inventory, marketing efforts and
distribution ability. ISW International's ability to operate profitably in the
future is substantially dependent upon consumer demand and the ability of ISW
International to distribute its sunglasses. See "Risk Factors."
In addition, management anticipates that the costs and expenses of
operating ISW International and its business will increase with the expansion of
the business. While management anticipates that most of such costs will increase
in proportion to increased sales and other business activity and, in some
instances may decline as a consequence of ISW International's ability to avail
itself of volume discounts for both products and services, certain expenses may
be expected to increase more than proportionately. In particular, members of
senior management historically have been compensated at levels that ISW
International deems appropriate for a formative company but that management
believes are substantially below compensation levels in operating companies in
ISW International's business. As ISW International grows, it is anticipated that
executive compensation will be increased.
Year 2000
- ---------
Our management information system is very modest and is not utilized to
communicate electronically either with our suppliers or distributors. As a
result, we do not need to update our operating systems to address many of the
complex year 2000 issues. While our current software used internally is not
fully year 2000 compliant, we believe that software that is fully compliant is
available for purchase on reasonable terms and such software can be implemented
with only minor expenditures. Moreover, since we are not dependent on a single
vendor, any vendor who is not Year 2000 compliant could be replaced.
Financial Condition
- -------------------
We had cash of $3,201 on hand on June 30, 1999, far less than we require to
pay the expenses of this offering and other operating costs it may incur.
Additionally, we had a working capital deficit of $65,272 and a stockholders'
deficit of $49,453.
If we are unsuccessful at raising the $1,500,000 sought from this offering,
we will likely be unable to continue in the development and implementation of
our business without some other source of equity funding. It is unlikely that
debt funding will be possible in amounts necessary to achieve the business plan.
Additional equity funding may consist of another public or private offering
which would further dilute our stockholders' interest, including the interest of
stockholders who invest in the present offering.
16
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITY HOLDERS
The first table below outlines warrants held for the purchase of shares of
common stock, as of the date of this prospectus. The second table sets forth, as
of the date of this prospectus, the aggregate number of shares of common stock
owned of record or beneficially by each person who owned of record, or is known
by us to own beneficially, more than 5% of our common stock, and the name and
shareholdings of each officer and director and all officers and directors as a
group:
<TABLE>
<CAPTION>
-------------------------- -------------------------------------- ------------------------- ---------------------------
Name of Warrant Holder Title and Amount of Securities Exercise Price Date of Exercise
Called for by Warrants
<S> <C> <C> <C>
Invest Linc Capital
Corp., Inc 304,445 shares of common stock $0.333 per share On or before
January 7, 2004
-------------------------- -------------------------------------- ------------------------- ---------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------- --------------- -------------- ---------------------------
Number of After Offering
Name and Address of Owner Shares Before
Owned(1) Offering Minimum Maximum
- ----------------------------------------------------------- --------------- -------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Principal Stockholders:
Allen Weatherby 3,195,000 55.3% 50.8% 43.9%
363 Atlantic Blvd., Suite 6
Atlantic Beach, FL 32233
Invest Linc Advisors, Corp 156,273 2.7% 2.5% 2.1%
5252 N. Edgewood, Dr., #210
Provo, UT 84604
Invest Linc Emerging Growth 572,364 9.9% 9.1% 7.9%
Equity Fund I
5252 N. Edgewood, Dr., #210
Provo, UT 84604
York Chandler 450,000 7.8% 7.1% 6.2%
935 East, Northcliffe Drive
Salt Lake City, UT 84103
Officers and Directors:
Allen Weatherby " " " "
See above
Allan Klenke 75,000 1.2% 1.2% 1.0%
5 Post Oak Park, Suite 900
Houston, TX 77027-7828
All 5% stockholders, officers and directors as a group 4,448,637 76.9% 70.7% 61.1%
- ----------------------------------------------------------- --------------- -------------- ------------- -------------
</TABLE>
(1) All shares are held beneficially and of record, and each record
stockholder has sole voting, investment, and dispositive power.
18
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS
AND SIGNIFICANT EMPLOYEES AND PARTIES
Officers And Directors
- ----------------------
The following table sets forth the names, age, and position of each of our
directors and executive officers.
Name Age Position and Office Held
---- --- ------------------------
Allen Weatherby 50 President and Director
Allan J. Klenke 31 Director
Allen Weatherby became an officer and director in connection with our
organization. Allan J. Klenke became a director in July 1999. The term of office
of each director is one year or until his successor is elected and qualified.
Biographical Information
- ------------------------
Set forth below is biographical information for each officer and director.
No person other than officers and directors will currently perform any
management functions for the ISW International.
Allen Weatherby
- ---------------
Allen Weatherby is the founder, President and CEO, of ISW International.
Mr. Weatherby has launched a car care product line and maintained consulting
positions within the petroleum industry, automotive manufacturing industry and
motor sports arena. Mr. Weatherby has a degree in marketing from Jacksonville
University and general management experience.
Allan Klenke
- ------------
Allan Klenke is Vice President-Investments at PaineWebber, Inc. in Houston,
Texas. He helped form and leads the Corporate Services Consulting Group that
works with publicly traded companies and their executives. The Corporate
Services Consulting Group helps manage stock option programs for companies, and
works with individual executives' investment portfolios. He is a member of the
National Association of Stock Plan Professionals and is a speaker at national
conferences concerning stock compensation programs. Allan holds a Bachelor of
Science in Business Administration from the University of Kansas and an M.B.A.
from the University of Notre Dame.
Remuneration of Officers and Directors
- --------------------------------------
There are no employment agreements between ISW International and any member
of management, and it is not anticipated that any employment agreements will be
entered into during at least the first year of operations following the
offering. During the first twelve months of operations following the offering,
we will pay Allen Weatherby a salary of $6,000 per month.
There are no agreements or arrangements, express or implied, between any
officer or director and ISW International, regarding any other form of
compensation, including stock options, warrants, employment incentives, or the
like.
19
<PAGE>
Significant Employee
- --------------------
Except for Allen Weatherby, we have no significant employees.
Significant Parties
- -------------------
Set forth below are the names and business and residential addresses, as
applicable, for the following "significant parties" as required under Item 2 of
Form SB-1:
- --------------------------------------------------------------------------------
(1) Officers and Directors Address
- --------------------------------------------------------------------------------
Allen Weatherby Business: 363 Atlantic Blvd. Suite 6
Atlantic Beach, FL 32233
Residence: 351 19th Street
Atlantic Beach, FL 32233
- --------------------------------------------------------------------------------
Allan J. Klenke Business: 5 Post Oak Park, Suite 900
Houston, TX 77027-7828
Residence: 9238 Elizabeth
Houston, TX 77055
- --------------------------------------------------------------------------------
(2) Record owners and beneficial See "SECURITY OWNERSHIP OF
owners of 5% or more of any MANAGEMENT AND CERTAIN
class of our securities: SECURITYHOLDERS".
(3) Promoters: None, except for officers and
directors.
(4) Affiliates: None, except for officers and
directors.
(5) Counsel: Ray, Quinney & Nebeker
79 South Main
Salt Lake City, UT 84145
Wangsgard & Associates, LLC
3106 Homestead
Park City, UT 84098
20
<PAGE>
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS
Purchase of Stock at Organization and Capital Contributions
- -----------------------------------------------------------
We entered into a Business Financial and Advisory Agreement ("BFAA") with
Invest Linc Consulting Corp. ("ILCC") on January 7, 1999. ILCC agreed to provide
us with a broad array of financial advisory services for the price of $2,500 per
month, or $30,000 over the BFAA's two year term. ILCC owns 156,273, or 2.7%, of
our current outstanding stock, and non-dilutive warrants to purchase an
additional 5% of the stock. ILCC is affiliated with the Invest Linc Emerging
Growth Equity Fund I ("ILEGE Fund") an ISW International stockholder that
currently owns 572,364, or 9.9%, of our currently outstanding stock.
Collectively, ILCC and ILEGE Fund own 12.6% of our stock, plus the warrants to
purchase an additional 5% of our stock. No payments have been made in compliance
with the BFAA. At the time of filing of this registration statement, the unpaid
balance under the BFAA was $22,500 and designated as an expense of issuance and
distribution.
DESCRIPTION OF SECURITIES
General
- -------
We are authorized to issue 25,000,000 shares of common stock, par value
$0.01 per share, of which 5,784,456 shares are issued and outstanding.
Common Stock
- ------------
Holders of common stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of stockholders. Shares of common stock do
not carry cumulative voting rights and, therefore, holders of a majority of the
outstanding shares of common stock will be able to elect the entire board of
directors, and, if they do so, minority stockholders would not be able to elect
any members to the board of directors. Our board of directors has authority,
without action by the stockholders, to issue all or any portion of the
authorized but unissued shares of common stock, which would reduce the
percentage ownership of the stockholders and which may dilute the book value of
the common stock.
Stockholders have no pre-emptive rights to acquire additional shares of
common stock. The common stock is not subject to redemption and carries no
subscription or conversion rights. In the event of liquidation, the shares of
common stock are entitled to share equally in corporate assets after
satisfaction of all liabilities. The shares of common stock, when issued, will
be fully paid and non-assessable.
Holders of common stock are entitled to receive such dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. We have not paid dividends on common stock and do not
anticipate that we will pay dividends in the foreseeable future.
Resale of Outstanding Shares
- ----------------------------
Presently, we have 5,784,456 shares of common stock outstanding. About
a quarter of the shares of our outstanding common stock, 1,520,055 shares, are
not restricted and may be resold at anytime. The remaining 4,264,401 shares of
the common stock presently issued and outstanding are "restricted securities" as
that term is defined in Rule 144 adopted under the Securities Act. Rule 144
provides, in essence, that as long as there is publicly available current
information about an issuer, a person holding restricted securities for a period
of at least one year may sell in each 90-day period, provided he is not part of
a group acting in concert, an amount equal to the greater of the average weekly
trading volume of the stock during the four calendar weeks preceding the sale or
1% of the issuer's outstanding common stock. Consequently, in May 2000, all
shares of common stock currently issued and outstanding will have been held for
one year within the meaning of Rule 144 and may be eligible for resale in
accordance with such volume restrictions. In addition, in May 2001, all
5,784,456 shares now issued and outstanding will be eligible for resale without
regard to such restrictions if the holders of such shares are not then
affiliates of the issuer and have not been so for three months prior to such
sale. We contemplate that Allen Weatherby, officer, director and holder of
outstanding shares, will continue to be our affiliate over the next several
years, and will be, therefore, subject to the restrictions described above.
Sales under Rule 144 or otherwise may, in the future, have a depressive effect
on the price of the common stock in any market which may develop.
Transfer and Warrant Agent
- --------------------------
Our transfer agent is Interwest Transfer Company, Inc., 1981 East
Murray-Holladay Road, Holladay, UT 84117.
21
<PAGE>
PLAN OF DISTRIBUTION
We are offering the common stock to the public on a 500,000 share minimum,
1,500,000 share maximum basis. There can be no assurance that any of the shares
will be sold. If we fail to sell at least 500,000 shares by February 15, 2000,
the offering will be terminated and subscription payments will be promptly
refunded in full to subscribers, without paying interest or deducting expenses.
If the minimum number of shares is sold by February 15, 2000, the offering will
continue until April 15, 2000, all offered shares are sold, or terminated by us,
whichever occurs first.
All subscription payments should be made payable to "Brighton Bank-- ISW
International, Inc. Escrow Account." We will deposit subscription payments no
later than Noon of the next business day following receipt in the escrow account
maintained by Brighton Bank, 311 South State Street, Salt Lake City, UT 84111,
as escrow agent, pending the sale of at least 500,000 shares by February 15,
2000. The subscription payments will only be released from the escrow account if
the minimum number of shares is sold or for the purpose of refunding
subscription payments to the subscribers. Subscribers will not have the use or
right to return of the funds during the escrow period, which may last as long as
four months.
The shares of common stock in this offering will be offered and sold by our
officers and directors who will receive no compensation therefor, except
reimbursement of expenses actually incurred in connection with such activities.
Shares of common stock will also be sold through Travis Morgan Securities, Inc.,
as placement agent, at an 8% commission rate. Commissions apply only to shares
actually sold by the placement agent.
