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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
SECURITIES EXCHANGE ACT OF 1934
TMANglobal.com, INC.
(Name of Small Business Issuer in its charter)
FLORIDA 65-0782227
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 UNIVERSAL STUDIOS PLAZA, BUILDING 22A, ORLANDO, FLORIDA 32819-7610
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (407) 370-4460
Securities to be registered pursuant to Section 12(b) of the Act.
none
Securities to be registered pursuant to Section 12(g) of the Act.
COMMON STOCK par value, $.0001 per share
(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
TMANglobal.com, Inc. ("TMAN"), a corporation governed by the laws of
the State of Florida, is the result of a merger between FSGI Corporation and The
Martial Arts Network On-Line, Inc. on December 21, 1998. TMAN offers goods and
services to the martial arts, extreme sports, and health and fitness markets,
through its presence on the World Wide Web. TMAN also provides credit unions
with comprehensive and internal regulatory compliance audits services, and
related internal auditing, accounting and managerial advisory services, through
its wholly-owned subsidiary, Financial Standards Group, Inc. ("FSG"). TMAN is
traded on the NASDAQ OTC Bulletin Board under the symbol "CHOP" and has
principal executive offices at: 1000 Universal Studios Plaza, Building 22A,
Orlando, Florida 32819-7610.
FSGI Corporation was formed under the laws of the State of Florida in
1997 as a holding company for the purpose of acquiring FSG. FSGI Corporation
began trading on the NASDAQ OTC Bulletin Board on July 31, 1998 under the symbol
"FSGI". TMAN changed its trading symbol to "CHOP" on January 14, 1999. In 1997,
FSGI Corporation acquired FSG, a Florida company organized in October 1989 to
assist credit unions in performing financial services. FSG continues to offer
financial services to credit unions as a wholly-owned subsidiary of TMAN.
The Martial Arts Network On-Line, Inc., a company organized under the
laws of the State of Florida, was created in 1996 by its parent company The
Martial Arts Network, Inc. as a development stage company for the purpose of
establishing an Internet point of presence through its web site
www.martial-arts-network.com. This site continues to be maintained by the parent
company, while TMAN launched www.tmanglobal.com in February 1999 to offer goods
and services to the martial arts, extreme sports, and health and fitness
markets.
Through its web site, TMAN attempts to provide portals that are
inviting to, and frequented by, its target market; thereby creating a low cost,
and efficient distribution channel. TMAN believes that the sale of products and
services over the Internet offers attractive benefits to customers, including
greater selection, convenience, ease of use and competitive pricing. As the
Internet becomes an increasingly significant global medium for online activity,
TMAN's objective is to become the preeminent site for martial arts, extreme
sports, and health and fitness products and services.
PRODUCTS AND SERVICES - INTERNET WEB SITE BUSINESS
TMAN is developing three business models to market a compilation of
products and services through its online web site. While these models are
operational, they have not resulted in significant revenues and there can be no
assurance that they will be able to compete against companies that may be better
established, have broader public and industry recognition, have financial
resources substantially greater than those of TMAN, and have distribution
facilities better than those which now or in the foreseeable future will become
available to TMAN. These business models include an e-commerce operation, a
Charter Membership Program, and an entertainment agency.
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E-COMMERCE OPERATIONS. TMAN offers name-brand sporting goods and
apparel at discount prices through a virtual shopping mall accessible on its web
site. Similarly, TMAN offers a variety of how-to books, magazine subscriptions,
videotapes, CDs, DVDs, and cassettes pertaining to martial arts, extreme sports,
health, fitness, and nutrition through a virtual bookstore. TMAN's access to
various titles and labels has expanded tremendously since its affiliation with
Amazon.com beginning in January 1999. As an Amazon.com Associate, TMAN provides
selected books, CDs and videos with accompanying editorials on its web site that
allow customers to make informed choices about their purchases. The purchases
are made through a special link to Amazon.com, which supplies and delivers the
items purchased.
As a complementary business line in its e-commerce operations, TMAN
also intends to develop a billing company that will provide martial arts
schools, gyms and heath clubs with marketing and business planning services.
However, there is no assurance that TMAN will be able to develop and provide
such services successfully.
CHARTER MEMBERSHIP PROGRAM. In June 1999, TMAN launched a web-community
Charter Membership Program that offers members a combination of TMAN's products
and services. The program includes access to the following: celebrity chat
rooms; a video jukebox that airs sporting events from around the world; passes
to live events; a global calendar displaying dates and times of sports, fitness,
and health events; a personal web page; magazine subscriptions; a custom
affinity web browser; CD music cards and t-shirts; vacation packages; discounts
on virtual mall purchases; and a monthly newsletter.
ENTERTAINMENT AGENCY. TMAN also provides customers the service of its
virtual talent and casting agency. The agency provides established and amateur
actors access to information on the latest acting prospects, including
opportunities to act as stunt people and body doubles for major stars.
SUPPLIERS - INTERNET WEB SITE BUSINESS
The majority of clothing, training equipment, safety gear, and related
products sold to customers through TMAN's virtual shopping mall are manufactured
in Asia. Management believes that, if for any reason it could not rely on, or
retain the services of any of its current suppliers or manufacturers, other
comparable suppliers and manufacturers would be readily available in the
marketplace.
In May 1999, TMAN opened a branch office in Bangkok, Thailand, one of
the centers of the Asian retail market, to serve as TMAN's buying office for its
virtual shopping mall. The Bangkok office allows direct participation in the
Asian market as well as direct access to a range of products produced by a
diversified-base of Asian manufacturers. TMAN's Bangkok presence allows TMAN to
ship and distribute the majority of its merchandise, sold over the Internet via
its virtual shopping mall, directly to customers. The elimination of a
third-party distributor for these products gives TMAN a significant advantage
over many U.S.-based retail companies, and allows TMAN to offer its merchandise
at a more competitive price.
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In June 1999, TMAN signed an agreement with a Thai manufacturer to
produce its own line of clothing, training equipment, and safety gear with the
private label, TMAN America. TMAN expects that these items will be natural
additions to the products marketed on its virtual shopping mall, TMAN also
expects to be able to produce this label in Thailand at relatively lower costs.
However, there can be no assurance that TMAN will be successful in producing its
private label at a lower cost than those of its competitors, nor can there be
any assurance that the TMAN America label will be competitive with other more
established and well-known brands.
The majority of the books, music labels, and game titles purchased
through TMAN's virtual bookstore are supplied by three U.S.-based companies.
Similarly, TMAN has relationships with several suppliers to meet its demand for
magazine subscriptions. In the event that any of these sources became
unavailable to TMAN, Management believes that comparable replacements could
easily be obtained in the marketplace.
In January 1999, TMAN's application to participate in the Amazon.com
Associates program was approved. As an Amazon.com Associate, TMAN has agreed to
display the Amazon.com logo on its web site in exchange for access to more than
4.7 million books, music CDs, videos, DVDs, and computer game titles, as well as
Amazon.com's customer service facilities, including payment processing,
ordering, shipping, order status reports, and returns. While the arrangement is
automatically renewable, there can be no assurance that TMAN will be able to
continue its relationship with Amazon.com and the loss of such a prestigious and
important contract might materially alter TMAN's ability to obtain and maintain
customers.
In April 1999, TMAN and Physical Genius, Inc. came to an arrangement
whereby TMAN agreed to market the Physical Genius Home Trainer on its virtual
shopping mall in exchange for the percentage it earned from the mark-up. The
Physical Genius Home Trainer utilizes the latest computer hardware and software
technologies to assist athletes, coaches and trainers in designing, executing,
monitoring and analyzing workout routines. The system provides immediate and
comprehensive performance feedback through its patented interactive hand-held
device called a digital training assistant, and allows the customer access to
the many workout routines contained in its library of exercises. In the event
TMAN's relationship with Physical Genius, Inc. terminated, TMAN would lose its
ability to market the patented technology of the unique Physical Genius Home
Trainer. However, as of September 1999 sales of the Physical Genius Home Trainer
have been immaterial to TMAN's profits.
MARKETS AND CUSTOMERS - INTERNET WEB SITE BUSINESS
TMAN markets its products and services worldwide to men and women 18 to
49 years of age with interests in martial arts, extreme sports, health, fitness,
and nutrition. TMAN's objectives are to increase customer traffic to the TMAN
web site, build customer loyalty, encourage repeat purchases and develop
incremental product and service revenue opportunities. TMAN is currently
exploring a variety of media, business developmental and promotional methods to
achieve these goals. TMAN also benefits from public relations activities as well
as online and traditional advertising.
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TMAN is primarily focused on marketing its products and services on the
World Wide Web. In May 1999, TMAN indexed its web site on more than 1,500 search
engines in 37 countries and retained an Internet technology company to increase
the frequency in which TMAN is accessed on keyword searches. Additionally, TMAN
is currently under review for participation as a Yahoo! Premier Shopping
Partner. Such an arrangement would allow TMAN to benefit directly from Yahoo!
traffic by being listed on Yahoo!'s popular and prominent web site as a Premier
Shopping Partner.
As an added business strategy to increase access to markets, TMAN seeks
to enter into business combinations and alliances that allow TMAN continued
access to technological innovation and diversified products. Management believes
that developments in the digital information superhighway and other technologies
will give TMAN still greater access to customers.
TMAN's sponsorship of sporting events and participation in high-profile
fundraisers also increases its visibility in the market. TMAN currently has an
arrangement with a clothing manufacturer that produces positive attitude
kidswear, whereby TMAN makes a donation of each sale of kidswear to children's
hospitals. Management believes that TMAN's participation in goodwill events and
sponsorship of sporting events will increase the support it receives from the
martial arts community and the public in general.
COMPETITION - INTERNET WEB SITE BUSINESS
The online commerce market is rapidly evolving and intensely
competitive. In addition, the retail clothing, book, music, and sports equipment
industries are intensely competitive. TMAN competes globally with other
retailers and distributors of the products sold on TMAN's web site.
TMAN's strategy for market expansion includes using its significant
position on the Internet to procure business relationships with potential
competitors whenever a compatible business interest can be identified. However,
there can be no assurance that TMAN will be able to come to such arrangements
with competitors, nor that TMAN will be able to compete against new companies
that may be better established, have broader public and industry recognition,
have financial resources substantially greater than those of TMAN, and have
distribution facilities better than those which now or in the foreseeable future
will become available to TMAN.
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FINANCIAL SERVICES
TMAN, through its subsidiary, FSG, provides credit unions with
comprehensive and internal regulatory compliance audit services, and related
accounting and managerial advisory services that do not involve the expertise of
a Certified Public Accountant ("CPA"). Under applicable regulation, credit
unions and their supervisory committees are not required to obtain a certified
audit of their financial statements in accordance with generally accepted
auditing standards as published by the American Institute of Certified Public
Accountants. The supervisory committee may elect to conduct the audit itself or
it may seek the expertise of a non-CPA accounting firm, depending on the
committee's expertise and the complexity of the credit union's operations. FSG
specializes in performing uncertified audits for credit union supervisory
committees at competitive rates. FSG's staff is recruited through the
acquisition of accounting practices and by hiring existing credit union league
examiners, retired federal and state credit union examiners, and individuals
with accounting and finance training.
MARKETS AND CUSTOMERS - FINANCIAL SERVICES
FSG currently services approximately 600 credit unions nationwide
through its offices located in Florida, Kentucky, Michigan, Hawaii, California,
Mississippi, Georgia and Louisiana. FSG's intends to expand its markets through
the acquisition of smaller credit union audit practices.
FSG promotes its services within the credit union industry through the
relationships of its senior management and members of its board of directors
with various federal and state credit union organizations and by their
participation in various industry associations, conferences, seminars, chapter
meetings and other programs. Management also associates with state credit union
leagues and the National Association of Credit Union Supervisory and Auditing
Committee in order to obtain referrals. FSG has developed various brochures,
newsletters and other marketing literature outlining its proposed services for
small credit unions. These products are updated regularly and delivered to
various credit union supervisory committees. FSG advertises in various industry
publications and exhibits FSG's services at major credit union conferences and
credit union league annual meetings.
Despite these efforts, there can be no assurance that FSG will be
successful in its expansion strategy. The ability of FSG to develop and expand
its operations is dependent on numerous factors including economic conditions,
competition, and the ability to develop clientele. There can be no assurance
that FSG will be able to provide its comprehensive internal audit services
through a nationwide organization on a profitable basis. In addition, there can
be no assurance that the expansion of operations will not consume needed
financial resources and divert necessary administrative, professional and
management personnel from FSG's established operations.
COMPETITION - FINANCIAL SERVICES
FSG has established a competitive position in this segment of the
market by providing non-CPA regulatory compliance audit services to credit
unions at a significantly lower cost than those offered by CPA-firms. The
majority of the smaller credit unions FSG has targeted for its services are
currently being audited by small auditing firms, individual CPAs, retired
federal, and state regulatory examiners or state credit union leagues.
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However, given the ease of entry which currently characterizes this
segment of the market, medium-sized, regional or national CPA firms may
establish services that compete with those provided by FSG. In addition, there
are individuals and firms which provide on a local or regional basis,
comprehensive internal audit services for credit unions, and there may be other
firms which seek to establish similar proprietary services which will be
competitive with those provided by FSG. Accordingly, while this segment of the
industry is highly fragmented at the present time, it is anticipated that the
business will be highly competitive in the future. FSG may be in competition
with well established companies and firms both large and small, many of which
have greater financial resources and capabilities than FSG. There can be no
assurance that FSG will be able to compete successfully in this market segment
on an ongoing basis
Moreover, while credit union assets have increased substantially in
recent years, the number of credit unions has contracted. As the amount of
assets of credit unions increase, as is anticipated, the feasibility of
conducting certified audits may also increase, and the cost burden relative to
the assets of such credit unions will correspondingly decline. Accordingly, FSG
will be attempting to provide its services to a potentially declining number of
credit unions.
Finally, there are periodic proposals before the National Credit Union
Administration and the American Institute of Certified Public Accountants to
require credit unions to obtain certified audits, and there can be no assurances
that credit unions will not be required to submit certified financial statements
or undertake more stringent audit procedures in the future. In that event, while
FSG may still be able to provide its services as support to CPA firms, the need
for FSG's services could be sharply reduced, which could limit FSG's revenues
and profits in the future.
EMPLOYEES OF THE COMPANY
As of September 1, 1999, TMAN and its subsidiary, FSG, employed 28
full-time employees. None of TMAN's or FSG's employees are represented by a
labor union, and Management considers its employee relations to be good.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
CERTAIN STATEMENTS CONTAINED HEREIN ARE NOT BASED ON HISTORICAL FACTS,
BUT ARE FORWARD-LOOKING STATEMENTS THAT ARE BASED UPON NUMEROUS ASSUMPTIONS
ABOUT FUTURE CONDITIONS THAT COULD PROVE NOT TO BE ACCURATE. ACTUAL EVENTS,
TRANSACTIONS AND RESULTS MAY MATERIALLY DIFFER FROM THE ANTICIPATED EVENTS,
TRANSACTIONS OR RESULTS DESCRIBED IN SUCH STATEMENTS. THE COMPANY'S ABILITY TO
CONSUMMATE SUCH TRANSACTIONS AND ACHIEVE SUCH EVENTS OR RESULTS IS SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE
NOT LIMITED TO, THE EXISTENCE OF DEMAND FOR AND ACCEPTANCE OF THE COMPANY'S
PRODUCTS AND SERVICES, REGULATORY APPROVALS AND DEVELOPMENTS, ECONOMIC
CONDITIONS, THE IMPACT OF COMPETITION AND PRICING, RESULTS OF FINANCING EFFORTS
AND OTHER FACTORS AFFECTING THE COMPANY'S BUSINESS THAT ARE BEYOND THE COMPANY'S
CONTROL. THE COMPANY UNDERTAKES NO OBLIGATION AND DOES NOT INTEND TO UPDATE,
REVISE, OR OTHERWISE PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT FUTURE EVENTS OR
CIRCUMSTANCES.
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THE FOLLOWING DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS
REPORT.
OVERVIEW
TMANglobal.com, Inc. ("TMAN" or the "Company"), is a corporation
organized and existing under the laws of the State of Florida. It is the
surviving corporation of the combination of FSGI Corporation and The Martial
Arts Network On-Line, Inc., which occurred effective December 21, 1998. The
Martial Arts Network On-Line, Inc. was a development stage company organized
under the laws of the State of Florida, for the purpose of establishing an
Internet point of presence for the purpose of marketing goods and services to
the martial arts, extreme sports, and health and fitness markets. FSGI
Corporation was formed in 1997 for the purpose of acquiring Financial Standards
Group, Inc. ("FSG"). FSG was organized in October 1989 and commenced operations
in November, 1989. FSG is in the business of providing credit unions with
comprehensive and internal regulatory compliance audit services, and related
internal auditing, accounting and managerial advisory services. FSG continues to
offer financial services to credit unions as a wholly-owned subsidiary of TMAN.
The Company, through its subsidiary, FSG, provides comprehensive and
internal auditing, as well as related accounting and managerial advisory
services to smaller credit unions and their supervisory committees. FSG
currently services approximately 600 credit unions nationwide through its
offices located in Florida, Kentucky, Michigan, Hawaii, California, Mississippi,
Georgia and Louisiana. Under applicable regulation, such entities and their
supervisory committees may obtain a certified audit of their financial
statements in accordance with generally accepted auditing standards as published
by the American Institute of Certified Public Accountants. However, currently
there is no statutory requirement that the annual audit be certified by a
Certified Public Accountant ("CPA") or that it be conducted in accordance with
generally accepted auditing standards. The supervisory committee may elect to
conduct the audit itself or it may seek the expertise of a non-CPA accounting
firm, depending on the committee's expertise and the complexity of the credit
union's operations. FSG specializes in performing uncertified audits for credit
union supervisory committees.
TMAN is in the business of offering goods and services to the martial
arts, extreme sports, and health and fitness markets, through a point of
presence operating and maintained by it on the World Wide Web. Specifically,
TMAN operates www.tmanglobal.com, a web site, devoted to martial arts, extreme
sports, and health and fitness launched by TMAN in February 1999. Through its
web site, TMAN attempts to provide portals that are inviting to, and frequented
by, its target market; thereby creating a low cost, and efficient distribution
channel. TMAN believes that the sale of products and services over the Internet
offers attractive benefits to customers, including greater selection,
convenience, ease of use and competitive pricing. As the Internet becomes an
increasingly significant global medium for online activity, TMAN's objective is
to become the preeminent site for martial arts, extreme sports, and health and
fitness products and services.
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ACQUISITIONS
On November 13, 1998, FSGI Corporation acquired the right to service
the credit union clients of Bonnie Davis P.C. As consideration, the Company will
issue 40,000 shares of restricted common stock with an agreed upon market value
of $80,000. If the total market value at the twelve month and twenty four month
anniversary dates is less than $2.00 per share, the Company will issue
additional shares valued at the difference between the market price and the
guaranteed amount. The accumulated amortization of the client list at June 30,
1999 was $10,000. Further, should the gross revenue for the twelve month period
ended November 13, 1999, not equal or exceed 80% of the purchase price
($64,000), then the share adjustments referred to earlier would not apply.
On December 21, 1998, FSGI Corporation acquired all of the outstanding
common stock of The Martial Arts Network On-Line, Inc. For accounting purposes,
the transaction was effective on January 1, 1999. As consideration, FSGI
Corporation issued an aggregate of three million shares of common stock and an
option to purchase up to one million additional shares at a purchase price of
$1.00 per share. The Martial Arts Network, Inc. (parent of TMANglobal.com, Inc.)
now has controlling interest in the new corporation formed. The acquisition was
recorded using the purchase method of accounting. The results of operations
since the date of acquisition, January 1, 1999, for accounting purposes, are
included in the consolidated statements of operations at June 30, 1999. Goodwill
of $3,402,777 was recorded in this transaction and is being amortized over 15
years using the straight line method.
The following is a summary of the results of operations of the separate
companies from the date of acquisition to June 30, 1999:
TMANGLOBAL.COM, INC. FSGI CORPORATION
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Net Sales: $ 6,235 $649,357
Net (loss): ($273,617) ($150,232)
The following summarizes the fair value of the assets acquired and
liabilities assumed of FSGI Corporation:
Cash ($ 2,437)
Accounts receivable 58,551
Subscriptions receivable 50,000
Prepaid expenses 13,475
Property and equipment 38,767
Client list 78,000
Accounts payable (64,161)
Accrued expenses (35,264)
Notes payable (76,875)
---------
Net assets $ 60,056
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The financial statements as presented, include the operations of The
Martial Arts Network On-Line, Inc., for the nine months ended June 30, 1999, and
FSGI Corporation, from the date of acquisition, January 1, 1999 to June 30,
1999.
RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1998 AND 1997
TMAN did not commence operations until February 1999. From inception
through the end of January 1999, TMAN was a development stage company.
Consequently, it did not realize any revenues, cost of revenues or gross profit
during either of the fiscal years ended September 30, 1998 or 1997. Selling,
general and administrative expenses were $1,027 and $8,323, respectively, for
those same periods. Selling, general and administrative expenses for the 1998
fiscal year, in the amount of $1,027, decreased $7,296 from $8,323 in fiscal
1997. The decrease reflected the conclusion of the preparatory period and the
consolidation of certain administration activity. The Net Loss for fiscal 1998
decreased $7,296 from $8,323 in fiscal 1997, directly reflecting the change in
selling, general and administrative expenses.
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
Revenues increased from $0 in the nine month period ended June 30, 1998
to $655,592 in the nine month period ended June 30, 1999 due to the inclusion of
the revenues of FSGI Corporation in the consolidated revenues of the Company
from and after January 1, 1999 (the effective date of the FSGI Corporation
purchase, for accounting purposes). Costs of revenues increased from $0 in the
nine months ended June 30, 1998 to $460,769 in the nine months ended June 30,
1999 due primarily to the inclusion of the operations of FSGI Corporation in the
consolidated revenues of the Company effective January 1, 1999. Selling, general
and administrative expenses increased from $513 in the nine months ended June
30, 1998 to $618,672 in the nine months ended June 30, 1999 due primarily to the
inclusion of the operations of FSGI Corporation in the consolidated revenues of
the Company effective January 1, 1999 (which accounted for $343,274 of the
selling, general and administrative expenses in the nine months ended June 30,
1999). The balance of the selling, general and administrative expenses in the
nine months ended June 30, 1999 ($275,398) relate to the operations of
TMANglobal.com. The Net Loss increased from $513 in the nine months ended June
30, 1998 to $423,849 in the nine months ended June 30, 1999 due to the inclusion
of the operations of FSGI Corporation in the consolidated revenues of the
Company effective January 1, 1999, and to pre-operating and operating costs
incident to the commencement of operations at TMANglobal.com.
The following is a summary of the results of operations of the separate
companies from the date of acquisition to June 30, 1999:
TMANGLOBAL.COM, INC. FSGI CORPORATION
-------------------- ----------------
Net Sales: $ 6,235 $649,357
Net (loss): ($273,617) ($150,232)
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FINANCIAL CONDITION
The Company's cash balance was $185,825 at June 30, 1999 as compared to
$499 on June 30, 1998. The increase was due primarily to net cash in the amount
of $363,909, provided from financing activities during the nine month period
ended June 30, 1999. Specifically, $328,790 in cash proceeds were received from
the issuance of 343,721 shares of Common Stock in a private placement that the
Company completed in April, 1999 (net of subscriptions receivable), and $47,375
was received by virtue of increases in long-term debt (which increases were
partially offset by payments on long-term debt of $12,256). Operating activities
during the nine month period ended June 30, 1999 accounted for the use of
$176,201, as compared to $513 used in the nine month period ended June 30, 1998.
The Company expects that its working capital resources and the cash flow that it
expects to receive from operations will be sufficient to fund its working
capital needs in the near term. While the Company may use funds available under
the Credit Agreement (discussed below) to fund future operations, there can be
no assurance that the Company's capital resources will be adequate.
In May 1998, FSGI Corporation entered into a Credit Agreement with Bank
Atlantic consisting of a $50,000 Loan and a $50,000 Line of Credit
collateralized by the assets of FSGI Corporation, for its financial services
operations. The Loan has an interest rate of 11.05% and comes due on May 13,
2000. As of June 30, 1999, the balance due on the Loan was $24,274. The Line of
Credit provides for borrowings of up to $50,000 at the prime rate plus 2% (9.75%
at June 30, 1999). As of June 30, 1999, the balance due under the Line of Credit
was $40,000. The Line of Credit is perpetual and interest is paid on it monthly.
The Loan and Line of Credit are not available to fund the separate operations of
TMANglobal.com, Inc.
IMPACT OF YEAR 2000
The Company has developed a Year 2000 compliance plan to address the
issue of software currently in use that may have time or date sensitivity that
requires correction. If not addressed, system failures or miscalculations could
cause disruptions of operations, including, among other things, a temporary
inability to process transactions, prepare invoices, or engage in similar normal
business activities. The Company has contacted its major vendors and received
written confirmation of Year 2000 compliance from them. These vendors provide
the Company with technical support and software programs that cover the paging
signals, invoicing and retention of customer activity, and the reporting of the
Company's financial and accounting transactions. All of these programs are
covered under existing maintenance agreements, and no significant costs have
been incurred with respect to Year 2000 compliance issues.
Although the Company has received assurances that it will be Year 2000
compliant and expects no significant issues or expenses with respect to Year
2000, the Company is continuing to review its product offering for potential
problems. The Company is also in the process of developing Year 2000 contingency
plans in the event of unforeseen circumstances.
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ITEM 3. DESCRIPTION OF PROPERTIES
TMAN leases the following properties for its Internet web site
operations: 300 square feet for $700 per month at 1000 Universal Studios Plaza,
Building 22A, Orlando, Florida 32819-7610 under a month-to-month lease; and 150
square feet for $220 per month at 919-459 Silom Road, Galleria Plaza, Bangkok,
Thailand under a lease commencing May 11, 1999 and expiring November 10, 1999.
TMAN also subleases 600 square feet for its customer service and storage
facility at 11435A Palmetto Park Road, Boca Raton, Florida for $1,000 per month
from West Boca Karate which is owned by Ron Tramontano a director and President
of TMAN. Management believes that the terms and conditions of this lease are
comparable or better than those that would have been obtained on an arms-length
basis.
FSG leases the following properties for its financial services
operations: 1,400 square feet for $2,061.82 per month at 3200 N. Military Trail,
Suite 110, Boca Raton, Florida 33431 under a lease commencing October 1, 1998
and expiring September 30, 1999; 480 square feet for $417.90 per month at 3615
Newburg Road, Louisville, Kentucky 40218 under a lease commencing October 1,
1997 and expiring September 30, 2000; 600 square feet for $690.66 per month at
5075 Cascade Road, S.E., Suite E, Grand Rapids, Michigan 49546 under a lease
commencing October 1, 1998 and expiring September 30, 2003; 120 square feet for
$338.54 per month at 1654 South King Street, Honolulu, Hawaii 96826 under a
lease commencing March 1, 1997 and expiring February 28, 2000; 370 square feet
for $420.00 per month at 300 Willowbend Road, Suite H, Peachtree City, Georgia
30269 under a lease commencing September 4, 1998 and expiring September 30, 1999
(the lease was renewed on October 1, 1999 through September 30, 2000).
Except for the sublease at 11435A Palmetto Park Road, Boca Raton,
Florida, each of the lease agreements are with unaffiliated parties. In the
event that TMAN or FSG lost its rights under a particular lease, Management
believes that it could locate comparable facilities without difficulty.
Management believes the properties are adequately covered by insurance and that
it has sufficient space for operations for the next twelve months.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 1, 1999,
with respect to the beneficial ownership of the outstanding shares of TMAN's
common stock by (1) each person known by TMAN to be the "beneficial owners" of
more than 5% of the common stock; (2) each director of TMAN; (3) each Named
Executive Officer; and (4) all directors and executive officers as a group.
11
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES % OF COMMON STOCK
OF BENEFICIAL OWNER (1) TITLE OF CLASS BENEFICIALLY OWNED BENEFICIALLY OWNED(2)
- --------------------------------------- ------------------ -------------------------- --------------------------
<S> <C> <C> <C>
The Martial Arts Network, Inc. common stock 4,000,000(3) 57.6%
1000 Universal Studios Plaza
Building 22A
Orlando, Florida 32819-7610
Tony Interdonato common stock 5,000,000(4) 63.0%
c/o TMANglobal.com, Inc.
1000 Universal Studios Plaza
Building 22A
Orlando, Florida 32819-7610
Ron J. Tramontano common stock 5,005,000(5) 63.0%
c/o TMANglobal.com, Inc.
1000 Universal Studios Plaza
Building 22A
Orlando, Florida 32819-7610
Ron Valli common stock 1,000,000(6) 14.4%
c/o TMANglobal.com, Inc.
1000 Universal Studios Plaza
Building 22A
Orlando, Florida 32819-7610
All directors and officers as common stock 7,000,000(7) 70.4%
a group ( 3 persons)
</TABLE>
- -----------------
(1) Unless noted, all of such shares of common stock are owned of September
1, 1999 by each person or entity named as beneficial owner and such
person or entity has sole voting and dispositive power with respect to
the shares of common stock owned by each of them.
(2) As to each person or entity named as beneficial owners, such person's
or entity's percentage of ownership is determined by assuming that any
options or convertible securities held by such person or entity which
are exercisable or convertible within 60 days from the date hereof have
been exercised or converted, as the case may be.
(3) Includes, 1,000,000 shares of common stock issuable pursuant to options
granted in January 1999 and exercisable through January 2002.
(4) Represents 1,000,000 shares of common stock issuable to Mr. Interdonato
pursuant to options granted in January 1999 and exercisable through
January 2002; the 3,000,000 shares of common stock beneficially owned
by The Martial Arts Network, Inc; and the 1,000,000 shares of common
stock issuable to The Martial Arts Network pursuant to options granted
to it in January 1999 and exercisable through January 2002. Mr.
Interdonato is considered a beneficial owner of the interest held by
The Martial Arts Network, Inc. in TMAN given his direct interest in The
Martial Arts Network, Inc. and his position as President and Chief
Operating Officer of The Martial Arts Network, Inc.
(5) Includes, 1,000,000 shares of common stock issuable pursuant to options
granted to Mr. Tramontano in January 1999 and exercisable through
January 2002; the 3,000,000 shares of common stock beneficially owned
by The Martial Arts Network, Inc; and the 1,000,000 shares of common
stock issuable to The Martial Arts Network pursuant to options granted
to it in January 1999 and exercisable through January 2002. Mr.