22
<PAGE>
There are no formal arrangements between us and our officers and directors
pursuant to which shares in the offering will be reserved for sale to person(s)
designated by such officers and directors or their affiliates. However, officers
and directors and their affiliates, may purchase shares in the offering in an
aggregate amount of not more than 20% of all offered shares. Since shares may be
offered and sold by officers and directors, it is likely that officers,
directors, or their affiliates desiring to purchase shares in the offering will
be able to do so.
Travis Morgan Securities, Inc. will act only as placement agent, not an
underwriter. Since we are not utilizing the services of an underwriter for the
offer and sale of the shares in this offering, the independent "due diligence"
review of our affairs and financial condition that is usually performed by an
underwriter has not been performed with respect to this offering. In addition,
since the offering is not being underwritten by a broker-dealer which would
ordinarily be expected to publish quotations for and make a market in the
offered securities following the offering, no assurance can be given that any
market for the common stock will develop following the offering or, that if such
a market should develop, it will be maintained. We have not had any discussions
with any broker-dealer firms regarding the possibility of making a market in the
common stock following the offering.
Our common stock might be defined as a "penny stock" pursuant to Rule
3a51-1 under the Securities and Exchange of Act if the shares are traded at a
price less than $5 per share, if we do not yet meet certain financial size and
volume levels, and if the shares are not registered on a national securities
exchange or quoted on the NASDAQ system. A "penny stock" is subject to Rules
15g-1 through 15g-10 of the Securities and Exchange Commission. Those rules
require securities broker-dealers, before making transactions in any "penny
stock," to (a) deliver to the customer and obtain a written receipt for a
disclosure document set forth in Rule 15g-10 (Rule 15g-2), (b) disclose certain
price information about the stock (Rule 15g-3), (c) disclose the amount of
compensation received by the broker-dealer (Rule 15g-4) or any "associated
person" of the broker-dealer (Rule 15g-5), and (d) send monthly statements to
customers with market and price information about the "penny stock" (Rule
15g-6). Our common stock could also become subject to Rule 15g-9, which requires
the broker-dealer, in some circumstances, to approve the "penny stock"
purchaser's account under certain standards and deliver written statements to
the customer with information specified in the rules. (Rule 15g-9) These
requirements discourage broker-dealers from making transactions in "penny
stocks" and may limit the ability of purchasers in this offering to sell their
shares into any secondary market for our common stock.
Prior to this offering, there has been no established market for our common
stock. We have arbitrarily determined the initial public offering price of the
shares and it bears no relationship to our book value, earnings, or any other
recognized criteria of value.
23
<PAGE>
LEGAL PROCEEDINGS
We are currently party to one legal proceeding brought in the Seventh
Judicial Circuit of the State of Florida. The suit was brought in September 1998
by Robert Palmiter who claims that he had entered in to an employment contract
with us, but we failed to pay him under the alleged contract. Mr. Palmiter
claims his damages total between $5,000 and $15,000. We are currently not party
to any other pending legal proceeding, or governmental agency proceedings, and
no other such action by or, to the best of our knowledge, against us has been
threatened.
EXPERTS
We have not engaged any expert or attorney on a contingent basis, nor is
any expert or attorney to receive a direct or indirect interest in our
securities. In addition, no expert or attorney is, or was, a promoter,
underwriter, voting trustee, director, officer or employee.
Wangsgard & Associates, LLC, 3106 Homestead, Park City, UT 84098, our
securities counsel, will render an opinion that the common stock being offered
hereby, when issued, will be fully paid and non assessable under the Florida
Revised Statutes.
The audited financial statements included elsewhere in this Prospectus have
been audited by James Moore & Co. P.L., independent certified public
accountants, as indicated in their report with respect thereto, and is included
herein in reliance upon the authority of said firm as experts in giving said
report.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
24
<PAGE>
FURTHER INFORMATION
We have filed with the SEC, a registration statement on Form SB-1, SEC File
No. _________ under the Securities Act with respect to the securities offered by
this prospectus. This prospectus omits certain information contained in the
registration statement. For further information, reference is made to the
registration statement and to the exhibits and other schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and where such contract
or other document is an exhibit to the registration statement, each such
statement is deemed to be qualified and amplified in all respects by the
provisions of the exhibit. Copies of the complete registration statement,
including exhibits may be examined at the office of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, or copies may be obtained from this office on
payment of the usual fees for reproduction. In addition, the SEC maintains a web
site (address: http.//www.sec.gov), that contains reports, proxy and information
statements and other information regarding issuers, including ISW International,
Inc., that file electronically with the SEC.
25
<PAGE>
ISW International, Inc.
INTERIM FINANCIAL STATEMENTS
For The Six Month Periods Ended June 30, 1999 and 1998
UNAUDITED
Unaudited Information-In the opinion of management, all adjustments
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position at June 30, 1999; the results of
operations and cash flows for the six months then ended; and the results of
operations and cash flows for the six month periods ended June 30, 1999 and
1998, have been made. Operating results for the six month period ended June 30,
1999, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999.
<PAGE>
ISW International, Inc.
BALANCE SHEET
June 30, 1999
UNAUDITED
ASSETS
Current Assets
Cash $ 3,201
Accounts Receivable 9,889
Inventory 70,954
Deposit on Inventory 13,408
Total Current Assets $ 97,452
Property & Equipment, Net 12,060
Other Assets
Deferred offering costs 15,000
Utility Deposit 3,759
-----------
Total Other Assets 18,759
Total Assets $ 128,271
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable $ 72,724
Note & Stockholder Loans 105,000
Total Current Liabilities $ 177,724
Stockholders' Deficit
Common Stock 57,845
Additional Paid in Capital 589,675
Stockholder Advances (75,881)
Accumulated Deficit (621,092)
-----------
Total Stockholders' Deficit (49,453)
Total Liabilities & Stockholders' Deficit $ 128,271
<PAGE>
ISW International, Inc.
STATEMENTS OF OPERATIONS
For The Six Month Periods Ended June 30, 1999 and 1998
UNAUDITED
1999 1998
---- ----
Net Sales $ 12,690 $ 19,458
Cost of Sales 4,060 14,756
Gross Profit 8,630 4,702
-------- ---------
Operating Expenses
Selling, general and administrative
expenses 75,244 86,175
Depreciation 3,820 3,820
-------- ---------
Total operating expenses 79,064 89,995
Loss from Operations (70,434) (85,293)
Interest Expense 5,740 5,740
Net Loss $ (76,174) $ (91,033)
<PAGE>
ISW International, Inc.
STATEMENTS OF CASH FLOWS
For The Six Month Periods Ended June 30, 1999 and 1998
Increase (Decrease) in Cash and Cash Equivalents
UNAUDITED
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (76,174) $ (91,033)
----------------- ---------------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 3,820 3,820
Stock issued or capital contributions in exchange for services 17,500 43,223
Changes in certain assets and liabilities:
Accounts receivable (8,703) 12,102
Inventory (28,737) (4,458)
Other Assets (13,408) 2,281
Accounts payable and accrued expenses 2,143 15,559
---------------- ---------------
Total adjustments (27,385) 72,527
---------------- ---------------
Net cash used in operating activities (103,559) (18,505)
---------------- ---------------
Cash flows from financing activities
Proceeds from notes payable - 30,300
Stockholder advances (22,635) (11,887)
Proceeds from sale of stock 127,000 -
---------------- ---------------
Net cash provided by financing activities 104,365 18,413
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 806 (92)
Cash and cash equivalents, beginning of period 2,395 350
---------------- ---------------
Cash and cash equivalents, end of period $ 3,201 $ 258
================ ===============
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ - $ -
Supplemental schedule of non cash activities
Stock issued in exchange for services $ - $ 25,723
Services contributed by stockholder $ 17,500 $ 17,500
</TABLE>
<PAGE>
ISW INTERNATIONAL, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
ISW International, Inc.:
We have audited the accompanying balance sheet of ISW International, Inc. as of
December 31, 1998, and the related statements of operations, changes in
stockholders' deficit, and cash flows for the years ended December 31, 1998 and
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ISW International, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for the
years ended December 31, 1998 and 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 shown in the financial statements,
the Company incurred a net loss of $212,946 for 1998 and has incurred
substantial net losses for each of the past 2 years. At December 31, 1998,
current liabilities exceed current assets by $114,782 and total liabilities
exceed total assets by $95,143. These factors, and the others discussed in Note
10, raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
JAMES MOORE & CO., P.L.
Daytona Beach, Florida
May 4, 1999
<PAGE>
ISW International, Inc.
BALANCE SHEET
December 31, 1998
ASSETS
------
Current assets
Cash and cash equivalents $ 2,395
Accounts receivable, net 1,186
Inventory 42,217
----------
Total current assets 45,798
Property and equipment, net 15,880
Other assets
Utility deposits 3,759
----------
Total Assets $ 65,437
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 55,580
Note and stockholder loans payable 105,000
----------
Total current liabilities 160,580
Stockholders' deficit
Common stock, $0.01 par value, 25,000,000 shares
authorized, 5,052,820 shares issued and outstanding 50,528
Additional paid-in-capital 452,492
Stockholder advances (53,245)
Accumulated deficit (544,918)
-----------
Total stockholders' deficit (95,143)
-----------
Total Liabilities and Stockholders' Deficit $ 65,437
===========
<PAGE>
ISW International, Inc.
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1998 and 1997
1998 1997
---- ----
Net sales $ 58,188 $ 84,333
Cost of sales 28,887 45,264
----------- -----------
Gross profit 29,301 39,069
----------- -----------
Operating expenses
Selling, general and administrative expenses 223,126 281,941
Depreciation 7,641 7,094
----------- -----------
Total operating expenses 230,767 289,035
----------- -----------
Loss from operations (201,466) (249,966)
Interest expense 11,480 172
----------- -----------
Net Loss $ (212,946) $ (250,138)
=========== ===========
<PAGE>
ISW International, Inc.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Additional Accumulated Stockholder
Common Stock Paid-in Capital Deficit Advances Total
------------ --------------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996, as
previously reported $ 105,090 $ - $ (46,264) $ (13,092) $ 45,734
Reclassification (64,846) 64,846 - - -
Prior-period adjustment - error in
reporting pre-operating expenses - - (31,197) - (31,197)
Prior-period adjustment - error in
recording stock for services 9 4,364 (4,373) - -
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1996, as restated 40,253 69,210 (81,834) (13,092) 14,537
Stockholder advances - - - (18,266) (18,266)
Issuance of stock 5,320 169,515 - - 174,835
Services contributed by stockholder - 35,000 - - 35,000
Stock issued in exchange for debt
reduction 2,928 62,072 - - 65,000
Net loss - - (250,138) - (250,138)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1997 48,501 335,797 (331,972) (31,358) 20,968
Stockholder advances - - - (21,887) (21,887)
Issuance of stock 870 57,130 - - 58,000
Services contributed by stockholder - 35,000 - - 35,000
Stock issued in exchange for services 1,157 24,565 - - 25,722
Net loss - - (212,946) - (212,946)
--------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1998 $ 50,528 $ 452,492 $ (544,918) $ (53,245) $ (95,143)
=============== =============== =============== =============== ===============
</TABLE>
<PAGE>
ISW International, Inc.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1998 and 1997
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (212,946) $ (250,138)
----------------- ----------------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 7,641 7,094
Stock issued or capital contributions in exchange for services 60,722 35,000
Changes in certain assets and liabilities:
Accounts receivable 32,723 (33,283)
Inventory 17,120 (25,038)
Accounts payable and accrued expenses 30,987 21,626
---------------- ---------------
Total adjustments 149,193 5,399
---------------- ---------------
Net cash used in operating activities (63,753) (244,739)
---------------- ---------------
Cash flows from investing activities
Purchases of property and equipment (615) (3,994)
---------------- ---------------
Cash flows from financing activities
Proceeds from notes payable 40,300 83,700
Principal payments on notes payable (10,000) (9,000)
Stockholder advances (21,887) (18,266)
Proceeds from sale of stock 58,000 174,835
---------------- ---------------
Net cash provided by financing activities 66,413 231,269
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 2,045 (17,464)
Cash and cash equivalents, beginning of year 350 17,814
---------------- ---------------
Cash and cash equivalents, end of year $ 2,395 $ 350
================ ===============
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 1,000 $ 172
Supplemented schedule of non cash activities
Stock issued in exchange for debt reduction $ - $ 65,000
Stock issued in exchange for services $ 25,722 $ -
Services contributed by stockholder $ 35,000 $ 35,000
</TABLE>
<PAGE>
ISW International, Inc.