Tramontano is considered a beneficial owner of the interest held by The
Martial Arts Network, Inc. in TMAN given his direct interest in The
Martial Arts Network, Inc. and his position as Director and Chairman of
The Martial Arts Network, Inc.
(6) Represents 1,000,000 shares of common stock issuable to Dr. Valli
pursuant to options granted in January 1999 and exercisable through
January 2002.
(7) Represents 3,000,000 shares of common stock issuable to the three
individual directors and officers pursuant to options granted in
January 1999 and exercisable through January 2002; the 3,000,000 shares
of common stock beneficially owned by The Martial Arts Network, Inc;
and the 1,000,000 shares of common stock issuable to The Martial Arts
Network pursuant to options granted to it in January 1999 and
exercisable through January 2002.
12
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of TMAN are:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---------------------------- --- -----------------------------------------
<S> <C> <C>
Tony Interdonato 40 Chairman of the Board and Chief Executive
Officer
Ron J. Tramontano 51 President and Director
Ronald Valli 49 Chief Operating Officer
</TABLE>
TMAN's articles of incorporation provide that the board of directors
shall consist of no less than one, nor more than seven directors, each of which
shall be elected annually. Currently the board of directors consists of Tony
Interdonato and Ron Tramontano, both of whom were elected in January 1999.
TONY INTERDONATO. Mr. Interdonato has been President and Chief
Operating Officer of TMAN's parent, The Martial Arts Network, Inc. since October
1994. Mr. Interdonato became Chairman and Chief Executive Officer of TMAN on
January 1, 1999. In May 1999, Mr. Interdonato became Chief Executive Officer of
FSG. From August 1996 to June 1997, Mr. Interdonato oversaw the creation and
production of an international business program hosted by former Secretary of
Defense Caspar Weinberger as Senior Vice President and General Manager of
Multi-Media Productions. From June 1994 to May 1996, Mr. Interdonato was the
President of Direct Image, Inc., an ad agency responsible for successfully
launching numerous national promotional campaigns for Fortune 500 clients. From
June 1995 to August 1996, he also served as the Vice President of Business
Development/Strategic Planning and Head of Corporate Communications/Public
Relations at Five Star Productions. Mr. Interdonato was a Senior Producer and
Vice President of Media Relations at WJMK-TV from October 1993 to June 1995. Mr.
Interdonato pursued degrees in Oceanography and Electronics at Florida Institute
of Technology from 1977 to 1979. Mr. Interdonato double majored in Marketing and
Mass Communications at the University of South Florida in 1982.
RON TRAMONTANO. Mr. Tramontano has been a Director and Chairman of The
Martial Arts Network, Inc. since October 1994. Mr. Tramontano became a Director
and President of TMAN in January 1999. Mr. Tramontano is also Chief Instructor
of the West Boca Karate Center, which he opened in 1986. Prior to opening West
Boca Karate Center, Mr. Tramontano was employed by Teltec Communications and New
York Telephone for more than eighteen years where he engineered and monitored
the first microwave transmission stations to be used at that time in the
Northeast, including the installation of CNN's video transmitter/receiver at One
World Trade Center in New York City. Mr. Tramontano graduated from Metropolitan
Collegiate Institute with a degree in Electronics in June 1985. In addition to
being a black belt master, Mr. Tramontano is also a published author, licensed
pilot, and an accomplished pianist.
13
<PAGE>
RON VALLI. Ron Valli, Ph.D, was appointed Chief Technology Officer of
TMAN's parent, The Martial Arts Network, Inc., in 1997. In January 1999, Dr.
Valli became TMAN's Chief Operating Officer. Dr. Valli worked on the
architecture and development of high-technology products as a design engineer
from January 1997 to January 1999 for Milgo Solutions. From October 1994 to
January 1997, Dr. Valli worked at NCR Corporation with a team of architects on
several high-technology products, including a next generation 8-way "Octascale"
Pentium Pro System and Windows NT systems that specialize in hierarchical
bus-based and SCI-based scaleable architectures, and multiple PCI bus systems.
Dr. Valli received a Masters in Science from the University of Virginia in 1984
and a Doctorate of Philosophy in Electrical Engineering/Computer Architecture
from the University of Pittsburgh in 1989. During his doctoral studies, he
started his studies of Tang Soo Do under Master C.S. Kim. He continued his
martial arts training under Mr. Tramontano and received his black belt in Tang
Soo Do in 1990. Dr. Valli achieved his second-degree black belt in 1992.
There are no material proceedings to which any director, officer or
affiliate of TMAN, any owner of record, of beneficially more than five percent
of TMAN common stock, or any associate of any such director, officer, affiliate
of TMAN or security holder is a party adverse to TMAN or any of its subsidiaries
or has a material interest adverse to TMAN or any of its subsidiaries.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate cash compensation paid for
services rendered to TMAN during the last three years by each person serving as
TMAN's chief executive officer during the last year and TMAN's most highly
compensated executive officers serving as such at the end of the year ended
December 31, 1998, whose compensation was in excess of $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------- ---------------------- ----------
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) SARS(#) PAYOUTS($) COMPENSATION($)
------------------- ----- --------- --------- --------------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jason L. Lents(1) 1998 90,000 - - 286,000 - - N/A
President 1997 90,000 - - - - - N/A
1996 - - - - - - N/A
</TABLE>
14
<PAGE>
(1) Jason L. Lents was appointed director of FSGI Corporation and president of
FSG in August 1997. Mr. Lents ran the operations of FSG and FSGI
Corporation, including the duties traditionally assigned to the chief
executive officer from the time it was acquired until January 1, 1999, at
which time Tony Interdonato was appointed chief executive officer of FSGI
Corporation's successor company TMAN. Mr. Lents continued as the president
of FSG until May 1, 1999 at which time Mr. Interdonato became chief
executive officer of FSG and Michael Santone became interim president of
FSG. Mr. Lents continued to work as a consultant for FSG until September
30, 1999. See "Consulting Agreements".
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1998)
TMAN granted no options to purchase shares of common stock to any
executive officer during the year ended December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
No options to purchase common stock were exercised by any executive
officer during the year ended December 31, 1998.
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE
No awards were made under any long-term incentive plan to any executive
officer during the year ended December 31, 1998.
DIRECTOR AND OFFICER COMPENSATION
TMAN does not generally compensate directors for the activities they
perform in their capacity as director. In January 1999 the board of directors
resolved to pay a fixed base salary through January 2000 to TMAN's three
principal officers as follows: $4,000 per month ($48,000 per year) to Tony
Interdonato, Chairman and Chief Executive officer; $5,000 per month ($60,000 per
year) to Ron Valli, Chief Operating Officer; and $2,000 per month ($24,000 per
year) to Ron Tramontano, President and Director. As of June 1999, the board of
directors resolved to pay Ron Tramontano $4,000 per month ($48,000 per year).
Messrs. Interdonato and Tramontano and Dr. Valli each also received in January
1999, options to purchase 1,000,000 shares of common stock exercisable at $1.00
until January 2002.
CONSULTING AGREEMENTS
Jason L. Lents, a former director of FSGI Corporation and the former
president of FSG, provided consulting services to FSG between May 1, 1999 and
September 30, 1999 at a rate of $6,250 per month ($75,000 per year).
15
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions between TMAN and any director, executive
officer, or beneficial owner in excess of $60,000 during the year ended December
31, 1998.
ITEM 8. DESCRIPTION OF SECURITIES
TMAN is currently authorized to issue 20 million shares of common
stock, par value $.0001 per share. As of September 1, 1999, there were 5,938,554
shares of common stock issued and outstanding and 55 holders of record.
Management believes that there are approximately 300 beneficial owners, only one
of which currently holds more than a 5% interest in TMAN. Each share of common
stock entitles the holder to one vote on each matter submitted to the
stockholders. The holders of common stock: (a) have equal ratable rights to
dividends from funds legally available therefor when, as and if declared by the
board of directors; (b) are entitled to share ratably in all of the assets of
TMAN available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of TMAN; (c) do not have preemptive,
subscription or conversion rights, or redemption or applicable sinking fund
provisions; and (d) as noted above are entitled to one non-cumulative vote per
share on all matters submitted to stockholders for a vote at any meeting of
stockholders. Prior to any payment of dividends to the holders of common stock,
all accrued and unpaid dividends on any outstanding shares of preferred stock
must be paid. TMAN anticipates that, for the foreseeable future, it will retain
earnings, if any, to finance the operations of its businesses. The payment of
dividends in the future will depend on, among other things, the capital
requirements and the operating and financial conditions of TMAN.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
TMAN currently trades on the NASDAQ OTC Bulletin Board under the symbol
"CHOP". TMAN traded under the symbol "FSGI" from July 31, 1998 to January 13,
1999. On January 4, 1999, the Securities and Exchange Commission approved
amendments to National Association of Securities Dealers, Inc. Rules 6530 and
6540 to limit quotations on the OTC Bulletin Board to the securities of
companies that make current filings pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended. This Form 10-SB must be declared
effective by December 1, 1999 for TMAN to meet its initial filing obligations
under the eligibility rule. In the event TMAN fails to meet this deadline it
will no longer be eligible to be quoted on the OTC Bulletin Board. Once becoming
compliant TMAN would only be allowed to reenter the OTC Bulletin Board after
being cleared by the OTC Compliance Unit. The range of high and low bid
information for TMAN's common stock for each full quarterly period during TMAN's
last two fiscal years, is as follows:
16
<PAGE>
PERIOD HIGH BID LOW BID
------ -------- -------
FISCAL 1998
4th quarter(1) 2.938 0.440
FISCAL 1999
1st quarter 2.406 0.440
2nd quarter 3.500 0.750
3rd quarter 2.000 0.625
4th quarter(2) 2.000 0.375
(1) Beginning July 31, 1998, the first date TMAN's common stock began
trading.
(2) As of September 24, 1999.
These quotations were obtained from the NASDAQ OTC Bulletin Board
quarterly quote summaries, and reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions. As of September 1, 1999, the closing bid price for TMAN's common
stock was $0.40625. As of the same date, there were 55 holders of record of
TMAN's common stock. Management believes that there are approximately 300
beneficial owners of TMAN common stock.
TMAN has not paid any cash dividends and does not anticipate paying any
cash dividends in the foreseeable future. TMAN intends to use any earnings which
it may generate to finance the growth of its business.
ITEM 2. LEGAL PROCEEDINGS
In July, 1999, the Trustee in Bankruptcy ("Trustee") for Total World
Telecommunications, Inc. ("Total World') filed a Complaint to Recover Fraudulent
Transfer in the United States Bankruptcy Court for the Southern District of
Florida against Financial Standards Group, Inc. ("FSG"), a wholly-owned
subsidiary of TMANglobal.com, Inc., and three individuals. In Re: Total World
Telecommunications, Inc. Lawrence H. Blum as Unsecured Creditors Trustee v.
Financial Standards Group, Inc., et al, Case No. 97-36030-BKC-SHF, Adv. 99-3153
(U.S.D.C. S.D. Fla. Bkrptcy, 1999). The Trustee alleges that Total World's
transfer of the stock in FSG to the three individuals who were officers of FSG
at the time for a $50,000 note within a year of the filing of Total World's
involuntary bankruptcy was for insufficient consideration while Total World was
insolvent, with the intent to hinder, delay, and defraud Total World's
creditors, and therefore is a voidable fraudulent transfer under Federal and
Florida bankruptcy law. The Trustee seeks an Order declaring the transfer of the
FSG stock to the three individuals to have been a violative fraudulent transfer,
and further ordering FSG and the individuals to turn the FSG stock over to the
Trustee, or alternatively awarding unspecified money damages. Counsel for FSG is
now reviewing the matter and determining a responsive course of action.
Discovery has not commenced, and TMAN is not yet in a position to assess the
significance or potential impact of the litigation.
17
<PAGE>
There can be no assurance that the outcome of this litigation will be
favorable to TMAN. An adverse finding against TMAN or the requirement that TMAN
expend significant resources defending itself may result in a material adverse
effect on the financial condition of TMAN.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
1. In October 1997, FSGI Corporation borrowed $50,000 from Premium
Investment Management, Ltd. In satisfaction of that debt, FSGI Corporation paid
to the lender $3,000 in interest, and in August 1998 at the lender's
instruction, issued to SBZ Investment Subtrust, Ltd. 500,000 shares of common
stock; options to purchase 100,000 shares of common stock at $1.00; and options
to purchase 100,000 shares of common stock at $.50 per share. In March 1999,
TMAN sold 66,667 shares of common stock to SBZ Investment Subtrust at $.75 per
share.
2. In November 1997, as consideration for consulting services, FSGI
Corporation granted Fly Yellow Investments, Ltd. options to purchase 100,000
shares of common stock at $1.00 per share, exercisable between November 1, 1997
and October 31, 2000
3. In July 1998, FSGI Corporation granted David Latraverse options to
purchase 50,000 shares of common stock at $1.00 per share between July 1998 and
June 30, 2001 in consideration for investment consulting services.
4. In August 1998, FSGI Corporation also issued 33,333 shares of common
stock to M&A West as consideration for financial advise, investor relations and
public relations services.
5. In September 1998, FSGI Corporation issued 25,000 shares of common
stock to National Capital Merchant Group, L.L.C. for strategic planning and
financial advice.
6. In October 1998, FSGI Corporation granted an option to Southeast
Capital Partners, Inc. to purchase 75,000 shares of common stock at $1.00 per
share between October 1, 1998 and September 30, 1999 in consideration of market
and strategic planning services. In September 1998, Southeast Capital Partners,
Inc. was issued 25,000 shares of common stock and in October 1998 Southeast
Capital Partners, Inc. was issued 25,000 shares of common stock.
7. In October 1998, as partial consideration for management advisor and
investor relation services, FSGI Corporation also granted options to Managerial
Advisory Services, Inc. to purchase common stock as follows: 100,000 shares at
$1.00; 100,000 shares at $1.50; and 100,000 shares at $2.00.
8. In November 1998, FSGI Corporation issued 50,000 shares of common
stock to Stockbroker Relations, Inc. and 133,333 shares of common stock to Scott
Sieck for financial advice, investor relations, and public relations services.
18
<PAGE>
9. In January 1999, TMAN granted options to purchase 1,000,000 shares
of common stock at $1.00 per share, between January 1999 and January 2002, to
its three officers, Tony Interdonato, Ron Tramontano, and Ron Valli.
10. In April 1999, TMAN issued 50,000 shares of common stock to K.M.
Ward, Inc. as consideration for consulting services, and agreed to grant Elliot,
Lane & Associates 100,000 shares of restricted common stock as consideration for
investment banking services.
11. In June 1998, FSGI Corporation issued 777,000 shares of common
stock to private investors as compensation for a prior investment.
12. In December 1998, FSGI Corporation issued 245,500 shares of
restricted common stock to private persons as compensation for a prior
investment.
13. In April 1998 TMAN sold 5,400 shares of common stock to private
investor at $.75 per shares and in June 1998, FSGI Corporation sold 538,667
shares of common stock to private investors at $.75 per share in connection with
a private offering.
14. FSGI Corporation sold 100,000 shares of common stock at $.75 per
share to Five Speed Investment Subtrust in August 1998. FSGI Corporation sold
another 100,000 shares at $.75 per share to Five Speed Investment Subtrust in
October 1998. In February 1999, Five Speed Investment Subtrust purchased 66,667
shares of TMAN's common stock at $.75 per share.
15. In January 1999, private investors purchased 13,500 shares of
common stock at $.75 per shares.
16. In March 1999, TMAN sold 288,153 shares of common stock to private
investors at a price of $.75 per share.
17. In March 1999, TMAN issued 3,000,000 shares of restricted common
stock to The Martial Arts Network, Inc. in accordance with Agreement and Plan of
Merger between FSGI Corporation and The Martial Arts Network On-Line, Inc. The
Martial Arts Network, Inc. was also issued options exercisable at $1.00 per
share for 1,000,000 shares of common stock between January 1999 and January
2002.
In the transactions described in paragraphs 1 through 10, exemptions
from the registration requirements of the Securities Act of 1933, as amended was
claimed under Rule 504 and/or Rule 701 and/or Section 4(2) of the Securities Act
of 1933, as amended. In the transactions described in paragraphs 11 through 16
exemption from the registration requirements of the Securities Act of 1933, as
amended was claimed under Rule 504 and/or 4(2). In the transaction described in
paragraph 17, exemption from the registration requirements of the Securities Act
of 1933, as amended was claimed under Section 4(2) of the Securities Act of
1933, as amended. The forgoing transactions did not involve any public offering
and the recipients either received adequate information about FSGI Corporation
or TMAN, or had access, through employment or other relationships, to such
information. In each of the foregoing transactions, Management reasonably
believed that each of the recipients was "sophisticated" within the meaning of
Section 4(2) of the Securities Act of 1933, as amended and/or "accredited"
within the meaning of Rule 501 under the Securities Act of 1933, as amended.
19
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act empowers a
corporation to indemnify any person who was or is a party to a proceeding by
reason of the fact that he was or is an officer, director, employee or agent of
the corporation against liability incurred in connection with such proceeding.
Such person must have acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interests of the corporation. With respect to
any criminal proceeding, such person must have had no reasonable cause to
believe his conduct was unlawful. Moreover, indemnification of officers,
directors, employees or agents of TMAN is only appropriate when determined to be
proper under the applicable standard of conduct by a majority vote of a quorum
of TMAN's board of directors, excluding any directors seeking indemnification.
Indemnification is not exclusive under the Florida Business Corporation
Act, however, indemnification is not permitted to be made on behalf of any
person if a judgment or final adjudication establishes: (1) a violation of the
criminal law, unless such person had reasonable cause to believe his conduct was
lawful or no reasonable cause to believe his conduct was unlawful; (2) such
person derived an improper personal benefit from the transaction; (3) as to any
director, such proceeding arose from an unlawful distribution under Section
607.0834 of the Florida Business Corporation Act; or (4) willful misconduct or a
conscious disregard for the best interests of TMAN in a proceeding by the
corporation or a stockholder.
TMAN's bylaws provide that TMAN shall indemnify persons acting in good
faith and in the best interest of TMAN. The bylaws provide further, with respect
to criminal activities, that TMAN shall indemnify persons who had no reasonable
cause to think his or her actions unlawful. TMAN is empowered by the bylaws to
purchase and maintain insurance on behalf of any such person.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING TMAN PURSUANT
TO THE FOREGOING PROVISIONS, TMAN HAS BEEN INFORMED THAT IN THE OPINION OF THE
SEC, SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE
SECURITIES ACT AND IS THEREFORE UNENFORCEABLE.
PART F/S
See pages F-1 through F-13 hereinbelow.
20
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
2.1 Agreement and Plan of Merger dated December 21, 1998 between
FSGI Corporation and The Martial Arts Network On-Line, Inc.
3.1 Articles of Incorporation and amendment thereto
3.2 Bylaws
4.1 Certificate for shares of common stock
10.1 Consulting Agreement dated March 9, 1999 between K. M. Ward
Inc. and TMAN
10.2 Consulting Agreement dated March 17, 1999 between VistaQuest,
Inc. and TMAN
10.3 General Agreement dated April 29, 1999 between Elliott, Lane &
Associates, Inc. and TMAN
10.4 Purchase Contract dated November 13, 1998 between Bonnie Davis
P.C. and FSGI Corporation.
11 Statement re: Computation of Per Share Earnings
21 Subsidiaries of the registrant
23 Consent of Independent Certified Public Accountants
27 Financial Data Schedule
99 TMANglobal.com, Inc. Pro Forma Combined Financial Statements.
SIGNATURE
Pursuant to the requirements of the Section 12 of the Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: October 8, 1999 TMANGLOBAL.COM, INC.
By: /S/ Tony Interdonato
------------------------------------
Tony Interdonato
Chairman and Chief Executive Officer
21
<PAGE>
TMANGLOBAL.COM, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
Independent Auditor's Report.............................................................................1
Financial Statements:
Balance Sheets as of September 30, 1998 and 1997, and
Unaudited at June 30, 1999 and 1998...............................................................2
Statements of Operations for the Years Ended September 30, 1998 and 1997, and
Unaudited for the Nine Months Ended June 30, 1999 and 1998 .......................................3
Statements of Changes in Stockholders' Equity (Deficit) for the Years Ended
September 30, 1998 and 1997, and Unaudited for the Nine Months
Ended June 30, 1999 and 1998......................................................................4
Statements of Cash Flows for the Years Ended September 30, 1998 and 1997, and
Unaudited for the Nine Months Ended June 30, 1999 and 1998........................................5
Notes to Financial Statements.........................................................................6-13
</TABLE>
<PAGE>
DASZKAL, BOLTON & MANELA
CERTIFIED PUBLIC ACCOUNTANTS
----------------------------
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE #100 @ BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN, CPA, P.A.
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors and Stockholders
TMANglobal.com, Inc.
Boca Raton, Florida
We have audited the accompanying balance sheets of TMANglobal.com, Inc., as of
September 30, 1998 and 1997, and the related statements of operations, changes
in stockholders' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TMANglobal.com, Inc., as of
September 30, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company experienced a loss from operations
in 1998 and 1997 and had negative cash flows from operations at September 30,
1998 and 1997. These matters raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding those matters are
described in Note 13. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Daszkal, Bolton, Manela, Devlin & Co., CPAs
Boca Raton, Florida
July 7, 1999
F-1
<PAGE>
TMANGLOBAL.COM, INC.
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
JUNE 30,
YEARS ENDED ----------------------------
SEPTEMBER 30, 1999 1998
---------------------------- ------------- -------------
1998 1997 (UNAUDITED)
------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Current assets:
Cash $ - $ 1,012 $ 185,825 $ 499
Accounts receivable - - 42,730 -
Prepaid and other assets - - 28,255 -
------------- ------------- ------------- -------------
Total current assets - 1,012 256,810 499
------------- ------------- ------------- -------------
Property and equipment, net - - 35,120 -
------------- ------------- ------------- -------------
Other assets:
Goodwill, net - - 3,289,351 -
Client list, net - - 70,000 -
------------- ------------- ------------- -------------
Total other assets - - 3,359,351 -
------------- ------------- ------------- -------------
Total assets $ - $ 1,012 $ 3,651,281 $ 499
============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accounts payable $ - $ - $ 60,382 $ -
Accrued expenses - - 1,541 -
Due to stockholders 8,097 8,097 8,062 8,097
Due to affiliate 1,000 1,000 - 1,000
Checks outstanding in excess of bank balances 15 - 29,140 -
Current maturities of long-term debt - - 75,422 -
------------- ------------- ------------- -------------
Total current liabilities 9,112 9,097 174,547 9,097
------------- ------------- ------------- -------------
Long-term debt - - 36,572 -
------------- ------------- ------------- -------------
Total liabilities 9,112 9,097 211,119 9,097
------------- ------------- ------------- -------------
Stockholders' equity (deficit):
Common stock, $0.0001 par value; authorized
20,000,000 shares: issued and outstanding -
3,000,000 shares 300 300 594 300
Subscriptions receivable - - (1,500) 0
Additional paid-in capital (200) (200) 3,874,129 (200)
Accumulated deficit (9,212) (8,185) (433,061) (8,698)
------------- ------------- ------------- -------------
Total stockholders' equity (deficit) (9,112) (8,085) 3,440,162 (8,598)
------------- ------------- ------------- -------------
Total liabilities and stockholders' equity $ - $ 1,012 $ 3,651,281 $ 499
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
TMANGLOBAL.COM, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
YEARS ENDED ----------------------------
SEPTEMBER 30, 1999 1998
---------------------------- ------------- -------------
1998 1997 (UNAUDITED)
------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Revenues earned $ - $ - $ 655,592 $ -
Costs of revenues earned - - 460,769 -
------------- ------------- ------------- -------------
Gross profit - - 194,823 -
Selling, general and administrative
expenses 1,027 8,323 618,672 513
------------- ------------- ------------- -------------
Net loss $ (1,027) $ (8,323) $ (423,849) $ (513)
------------- ------------- ------------- -------------
Net loss per share (basic & diluted) $ - $ - $ (0.07) $ -
============= ============= ============= =============
Weighted average common shares
outstanding 3,000,000 3,000,000 5,799,230 3,000,000
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
TMANGLOBAL.COM, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL
NUMBER COMMON PAID-IN SUBSCRIPTION ACCUMULATED
OF SHARES STOCK CAPITAL RECEIVABLE (DEFICIT) TOTAL
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1996 3,000,000 $ 300 $ (200) $ - $ 138 $ 238
Net loss - September 30, 1997 - - - - (8,323) (8,323)
------------- ------------- ------------- ------------- ------------- -------------
Balance (deficit), September 30, 1997 3,000,000 300 (200) - (8,185) (8,085)
Net loss - September 30, 1998 - - - - (1 ,027) (1,027)
------------- ------------- ------------- ------------- ------------- -------------
Balance (deficit), September 30, 1998 3,000,000 300 (200) - (9,212) (9,112)
Unaudited:
Acquisition of assets of FSGI
Corporation 2,542,833 254 3,512,579 (50,000) - 3,462,833
Issuance of stock 440,987 44 330,246 - - 330,290
Issuance of stock for services 52,000 5 81,495 (1,500) - 80,000
Retirement of common stock (97,266) (9) (49,991) 50,000 - -
Net loss - June 30, 1999 - - - - (423,849) (423,849)
------------- ------------- ------------- ------------- ------------- -------------
Balance, June 30, 1999 (Unaudited) 5,938,554 $ 594 $ 3,874,129 $ (1,500) $ (433,061) $ 3,440,162
============= ============= ============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
TMANGLOBAL.COM, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
YEARS ENDED ----------------------------
SEPTEMBER 30, 1999 1998
---------------------------- ------------- -------------
1998 1997 (UNAUDITED)
------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (1,027) $ (8,323) $ (423,849) $ (513)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Depreciation - - 5,530 -
Amortization - - 121,426 -
Common stock issued for services - - 81,500 -
Changes in assets and liabilities, net of
effects of acquisitions:
(Increase) decrease in:
Cash acquired - - (2,437) -
Accounts receivable - - 15,821 -
Subscriptions receivable - - 50,000 -
Prepaid and other assets - - (14,780) -
Increase (decrease) in:
Accounts payable - - (3,779) -
Accrued expenses - - (33,723) -
Due to stockholder - 8,097 (35) -
Due to affiliates - 1,000 (1,000) -
Checks outstanding in excess of bank
balance 15 - 29,125 -
------------- ------------- ------------- -------------
Net cash provided (used) by
operating activities (1,012) 774 (176,201) (513)
------------- ------------- ------------- -------------
Cash flows from investing activities:
Purchase of property and equipment - - (1,883) -
------------- ------------- ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock - - 330,290 -
Subscriptions receivable (1,500)
Increase in long-term debt - - 47,375 -
Payments on long-term debt - - (12,256) -
------------- ------------- ------------- -------------
Net cash provided by financing
activities - - 363,909 -
------------- ------------- ------------- -------------
Net increase (decrease) in cash (1,012) 774 185,825 (513)
Cash at beginning of period 1,012 238 - 1,012
------------- ------------- ------------- -------------
Cash at end of period $ - $ 1,012 $ 185,825 $ 499
============= ============= ============= =============
Additional cash payment information:
Interest paid $ - $ - $ 5,092 $ -
============= ============= ============= =============
Income taxes $ - $ - $ - $ -
============= ============= ============= =============
Non cash transactions affecting investing and
financing activities:
Common stock issued for acquisition - - 2,542,833 -
============= ============= ============= =============
Common stock issued for services - - 52,000 -
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
TMANglobal.com, Inc., ("the Company") was formed on December 21, 1998, resulting
from a merger between The Martial Arts Network On-line, Inc. (a development
stage company), (TMANO) and FSGI Corporation (FSGI). TMANglobal.com, Inc., is
located at Universal Studios in Orlando, Florida.
TMANO was incorporated on May 23, 1996, in the State of Florida as the Martial
Arts Network, Inc. The Company then underwent a name change to TMANO on June 1,
1997. From its inception, TMANO was in the development stage and engaged
primarily in the business of developing its on-line web site. Consequently,
TMANO has had no significant revenue and has been dependent upon the receipt of
capital investment or other financing to fund its continuing operations.
FSGI was incorporated on May 15, 1997, in the State of Florida. FSGI through its
wholly owned subsidiary Financial Standards Group, Inc., provides auditing and
accounting services to assist credit unions and their supervisory committees in
performing comprehensive internal and regulatory compliance audits in
satisfaction of their statutory requirements. Financial Standards Group, Inc.,
has offices in Georgia, Florida, Kentucky, Michigan, Mississippi, Louisiana,
California, and Hawaii.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all cash and
other demand deposits to be cash and cash equivalents. As of September 30, 1998
and 1997, the Company had no cash equivalents.
Property and Equipment
- ----------------------
Property and equipment are stated at cost and are being depreciated using the
straight-line and accelerated methods over the estimated useful lives of two to
seven years. Leasehold improvements are stated at cost and are being amortized
over the lesser of the term of the lease or the estimated useful life of the
asset. Amortization is included in depreciation expense.
Revenue Recognition
- -------------------
Revenue is recognized as earned as services are performed.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
F-6
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Unaudited Interim Information
- -----------------------------
The information presented as of June 30, 1999 and 1998, and for the nine month
period ended June 30, 1999 and 1998, has not been audited. In the opinion of
management, the unaudited interim financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Company's financial position as of June 30, 1999 and 1998, and the results of
its operations and its cash flows for the nine months ended June 30, 1999 and
1998, and the stockholders equity for the nine months ended June 30, 1999.
Principles of Consolidation (Unaudited)
- ---------------------------------------
The consolidated financial statements include the accounts of TMANglobal.com,
Inc. and its wholly-owned subsidiary, Financial Standards Group, Inc., at June
30, 1999. All intercompany accounts and transactions have been eliminated in
consolidation.
The financial statements as presented, reflect the reverse merger of the Martial
Arts Network On-Line, Inc., for the nine months ended June 30, 1999, and FSGI
Corporation, from the date of acquisition, December 31, 1998 to June 30, 1999.
See Note 3 for a schedule of the operating results for the period ended June 30,
1999 for each individual company.
Advertising (Unaudited)
- -----------------------
Advertising costs are expensed when incurred. The advertising cost incurred for
the period ended June 30, 1999, was $26,718.
Amortization of Goodwill (Unaudited)
- ------------------------------------
Goodwill represents the amount of which the purchase price of businesses
acquired exceeds the fair market value of the net assets acquired under the
purchase method of accounting.