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies:
-------------------------------------------
The following is a summary of the more significant accounting policies of ISW
International, Inc. (the Company) which affect significant elements of the
accompanying financial statements:
(a) Organization and operations--The Company is a Florida corporation which
is engaged in the design and marketing of advanced polarized sunglasses and
accessories under the brand name ICE-TECH. The principal markets for Ice-Tech
sunglasses are individuals and retail stores throughout the United States.
(b) Use of estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
(c) Cash and cash equivalents--For the purposes of reporting cash flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
(d) Inventory--Inventory is stated at the lower of cost (first-in,
first-out) or market.
(e) Property and equipment--Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which range from three to ten years.
(f) Income taxes--The Company uses the asset and liability method to
measure and record deferred income tax assets and liabilities. Under the asset
and liability method, deferred income tax assets and liabilities are recognized
for the future consequences attributed to differences between financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Differences between income for financial and tax reporting
purposes arise primarily from the use of accelerated depreciation for income tax
purposes, principal and interest recognition on notes, the use of the allowance
method for bad debts and the recording of losses on investments. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the period that includes the enactment
date.
(g) Advertising costs--The Company charges advertising costs to operations
as incurred. Advertising expense was approximately $61,000 and $35,000 for the
years ended December 31, 1998 and 1997, respectively.
<PAGE>
(2) Concentrations:
---------------
Significant concentrations of credit risk for all financial instruments owned by
the Company as of December 31, 1998, are as follows:
(a) Demand deposits--The Company has demand deposits with a local bank
amounting to $3,421 as of December 31, 1998. The Company has no policy requiring
collateral or other security to support its deposits although all deposits with
banks are federally insured up to $100,000 by the FDIC.
(b) Accounts receivable--The Company has accounts receivable from wholesale
and resale distributors and retail customers located primarily in the United
States. An allowance for doubtful accounts has been based on a review of the
current status of the existing receivables and historical collection experience.
Accounts receivable and the related allowance at December 31, 1998 is as
follows:
Accounts receivable $ 10,002
Allowance for doubtful accounts (8,816)
---------
Accounts receivable, net $ 1,186
=========
The Company purchased materials for certain products from one supplier which
represented approximately 91% and 77% of purchases in 1998 and 1997,
respectively. A disruption of the flow of this product could cause a possible
loss of sales which would affect operating results adversely.
(3) Inventory:
----------
Inventory consists of the following as of December 31, 1998:
Finished goods $ 15,973
Raw materials 26,244
--------
$ 42,217
========
<PAGE>
(4) Leasing Activities:
-------------------
The Company leases office facilities under an operating lease with minimum
monthly payments of $935 which expires at December 31, 1999. In addition to the
minimum rents, the company is required to pay additional payments for real
property taxes, rental taxes, and insurance. Rent expense was $18,254 and
$18,689, for the years ended December 31, 1998 and 1997, respectively. Minimum
future lease payments under operating leases as of December 31, 1998 in the
aggregate are:
Year Ending
December 31, Amounts
------------ -------
1999 $ 11,220
2000 -
2001 -
2002 -
2003 -
----------
$ 11,220
<PAGE>
(5) Note and Stockholder Loans Payable:
-----------------------------------
Note and stockholder loans payable consist of the following as of December 31,
1998:
Note payable to an individual, due on
December 15, 1999 with an interest rate of 6%. $ 45,000
Stockholder loans due on demand with an interest
rate of 10.5%. 60,000
---------
Total $ 105,000
=========
(6) Income Taxes:
-------------
The components of deferred taxes of the Company are as follows at December 31,
1998:
Deferred tax asset $ 188,000
Valuation allowance for deferred tax asset (188,000)
---------
Deferred tax asset, net $ -
=========
The deferred tax asset results from the following temporary differences at
December 31, 1998:
Net operating loss carryforwards $ 185,000
Recording of allowances for financial reporting purposes 3,000
---------
$ 188,000
Because it is likely that the deferred tax asset will not be realized, a
valuation allowance has been established against the entire amount.
As of December 31, 1998, the Company generated cumulative net operating losses
for tax purposes of approximately $545,000, which expire from 2011 through 2018.
(7) Prior Period Adjustment:
------------------------
Accumulated deficit at the beginning of 1997 has been adjusted to correct an
error in the capitalization of start-up expenses made in 1996. The error had no
effect on net income for December 31, 1998 or 1997.
Common stock, additional paid-in capital, and accumulated deficit at the
beginning of 1997 have been adjusted to correct an error in the recording of
stock transactions for services in 1996. The error had no effect on net income
for December 31, 1998 or 1997.
(8) Related Party Transactions:
---------------------------
The Company is owed $53,246 at December 31, 1998 from a single stockholder. The
advance is due upon demand with accrued interest at seven percent.
A stockholder performed services on behalf of the Company. In 1998 and 1997,
$35,000 per year has been recorded as additional paid in capital for the value
of these services.
<PAGE>
(9) Property and equipment
----------------------
Property and equipment consists of the following as of December 31, 1998:
Office furniture and equipment $ 18,352
Leasehold improvements 5,966
Tool and die 9,563
----------------
33,881
Less: Accumulated depreciation 18,001
Net property and equipment ----------------
$ 15,880
================
(10) Going Concern:
--------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has sustained substantial
operating losses in recent years. In addition, the Company has used substantial
amounts of working capital in its operations. Further, at December 31, 1998,
current liabilities exceed current assets by $114,782, and total liabilities
exceeded total assets by $95,143.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements (through a planned issuance of additional stock), and the
success of its future operations. Management believes that actions presently
being taken to revise the Company's operating and financial requirements provide
the opportunity for the Company to continue as a going concern.
(11) Stock Split:
------------
On June 30, 1997, the Board of Directors authorized a 45 for 1 stock split of
the Company's $.01 par value common stock, which resulted in the Board
increasing the authorized shares to 25,000,000 shares. As a result of the split,
4,940,535 additional shares were issued, and additional paid-in capital was
reduced by $49,405. All references in the accompanying financial statements to
the number of common shares have been restated to reflect the stock split.
<PAGE>
No dealer, salesman or other person is authorized to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by ISW
International. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities covered hereby in any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, in any circumstances, create any implication that
there has been no change in the affairs of ISW International since the date
hereof.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY 2
RISK FACTORS RELATING TO OUR BUSINESS 4
GENERAL RISKS RELATING TO INVESTMENT 6
DILUTION 7
COMPARATIVE DATA 8
USE OF PROCEEDS 9
BUSINESS 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 14
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS 17
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
AND PARTIES 19
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 21
DESCRIPTION OF SECURITIES 21
PLAN OF DISTRIBUTION 22
LEGAL PROCEEDINGS 24
EXPERTS 24
INDEMNIFICATION OF OFFICERS AND DIRECTORS 24
FURTHER INFORMATION 25
ISW International, Inc.
1,500,000 shares of common stock
PROSPECTUS
September __, 1999
Until __________, 1999 (90 days after the date of this prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------
Section 607.0850 of the Florida Statutes provides in relevant part as
follows:
(1) A corporation shall have power to indemnify any person who was or is a party
to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation or, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(2) A corporation shall have power to indemnify any person, who was or is a
party to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made under
this subsection in respect of any claim, issue, or matter as to which such
person shall have been adjudged to be liable unless, and only to the extent
that, the court in which such proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a corporation
has been successful on the merits or otherwise in defense of any proceeding
referred to in subsection (1) or subsection (2), or in defense of any claim,
issue, or matter therein, he or she shall be indemnified against expenses
actually and reasonably incurred by him or her in connection therewith.
<PAGE>
Article X of the ISW International's articles of incorporation contains an
indemnification provision for its officers and directors that states, "The
Corporation shall indemnify any incorporator, officer or director, or any former
incorporator, officer or director, to the full extent permitted by law."
Insofar as indemnification by the Company for liabilities arising under the
Securities Act may be permitted to officers and directors of the Company, the
Company is aware that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by an officer or director in the successful defense of any
action, suit, or proceeding) is asserted by such officer or director in
connection with the securities being registered hereby, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(See "ITEM 26. UNDERTAKINGS.")
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- ----------------------------------------------------
The following table sets forth an itemized estimate of expenses to be
incurred in connection with the sale and distribution of the securities being
registered, other than discounts and commissions:
1. SEC filing fee $ 417
2. Accounting fees* 12,000
3. Legal fees* 25,000
4. Other professional fees* 22,500
5. Blue Sky fees and expenses (including counsel fees)* 2,683
6. Transfer agent's fees* 1,900
7. Printing, including registration statement and prospectus* 4,000
8. Miscellaneous costs and expenses* ** 2,000
----------
TOTAL $70,500
==========
* Except for the SEC filing fees, all of the foregoing items are estimates.
** Includes fees for electronic (Edgar) filings
<PAGE>
ITEM 3. UNDERTAKINGS
- -----------------------
POST-EFFECTIVE AMENDMENTS [Regulation S-B, Item 512(a)]
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) To reflect in the prospectus any fact or events
arising after the effective date of the Registration
Statement (or the most recent post- effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
(c) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement,
including (but not limited to) addition or deletion
of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
- -----------------------------------------------------------------
The registrant has issued or sold the following securities within one year
prior to filing this registration statement which were not registered under the
Securities Act of 1933 (the "Securities Act").
(a) 934,402 shares of common stock have been issued in the past year in a
private offering which commenced August 1998, and ended May 7, 1999.
(b) No underwriters were involved. Purchasers of the securities were:
Lora Ann Foshee
Tom McClaren
Allan Klenke
G. Lemond
R. Schwoerer
Invest Linc Advisors, Corp.
Invest Linc Emerging Growth Equity Fund I
(c) The shares were sold for cash and in exchange for services in the
aggregate amount of $245,722.20.
(d) The transactions were exempt from registration under the Securities
Act pursuant to Section 4(2) as a transaction by an issuer not
involving any public offering. The purchasers acknowledged that the
shares were purchased for investment and not with a view to
distribution and a legend restricting transfer has been placed on the
certificate representing the securities.
ITEM 5. INDEX TO EXHIBITS
- ---------------------------
Copies of the following documents are included as exhibits to this
Registration Statement pursuant to Item Part III of Form I-A and Item 6 of Part
II.
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ------------------------ ---------------------------------------------- -------------------------
<S> <C> <C> <C>
Exhibit No. SEC Reference No. Title of Document Location
----------- ----------------- ----------------- --------
3.10 Articles of Incorporation
3.11 Amendment to the Articles of Incorporation
3.2 Bylaws
5 Opinion Regarding Legality on Shares
10.1 Business and Financial Advisory Agreement,
dated January 7, 1999 with Invest Linc
Advisors, Inc.
23.1 Consents
23.2 Consent of Counsel to Issuer
99.1 Subscription Agreement This Initial Filing
99.2 Escrow Agreement This Initial Filing
- -------------------- ------------------------ ---------------------------------------------- -------------------------
</TABLE>
ITEM 6. DESCRIPTION OF EXHIBITS
- ---------------------------------
Exhibit No. Description of Exhibit
----------- ----------------------
3.10 Articles of Incorporation
3.11 Amendment to the Articles of Incorporation
3.2 Bylaws
5 Opinion on Legality of Shares
10.1 Business and Financial Advisory Agreement, dated
January 7, 1999 with Invest Linc Advisors, Inc.
23.1 Consent of James Moore & Co.
23.2 Consent of Counsel to Issuer (included in Exhibit 5)
99.1 Subscription Agreement
99.2 Escrow Agreement
SIGNATURES
- ----------
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Atlantic
Beach, State of Florida, on September __, 1999.