The excess of the fair value of the net assets of FSGI Corporation acquired by
the reverse merger was $3,402,777 and was recorded as goodwill. Goodwill is
being amortized on a straight-line method over 15 years. The accumulated
amortization of the excess fair value of net assets of the Company acquired over
cost is $113,426 at June 30, 1999.
NOTE 3 - ACQUISITIONS (UNAUDITED)
On December 21, 1998, FSGI Corporation acquired all of the outstanding common
stock of TMAN Online, for accounting purposes the transaction was effective on
January 1, 1999. As consideration, FSGI Corporation issued an aggregate of three
million shares of common stock and an option to purchase up to one million
additional shares at a purchase price of $1.00 per share. The Martial Arts
Network, Inc. (parent of TMANglobal.com, Inc.) now has controlling interest in
the new corporation formed.
F-7
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - ACQUISITIONS (UNAUDITED) (CONTINUED)
The acquisition was recorded using the purchase method of accounting. The
results of operations since the date of acquisition, January 1, 1999, for
accounting purposes, are included in the consolidated statements of operations
at June 30, 1999. Goodwill of $3,402,777 was recorded in this transaction and is
being amortized over 15 years using the straight line method.
The following is a summary of the results of operations of the separate
companies from the date of acquisition to June 30, 1999:
FSGI
----
TMANGLOBAL.COM CORPORATION
-------------- --------------
Net Sales $ 6,235 $ 649,357
-------------- --------------
Net (loss) $ (273,617) $ (150,232)
============== ==============
The following summarizes the fair value of the assets acquired and liabilities
assumed of FSGI Corporation:
Cash $ (2,437)
Accounts receivable 58,551
Subscriptions receivable 50,000
Prepaid expenses 13,475
Property and equipment 38,767
Client list 78,000
Accounts payable (64,161)
Accrued expenses (35,264)
Notes payable (76,875)
--------------
Net assets $ 60,056
==============
NOTE 4 - PROPERTY AND EQUIPMENT (UNAUDITED)
The Company acquired computer equipment as part of the reverse merger with FSGI
Corporation December 21, 1998. The Company's property and equipment consisted of
the following at June 30, 1999:
Computer equipment $ 40,650
Less: accumulated depreciation (5,530)
--------------
Total property and equipment $ 35,120
==============
Depreciation expense for the period ended June 30, 1999 was $5,530.
F-8
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (UNAUDITED)
The Company assumed various notes on December 21, 1998 as part of the
acquisition. FSGI Corporation's long-term debt consists of the following at June
30, 1999:
<TABLE>
<CAPTION>
<S> <C>
Various notes payable for insurance with varying terms and
maturities. Interest rates range from 11% to 17%. $ 11,148
Note payable, interest payable at prime plus 1%, (8.75% at June
30, 1999) paid semi-annually, with principal due May 2002,
unsecured. 36,572
Note payable, monthly payments of $2,335, including interest at
11.05%, due May 2000, collateralized by Company assets. 24,274
Line of credit, with a bank providing borrowings for up to
$50,000 at prime plus 2% (9.75% at June 30, 1999),
collateralized by Company assets. 40,000
-------------
Total 111,994
Less: current portion (36,572)
-------------
$ 75,422
=============
</TABLE>
Maturities of long-term debt at June 30, are as follows:
2000 $ 75,422
2001 -
2002 36,572
--------------
Total $ 111,994
==============
NOTE 6 - OPERATING LEASES (UNAUDITED)
The Company leases its facilities in Florida under an operating lease with a
term of four years payable in monthly installments. Other operating leases
include automobiles and equipment. Total lease expense for the period ended June
30, 1999 was $23,298.
Future minimum lease payments for the period ended June 30 are as follows:
2000 $ 27,316
2001 17,551
2002 2,676
--------------
Total future minimum lease payments $ 47,543
==============
F-9
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - ACQUISITION OF CLIENT LIST (UNAUDITED)
On November 13, 1998, FSGI Corporation acquired the right to service the credit
union clients of Bonnie Davis P.C. As consideration, the Company will issue
40,000 shares of restricted common stock with an agreed upon market value of
$80,000. If the total market value at the twelve month and twenty four month
anniversary dates is less than $2.00 per share, the Company will issue
additional shares valued at the difference between the market price and the
guaranteed amount.
Further, should the gross revenue for the twelve month period ended November 13,
1999, not equal or exceed 80% of the purchase price ($64,000), then the share
adjustments referred to earlier would not apply.
The accumulated amortization of the client list at June 30, 1999 was $10,000.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation
- ----------
The Company is currently engaged in litigation in connection with the claim of a
former employee for monetary amounts with respect to her return of 100,000
shares of common stock.
Additionally, the Company is a party to legal proceedings with TWT, Inc., former
parent of FSG, Inc., in connection with TWT, Inc.'s bankruptcy. A $50,000 note
payable was recorded in relation to the transfer of TWT's common stock in FSG to
three officers. The balance on the note as of June 30, 1999, is $36,572 (See
Note 5).
In the opinion of management, these proceedings are not expected to have a
material impact on its financial position or results of operations. However,
there can be no assurance that the outcome of the litigations will be favorable
to the Company. If the outcome of the litigations is not favorable, such outcome
could have a material adverse effect on the financial condition of the Company.
NOTE 9 - STOCKHOLDERS' EQUITY (UNAUDITED)
In December 1998, as a result of the reverse merger, The Martial Arts Network,
Inc. (TMAN), was issued three million of the common shares of FSGI Corporation,
which resulted in TMAN obtaining the controlling interest in FSGI Corporation.
Common Stock Issued for Cash
- ----------------------------
The Company issued 440,987 shares of common stock during the nine months ended
June 30, 1999. The total amount obtained from the issuance of these common
shares was $330,290. The Company also retired 97,266 shares of common stock
during the same period.
F-10
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - RELATED PARTY TRANSACTIONS
At September 30, 1998, the Company had an outstanding payable to the
stockholders in the amount of $8,097. The transactions involving the
stockholders/officers are summarized below:
Balance at October 1, 1997 $ -
Advances from stockholders 8,097
--------------
Balance at September 30, 1997 8,097
Advances from stockholders -
--------------
Balance at September 30, 1998 $ 8,097
==============
NOTE 11 - INCOME TAXES (UNAUDITED)
As of June 30, 1999, TMANglobal.com, Inc. had an unused net operating loss carry
forward of $402,394 available for use on its future corporate federal income tax
returns. This amount includes the net operating losses of TMANO, from the date
of inception, and the net operating losses of its subsidiary, FSGI Corporation
since the date of acquisition, January 1, 1999. The Company's evaluation of the
tax benefit of its net operating loss carry forward is presented in the
following table. The tax amounts have been calculated using the 34% tax rate.
Deferred tax asset:
Tax benefit of net operation loss $ 136,814
Less: valuation allowance (136,814)
--------------
Deferred tax asset $ -
==============
In addition to the above, FSGI Corporation has $460,522 of unused loss carry
forwards which can be used to offset FSGI Corporation's future taxable income.
The deferred tax amount of $156,577 has been offset by the valuation allowance
of $156,577. The loss carry forwards expire from 2012 to 2014.
Temporary differences between the financial statement carrying amount and tax
basis of assets and liabilities did not give rise to significant portions of
deferred taxes.
The Company's unused net operating loss carryover as of June 30, 1999 is
summarized below:
YEAR LOSS ORIGINATED YEAR EXPIRING AMOUNT
-------------------- -------------- --------------
September 30, 1997 2012 $ 8,185
September 30, 1998 2013 1,027
June 30, 1999 2014 393,182
--------------
Total Available Net Operating Loss $ 402,394
==============
F-11
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - EMPLOYEE STOCK OPTIONS (UNAUDITED)
As of June 30, 1999, options to purchase 4,350,000 shares of the Company's
common stock at an average price per share of $0.99 have been granted to certain
of the Company's officers and key employees.
The Company has elected to account for the stock options under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related interpretations. Accordingly, no compensation expense has been
recognized on the stock options.
Had compensation expense for the stock option plan been determined based on the
fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for Stock
Based Compensation", the Company's net income for the three months ended June
30, 1999 would have been decreased by approximately $1,820,000. The fair value
of each option is estimated on the date of grant using the fair market option
pricing model with the assumption:
Risk-free interest rate 5%
Expected life (years) 1.5
Expected volatility 2,001
Expected dividends None
A summary of options during the years ended June 30, 1999 is shown below:
<TABLE>
<CAPTION>
NUMBER WEIGHTED-AVERAGE
OF SHARES EXERCISE PRICE
-------------- --------------
<S> <C> <C>
Outstanding at December 31, 1998 1,350,000 $ 0.96
(grants at date of acquisition)
Granted to the management of TMAN 3,000,000 1.00
Exercised - -
Forfeited - -
-------------- --------------
Outstanding at June 30, 1999 4,350,000 $ 0.99
============== ==============
Exercisable at June 30, 1999 4,350,000
==============
Available for issuance at June 30, 1999 17,457,167
==============
</TABLE>
NOTE 13 - MANAGEMENT'S CONSIDERATION OF GOING CONCERN MATTERS
As shown in the accompanying financial statements, the Company incurred a net
loss of $393,182 during the nine months year ended June 30, 1999. The ability of
the Company to continue as a going concern is dependent on returning to
profitable operations and obtaining additional capital and financing. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
F-12
<PAGE>
TMANGLOBAL.COM, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - MANAGEMENT'S CONSIDERATION OF GOING CONCERN MATTERS
(CONTINUED)
The Company plans on raising additional capital through private placement
offerings of common stock, which during the period from January 1, 1999, through
June 30, 1999, have raised approximately $330,290. Management believes these
actions will provide the necessary capital and cash requirements to ensure the
Company's ability to continue as a going concern.
No estimate has been made should managements' plan be unsuccessful.
F-13
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 30, 1998 AND
THREE MONTHS ENDED DECEMBER 31, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Independent Auditor's Report................................................ 1
Financial Statements:
Consolidated Balance Sheets.............................................. 2-3
Consolidated Statements of Operations.................................... 4
Consolidated Statements of Changes in Stockholders' Equity (Deficit)..... 5
Consolidated Statements of Cash Flows.................................... 6
Notes to Financial Statements...............................................7-12
<PAGE>
DASZKAL, BOLTON & MANELA
CERTIFIED PUBLIC ACCOUNTANTS
----------------------------
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE #100 @ BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN, CPA, P.A.
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Board of Directors and Stockholders
FSGI Corporation and subsidiary
We have audited the accompanying consolidated balance sheets of FSGI Corporation
and subsidiary as of September 30, 1998, and December 31, 1998, the related
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for the year and three months then ended. These consolidated
financial statements are the responsibility of the management of FSGI
Corporation and subsidiary. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated 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 include 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FSGI Corporation and
subsidiary as of September 30, 1998 and December 31, 1998, and the results of
its operations and its cash flows for the year and three months then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company experienced a loss from operations
in 1998 and had negative cash flows from operations for the periods ended
September 30, 1998 and December 31, 1998. These matters raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
regarding those matters are described in Note 13. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Daszkal, Bolton, Manela, Devlin & Co., CPAs
Boca Raton, Florida
June 24, 1999
-1-
<PAGE>
<TABLE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
------
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- ------------
<S> <C> <C>
Current assets:
Cash $ 52,025 $ 6,369
Accounts receivable 65,009 58,551
Subscription receivable - 50,000
Prepaid and other assets 18,966 13,476
------------- ------------
Total current assets 136,000 128,396
------------- ------------
Property and equipment, net 1,279 4,524
------------- ------------
Other assets:
Client list, net - 78,000
------------- ------------
Total assets $ 137,279 $ 210,920
============= ============
</TABLE>
See accompanying notes to consolidated financial statements
-2-
<PAGE>
<TABLE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 69,370 $ 64,162
Accrued expenses 23,647 35,264
Checks outstanding in excess of bank balances - 8,806
Current maturities of long-term debt 30,129 28,038
------------- ------------
Total current liabilities 123,146 136,270
------------- ------------
Excess of fair value of net assets of company
acquired over cost 22,913 21,335
Long-term debt 55,396 48,837
------------- ------------
Total liabilities 201,455 206,442
------------- ------------
Stockholders' equity (deficit):
Preferred stock, $0.001 par value; authorized
2,000,000; -0- shares issued and outstanding - -
Common stock, $0.0001 par value; 20,000,000 shares
authorized; 1,989,000 shares issued and outstanding,
September 30, 1998 and 2,542,833 issued and
outstanding, December 31, 1998 199 254
Additional paid-in capital 334,801 514,746
Subscriptions receivable - (50,000)
Accumulated deficit (399,176) (460,522)
------------- ------------
Total stockholders' equity (deficit) (64,176) 4,478
------------- ------------
Total liabilities and stockholders' equity (deficit) $ 137,279 $ 210,920
============= ============
</TABLE>
See accompanying notes to consolidated financial statements
-3-
<PAGE>
<TABLE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- -------------
<S> <C> <C>
Revenues earned $ 1,311,979 $ 358,327
Costs of revenues earned 916,796 211,203
------------- -------------
Gross profit 395,183 147,124
------------- -------------
Selling, general and administrative expenses 598,210 165,479
------------- -------------
Loss from operations (203,027) (18,355)
Other income (expense):
Bad debts (68,586) (43,232)
Amortization of excess of fair value of net
assets of company acquired over cost 6,317 1,578
Interest income 3,499 195
Interest expense (2,522) (1,532)
------------- -------------
Total other income (expense) (61,292) (42,991)
------------- -------------
Net loss $ (264,319) $ (61,346)
============= =============
Net loss per share (basic and diluted) $ (0.26) $ (0.03)
============= =============
Weighted average common shares outstanding 1,011,421 2,245,179
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
-4-
<PAGE>
<TABLE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
ADDITIONAL
NUMBER OF COMMON PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES STOCK CAPITAL RECEIVABLE (DEFICIT) TOTAL
----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1997 as previously reported 1,000 $ - $ 0 $ - $ (134,857) $(134,857)
751 for one stock split 751,000 75 (75) - - -
----------- ----------- ----------- ------------- ----------- -----------
Balance, October 1, 1997 752,000 75 (75) - (134,857) (134,857)
Conversion of note payable to common shares 500,000 50 49,950 - - 50,000
Issuance of stock 737,000 74 503,676 - - 503,750
Stock issuance costs - - (218,750) - - (218,750)
Net loss - September 30, 1998 - - - - (264,319) (264,319)
----------- ----------- ----------- ------------- ----------- -----------
Balance, September 30, 1998 1,989,000 199 334,801 - (399,176) (64,176)
40,000 shares to be issued for purchase of asset - - 80,000 - - 80,000
Subscriptions receivable 66,666 7 49,993 (50,000) - -
Issuance of stock 487,166 48 190,952 - - 191,000
Stock issuance costs - - (141,000) - - (141,000)
Net loss - December 31, 1998 - - - - (61,346) (61,346)
----------- ----------- ----------- ------------- ----------- -----------
Balance, December 31, 1998 2,542,833 $ 254 $ 514,746 $ (50,000) $ (460,522) $ 4,478
=========== =========== =========== ============= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
<TABLE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (264,319) $ (61,346)
Depreciation and amortization - 2072
Amortization of excess of fair value of net
assets of company acquired over cost (6,317) (1,578)
(Increase) decrease in:
Accounts receivables (28,227) 6,458
Prepaid and other assets (2,640) 5,490
Increase (decrease) in:
Accounts payable 963 (5,208)
Accrued expenses (33,409) 11,617
Checks outstanding in excess of bank balance - 8,806
------------- -------------
Net cash (used) by operating activities (333,949) (33,689)
------------- -------------
Cash flows from investing activities:
Purchase of property and equipment (1,279) (3,317)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock 335,000 -
Increase in long-term debt 59,245 -
Payments on long-term debt (23,720) (8,650)
------------- -------------
Net cash provided (used) by financing activities 370,525 (8,650)
------------- -------------
Net increase (decrease) in cash 35,297 (45,656)
Cash at beginning of period 16,728 52,025
------------- -------------
Cash at end of period $ 52,025 $ 6,369
============= =============
Additional cash payment information:
Interest paid $ 2,522 $ 1,532
============= =============
Income taxes $ - $ -
============= =============
Non cash transactions affecting investing and
financing activities:
Conversion of note payable to common stock $ 50,000 $ -
============= =============
Purchase of client list for common stock $ - $ 80,000
============= =============
Stock issued for services $ - $ 141,000
============= =============
Stock issuance costs $ - $ (141,900)
============= =============
Stock issued for receivable $ - $ 100,000
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
-6-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
FSGI Corporation (the "Company") was incorporated on May 15, 1997, in the State
of Florida. The Company through its wholly owned subsidiary, Financial Standards
Group, Inc., provides auditing and accounting services to assist credit unions
and their supervisory committees in performing comprehensive internal and
regulatory compliance audits in satisfaction of their statutory requirements.
Financial Standards Group, Inc., has offices in Georgia, Florida, Kentucky,
Michigan, Mississippi, Louisiana, California, and Hawaii.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all cash and
other demand deposits to be cash and cash equivalents. As of September 30, 1998,
and December 31, 1998, the Company had no cash equivalents.
Property and Equipment
- ----------------------
Property and equipment are stated at cost and are being depreciated using the
straight-line and accelerated methods over the estimated useful lives of two to
seven years. Leasehold improvements are stated at cost and are being amortized
over the lesser of the term of the lease or the estimated useful life of the
asset.
Revenue Recognition
- -------------------
Revenue is recognized as earned as services are performed.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of FSGI Corporation
at September 30, 1998, and December 31, 1998, and its wholly-owned subsidiary,
Financial Standards Group, Inc. All intercompany accounts and transactions have
been eliminated in consolidation.
Advertising
- -----------
Advertising costs are expensed when incurred. The advertising costs incurred for
the year ended September 30, 1998, was $2,592, and for the three months ended,
December 31, 1998, was $27,661.
Amortization of Negative Goodwill
- ---------------------------------
Financial Standards Group, Inc., was a wholly-owned subsidiary of TWTI, a public
company, when it was acquired by FSGI Corporation in May 1997. TWTI subsequently
went into Chapter 11. The total cost of the acquisition was $50,000 and the
transaction was accounted as a purchase. The excess of the fair value of the net
assets of Financial Standards Group, Inc., exceeded the cost by $31,600 and has
been recorded as negative goodwill.
-7-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The excess of the fair value of net assets of the Company acquired over the
purchase price, is being amortized into income on the straight-line method over
60 months. The accumulated amortization of the excess of fair value of net
assets of the Company acquired over cost is $8,687 at September 30, 1998, and
$10,265 at December 31, 1998.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, cash equivalents, accounts receivable, loans
receivable, accounts payable and notes payable approximates fair value because
of their short maturities.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- ------------
<S> <C> <C>
Computer equipment $ 1,279 $ 4,596
Less: accumulated depreciation - (72)
------------- ------------
Total property and equipment $ 1,279 $ 4,524
============= ============
</TABLE>
Depreciation expense for the periods ended September 30, 1998, was $-0- and
December 31, 1998, was $72.
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1998
------------- ------------
<S> <C> <C>
Note payable, monthly payments of $966, including interest at 9.6%,
due March 1999. $ 5,547 $ 2,773
Note payable, interest payable at prime plus 1%, (8.75% at September 30, 1998,
and December 31, 1998) paid semi-annually, with principal
due May 2002. Unsecured. 37,572 37,572
Note payable, monthly payments of $2,335, including interest at 11.5%,
due May 2000, collateralized by company assets. 42,406 36,530
------------- ------------
Total 85,525 76,875
Less: current portion (30,129) (28,038)
------------- ------------
$ 55,396 $ 48,837
============= ============
</TABLE>
-8-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (CONTINUED)
Maturities of long-term debt at December 31, are as follows:
1999 $ 28,038
2000 11,265
2001 -
2002 37,572
-----------
Total $ 76,875
===========
NOTE 6 - OPERATING LEASES
The Company leases its facilities in Florida under an operating lease with a
term of four years, payable in monthly installments. Other operating leases
include automobiles and equipment.
Total lease expense amounted to $70,835 for the year ended September 30, 1998,
and $16,142 for the period ended December 31, 1998.
Future minimum lease payments for the period ended December 31, are as follows:
1999 $ 46,596
2000 22,467
2001 17,551
2002 2,676
2003 1,324
-----------
Total future minimum lease payments $ 90,614
===========
NOTE 7 - ACQUISITION OF CLIENT LIST
On November 13, 1998, the Company acquired the right to service the credit union
clients of Bonnie Davis P.C. As consideration, the Company will issue 40,000
shares of common stock with an agreed upon market value of $80,000. If the total
market value at the twelve month and twenty four month anniversary dates is less
than $2.00 per share, the Company will issue additional shares valued at the
difference between the market price and the guaranteed amount.
Further, should the gross revenue for the twelve month period ended November 13,
1999, not equal or exceed 80% of the purchase price ($64,000), then the share
adjustments referred to earlier would not apply.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation
- ----------
The Company is currently engaged in litigation in connection with the claim of a
former employee for monetary amounts with respect to her return of 100,000
shares of company stock. There can be no assurance that the outcome of the
litigation will be favorable to the Company. If the outcome of the litigation is
not favorable, such outcome could have a material adverse effect on the
financial condition of the Company.
-9-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 9 - STOCKHOLDERS' EQUITY
In October 1997, the Board of Directors of FSGI Corporation resolved to increase
the number of authorized common stock of the corporation to 20,000,000 at a par
value of $0.0001. The outstanding common stock at that date was adjusted to
1,989,000 shares. The Company further resolved to authorize 2,000,000 shares of
preferred stock. As of September 30, 1998 and December 31, 1998, there are no
preferred shares issued and outstanding.
Common Stock Issued for Cash
- ----------------------------
The Company issued 840,833 shares of common stock during the year ended
September 30, 1998, and the three months ended December 31, 1998. The total
amount obtained from the issuance of these common shares was $385,000. In
addition, the Company issued 383,333 shares of common stock for services
relating to the issuance of the common stock. The value of these services was
approximately $50,000 and is included in the accompanying financial statement as
a reduction of additional paid-in capital.
Non-Cash Stock Transactions
- ---------------------------
The Company will issue 40,000 shares of common stock as part of the
consideration for purchase of asset, in October 1998. These shares were assigned
a value of $2.00 per share.
NOTE 10 - CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards No. 105,
consist primarily of trade receivables. The Company officers have attempted to
minimize this risk by monitoring the companies for whom it provided credit
services.
NOTE 11 - EMPLOYEE STOCK OPTIONS
Options to purchase 1,350,000 shares of the Company's common stock at an average
price per share of $1.86 have been granted to certain of the Company's officers
and key employees.
The Company has elected to account for the stock options under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related interpretations. Accordingly, no compensation expense has been
recognized on the stock options.
Had compensation expense for the stock option plan been determined based on the
fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for Stock
Based Compensation", the Company's net income would have been decreased by
$361,295. The fair value of each option is estimated on the date of grant using
the fair market option pricing model with the assumption:
Risk-free interest rate 5%
Expected life (years) 1.5
Expected volatility 2,001
Expected dividends None
-10-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 11 - EMPLOYEE STOCK OPTIONS (CONTINUED)
A summary of options during the period ended December 31, 1998 is shown below:
<TABLE>
<CAPTION>
NUMBER WEIGHTED-AVERAGE
OF SHARES EXERCISE PRICE
------------- ----------------
<S> <C> <C>
Outstanding at September 30, 1997 - $ -
Granted 1,350,000 .96
Exercised - -
Forfeited - -
------------- -------------
Outstanding at December 31, 1998 1,350,000 $ .96
============= =============
Exercisable at December 31, 1998 1,350,000
=============
Available for issuance at December 31, 1998 13,197,167
=============
</TABLE>
NOTE 12 - INCOME TAXES
As of December 31, 1998, the Company had an unused net operating loss carry
forward of $460,522 available for use on its future corporate federal income tax
returns. The Company's evaluation of the tax benefit of its net operating loss
carry forward is presented in the following table. The tax amounts have been
calculated using the 34% tax rate.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Deferred tax asset:
Tax benefit of net operating loss $ 156,577 $ 135,720
Less: valuation allowance (156,577) (135,720)
------------ -------------
Deferred tax asset $ - $ -
============ =============
</TABLE>
Temporary differences between the financial statement carrying amount and tax
basis of assets and liabilities did not give rise to significant portions of
deferred taxes.
The Company's unused net operating loss carryover as of December 31, 1998, is
summarized below:
YEAR LOSS ORIGINATED YEAR EXPIRING AMOUNT
-------------------- ------------- -------------
September 30, 1997 2012 $ 134,857
September 30, 1998 2013 264,319
December 31, 1998 2014 61,346
-------------
Total Available Net Operating Loss $ 460,522
=============
-11-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
NOTE 13 - MANAGEMENT'S CONSIDERATION OF GOING CONCERN MATTERS
As shown in the accompanying financial statements, the Company incurred a net
loss of $264,319 during the year ended September 30, 1998, and $61,346 for the
three months ended December 31, 1998. The ability of the Company to continue as
a going concern is dependent on returning to profitable operations and obtaining
additional capital and financing. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
The Company plans on raising additional capital through private placement
offerings of common stock, which during the period from January 1, 1999, through
March 31, 1999, have raised approximately $316,565. Management believes these
actions will provide the necessary capital and cash requirements to ensure the
Company's ability to continue as a going concern.
No estimate has been made should managements' plan be unsuccessful.
NOTE 14 - ACQUISITIONS
On December 21, 1998, FSGI Corporation merged with The Martial Arts Network
Online, Inc., (TMANO) to form TMANglobal.com., Inc. As consideration, the
Company issued 3,000,000 of its common stock. The combination resulted in a
reverse merger and The Martial Arts Network, Inc. was given controlling interest
in the newly-formed corporation. The acquisition was effective January 1, 1999,
and will be recorded as a purchase and the results of operations and goodwill
will be included in the consolidated financial statements beginning with the
date of closing. For accounting purposes the Company's operations are
consolidated with TMANglobal.com, Inc., as of January 1, 1999.
-12-
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
For the Period from May 15, 1997
(Date of Inception)
to September 30, 1997
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
For the Period from May 15, 1997
(Date of Inception)
to September 30, 1997
CONTENTS
Report of Independent Auditors.....................................2
Financial Statements:
Consolidated Balance Sheets...................................3
Consolidated Statements of Operations.........................4
Consolidated Statements of Changes in Stockholders' Equity....5
Consolidated Statements of Cash Flows.........................6
Notes to Consolidated Financial Statements......................7-10
1
<PAGE>
To the Board of Directors
FSGI Corporation
Boca Raton, Florida
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying consolidated balance sheets of FSGI Corporation
(a Florida corporation) and Subsidiary as of September 30, 1997 and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the period from May 15, 1997 (date of inception) to September 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of FSGI
Corporation and Subsidiary as of September 30, 1997 and the consolidated results
of its operations and its cash flows for the period from May 15, 1997 (date of
inception) to September 30, 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, at September 30, 1997 the accompanying balance sheet
reflects an accumulated deficit of $134,857 and a working capital deficiency of
$55,617. These matters raise substantial doubt about the Company's ability to
continue as a going concern. Management's plan in regard to these matters as
described in Note 2 is to achieve profitable operations through its increased
revenue and cost cutting.
Millward & Co. CPAs
Fort Lauderdale, Florida
December 15, 1997
2
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
September 30, 1997
ASSETS
CURRENT ASSETS:
Cash $ 16,728
Accounts receivable, net 36,782
Prepaid expenses and other current assets 16,316
---------------
Total Current Assets 69,826
---------------
Total Assets $ 69,826
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 68,397
Accrued expenses and other liabilities 57,056
---------------
Total Current Liabilities 125,453
---------------
LONG-TERM DEBT:
Note payable 50,000
---------------
Excess of fair value of net assets of companies
Acquired over cost (net of amortization of $2,370) 29,230
---------------
STOCKHOLDERS' EQUITY:
Common Stock - $.0001 par value,
1,000 shares, authorized, shares issued and outstanding -
Accumulated deficit (134,857)
---------------
(134,857)
---------------
Total Liabilities and Stockholders' Equity $ 69,826
===============
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period from May 15, 1997
(Date of Inception)
to September 30, 1997
AUDIT FEES $ 483,116
---------------
DIRECT AUDIT EXPENSES 361,229
---------------
GROSS PROFIT
121,887
---------------
OPERATING EXPENSES:
General and administrative 250,811
Marketing 8,303
---------------
259,114
---------------
Loss from operations (137,227)
---------------
OTHER INCOME
Amortization of excess of fair value of net assets
of company acquired over cost 2,370
---------------
Total other income 2,370
---------------
NET LOSS $ (134,857)
===============
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from May 15, 1997
(Date of Inception)
to September 30, 1997
<TABLE>
<CAPTION>
Common Stock
$.0001 Par Value Total
---------------------------------- Additional Accumulated Stockholders
Issued Amount Paid-in Capital Deficit Deficit
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, May 15, 1997 - $ - $ - $ - $ -
(Date of Inception)
Issuance of Common Stock 1,000 - - - -
Net Loss - - - (134,857) (134,857)
--------------- --------------- --------------- --------------- ---------------
Balance,
September 30, 1997 1,000 - - (134,857) (134,857)
=============== =============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period from May 15, 1997
(Date of Inception)
to September 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES: $(134,857)
Net Loss
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used in) Operating Activities:
Amortization of Excess of Fair Value of Net Assets
of Company Acquired over Cost (2,370)
(Increase) decrease in:
Accounts Receivable 41,341
Prepaid Expenses 51,060
Increase (Decrease) in:
Accounts Payable 44,196
Accrued Expenses and Other 418
----------
Net Cash Provided by (Used in) Operating Activities (212)
==========
Net Increase (Decrease) in Cash and Cash Equivalents (212)
Cash Received in Acquisition of Financial Standards Group, Inc. 16,940
Cash and Cash Equivalents - Beginning of Period -
----------
Cash and Cash Equivalents - End of Period $ 16,728
==========
SUPPLEMENTAL NONCASH FINANCING AND INVESTING ACTIVITIES:
Issuance of note payable for purchase of net assets of
Financial Standards Group, Inc. $ 50,000
==========
SUPPLEMENTAL DISCLOSURES:
Interest paid - cash basis $ 146
==========
As discussed in Note 3, on May 15, 1997, the Company purchased
the net assets of Financial Standards Group, Inc. for a $50,000
note payable. The following summarizes the net assets acquired:
Cash $ 16,940
Accounts receivable 78,122
Prepaid expenses 67,379
Accounts Payable and other liabilities (80,841)
Excess of fair value of assets of Company (negative goodwill) (31,600)
Acquired investment $ 50,000
==========
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
FSGI Corporation (the Company) was incorporated under the laws of the State of
Florida on May 15, 1997. On May 15, 1997, the Company acquired all of the
outstanding stock of Financial Standards Group, Inc. ("FSG"). FSG is primarily
engaged to provide accounting services to assist credit unions and their
supervisory committees in performing comprehensive internal and regulatory
compliance audits in satisfaction of their statutory requirements. The Company
also provides various other auditing, accounting and managerial advisory
services to the credit union industry but does not perform audits of financial
statements. FSG was a subsidiary of TWTI, Inc., a public company who subsequent
to the acquisition date, went into Chapter 11.