<PAGE>
REGISTRANT:
By: /s/ Allen Weatherby
--------------------------------
Allen Weatherby, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Allen Weatherby
--------------------------------
Allen Weatherby, President, Principal
Financial Officer, Principal
Accounting Officer, and Director
Date: 09/___/99
/s/ Allan J. Klenke
--------------------------------
Allan J. Klenke,
Director
Date: 09/___/99
Dated Filed: September __, 1999
SEC File No. ___________
Articles of Incorporation
of
ISW INTERNATIONAL, INC.
ARTICLE I
---------
Name and Duration
-----------------
The name of the Corporation is 15W International, Inc. The duration of
the Corporation is perpetual. The effective date upon which this Corporation
shall come into existence shall be the date these Articles are filed by the
Secretary of State.
ARTICLE II
----------
Principal Office
----------------
The address of the principal office of the Corporation in the State of
Florida is do Mahoney Adams & Criser, P.A., 50 N. Laura Street, 3400 Barnett
Center, in the City of Jacksonville 32202.
ARTICLE III
-----------
Registered Office and Agent
---------------------------
The address of the registered office in the State of Florida is do
Mahoney Adams & Criser, P.A., 50 North Laura Street, 3400 Barnett Center, in the
City of Jacksonville, County of Duval. The name of the registered agent at such
address is RAX CO.
ARTICLE IV
----------
Corporate Purposes, Powers and Rights
-------------------------------------
1. The nature of the business to be conducted or promoted and the
purposes of the Corporation are to engage in any lawful act or activity for
which corporations may be organized under the Florida Business Corporation Act.
<PAGE>
2. In furtherance of its corporate purposes, tile Corporation shall
have all of the general and specific powers and rights granted to and conferred
on a corporation by the Florida Business Corporation Act.
ARTICLE V
---------
Capital Stock
-------------
The total number of shares of capital stock which the Corporation has
the authority to issue is One Hundred Thousand (100,000) shares of Common Stock
("Common Stock") $0.01 par value per share.
ARTICLE VI
----------
Incorporator
------------
The name and mailing address of the incorporator of this Corporation is
as follows:
Name Address
---- -------
RAX CO. c/o Mahoney Adams & Criser, P.A.
50 N. Laura Street
3400 Barnett Center
Jacksonville, FL 32202
ARTICLE VII
-----------
Board of Directors
------------------
1. The number of members of the Board of Directors may be increased or
diminished from time to time by the Bylaws; provided, however, there shall never
be less than one. Bach director shall serve until the next annual meeting of
shareholders.
2. If any vacancy occurs in the Board of Directors during a term, the
remaining directors, by affirmative vote of a majority thereof, may elect a
director to fill the vacancy until the next annual meeting of shareholders.
3. The name and mailing address of the person who shall serve as the
sole director of the Corporation until the first annual meeting of the
shareholders is as follows:
Name Address
---- -------
Allen Weatherby c/o Mahoney Adams & Criser, P.A.
Post Office Box 4099
Jacksonville, FL 32201
-2-
<PAGE>
ARTICLE VIII
------------
Amendment
---------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.
ARTICLE IX
----------
Bylaws
------
The power to adopt, amend or repeal bylaws for the management of this
Corporation shall be vested in the Board of Directors or the shareholders, but
the Board of Directors may not amend or repeal any bylaw adopted by the
shareholders if the shareholders specifically provide that such bylaw is not
subject to amendment or repeal by the Board of Directors.
ARTICLE X
---------
Indemnification
---------------
The Corporation shall indemnify any incorporator, officer or director,
or any former incorporator, officer or director, to the full extent permitted by
law.
ARTICLE XI
----------
Transfer of Shares
------------------
If, from time to time, a shareholders' agreement among all of the
shareholders of the Corporation is in effect regarding the Subchapter S status
of the Corporation pursuant to the Internal Revenue Code of the United States in
effect from time to time, then transfers of the Corporation's Common Stock made
not in accordance with such agreement, whether by operation of law or otherwise,
are null and void ab initio.
The undersigned, for the purpose of forming a corporation under the
laws of the State of Florida, does make, file and record these Articles of
Incorporation, and does certify that the facts herein stated are true; and I
have accordingly hereunto set my hand and seal.
-3-
<PAGE>
DATED at Jacksonville, Duval County, Florida, this 14th day of
November, 1995.
RAX CO., a Florida corporation
By: /s/ Halcyon E. Skinner
----------------------------
Halcyon E. Skinner, President
-4-
<PAGE>
REGISTERED AGENT CERTIFICATE
----------------------------
In pursuance of the Florida Business Corporation Act, the
following is submitted, in compliance with said statute:
That ISW International, Inc., desiring to organize under the
laws of the State of Florida, with its registered office, as indicated in the
Articles of Incorporation at the City of Jacksonville, County of Duval, State of
Florida, has named RAX CO., located at said registered office, as its registered
agent to accept service of process and perform such other duties as are required
in the State.
ACKNOWLEDGMENT:
Having been named to accept service of process and serve as
registered agent for the above-stated Corporation, at the place designated in
this Certificate, the undersigned, by and through its duly elected officer,
hereby accepts to act in this capacity, and agrees to comply with the provision
of said statute relative in keeping open said office, and further state that I
am familiar with ss.607.0501, Florida Statutes.
RAX CO., a Florida corporation
By: /s/ Halcyon E. Skinner
-----------------------------
Halcyon E. Skinner, President
DATED: November 14, 1995
-5-
<PAGE>
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION OF
ISW INTERNATIONAL, INC.
1SW International, Inc., pursuant to Section 607.1006, Florida
Statutes, does hereby file the following Articles of Amendment:
1. That the name of the Corporation is ISW International, Inc.
2. Article V of the Articles of Incorporation of ISW
International, Inc. is hereby amended in its entirety to read as follows:
ARTICLE V
---------
Capital Stock
-------------
The maximum number of shares of stock which the Corporation
has the authority to issue is Twenty-Five Million (25,000,000) shares
of common stock ("Common Stock") having a par value of $0.01 per share.
3. The amendment was adopted on the 24 day of February 1999.
4. The amendment was duly approved by the shareholders of the
Corporation in accordance with Section 607.1006, Florida Statutes. The number of
votes cast was sufficient for approval.
Dated February 24, 1999.
ISW INTERNATIONAL, INC.
By: /s/ K. Allen Weatherby
--------------------------
K. Allen Weatherby, President
<PAGE>
BYLAWS
OF
ISW INTERNIONAL. INC.
---------------------
ARTICLE I
BUSINESS OFFICES
----------------
Section 1.1. FLORIDA. The corporation shall have such offices as its
business may require in or out of the State of Florida.
ARTICE II
REGISTERED OFFICES AND REGISTERED AGENTS
----------------------------------------
Section 2.1. FLORIDA. The address of the initial registered office in
the State of Florida and the name of the initial registered agent of the
corporation at such address are set forth in the Articles of Incorporation. The
corporation may, from time to time1 designate a different address as its
registered office or a different person as its registered agent, or both;
provided, however, that such designation shall become effective only upon the
filing of a statement of such change with the Department of State of the State
of Florida as is required by law.
Section 2.2. OTHER STATES. In the event the corporation desires to
qualify to do business in one or more states other than Florida, the corporation
shall designate the location of tile registered office in each such state and
designate the registered agent for service of process at such address in the
manner provided by the law of the state in which the corporation elects to be
qualified.
ARTICLE III
SHAREHOLDERS' MEETINGS
----------------------
Section 3.1 PLACE OF MEETING. Meetings of the shareholders shall be
held at the principal office of the corporation or at any other place (in or out
of the State of Florida) designated in the notice of the meeting.
Section 3.2. ANNUAL MEETING. An annual meeting of the shareholders
shall be held within one hundred and twenty (120) days after the close of each
fiscal year of the corporation, or on such other date as the Board of Directors
may designate, at a time and place designated by the Board of Directors. The
shareholders shall elect a Board of Directors and transact other business at the
annual meeting. If an annual meeting is not held within any 13-month period, the
circuit court of the circuit in which the principal office of the corporation is
located may, on tile application of any shareholder, order an annual meeting to
be held.
Section 3.3. SPECIAL MEETINGS. Special meetings of the shareholders
shall be held (a) when directed by the President, (b) when directed by the Board
of Directors1 or (c) when requested in a written demand signed and dated by the
holders of not less than ten percent (10%) of all the shares entitled to vote at
<PAGE>
the meeting, which written demand shall be delivered to the corporation's
Secretary. A meeting requested by shareholders shall be called for a date not
less than ten (10) nor more than sixty (60) days after the request is made. The
call for the meeting shall he issued by the Secretary, unless the President,
Board of Directors or shareholders requesting the meeting shall designate
another person to do so.
Section 3.4. NOTICE. Written notice stating the place, day, and hour of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten (10) nor more
than sixty (60) days before the meeting, either personally or by first class
mail, by or at the direction of the President, the Secretary, or the officer or
persons calling the meeting to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited, postage prepaid, in the United States mall addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation.
Section 3.5. NOTICE OF ADJOURNED MEETINGS. When a meeting is adjourned
to another date, time or place, it shall not be necessary to give any notice of
the adjourned meeting if the date, time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken, and
any business may be transacted at the adjourned meeting that might have been
transacted on the original date of the meeting. if, however, alter the
adjournment, the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given as provided in Section
3.4 above, to each shareholder of record on the new record date entitled to vote
at such meeting.
Section 3.6. WAIVER OF NOTICE. A shareholder may waive any notice
required to be given to such shareholder, whether before or after the time
stated in such notice, if a waiver thereof in writing, signed by the shareholder
entitled to such notice, is delivered to the corporation for inclusion in the
minutes or filing with the corporate records. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders need be specified in the written waiver of notice. Attendance of a
shareholder at a meeting shall constitute a waiver of notice of such meeting,
except when the shareholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the holding of the meeting or the
transacting of business at the meeting.
Section 3.7. CLOSING OF TRANSFER BOOKS AND FIXING OF RECORD DATE.
(a) For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other purpose, the Board of Directors may provide that
the stock transfer books shall he closed for a stated period not to exceed, in
any case, seventy (70) days.
(b) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any determination of
shareholders, such date in any case to be not more than seventy (70) days prior
to the date on which the particular action requiring such determination of
shareholders is to be taken.
<PAGE>
(c) If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice of or to vote at
an annual or special meeting of shareholders, the close of business on the day
before the first notice of the meeting is delivered to shareholders shall be the
record date for such determination of shareholders.
(d) If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to receive a dividend, the
date on which the Board of Directors authorizes the dividend shall be the record
date for such determination of shareholders.
(e) When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 3.7, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting, which the Board of
Directors shall do if the adjourned meeting is more than one hundred and twenty
(120) days after the date fixed for the original meeting.
Section 3.8. RECORD OF SHAREHOLDERS HAVING VOTING RIGHTS. After fixing
the record date for a shareholders' meeting, the officer or agent having charge
of the stock transfer books for shares of the corporation's stock shall prepare,
at least ten (10) days before each meeting of shareholders or such shorter time
as exists between the record date and the meeting, a complete alphabetical list
of the shareholders entitled to vote at such meeting or any adjournment thereof,
with the address of and the number and class and series, if any, of shares held
by each. The list, for a period of ten (10) days prior to such meeting or such
shorter time as exists between the record date and the meeting, shall be kept on
file at the registered office of the corporation, at the corporation's principal
office or at the office of the transfer agent or registrar of the corporation,
and any shareholder, upon written demand, shall be entitled to inspect the list
at any time during regular business hours and at the shareholder's expense. The
list shall also be made available at the meeting and shall be subject to
inspection by any shareholder at any time during the meeting or any adjournment.
The shareholders' list shall be prima facie evidence of the identity of
shareholders entitled to examine the shareholders' list or to vote at a meeting
of the shareholders. If the requirements of this Section 3.8 have not been
substantially complied with, or if the corporation refuses to allow a
shareholder or his agent or attorney to inspect the shareholders' list before or
at the meeting, on the demand of any shareholder in person or by proxy who
failed to obtain such access, the meeting shall be adjourned until the
requirements are complied with. Refusal or failure to comply with the
requirements of this Section 3.8 shall not affect the validity of any action
taken at such meeting.