In connection with the acquisition, the Company entered into a $50,000 note
payable. The negative goodwill resulting from this acquisition is being
amortized on the straight-line method over 60 months. The total cost of the
acquisition was $50,000 and the transaction is account for as a purchase. The
excess of the fair value of the net assets of FSG exceeded the cost by $31,600
(negative goodwill).
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of FSGI Corporation
and its wholly-owned subsidiary, FSG. All intercompany accounts and transactions
have been eliminated in consolidation.
Cash and Cash Equivalents
- -------------------------
For purposes of the consolidated statements of cash flows, the Company considers
all short-term, highly liquid investments with a maturity of one year or less to
be cash equivalents. As of September 30, 1997, the Company had no cash
equivalents.
Income Taxes
- ------------
The Company uses Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". Under the liability method specified by SFAS 109,
the deferred tax liability is determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by the
enacted tax rates which will be in effect when these differences reverse.
Revenue Recognition
- -------------------
Revenue is recognized as earned as services are performed.
Recent Pronouncements
- ---------------------
In February 1997, the FASB issued Statement No. 129, "Disclosure of Information
About Capital Structure" ("FAS 129"). Since the Company has only one class of
shares, which is adequately disclosed on the face of the balance sheet, the
adoption of FAS 129 will have no impact on the Company's financial statements.
7
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In September 1997, the FASB issued Statement of Financial Accounting Standard
No. 130, "Reporting Comprehensive Income" ("FAS 130"). FAS 130 is effective for
financial statements of periods beginning subsequent to December 15, 1997, but
early adoption is permitted. The Company presents adequately all components of
comprehensive income in the statement of shareholders' equity.
Amortization of Negative Goodwill
- ---------------------------------
The excess of the fair value of net assets of companies acquired over the
purchase price of those companies at dates of acquisition is being amortized
into income on the straight-line method over 60 months. The current amortization
of the excess of fair value of net assets of companies acquired over cost is
$2,370 for the period May 15, 1997 (Date of Inception) to September 30, 1997.
Financial Instruments and Concentration of Credit Risks
- -------------------------------------------------------
Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash and temporary investments and accounts
receivable. The Company invests its excess cash in back accounts with major
financial institutions and the carrying value approximates market value. The
Company has not experienced any significant losses in such accounts. The Company
believes it is not exposed to any significant credit risk or either cash or cash
equivalents or accounts receivable.
Use of Estimates
- ----------------
The preparation of the consolidated 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 and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 2 - GOING CONCERN CONSIDERATION
Since inception, the Company has incurred losses and as of September 30, 1997,
has an accumulated deficit of $134,857 and a working capital deficiency of
$55,617.
The Company's plans to achieve profitable operations through cost cutting and
revenue raising, should result in a significant decrease in operating losses.
There can be no assurance that such cost cutting and revenue raising programs
will be effective all of which are necessary to meet the Company's obligations
over the next year.
8
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 3 - ACQUISITION
On May 15, 1997, the Company acquired all of the assets and liabilities of
Financial Standards Group, Inc. This transaction has been accounted for as a
purchase.
The following are the net assets acquired:
Current assets primarily cash, accounts receivable,
prepaid expenses and deposits $ 162,441
Accounts payable and other liabilities (80,841)
Excess of fair value of assets of Company acquired over cost (31,600)
-------------
$ 50,000
=============
NOTE 4 - LONG-TERM DEBT
At September 30, 1997 long-term debt consisted of the following:
Promissory Note Payable, Interest Payable at a rate of 1%
above prime will accrue, starting May 15, 1998. Interest
shall be paid semi-annually in arrears during the term
commencing November 15, 1998. The principal and any unpaid
interest shall be due on May 15, 2002. $ 50,000
-------------
50,000
Less Current Maturities -
-------------
$ 50,000
=============
At September 30, 1997, principal payments required during
the next five years and thereafter are as follows:
For the Year Ended September 30, Amount
-------------
1998 $ -
1999 -
2000 -
2001 -
2002 50,000
-------------
$ 50,000
=============
9
<PAGE>
FSGI CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 5 - COMMITMENTS
The Company leases office locations and vehicles under leases classified as
operating leases.
Total lease expense for the period ended September 30, 1997 was $5,696.
Generally, the lease agreements for the office locations require fixed rental
payments. In addition, certain lease agreements provide for renewal options and
rental escalations at specific intervals.
At September 30, 1997 minimum annual rental commitments under non-cancelable
operating leases are as follows:
Fiscal years ending September 30,
1998 $ 17,203
1999 10,137
2000 8,285
2001 8,285
2002 2,072
-------------
$ 45,982
=============
NOTE 6 - FINANCIAL INSTRUMENTS
The fair value of financial instruments is the amount at which the instrument
could be exchanged in a current transaction between willing parties. The
carrying amounts of cash, accounts receivable, other assets, accounts payable
and accrued expenses approximate fair value because of the short maturity of
those instruments. The fair value of long term debt - note payable approximates
the carrying value due to the nature of the interest rate by a function of the
prime rate at any given time.
NOTE 7 - INCOME TAXES
At September 30, 1997, the Company has net operating loss carryforwards of
approximately $135,000 that will expire in the year 2012. Such net operating
losses are available to offset future taxable income, if any. As the utilization
of such operating losses for tax purposes is not assured, the deferred tax asset
has been fully reserved through the recording of a 100% valuation allowance.
Should a cumulative change in the ownership of more than 50% occur within a
three-year period, there could be an annual limitation on the use of the net
operating loss carryforward.
The deferred tax asset due to the net operating loss carryforward for the period
from May 15, 1997 (date of inception) to September 30, 1997 amounted to $48,600
and has been fully reserved through the recording of the 100% valuation reserve.
10
EXHIBIT 2.1
-----------
----------
AGREEMENT AND PLAN OF REORGANIZATION
By and among
FSGI CORPORATION
as PURCHASER
and
THE MARTIAL ARTS NETWORK, INC.
as SELLER
----------
December 21, 1998
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into this 21st day of December, 1998 by and among FSGI CORPORATION, a
Florida corporation (hereinafter referred to as "PURCHASER"), & THE MARTIAL ARTS
NETWORK, INC., a Delaware corporation, (hereinafter referred to as "SELLER"),
relating to the acquisition by PURCHASER of all of the outstanding common
capital stock of THE MARTIAL ARTS NETWORK ON-LINE, INC. (hereinafter referred to
as "MANO"), a wholly-owned subsidiary of the SELLER.
RECITALS
--------
A. Seller owns all of the issued and outstanding shares of the
capital stock of MANO.
B. PURCHASER is willing to acquire all of the issued and
outstanding capital stock of MANO, making MANO a wholly-owned
subsidiary of PURCHASER, and the SELLER desires to exchange all
of it's shares of MANO's capital stock for authorized by
unissued shares of Common Stock $.001 par value (the "Common
Stock") of PURCHASER as hereinafter provided.
C. It is the intention of the parties hereto that: (i) PURCHASER
shall acquire all of the issued and outstanding capital stock of
MANO in exchange solely for the consideration set forth below
(the "Exchange")' (ii) the Exchange shall qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and related sections
thereunder; and (iii) the Exchange shall qualify as a
transaction in securities exempt from registration or
qualification under the Securities Act of 1933, as amended, and
under the applicable securities laws of each jurisdiction where
the SELLER is located.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this AGREEMENT, the parties hereto
agree as follows:
SECTION 1. PURCHASE OF SHARES
- ------------------------------
1.1 ACQUISITION OF SHARES - PURCHASER and SELLER hereby agree that
the SELLER shall, on the Closing Date (as hereinafter defined),
exchange all of the issued and outstanding shares of capital
stock of MANO (the "MANO SHARES") and PURCHASER shall issue to
the SELLER an aggregate of three million (3,000,000) Shares of
PURCHASER'S Restricted Common Stock (the "PURCHASER SHARES") and
an option to purchase up to one million additional shares
(1,000,000) of PURCHASER'S Restricted Common Stock at a purchase
price of $1.00 (the "OPTIONS"). The allocation of the PURCHASER
SHARES and OPTIONS to the SELLER is set forth on Exhibit A
hereto.
1.2 DELIVERY OF MANO SHARES - On the Closing Date, the SELLER will
deliver to PURCHASER the certificates representing the MANO
SHARES, duly endorsed (or with executed stock powers) so as to
make PURCHASER the sole owner thereof. Simultaneously, PURCHASER
will deliver certificates representing the PURCHASER SHARES to
the SELLER.
<PAGE>
1.3 TAX-FREE REORGANIZATION - SELLER acknowledges that, in the event
that capital stock of MANO representing at least 80% in interest
of MANO is not exchanged for shares of PURCHASER Common Stock
pursuant hereto, the Exchange will not qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
1.4 INVESTMENT INTENT - The PURCHASER SHARES have not been
registered under the Securities Act of 1933, as amended (the
"ACT"), and may not be resold unless the PURCHASER SHARES are
registered under the ACT or an exemption from such registration
is available. The SELLER represents and warrants that it is
acquiring the PURCHASER SHARES for its own account, for
investment, and not with a view to the sale or distribution of
the PURCHASER SHARES. Each certificate representing the
PURCHASER SHARES will have a legend thereon incorporating
language as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"ACT"). The shares have been acquired for investment and may not
be sold or transferred in the absence of an effective
Registration Statement for the shares under the ACT unless in
the opinion of counsel satisfactory to the Company, registration
is not required under the ACT."
SECTION 2. REPRESENTATION AND WARRANTIES OF SELLER REGARDING MANO
- ------------------------------------------------------------------
SELLER hereby represents and warrants as follows:
2.1 ORGANIZATION AND GOOD STANDING - MANO is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Florida, and is entitled to own or lease its
properties and to carry on its business as and in the places
where such properties are now owned, leased or operated and such
business is now conducted. MANO does not have any subsidiaries.
2.2 OWNERSHIP OF MANO SHARES - The SELLER represents as to its
ownership of MANO Shares, it is the owner of record and
beneficially of all of the shares of capital stock of MANO
listed on Exhibit A hereto, all of which shares are free and
clear of all rights, claims, liens and encumbrances, and have
not been sold, pledged, assigned or otherwise transferred except
pursuant to this AGREEMENT. There are no outstanding
subscriptions, rights, options, warrants or other agreements
obligating MANO to issue, sell or transfer any stock or other
securities of MANO.
2.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS - MANO was organized on
May 23, 1996, and has only nominal assets or liabilities.
2.4 NO MATERIAL ADVERSE CHANGES - Since the date of MANO's
organization, there has not been:
(i) any material adverse change in the assets,
operations, condition (financial or otherwise)
or prospective business of MANO;
<PAGE>
(ii) any damage, destruction or loss materially affecting
the assets, prospective business, operations or
condition (financial or otherwise) of MANO, whether or
not covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption
or repurchase of MANO's capital stock;
(iv) any sale of an asset (other than in the ordinary
course of business) or any mortgage or pledge by
MANO of any properties or assets; or
(v) adoption of any pension, profit sharing,
retirement, stock bonus, stock option or similar
plan or arrangement.
2.5 COMPLIANCE WITH LAWS - MANO has complied with all federal,
state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business which, if not complied with,
would materially and adversely affect the business of MANO.
2.6 NO BREACH -The execution, delivery and performance of this
AGREEMENT and the consummation of the transactions contemplated
hereby will not:
(i) violate any provisions of the Charter or By-Laws of
MANO;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of,
otherwise given any contracting party the right to
terminate, or constitute (or with notice or lapse of
time or both constitute) a default under, any contract
or other agreement to which MANO is a party or by or to
which it or any of its assets or properties may be bound
or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory
body against, or binding upon, MANO, or upon the
properties or business of MANO; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions contemplated
herein which could have a materially adverse effect on
the business or operations of MANO.
2.7 ACTIONS AND PROCEEDINGS - There is not outstanding order,
judgment, injunction, award or decree of any court, governmental
or regulatory body or arbitration tribunal against or involving
MANO. There is no action, suit or claim or legal, administrative
or arbitral proceeding or (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending
or threatened against or involving MANO or any of its properties
or assets.
2.8 BROKERS OR FINDERS - No broker's or finder's fee will be payable
by MANO in connection with the transaction contemplated by this
AGREEMENT, nor will any such fee be incurred as a result of any
actions by MANO.
<PAGE>
2.9 REAL ESTATE - MANO neither owns real property nor is a party to
any leasehold agreement.
2.10 TANGIBLE ASSETS - MANO has full title and interest in all
machinery, equipment, furniture, leasehold improvements,
fixtures, vehicles, structures, owned or leased by MANO, any
related capitalized items or other tangible property material to
the business of MANO (the "Tangible Assets"). MANO holds all
rights, title and interest in all the Tangible Assets owned by
it free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other
encumbrances.
2.11 LIABILITIES - MANO does not have any material direct or indirect
indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, fixed or
unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, (all of the
foregoing collectively defined to as "Liabilities"). As of the
Closing Date, MANO will not have any Liabilities, other than
Liabilities incurred in the ordinary course of business.
2.12 OPERATIONS OF MANO - At the Closing Date, MANO has not and will
not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any
direct or indirect redemption, retirement, purchase or
other acquisition of any shares in its capital stock;
(iii) made any material loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other material loan or
advance otherwise than in the ordinary course of
business;
(iv) except in the ordinary course of business, incurred or
assumed any material indebtedness or liability (whether
or not currently due and payable); or
(v) disposed of any assets of MANO except in the ordinary
course of business.
2.13 CAPITALIZATION - The authorized capital stock of MANO consists
of 1,000,000 shares of common stock of which 100,000 shares are
presently issued and outstanding. MANO has not granted, issued
or agreed to grant, issue or make available any warrants,
options, subscription rights or any other commitments of any
character relating to the issued or unissued shares of capital
stock of MANO.
2.14 FULL DISCLOSURE - No representation or warranty by MANO in this
AGREEMENT or in any document or schedule to be delivered by them
pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished to PURCHASER pursuant
hereto or in connection with the negotiation, execution or
performance of this AGREEMENT contains or will contain any
untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct
presentation of all material aspects of the businesses of MANO.
<PAGE>
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
- -------------------------------------------------------
PURCHASER hereby represents and warrants to SELLER as follows:
3.1 ORGANIZATION AND GOOD STANDING - PURCHASER is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Florida, and is entitled to own or lease its
properties and to carry on its business as and in the places
where such properties are now owned, leased, or operated and
such business is now conducted. The authorized capital stock of
PURCHASER consists of 20,000,000 shares of Common Stock, of
which 1,800,000 shares are presently issued and outstanding, and
2,000,000 Shares of Preferred Stock, NO shares of which are
issued and outstanding. PURCHASER is duly licensed or qualified
and in good standing as a foreign corporation where the
character of the properties owned by PURCHASER or the nature of
the business transacted by it make such license or qualification
necessary.