Section 3.9. SHAREHOLDER QUORUM. A majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. When a specified item of business is required to be voted on by
a class or series of stock, a majority of the shares of such class or series
shall constitute a quorum for the transaction of such item of business by that
class or series. 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 shareholders, unless the vote of a greater number or
voting by classes is required by The Florida Business Corporation Act (Chapter
607, Florida Statutes) or by the Articles of Incorporation. After a quorum has
been established at a shareholders' meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
<PAGE>
Section 3.10. VOTING OF SHARES.
(a) Each outstanding share, regardless of class, shall be entitled to
one (1) vote on each matter submitted to a vote at a meeting of shareholders,
except as may otherwise be provided in the Articles of Incorporation.
(b) A shareholder may vote either in person or by duly appointed proxy
(as provided in Section 3.11).
(c) At each election for directors every shareholder entitled to vote
at such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
at that time and for whose election he has a right to vote, and if cumulative
voting is specifically authorized by the Articles of Incorporation, he may
cumulate his votes by giving one candidate as many votes as the number of
directors to be elected at that time multiplied by the number of his shares, or
by distributing such votes on the same principle among any number of such
candidates.
Section 3.11. PROXIES.
(a) Every shareholder entitled to vote at a meeting of shareholders or
to express consent without a meeting, or a shareholder's duly authorized
attorney-in-fact, may authorize another person or persons to act for him in
person or by proxy.
(b) Every appointment of proxy must be signed by the shareholder or his
attorney-in-fact, and shall be effective when received by the Secretary of the
corporation or such other officer or agent authorized to tabulate votes. No
proxy shall be valid after the expiration of eleven (11) months from the date of
appointment unless otherwise provided in the appointment form. Every appointment
of a proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided by law.
(c) If an appointment of proxy for the same shares confers authority
upon two or more persons and does not provide otherwise, a majority of them
present at the meeting, or if only one is present, then that one, may exercise
all the powers conferred by the proxy; but if the proxy holders present at the
meeting are equally divided on a particular matter, the voting of such shares
shall be prorated.
Section 3.12. ACTION BY SHAREHOLDERS WITHOUT A MEETING.
(a) Any action required to be taken at any annual or special meeting of
shareholders of the corporation, or any action which may be taken at any annual
or special meeting of such shareholders, may be taken without a meeting, without
prior notice, and without a vote, if a consent in writing setting forth the
action so taken, shall be signed and dated by the holders of a majority of the
outstanding stock and delivered to (a) the principal place of business of the
corporation, (1)) the Secretary of the corporation, or (c) such other officer or
agent having custody of the corporate record book. If shares are entitled to be
voted by class and if any class of shares is entitled to vote thereon as a
<PAGE>
class, such written consent shall be required of the holders of a majority of
the shares of each class of shares entitled to vote as a class thereon and of
the total shares entitled to vote thereon. No written consent shall be effective
to take corporate action unless, within sixty (60) days after the earliest dated
consent delivered as provided in this Section 3.12, written consents signed by
the holders of a majority of the outstanding stock (or a majority of a class of
shares, if applicable) shall be delivered as provided in this Section 3.12.
(b) Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action and, if the action be a
merger, consolidation, or sale or exchange of assets for which dissenters rights
are provided under The Florida Business Corporation Act, the notice shall
contain a clear statement of the right of shareholders dissenting therefrom to
be paid the fair value of their shares upon compliance with further provisions
of The Florida Business Corporation Act regarding the rights of dissenting
shareholders.
(c) In the event that the action to which the shareholders consent is
such as would have required the filing of a certificate under The Florida
Business Corporation Act if such action had been voted on by shareholders at a
meeting thereof, the certificate filed under The Florida Business Corporation
Act shall state that written consent has been given in accordance with the
provisions of Section 607.0704 of the Florida Statutes.
(d) Whenever action is taken by written consent of the shareholders, as
provided in this Section 3.12, the written consent of the shareholders
consenting thereto, or the written reports of inspectors appointed to tabulate
such consents, shall be filed in the corporate record book.
ARTICLE IV
DIRECTORS
----------
Section 4.1. FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of this corporation shall
be managed under the direction of, the Board of Directors.
Section 4.2. QUALIFICATION. Directors shall he natural persons who are
eighteen (18) years of age or older; provided, however, that they need not be
residents of this state or be shareholders of this corporation.
Section 4.3. COMPENSATION. The Board of Directors shall have authority
to fix the compensation of directors unless otherwise provided in the Articles
of Incorporation.
Section 4.4. NUMBER. This corporation initially shall have one (1)
director. The number of directors may be increased or diminished from time to
time by the Board of Directors, but shall never be less than one (1).
<PAGE>
Section 4.5. ELECTION AND TERM.
(a) Each person named in the Articles of Incorporation as a member of
the initial Board of Directors shall hold office until the first annual meeting
of shareholders and until his successor shall have been elected and qualified or
until his earlier resignation, removal from office or death.
(b) At the first annual meeting of shareholders and at each annual
meeting thereafter, the shareholders shall elect directors to hold office until
the next succeeding annual meeting. Each director shall hold office for the term
for which he is elected and until his successor shall have been elected and
qualified or until his earlier resignation, removal from office or death.
Section 4.6. REMOVAL OF DIRECTORS. Any director, or the entire Board of
Directors, may be removed, with or without cause, at a meeting of the
shareholders called expressly for that purpose, as provided in Section 607.0808,
Florida Statutes.
Section 4.7. VACANCIES. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors, or by
the shareholders. A director elected to fill a vacancy shall hold office only
until the next election of directors by the shareholders.
Section 4.8. QUORUM AND VOTING. A majority of the number of directors
fixed by these bylaws shall constitute a quorum for the transaction of business.
The act of the majority of the directors present at a meeting at which the
quorum is present shall be the act of the Board of Directors. A director present
at a meeting of the Board of Directors when corporate action is taken shall be
deemed to have assented to the action unless: (a) the director objects at the
beginning of the meeting (or upon the director's arrival, if later) to the
holding of the meeting or the transacting of business at the meeting; or (b) the
director votes against or abstains from the action taken.
Section 4.9. EXECUTIVE AND OTHER COMMITTEES.
(a) The Board of Directors, by resolution adopted by a majority of the
full Board of Directors, may designate from among its members an executive
committee and one or more committees each of which, to the extent provided in
such resolution, shall have and may exercise all the authority of the Board of
Directors, except as limited by the laws of the State of Florida.
(b) The Board of Directors, by resolution adopted in accordance with
this Section 4.9, may designate one or more directors as alternate members of
any such committee, who may act in the place and stead of any absent member or
members at any meeting of such committee.
Section 4.10. PLACE OF MEETING. Regular and special meetings of the
Board of Directors may be held in or out of the State of Florida.
Section 4.11. TIME. NOTICE AND CALL OF MEETINGS.
(a) Regular meetings of the Board of Directors shall be held
immediately following the annual meeting of shareholders each year and on the
<PAGE>
first Monday of each quarter thereafter, and other regular or special meetings
may be held at such times thereafter as the Board of Directors may fix, and at
such other times as called by the President of the corporation. Written notice
of the time and place of special meetings of the Board of Directors shall be
given to each director by either personal delivery, telegram, or facsimile
transmission at least two (2) days before the meeting, or by notice mailed to
each director at least five (5) days before the meeting.
(b) Notice of a meeting of the Board of Directors need not be given to
any director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting (or upon the
director's arrival, if later), any objection to the transaction of business
because the meeting is not lawfully called or convened.
(c) Members of the Board of Directors may participate in a meeting of
such board by conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time. Participation by a director by such means shall constitute presence
in person at a meeting.
Section 4.12. ACTION WITHOUT A MEETING. Any action required to be taken
at a meeting of the Board of Directors or at a meeting of a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the action
to be so taken, signed by all of the directors, or all the members of the
committee, as the case may be, is filed in the minutes of the proceedings of the
board or of the committee. Action taken under such a consent shall effective
when the last director signs the consent (unless the consent provides a
different effective date), and shall have the same effect as a unanimous vote.
Section .13. DIRECTOR CONFLICTS OF INTEREST
(a) No contract or other transaction between this corporation and one
or more of its directors or any other corporation, firm, association, or entity
in which one or more of the directors are directors or officers or are
financially interested, shall be either void or voidable because of such
relationship or interest or because such director or directors are present at
the meeting of the Board of Directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction or because his or their votes
are counted for such purpose, if:
(i) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes,
approves, or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of
such interested directors; or
(ii) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve,
or ratify such contract or transaction by vote or written consent; or
<PAGE>
(iii) The contract or transaction is fair and reasonable as to
the corporation at the time it is authorized by the board, a committee
or the shareholders.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
(c) For purposes of Subsection 4. 13(a)(ii), a conflict of interest
transaction is authorized, approved, or ratified if it receives the vote of a
majority of the shares entitled to be counted under this Section 4.13. Shares
owned by or voted under the control of a director who has a relationship or
interest in the transaction described in section (a) may not be counted in a
vote of shareholders to determine whether to authorize, approve, or ratify a
conflict of interest transaction under Subsection 4. 13(a)(ii). The vote of
those shares, however, shall be counted in determining whether the transaction
is approved under other Sections of these bylaws. A majority of the shares,
whether or not present, that are entitled to be counted in a vote on the
transaction under this Section 4.13 constitutes a quorum for the purpose of
taking action under this Section 4.13.
ARTICLE V
OFFICERS
---------
Section 5.1. OFFICERS. This corporation shall have a President, a Vice
President, a Secretary and a Treasurer. Each officer shall be appointed by the
Board of Directors at the first meeting of the Board of Directors held following
each annual meeting of the shareholders, and shall serve until its successor is
chosen and qualifies. All other officers, agents and factors shall be chosen,
serve for such terms and have such duties as may be determined by the Board of
Directors. Any person may simultaneously hold two or more offices.
Section 5.2. DUTIES. The officers of this corporation shall have the
following duties:
(a) The President shall be the chief executive officer of the
corporation, shall have general and active management of the business and
affairs of the corporation subject to the directions of the Board of Directors,
and shall preside at all meetings of the shareholders and Board of Directors.
(b) The Vice President shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President. He also
shall perform whatever duties and have whatever powers the Board of Directors
may from time to time assign him. If more than one Vice President is elected,
one such Vice President shall be designated as Executive Vice President and
shall, in the absence or disability of the President, perform the duties and
exercise the powers of the President and each other Vice President shall only
perform whatever duties and have whatever powers the Board of Directors may from
time to time assign him.
(c) The Secretary shall have custody of, and maintain, all of the
corporate records except the financial records, shall record the minutes of all
meetings of the shareholders and the Board of Directors or its committees, shall
authenticate records of the corporation, shall send all notices of meetings, and
shall perform such other duties as may be prescribed by the Board of Directors
or the President.
<PAGE>
(d) The Treasurer shall have custody of all corporate funds and
financial records, shall keep full and accurate accounts of receipts and
disbursements and render accounts thereof at the annual meetings of shareholders
and whenever else required by the Board of Directors or the President, and shall
perform such other duties as may be prescribed by the Board of Directors or the
President.
Section5.3. REMOVAL OF OFFICERS. Any officer or agent elected or
appointed by the Board of Directors may be removed by the board at any time with
or without cause.
Section 5.4. VACANCIES. Any vacancy, however occurring, in any office
may be filled by the Board of Directors.
Section 5.5. COMPENSATION. The compensation of the President,
Secretary, Vice President, Treasurer, and such other officers elected or
appointed by the Board of Directors shall be fixed by the Board of Directors and
may be changed from time to time by a majority vote of such Board. The fact that
an officer is also a director shall not preclude such person from receiving
compensation as either a director or officer1 nor shall it affect the validity
of any resolution by the Board of Directors fixing such compensation. The
President shall have authority to fix the salaries of all employees of the
corporation other than officers elected or appointed by the Board of Directors.
ARTICLE VI
STOCK CERTIFICATES
------------------
Section 6.1. AUTHORIZED ISSUANCE. This corporation may issue the shares
of stock authorized by its Articles of Incorporation and none other. Shares may
be issued only pursuant to a resolution adopted by the Board of Directors. No
shares may be validly issued or transferred in violation of any provision of
these bylaws or in violation of any agreement respecting the issuance or
transfer of shares to which the corporation is a party.
Section 6.2. ISSUANCE. Shares of stock of this corporation shall be
represented by certificates. The Board of Directors may authorize shares to be
issued for consideration consisting of any tangible or intangible property or
benefit to the corporation, including, without limitation, cash, promissory
notes, services performed, promises to perform services evidenced by a written
contract or other securities of the corporation. No certificates shall be issued
for any shares until the Board of Directors has determined that the
consideration received or to be received for such shares is adequate. The Board
of Directors' determination as to the adequacy of consideration for the issuance
of shares shall be conclusive as to whether the shares are validly issued, fully
paid and nonassessable. When the corporation receives the consideration for
which the Board of Directors authorized the issuance of shares, the shares
issued therefor shall be fully paid and nonassessable. Consideration in the form
of a promise to pay money or a promise to provide future services is received at
the time of the making of the promise, unless the agreement specifically
provides otherwise.
Section 6.3. SIGNATURES. Certificates representing shares in this
corporation shall be signed, either manually or in facsimile by the President or
Vice President, and the Secretary (or an Assistant Secretary, if one is
appointed), and may be sealed with the seal of this corporation or a facsimile
thereof.
<PAGE>
Section 6.4. FORM. Each certificate representing shares shall state
upon the face thereof: the name of this corporation; that this corporation is
organized under the laws of Florida; the name of the person or persons to whom
issued; the number and class of shares, and the designation of the series, if
any, which such certificate represents; and the par value of each share
represented by such certificate, or a statement that the shares are without par
value. Any restriction on the transfer or registration of transfer of shares, if
applicable, shall be noted conspicuously on the front or back of each
certificate. Back certificate shall otherwise comply, in all respects, with the
requirements of applicable law.
Section 6.5. TRANSFER OF STOCK. The corporation shall register a
transfer of shares if the certificate representing such shares is properly
endorsed by the holder of record or by his duly authorized attorney. The
corporation or its transfer agent may require the signature of such person to be
guaranteed by a commercial bank or trust company or by a member of the New York
or American Stock Exchanges.
Section 6.6. LOST. STOLEN OR DESTROYED CERTIFICATES. The corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate: (a) makes proof in affidavit
form that it has been lost, destroyed, or wrongfully taken; (b) requests the
issue of a new certificate before the corporation has notice that the
certificate has been acquired by a purchaser for value in good faith and without
notice of any adverse claim; (c) gives bond in such form as the corporation may
direct, to indemnify the corporation, the transfer agent, and registrar against
any claim that may be made on account of the alleged loss, destruction, or theft
of the certificate; and (d) satisfies any other reasonable requirements imposed
by the corporation.
ARTICLE VII
BOOKS AND RECORDS
-----------------
Section 7.1. BOOKS AND RECORDS.
(a) This corporation shall keep accurate accounting records, and shall
keep, as permanent records, (i) minutes of all meetings of its
shareholders, Board of Directors and committees of directors and
(ii) a record of all actions taken by the shareholders and Board
of Directors without a meeting.
(b) This corporation shall keep at the registered office of the
corporation, at the corporation's principal office or at the
office of the transfer agent or registrar of the corporation, a
record of its shareholders, giving the names and addresses of all
shareholders, and the number, class, and series, if any, of the
shares held by each.
(c) This corporation shall keep a copy of the following records: (i)
its articles of incorporation and all amendments currently in effect; (ii) its
bylaws and all amendments currently in effect; (iii) resolutions, if any,
adopted by the Board of Directors creating one or more classes or series of
shares and fixing all of their rights, preferences and limitations, if shares
issued pursuant to those resolutions are outstanding; (iv) the minutes of all
shareholders' meetings and records of all action taken by the shareholders
without a meeting for the past three (3) years; (v) written communications to
<PAGE>
all shareholders within the past three (3) years, including financial statements
furnished to shareholders for the past three (3) years; (vi) a list of the names
and business street addresses of the corporation's current officers and
directors; and (vii) the corporation's most recent annual report delivered to
the Department of State.
(d) Any books, records, and minutes may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
Section7.2. SHAREHOLDERS' INSPECTION RIGHTS.
(a) Any shareholder of this corporation is entitled to inspect and
copy, during regular business hours at the corporation's principal office, any
of the records of the corporation described in Subsection 7.1(c) above, if he
gives the corporation written notice of his demand at least five (5) business
days before the date on which he wishes to inspect and copy.
(b) Any shareholder of this corporation is entitled to inspect and
copy, during regular business hours at a reasonable location specified by the
corporation, any of the following records of the corporation if the shareholder
meets the requirements of Subsection (c) below and gives the corporation written
notice of his demand at least five (5) business days before the date on which he
wishes to inspect and copy:
(i) Excerpts from minutes of any meeting of the Board of
Directors, records of any action of a committee of the Board of
Directors while acting in place of the Board of Directors on behalf of
the corporation, minutes of any meeting of the shareholders, and
records of action taken by the shareholders or Board of Directors
without a meeting, to the extent not subject to inspection under
Subsection (a) above;
(ii) Accounting records of the corporation;
(iii) The record of shareholders; and
(iv) Any other books and records.
(c) A shareholder may inspect and copy the records described in
Subsection (1)) only if:
(i) His demand is made in good faith and for a proper purpose;
(ii) He describes with reasonable particularity his purpose
and the records he desires to inspect; and
(iii) The records are directly connected with this purpose.
<PAGE>
Section 7.3. FINANCIAL INFORMATION.
(a) Unless modified by resolution of the shareholders within one
hundred and twenty (120) days after the close of each fiscal year, this
corporation shall furnish its shareholders with annual financial statements that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If the financial
statements are reported upon by a public accountant, his report shall accompany
the financial statements. If the financial statements are not reported upon by a
public accountant, the financial statements shall be accompanied by a statement
of the corporation's President or other person responsible for the corporation's
financial records (i) stating such person's reasonable belief that the financial
statements were prepared on the basis of generally accepted accounting
principles, or, if not, describing the basis of preparation and (ii) describing
any respects in which the financial statements were not prepared on a basis of
accounting consistent with the financial statements prepared for the preceding
fiscal year.
(b) Upon the written request of any shareholder who was not mailed the
financial statements, the corporation shall mail to such shareholder the latest
annual financial statements.
Section 7.4. OTHER REPORTS TO SHAREHOLDERS.
(a) If the corporation indemnifies or advances expenses to any officer
or director (as provided in Section 11.1), other than by court order, by
shareholder action or by an insurance carrier pursuant to insurance maintained
by the corporation, the corporation shall report the indemnification or advance
in writing to the shareholders with or before the notice of the next
shareholders' meeting, or prior to such meeting if the indemnification or
advance occurs after the giving of notice but prior to the time of the meeting,
which report shall specify the persons paid) the amounts paid and the nature and
status at the time of such payment of the litigation or threatened litigation.
(b) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
ARTICLE VIII
DIVIDENDS
------------
Section 8.1. DISTRIBUTIONS. The Board of Directors of this corporation
may, from time to time, declare and the corporation may pay, dividends as
permitted by law on its shares in cash or property, except if, after giving
effect to the distribution, (a) the corporation would not be able to pay its
debts as they became due in the ordinary course of business or (b) the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of the distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution. The record date for shareholders entitled to a
distribution shall be fixed by the Board of Directors, or, if not so fixed,
shall be the date the Board of Directors authorizes the distribution (except in
the case of distributions involving a purchase, redemption or other acquisition
of the corporation's shares).
<PAGE>
Section 8.2. SHARE DIVIDENDS. The Board of Directors may, from time to
time, declare and issue shares pro rata and without consideration to the
corporations' shareholders. Shares of one class or series may not be issued to
shareholders of another class or series unless: (a) authorized by the Articles
of Incorporation; (b) a majority of the votes entitled to be cast by the class
or series to be issued approves the issue; or (c) there are no outstanding
shares of the class or series to be issued. The record date for shareholders
entitled to a share dividend shall be fixed by the Board of Directors, or, if
not so fixed, shall be the date the Board of Directors authorizes the share
dividend.
ARTICLE IX
CORPORATE SEAL
--------------
Section 9.1. FORM. The Board of Directors shall provide a corporate
seal which shall have the name of the corporation inscribed thereon, and may be
facsimile, engraved, printed or an impression seal.
ARTICLE X
AMENDMENT
---------
Section 10.1. POWER TO AMEND. These bylaws may be altered, amended or
repealed, and new bylaws may be adopted, by either the Board of Directors or the
shareholders; provided, however, that the Board of Directors may not alter,
amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that such bylaw is not subject to amendment or repeal by
the Board of Directors.
Section 10.2. REOUISITES FOR AMENDMENT BY SHAREHOLDERS. These bylaws
(including any bylaw that may be amended by the Board of Directors) may be
amended or repealed, wholly or in part, by a majority of the shareholders
entitled to vote thereon present at any shareholders' meeting if notice of the
proposed action was included in the notice of the meeting or is waived in
writing by a majority of the shareholders entitled to vote thereon.
Section 10.3. BYLAWS INCREASING OUORUM OR VOTING REOUIREMENTS FOR
DIRECTORS. A bylaw that fixes a greater quorum or voting requirement for the
Board of Directors may be amended or repealed (a) if originally adopted by the
shareholders, only by the shareholders, or (b) if originally adopted by the
Board of Directors, either by the shareholders or by the Board of Directors. A
bylaw adopted or amended by the shareholders that fixes a greater quorum or
voting requirement for the Board of Directors may provide that it may be amended
or repealed only by a specified vote of either the shareholders or the Board of
Directors. Action by the Board of Directors to adopt or amend a bylaw that
changes the quorum or voting requirement for the Board of Directors must meet
the same quorum requirement and be adopted by the same vote required to take
action under the quorum and voting requirement then in effect or proposed to be
adopted, whichever is greater.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
<PAGE>
Section 11.1. INDEMNIFICATION OF DIRECTORS AND OFFICERS. This
corporation shall indemnify each of its directors and officers and former
directors and officers to the full extent permissible under applicable law. Any
such director or officer shall be entitled to indemnification by the corporation
in any action, suit or proceeding (including any appeal thereof) resulting from
the fact that he is or was a director or officer of this corporation or is or
was serving at the request of this corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceedings, had no reasonable cause to
believe his conduct was unlawful. The determination of whether the applicable
standard of conduct has been met shall be made: (a) by the Board of Directors by
a majority vote of a quorum of directors who were not parties to the action,
suit or proceeding; (b) if such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by the Board of
Directors (in which directors who are parties may participate) consisting solely
of two or more directors not at the time parties to the proceeding; (c) by the
written opinion of independent legal counsel, selected by the Board of Directors
prescribed in (a) above or the committee prescribed in (b) above, or, if a
quorum of directors cannot be obtained as provided in (a) above and a committee
cannot be designated as provided in (b) above, selected by a majority vote of
the full Board of Directors (in which directors who are parties may
participate); or (d) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding, or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
Section 11.2 FURTHER INDEMNIFICATION. In addition to any
indemnification provided for in Section 11.1 above, this corporation may make
such other and further indemnification or advancement of expenses of any of its
directors, officers, employees, or agents as may be approved from time to time
by the Board of Directors.
Secretary
/s/ Halcyon E. Skinner
Dated: 12/1/95
WANGSGARD & ASSOCIATES, LLC
ATTORNEYS AT LAW
5252 NORTH EDGEWOOD DRIVE, SUITE 210 A
PROVO, UTAH 84604
CRAIG J. WANGSGARD TELEPHONE:
DAVID S. HUNT (801) 852-8452
FACSIMILE:
(801) 222-9914
September 15, 1999
The Board of Directors
ISW International, Inc.
363 Atlantic Blvd., Suite 6
Atlantic Beach, FL 32233
Re: ISW International, Inc.
Gentlemen:
We have been retained by ISW International, Inc. (the "Company") in
connection with the Registration Statement on Form SB-l filed by the Company
with the Securities and Exchange Commission (the "Registration Statement")
relating to 1,500,000 shares of Common Stock (the "Common Stock"). You have
requested that we render an opinion as to whether the Common Stock to be issued
upon the terms set forth in the Registration Statement will be validly issued,
fully paid and non-assessable.
In connection with this agreement we have examined the following:
o Articles of Incorporation of The Company
o Articles of Amendment To Articles of Incorporation of The Company
o The Bylaws of The Company
o Unanimous Consents of The Board of Directors
o Minutes of Board Of Directors Meetings
o Minutes of Shareholder Meetings
o Letter to Shareholders Offering Redemption of Outstanding Shares
We have examined such other corporate records and documents and have
made such other examinations as we deemed relevant.
Based upon the above examination, we are of the opinion that the Common
Stock to be issued pursuant to the Registration Statement, are validly
authorized and, when issued in accordance with the terms set forth therein, will
be validly issued, fully paid, and non-assessable.
We hereby consent to being named in the Prospectus included in the
Registration Statement as having rendered the foregoing opinion and as having
represented the Company in connection with the Registration Statement.
Sincerely yours,
/s/ Craig J. Wangsgard
Wangsgard & Associates, LLC
<PAGE>
INVEST LINC CONSULTING CORP.
692 EAST CHERAPPLE CIRCLE, 2ND FLOOR
OREM, UT 84097
PHONE: (801) 222-9414
FAX: (801) 222-9914
January 7, 1999
Allen Weatherby, President
ISW International, Inc.
363 Atlantic Blvd, Suite 6
Atlantic Beach, FL 32233
Re: Business and Financial Advisory Agreement
Dear Allen Weatherby:
The purpose of this letter agreement (the "Agreement") is to confirm
and set forth the terms and conditions of the engagement of Invest Linc
Consulting Corp., a Nevada corporation (the "Advisor") by ISW International,
Inc., a Florida corporation (the "Company"), to render business and financial
advisory services to the Company for the purpose of assisting the Company's
growth and development.
The Company desires to develop business and marketing plans, financial
models and strategies, make its material information available to appropriate
parties, cause presentations of its business to be prepared and delivered, be
introduced to underwriters and financial sources and to possible merger and
acquisition candidates, and establish commercial and strategic partner and joint
venture relationships. The services to be rendered by Advisor to the Company
shall be subject to the following terms and conditions:
1. Engagement.
-----------
The Company hereby engages Advisor to act as its business and exclusive
financial advisor on a best efforts basis upon the terms and conditions set
forth herein and Advisor accepts such engagement. During the terms of its
engagement, Advisor will consult with the Company in developing business and
marketing plans, financial models and strategies, making the Company's material
information available to the appropriate parties, will assist the Company in
obtaining and organizing its due diligence materials, making the Company's
material information available to appropriate parties, causing presentations of
the Company's business to be prepared and delivered, introducing potential
underwriters and financial sources for the Company and to possible merger and
acquisition candidates, establishing commercial and strategic partner and joint
venture relationships, and performing other services as agreed between the
Company and the Advisor. The parties agree that Advisor is not a registered
broker/dealer and that it cannot, and shall not be required hereunder to, engage
in the offer or sale of securities on behalf of the Company. While Advisor has
relationships and contacts with various investors, broker/dealers, underwriters,
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<PAGE>
and investment funds, Advisor's participation in the actual offer or sale of the
Company's securities shall be limited to that of an advisor to the Company and
as a "finder" of investors, broker/dealers and funds. The Company acknowledges
and agrees that the solicitation and consummation of any purchases of the
Company's securities shall be handled by the Company or by one or more NASD
members firms engaged by the Company for such purpose.
2. Compensation to the Advisor.
----------------------------
a) Compensation for Services. The Company will compensate Advisor as
follows: (i) the Company will pay Advisor a monthly fee of $2,500, accrued and
due upon receipt by the Company of any financing and on the last day of each
month thereafter through January, 2001, (ii) in consideration for the payment of
$1,000 for stock, the Company agrees to sell to Advisor three percent (3%) of
issued and outstanding, fully diluted shares, including warrants and options
(the "Shares"), of the Company's equity securities, including both shares of
common stock and preferred stock as of January 1999. This stock will be
non-dilutive until the date of a public offering of the company, and (iii) the
Company will grant Advisor common stock purchase warrants (the "Warrants") to
acquire that number of issued and outstanding, fully diluted shares of the
Company's common stock as is equal to five percent (5%) of the Company's
outstanding stock at the price of the current raising of capital. These warrants
will also be non-dilutive until the date of a public offering of the company,
and will also include a "take-along" provision specifying that the Advisor will
be granted the opportunity to participate in any subsequent offerings up to 5%
of each offering. The length of the warrant shall be five (5) years and the
Company acknowledges the warrant is issued only for advisory and consulting
services, and not in consideration of raising capital. The warrants shall be
redeemable and if the Company is a fully reporting company, under the 1933 and
1934 Securities Act, the warrants shall be registerable for sale. Furthermore,
the Company will take any and all actions necessary to assist Advisor to
register said warrants. (iv) in the event the Company merges into or is
otherwise acquired by a non-reporting public company (a "Public Company"), the
Company shall cause the Public Company to assume this agreement and the
obligations hereunder set forth. All Shares and Warrants, including the shares
of the common stock of the Public Company underlying the Warrants, shall be
issued pursuant to the requirements of Rule 701 of the Securities & Exchange
Commission.
b) Business Arrangements. Subject to the other terms and conditions of
this Agreement, in the event the Company consummates a Business Arrangement, as
hereinafter defined, Advisor shall be entitled to a normal finder's fee (a
"Finder's Fee"), which shall be no less than five percent (5%) of the aggregate
amount of the acquisition or sale price (whether payable in cash or otherwise
and including deferred payments, if any). The Company's agreement to cause the
Public Company to assume the Company's obligations under this Agreement shall
include the above obligation to pay Advisor the Finder's Fee in the event of a
Business Arrangement and such obligation shall include any Business Arrangements
entered into by the Public Company following the Public Company's merger with
the Company.
A Finder's Fee shall be payable with respect to any Business
Arrangement (i) consummated during the term of this Agreement or (ii)
consummated within twelve (12) months after the termination hereof. A Finder's
Fee shall be paid in cash at the closing of the Business Arrangement to which
such fee relates. For purposes of this Agreement, the term "Business
Arrangement" shall mean the acquisition, consolidation, merger, purchase, or
other union of the Company or its business or assets or any part thereof by or
2
<PAGE>
with another entity other than the Public Company with which the Company is to
merge.
c) Reimbursement of Expenses. The Company agrees to pay all accountable
out-of- pocket expenses, including legal fees, travel expenses, and other
business related disbursements, incurred by Advisor in acting on the Company's
behalf.
d) Compensation under Rule 701. The Company acknowledges and agrees
that all Compensation received and to be received by Advisor pursuant to this
Agreement as described in this section was in consideration for, and will be in
consideration for, as the case may be, Advisor's bona fide consulting services
hereunder and none of such compensation was paid Advisor in connection with the
offer and sale of securities in a capital-raising transaction and that such
compensation is not subject to the consummation of any transactions. In
addition, the Company acknowledges and agrees that this agreement constitutes a
written contract relation to the compensation of Advisor pursuant to the
requirements of Rule 701 of the Securities & Exchange Commission.
3. Obligations of the Company
--------------------------
a) Corporate Authorization. The Company agrees to take all necessary
and appropriate corporate actions to authorize all actions required to
implement, and all agreements and additional documents relating to, the terms
thereof.
b) Furnishing of information. The Company will furnish to Advisor such
information and documents as Advisor may reasonably request to facilitate the
performance of Advisor's advisory services hereunder, including access to
facilities operated by the Company and to members of the management of Company
and copies of management reports, budgets and the like, furnished to the
management or directors of the Company.
4. Representations and Warranties of the Company. The Company
represents and warrants to Advisor, to the best of the Company's officers'
knowledge and belief, that any information furnished or to be furnished to
Advisor for use in any business and marketing plans, financial models or
strategies, or Business Arrangement(s) will contain no untrue statement of any
material fact nor omit to state any material fact necessary to make the
information furnished not misleading, except to the extent subsequently
corrected prior to the date of use of such information with third parties. The
Company further warrants and represents that if the circumstances or facts
relating to information or documents furnished to Advisor change at any time
subsequent to the furnishing of such documentation or information to Advisor and
prior to the date of the consummation of any transaction, the Company will
inform Advisor promptly of such changes and forthwith deliver to Advisor
documents or information necessary to ensure the continued accuracy and
completeness of all information and documents previously furnished.
5. Representations and Warranties of Advisor. Advisor represents to the
Company that during the term of this Agreement it will not, to the best of
Advisor's officers' knowledge and belief, make any untrue statement of material
fact. Advisor further represents and warrants to the Company that, to the best
of Advisor's officers' knowledge and belief, all actions taken by it on behalf
of the Company in connection with any advisory services and/or Business
Arrangements will be conducted in compliance with all applicable state and
3
<PAGE>
federal laws and any procedures that might be reasonably imposed by the Company
or its legal counsel to ensure compliance with such laws.
6. Review and Approval of Documentation. The Company shall have the
right to review and approve, prior to distribution, the content of any business
or marketing plans, financial models or strategies, funding strategies, or
disclosure or offering documents prepared by Advisor in the performance of its
services hereunder.
7. Cooperation of Parties. Advisor shall cooperate with the Company and
its counsel and Company shall cooperate with Advisor and its counsel with
respect to any due diligence of the Company and with respect to the preparation
of any Company business and marketing plans, financial models and strategies,
and in the preparation of any related documentation as may be required as a
result of any actions taken by Advisor in the rendering of services to the
Company hereunder.
8. No Obligation to Consummate Transactions. The Company shall not be
obligated to enter into any Business Arrangement which may be presented to it by
Advisor and Advisor shall have no authority to make any representations on
behalf of the Company or to otherwise bind the Company in any manner whatsoever.
If the Company elects to consummate a transaction presented to it by or as a
result of the efforts of Advisor, the final terms of the transaction shall be
subject to negotiation by the Company and its legal counsel. The parties
understand and acknowledge that neither party has represented to or assured the
other that a Business Arrangement will actually be entered into as a result of
Advisor's services hereunder.
9. Indemnification of Advisor. The Company agrees to indemnify and hold
Advisor and each of its affiliates, directors, officers, employees and agents
and any person controlling (within the meaning of Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934,
as amended) any such person or entity (hereinafter referred to collectively as
the "Indemnified Persons") harmless against and from any and all losses, claims,
damages, liabilities, joint or several, suffered or incurred by, or asserted
against, any Indemnified Person (including any amounts paid in settlement of any
action, suit or proceeding brought or threatened to be brought, if such
settlement is effected with the written consent of the Company) under any of the
federal securities laws, under any other statute, common law, or otherwise,
which arises in connection with or is based upon any document provided by the
Company or transaction entered into by Company contemplated by this Agreement,
and to reimburse each Indemnified Person for any travel, legal or other
out-of-pocket expenses (including the cost of any investigation and preparation)
reasonably incurred by such Indemnified Person in connection with any action,
suit, preceding or claim ("Litigation") for which indemnification under the
preceding clause may be sought (including the fees of counsel of such
Indemnified Person's choice retained in connection with investigating or
defending against Litigation); provided, however, that there shall be excluded
from such indemnification and reimbursement any such loss, claim, expense,
damage or liability arising out of or based upon the breach of Advisor's
contractual duties to the Company hereunder or the simple negligence of the
Indemnified Persons; provided, further, that the Company shall not be liable for
any loss, claim, damage or liability resulting from any settlement entered into
by an Indemnified Person without the written consent of the Company as set forth
above; provided, further, that this indemnity shall not apply to any loss,
claim, damage, liability or expense resulting from information about an
4
<PAGE>
Indemnified Person furnished by such Indemnified Person for use in any offering
or disclosure documentation prepared for use in any financing transaction or
Business Arrangement contemplated hereby. The Company shall be notified by any
Indemnified Person seeking indemnification by registered letter, of any action
commenced against such Indemnified Person, within a reasonable time after such
Indemnified Person shall have been served with the summons or other first legal
process or shall have received written notice of the threat of a claim in
respect of which an indemnity may be claimed, giving information as to the
nature and basis of the claim, but failure so to notify the Company shall not
relieve the Company from any liability which it may have hereunder or otherwise
except to the extent that such failure so to notify the Company materially
prejudices the rights of the Company. The Company shall be entitled to
participate at its own expense in the defense, and if the Company so elects
within a reasonable time after receipt of such notice, or if all Indemnified
Persons seeking indemnification on such notice so direct, the Company shall
assume the defense of any Litigation brought to enforce any such claim, and in
either such case, such defense shall be conducted by counsel chosen promptly by
the Company and reasonably satisfactory to Advisor; provided, however, that, if
the defendants in any such action include both an Indemnified Person and the
Company and such Indemnified Person shall have been advised by its counsel that
there may be legal defenses available to such Indemnified Person which are
different from or additional to those available to the Company, and which in the
reasonable opinion of such counsel are sufficient to make it undesirable for the
same counsel to represent both the Company and such Indemnified Person, such
Indemnified Person shall have the right to employ his own counsel in such
Litigation, and in such event the reasonable fees and expenses of such counsel
shall be borne by the Company. The foregoing indemnity and reimbursement
agreement shall be in addition to any other rights which an Indemnified Person
may have at common law or otherwise.
10. Term and Termination of Agreement. This Agreement shall remain in
full force and effect for a term of twenty four (24) months from the date
hereof. During the term hereof, Advisor shall be the exclusive financial advisor
to the Company and the Company agrees not to enter into any similar or like
agreement with any other party during such period without the prior written
consent of Advisor. The indemnity provisions set forth herein shall survive any
termination of the Advisor's engagement hereunder.
11. Compliance with Rule 701. The Company shall use its best efforts to
ensure that all offers and sales of equity securities to Advisor hereunder shall
be in compliance with Rule 701 of the Securities & Exchange Commission, will
cooperate with Advisor in taking all such action as shall be necessary or
required to ensure that such securities are entitled to the benefits of such
Rule 701, and will not cause or permit the sale of securities of the Company in
such a manner as to restrict or prevent the sale or transfer of those securities
of the Company held by Advisor.
12. Rights of Parties. Advisor shall be entitled to assign all of its
rights and obligations hereunder to its designee reasonably acceptable to the
Company. Such assignment shall be effective upon the execution by such assignee
of a counterpart of this Agreement. Upon such assignment, the term "Advisor" is
used herein to refer to such assignee. Except as otherwise provided above, no
party shall be entitled to transfer or assign any of its rights or obligations
hereunder without the prior written consent of the other party. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of, the
parties and their respective successors and assigns.
5
<PAGE>
13. Legal Counsel: Waiver of Conflict of Interest. The parties have had
the opportunity to consider the terms of this agreement with their respective
legal counsel and have either obtained the advice of legal counsel in connection
with their execution hereof or do hereby expressly waive their right to seek
such legal counsel in connection with this transaction.
14. Governing Law. This Agreement shall be interpreted in accordance
with its terms and otherwise in accordance with the laws of the State of Utah
applicable to contracts entered into and to be performed entirely within such
State.
15. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements, understandings, representations and statements, if any,
whether oral or written, with respect to the subject matter hereof. No
modification of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and signed on behalf of each party hereto by its
respective authorized officer.
16. Headings. The headings used in this Agreement have been inserted
for convenience only and are not to be considered in construing the meaning of
the Agreement.
If the foregoing is in accordance with the Company's understanding,
please sign and return the enclosed copy of this letter, whereupon this
Agreement shall constitute a binding agreement between the Company and Advisor.
Sincerely yours,
/s/ Kirby D. Cochran
Kirby D. Cochran
President
This Business and Financial Advisory Agreement is acknowledged and agreed to by
the undersigned as of this 8 day of January, 1999.
ISW International Inc.
By /s/ Allen Weatherby
-------------------------
Allen Weatherby, President
6
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form SB-1 (File
No.____) of our report dated May 4, 1999, on our audit of the financial
statements of ISW International, Inc. We also consent to the reference to our
firm under the caption "Experts."
JAMES MOORE & CO., P.L.
Daytona Beach, Florida
September 13, 1999
<PAGE>
DATED:
SUBSCRIPTION AGREEMENT
OF
ISW INTERNATIONAL, INC.
1. PURCHASE. The undersigned hereby subscribes for the purchase of
_____________ shares of ISW INTERNATIONAL, INC., a Nevada corporation (the
"Company"). With this document the undersigned is submitting the sum of $
_________ in cash, check, money order, or equivalent, as payment for said shares
at the price of $1.00 per share. Checks or money orders are to be made payable
to "Brighton Bank-Escrow Agent for ISW INTERNATIONAL, Inc." until the offering
closes.
2. REPRESENTATIONS. The undersigned hereby represents and warrants
that:
(a) He/she is aware that, pursuant to Section 14 of the
Securities Act of 1933, any provision is void that binds a person acquiring a
security to waive compliance with any provision under the federal securities
law;
(b) The undersigned, if a natural person, is over the age of
twenty-one years;
(c) The undersigned has received and read a copy of the
prospectus of the Company;
(d) The undersigned acknowledges that neither the United
States Securities and Exchange Commission, nor any other state or federal agency
has made any determination as to the merits of purchasing any of such shares,
and that the purchase of any interest involves a very high degree of risk;
(e) The undersigned acknowledges that the application of
purchase may be accepted in whole or in part or rejected by the Company, and
that, to the extent the application may be rejected, the accompanying payment
will be refunded without the deduction of expenses;
(f) The offer and sale of these shares to the undersigned
were made by means of the Company's prospectus only, and no other documents or
advertisements were used in connection therewith; and
(g) The undersigned was offered and is purchasing these
shares within the state of
3. TYPE OF OFFERING. The undersigned hereby further acknowledges that
these shares are being offered and sold pursuant to a registration statement on
Form SB-l under the Securities Act of 1933, as amended, and that such shares may
only be offered and sold in states in which the securities have been qualified
for sale.
AFFIRMATION
THE UNDERSIGNED HEREBY SWEARS AND AFFIRMS THAT HE OR SHE HAS READ THE
FOREGOING SUBSCRIPTION AGREEMENT OF ISW INTERNATIONAL, INC. AND IS FAMILIAR WITH
THE CONTENTS THEREOF AND THAT ALL OF THE REPRESENTATIONS CONTAINED THEREIN ARE
TRUE AND ACCURATE.
<PAGE>
[Printed Name of Subscriber] [Signature]
[Street Address and Number] [City, State and Zip Code]
[Tax Identification or Social
Security Number of Subscriber]
The Company is requested to issue the stock certificate(s) as follows:
Name(s): No. of Shares [Please Print]
Name(s): No. of Shares [Please Print]
<PAGE>
PROCEEDS ESCROW AGREEMENT
THIS PROCEEDS ESCROW AGREEMENT (this "Agreement") is made and entered into this
___ day of September, 1999, by and between ISW INTERNATIONAL, INC., a Florida
corporation (the "Company"), and BRIGHTON BANK, a Utah banking corporation (the
"Escrow Agent").
Premises
The Company proposes to offer for sale to the general public in
certain states a total of Shares of common stock (the "Common Stock"), par value
$0.01, at an offering price of $1.00 per Share in accordance with the
registration provisions of the Securities Act of 1933, as amended, and pursuant
to a registration statement on form SB-l (the "Registration Statement") to be
filed with the Securities and Exchange Commission. The Company agrees herein to
offer for sale the Common Stock in accordance with the terms of the prospectus
contained in the Registration Statement. In accordance with the terms of the
Registration Statement, the Company desires to provide for the escrow of the
gross subscription payments for Common Stock until the amount, as set forth
below, has been received.
Agreement
NOW, THEREFORE, the parties hereto agree as follows:
1. Company or any officer or representative of the Company from
subscriptions for the purchase of Common Stock in the subject offering shall be
deposited promptly with the Escrow Agent, but in any event no later than noon of
the next business day following receipt.
2. Concurrently with transmitting funds to the Escrow Agent, the
Company shall also deliver to the Escrow Agent a schedule setting forth the name
and address of each subscriber whose funds are included in such transmittal, the
number of Shares subscribed for, and the dollar amount paid. All funds so
deposited shall remain the property of the subscriber and shall not be subject
to any lien or charges by the Escrow Agent, or judgments or creditors' claims
against the Company until released to it in the manner hereinafter provided.
3. If at any time prior to the expiration of the minimum offering
period, as specified in paragraph 4, $500,000 has been deposited pursuant to
this Agreement, the Escrow Agent shall confirm the receipt of such funds to the
Company.
4. If the Company and its agents have not deposited $500,000 in good
funds with the Escrow Agent by February 15, 2000, the Escrow Agent shall so
notify the Company and shall promptly transmit to those investors who subscribed
for the purchase of Shares the amount of money each such investor so paid. The
Escrow Agent shall furnish to the Company an accounting for the refund in full
to all subscribers.
5. If at any time prior to the termination of this escrow the Escrow
Agent is advised by the Securities and Exchange Commission that a stop order has
been issued with respect to the Registration Statement, the Escrow Agent shall
thereon return all funds to the respective subscribers.
6. It is understood and agreed that the duties of the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Company and its
agents and holding and disbursing such monies in accordance with this Agreement.
7. The Escrow Agent is not a party to, and is not bound by, any
agreement between the Company and any other party which may be evidenced by or
arise out of the foregoing instructions.
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8. The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness, or validity of any instrument deposited with it, or with respect to
the form or execution of the same, or the identity, authority, or rights of any
person executing or depositing the same.
9. The Escrow Agent shall not be required to take or be bound by notice
of any default of any person or to take any action with respect to such default
involving any expense or liability, unless notice in writing is given to an
officer of the Escrow Agent of such default by the undersigned or any of them,
and unless it is indemnified in a manner satisfactory to it against any expense
or liability arising therefrom.
10. The Escrow Agent shall not be liable for acting on any notice,
request, waiver, consent, receipt, or other paper or document believed by the
Escrow Agent to be genuine and to have been signed by the proper party or
parties.
11 The Escrow Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection herewith, except its own willful misconduct.
12. The Escrow Agent shall not be answerable for the default or
misconduct of any agent, attorney, or employee appointed by it if such agent,
attorney, or employee shall have been selected with reasonable care.
13. The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the consideration of the foregoing instructions or the
Escrow Agent's duties hereunder, and the Escrow Agent shall incur no liability
and shall be fully protected in acting in accordance with the opinion and
instructions of such counsel.
14. In the event of any disagreement between the undersigned or any of
them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and/or demands being made in
connection with or for any papers, money, or property involved herein or
affected hereby, the Escrow Agent shall be entitled at its option to refuse to
comply with any such claim, or demand so long as such disagreement shall
continue and, in so refusing, the Escrow Agent shall not be or become liable to
the undersigned or any of them or to any person named in the foregoing
instructions for the failure or refusal to comply with such conflicting or
adverse demands, and the Escrow Agent shall be entitled to continue to so
refrain and refuse to so act until:
(a) the rights of adverse claimants have been finally adjudicated in a
court assuming and having jurisdiction of the parties and the money, papers, and
property involved herein or affected hereby; and/or
(b) all differences shall have been adjusted by agreement and the
Escrow Agent shall have been notified thereof in writing signed by all of the
persons interested.
15. The fee of the Escrow Agent is $ 750.00, receipt of which is hereby
acknowledged. In addition, if a minimum of $500,000 is not received in escrow
within the escrow period and the Escrow Agent is required to return funds to
investors as provided in section 4, the Escrow Agent shall receive a fee of $
5.00 per check for such service. The fee agreed on for services rendered
hereunder is intended as full compensation for the Escrow Agent's services as
contemplated by this Agreement; however, in the event that the conditions of
this Agreement are not fulfilled, the Escrow Agent renders any material service
not contemplated by this Agreement, there is any assignment of interest in the
subject matter of this Agreement, there is any material modification hereof, any
material controversy arises hereunder, or the Escrow Agent is made a party to or
justifiably intervenes in any litigation pertaining to this Agreement or the
subject matter hereof, the Escrow Agent shall be reasonably compensated for such
extraordinary expenses, including reasonable attorneys' fees, occasioned by any
delay, controversy, litigation, or event and the same may be recoverable only
from the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers, as of the date first
above written.
By ________________________________________
Duly Authorized Officer
Brighton Bank hereby acknowledges receipt of this Agreement and agrees
to act in accordance with said Agreement and on the terms and conditions above
set forth this ___ day of September 1999.
BRIGHTON BANK
By _______________________________________
Duly Authorized Officer
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