3.2 THE PURCHASER SHARES -The PURCHASER SHARES to be issued to the
SELLER have been or will have been duly authorized by all
necessary corporate and shareholder actions and, when so issued
in accordance with the terms of this AGREEMENT, will be validly
issued, fully paid and non-assessable.
3.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS - The unaudited balance
sheet of PURCHASER as of June 30, 1998, and statement of
operations for the period then ended previously delivered were
prepared in accordance with generally accepted accounting
principles, except for the exclusion of footnotes, applied on a
consistent basis with prior periods, and such financial
statements fairly represent the financial position of PURCHASER
as at such dates and the results of its operations for the
periods then ended.
3.4 NO MATERIAL ADVERSE CHANGES - Since June 30, 1998, there has not
been:
(i) any material adverse change in the assets, operations,
condition (financial or otherwise) or prospective
business of PURCHASER;
(ii) any damage, destruction or loss materially affecting the
assets, prospective business, operations or condition
(financial or otherwise) of PURCHASER, whether or not
covered by insurance;
(iii) any declaration, setting aside or payment of any
dividend or distribution with respect to any redemption
or repurchase of PURCHASER's capital stock;
(iv) any sale of an asset (other than in the ordinary course
of business) or any mortgage or pledge by PURCHASER of
any properties or assets; or
(v) adoption of any pension, profit sharing, retirement,
stock bonus, stock option or similar plan or
arrangement.
<PAGE>
3.5 COMPLIANCE WITH LAWS - PURCHASER has complied with all federal,
state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to their businesses which, if not complied with,
would materially and adversely affect the business of PURCHASER
or the trading market for the shares of PURCHASER's Common
Stock.
3.6 NO BREACH - The execution, delivery and performance of this
AGREEMENT and the consummation of the transactions contemplated
hereby will not:
(i) violate any provision of the Articles of Incorporation
or By-Laws of PURCHASER;
(ii) violate, conflict with or result in the breach of any of
the terms of, result in a material modification of,
otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of
time or both constitute) a default under, any contract
or other agreement to which PURCHASER is a party or by
or to which it or any of its assets or properties may be
bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory
body against, or binding upon, PURCHASER or upon the
securities properties or business of PURCHASER; or
(iv) violate any statute, law or regulation or any
jurisdiction applicable to the transactions contemplated
herein.
3.7 ACTIONS AND PROCEEDINGS - There is no outstanding order,
judgment, injunction, award or decree of any court, governmental
or regulatory body or arbitration tribunal against or involving
PURCHASER. There is no action, suit or claim or legal,
administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by
insurance) pending or threatened against or involving PURCHASER
or any of its properties or assets. Except as set forth on
Schedule 3.7, there is no fact, event or circumstances that may
give rise to any suit, action, claim, investigation or
proceeding.
3.8 BROKERS OR FINDERS - No broker's or finder's fee will be payable
by PURCHASER in connection with the transaction contemplated by
this AGREEMENT, nor will any such fee be incurred as a result of
any actions by PURCHASER.
3.9 LIABILITIES - PURCHASER does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, fixed or
unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without
limitation, any liability on account of taxes, any other
governmental charge or lawsuit (all of the foregoing
collectively defined to as "Liabilities"), which were not fully,
fairly and adequately reflected on the June 30, 1998 Balance
Sheet. As of the Closing Date, PURCHASER will not have any
Liabilities, other than Liabilities fully and adequately
reflected on the June 30, 1998 Sheet, except for Liabilities
incurred in the ordinary course of business.
<PAGE>
3.10 OTC BULLETIN BOARD REPORTING OBLIGATIONS - PURCHASER's shares of
Common Stock are traded on the OTC Bulletin Board under the
symbol "FSGI," PURCHASER is not subject to the periodic
reporting responsibilities under the Securities Exchange Act of
1934, and has not registered its Common Stock under Section
12(g) of such ACT.
3.11 OPERATIONS OF PURCHASER - Except as set forth on Schedule 3.11,
since June 30, 1998 and through the Closing Date hereof,
PURCHASER has not and will not have:
(i) incurred any indebtedness for borrowed money;
(ii) declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any
direct or indirect redemption, retirement, purchase or
other acquisition of any shares in its capital stock;
(iii) made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other
representative or made any other loan or advance
otherwise than in the ordinary course of business;
(iv) except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not
currently due and payable);
(v) disposed of any assets of PURCHASER except in the
ordinary course of business; or
(vi) issued any equity securities or rights to acquire such
equity securities except as contemplated by the Stock
Purchase AGREEMENT.
3.12 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS - PURCHASER has the
full legal right and power and all authority and approval
required to enter into, execute and deliver this AGREEMENT and
to perform fully its obligations hereunder. This AGREEMENT has
been duly executed and delivered and is the valid and binding
obligation of PURCHASER, enforceable in accordance with its
terms, except as may be limited by bankruptcy, moratorium,
insolvency or other similar laws generally affecting the
enforcement of creditors' rights. The execution and delivery of
this AGREEMENT and the consummation of the transactions
contemplated hereby and the performance by PURCHASER of this
AGREEMENT, in accordance with its respective terms and
conditions will not:
(i) require the approval or consent of any governmental or
regulatory body, the shareholders of PURCHASER, or the
approval or consent of any other person;
(ii) conflict with or result in any breach or violation of
any of the terms and conditions of, or constitute (or
with any notice or lapse of time or both would
constitute) a default under, any order, judgment or
decree applicable to PURCHASER, or any instrument,
contract or other agreement to which PURCHASER is a
party or by or to which PURCHASER is bound or subject;
or
(iii) result in the creation of any lien or other encumbrance
on the assets or properties of PURCHASER.
<PAGE>
3.13 FULL DISCLOSURE - No representation or warranty by PURCHASER in
this AGREEMENT or in any document or schedule to be delivered by
it pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished to MANO or the MANO
Shareholders pursuant hereto or in connection with the execution
or performance of this AGREEMENT contains or will contain any
untrue statement of a material fact or omits or will omit to
state any fact necessary to make any statement herein or therein
not materially misleading or necessary to a complete and correct
presentation of all material aspects of the business of
PURCHASER.
SECTION 4. COVENANTS
- ---------------------
4.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS - Prior to the Closing
Date, the parties acknowledge that they have been entitled,
through their employees and representatives, to make such
investigation and verification of the assets, properties,
business and operations, books, records and financial condition
of the other, including communications with suppliers, vendors
and customers, as they each may reasonably require. No
investigation by a party hereto shall, however, diminish or
waive in any way any of the representations, warranties,
covenants or agreements of the other party under this AGREEMENT.
Consummation of this AGREEMENT shall be subject to the
fulfillment of due diligence procedures to the reasonable
satisfaction of each of the parties hereto and their respective
counsel.
4.2 EXPENSES - Each party hereto agrees to pay its own costs and
expenses incurred in negotiating this AGREEMENT and consummating
the transactions described herein.
4.3 FURTHER ASSURANCES - The parties shall execute such documents
and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such party
shall use its best efforts to fulfill or obtain the fulfillment
of the conditions to the Closing, including, without limitation,
the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to
the Closing.
4.4 CONFIDENTIALITY - In the event the transactions contemplated by
this AGREEMENT are not consummated, each of the parties hereto
agree to keep confidential any information disclosed to each
other in connection therewith for a period of two (2) years from
the date hereof; provided, however, such obligation shall not
apply to information which:
(i) at the time of disclosure was public knowledge;
(ii) after the time of disclosure becomes public knowledge
(except due to the action of the receiving party); or
(iii) the receiving party had within its possession at the
time of disclosure.
4.5 STOCK CERTIFICATES AND CONSIDERATION - At the Closing, SELLER
shall have delivered the certificates representing the MANO
Shares duly endorsed (or with executed stock powers) so as to
make PURCHASER the sole owner thereof. At such Closing,
PURCHASER shall issue to Seller the PURCHASER SHARES as provided
herein.
<PAGE>
4.6 ADDITIONAL MANAGEMENT OF PURCHASER - Directors and officers
designated by the SELLER shall be elected by PURCHASER. At the
time of the Closing, PURCHASER shall enter into employment and
consulting agreements with key employees and consultants as
mutually agreed upon by the parties hereto.
4.7 RIGHT TO PURCHASE - On or within 90 days of the Closing, Jason
Lents, the President of PURCHASER, shall have the right to
acquire the audit division of PURCHASER for a purchase price of
$1.00. In addition, any and all funds belonging to and/or debts
owed on behalf of the wholly-owned subsidiary Financial
Standards Group, Inc., shall remain with Financial Standards
Group, Inc., including all leases, contracts, and encumbrances.
SECTION 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF PURCHASER
- -------------------------------------------------------------------
Notwithstanding any right of the SELLER to fully investigate the
affairs of PURCHASER, the former shall have the right to rely
fully upon the representations, warranties, covenants and
agreements of PURCHASER contained in this AGREEMENT or in any
document delivered by PURCHASER or any of its representatives,
in connection with the transactions contemplated by this
AGREEMENT. All such representations, warranties, covenants and
agreements shall survive the execution and delivery hereof and
the Closing Date hereunder for twelve (12) months following the
Closing.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLER
- ----------------------------------------------------------------
Notwithstanding any right of PURCHASER TO fully investigate the
affairs of MANO, PURCHASER has the right to rely fully upon the
representations, warranties, covenants and agreements of SELLER
contained in this AGREEMENT or in any document delivered to
PURCHASER by the latter or any of their representatives in
connection with the transactions contemplated by this AGREEMENT.
All such representations, warranties, covenants and agreements
shall survive the execution and delivery hereof and the Closing
Date hereunder for twelve (12) months following the Closing.
SECTION 7. INDEMNIFICATION
- ---------------------------
7.1 OBLIGATION OF PURCHASER TO INDEMNIFY - Subject to the
limitations on the survival of representations and warranties
contained in Section 5, PURCHASER hereby agrees to forever
indemnify, defend and hold harmless the SELLER from and against
any losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable
attorneys' fees and disbursements) (a "LOSS") based upon,
arising out of or otherwise due to any inaccuracy in or any
breach of any representation, warranty, covenant or agreement of
PURCHASER contained in this AGREEMENT or in any document or
other writing delivered pursuant to this AGREEMENT or any verbal
representation.
<PAGE>
7.2 OBLIGATION OF MANO AND THE MANO SHAREHOLDERS TO INDEMNIFY -
Subject to the limitations on the survival of representations
and warranties contained in Section 6, MANO and the MANO
Shareholders agree to indemnify, defend and hold harmless
PURCHASER to the extent provided for herein, from and against
any Loss, based upon, arising out of or otherwise due to any
inaccuracy in or any breach of any representation, warranty,
covenant or agreement made by any of them and contained in this
AGREEMENT or in any document or other writing delivered pursuant
to this AGREEMENT.
SECTION 8. THE CLOSING
- -----------------------
The Closing shall take place simultaneously with the execution
hereof. At the Closing, the parties shall provide each other
with such documents as may be necessary or appropriate and
customary in transactions of this sort in order to consummate
the transactions contemplated hereby including evidence of due
authorization of the AGREEMENT and the transactions contemplated
hereby.
SECTION 9. MISCELLANEOUS
- -------------------------
9.1 WAIVERS - The waiver of a breach of this AGREEMENT or the
failure of any party hereto to exercise any right under this
AGREEMENT shall in no event constitute waiver as to any future
breach whether similar or dissimilar in nature or as to the
exercise of any further right under this AGREEMENT.
9.2 AMENDMENT - This AGREEMENT may be amended or modified only by an
instrument of equal formality signed by the parties or the duly
authorized representatives of the respective parties.
9.3 ASSIGNMENT - This AGREEMENT is not assignable except by
operation of law.
9.4 NOTICES - Until otherwise specified in writing, the mailing
addresses of both parties of this AGREEMENT shall be as follows:
SELLER: THE MARTIAL ARTS NETWORK, INC.
1000 Universal Studios Plaza #22
Orlando, FL 32819
PURCHASER: FSGI CORPORATION
3200 North Military Trail, Suite 110
Boca Raton, FL 33431
<PAGE>
Any notice of statement given under this AGREEMENT shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor.
9.5 GOVERNING LAW - This AGREEMENT shall be construed, and the legal
relations be the parties determined, in accordance with the laws
of the State of Florida, thereby precluding any choice of law
rules which may direct the application of the laws of any other
jurisdiction.
9.6 PUBLICITY - No publicity release or announcement concerning this
AGREEMENT or the transactions contemplated hereby shall be
issued by either party hereto at any time from the signing
hereof without advance approval in writing of the form and
substance thereof by the other party.
9.7 ENTIRE AGREEMENT - This AGREEMENT (including the Exhibits and
Schedules hereto) and the collateral agreements executed in
connection with the consummation of the transactions
contemplated herein contain the entire agreement among the
parties with respect to the purchase and issuance of the MANO
SHARES and the PURCHASER SHARES and related transactions, and
supersede all prior agreements, written or oral, with respect
thereto.
9.8 HEADINGS - The headings in this AGREEMENT are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this AGREEMENT.
9.9 SEVERABILITY OF PROVISIONS - The invalidity or unenforceability
of any term, phrase, clause, paragraph, restriction, covenant,
agreement or other provision of this AGREEMENT shall in no way
affect the validity or enforcement of any other provision or any
part thereof.
9.10 COUNTERPARTS - This AGREEMENT may be executed in any number of
counterparts, each of which when so executed, shall constitute
an original copy hereof, but all of which together shall
consider but one and the same document.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT on the
date first above written.
FSGI CORPORATION
By: /S/ JASON LENTS
-----------------------------
Jason Lents, President
THE MARTIAL ARTS NETWORK, INC.
By: /S/ TONY INTERDONATO
-----------------------------
Tony Interdonato, President
<PAGE>
EXHIBIT A
---------
EXCHANGE WITH FSGI FOR THE MARTIAL ARTS NETWORK ONLINE, INC.
<TABLE>
<CAPTION>
Shares of Shares of
Name of MANO to be PURCHASER to
SHAREHOLDER EXCHANGED BE RECEIVED
- ----------- --------- -----------
<S> <C> <C>
The Martial Arts Network, Inc. 100,000 3,000,000 (+ options previously notated)
</TABLE>
EXHIBIT 3.1
-----------
ARTICLES OF INCORPORATION
-------------------------
OF
--
FSGI CORPORATION
----------------
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be: FSGI CORPORATION.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 3200
North Military Trail, Suite 300, Boca Raton, Florida 33431.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 1,000 shares of common
stock, $.0001 par value per share.
ARTICLE IV
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
<PAGE>
ARTICLE V
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be:
James M. Dorman
3200 North Military Trail, Suite 300
Boca Raton, Florida 33431
ARTICLE VI
BOARD OF DIRECTORS
------------------
This Corporation shall have two Directors initially.
ARTICLE VII
INITIAL DIRECTORS
-----------------
The names and addresses of the initial Directors of this Corporation
are:
Lori Carmichael
3200 North Military Trail, Suite 300
Boca Raton, Florida 33431
James M. Dorman
3200 North Military Trail, Suite 300
Boca Raton, Florida 33431
The persons named as initial Directors shall hold office for the first
year of existence of this Corporation, or until their successors are elected or
appointed and have qualified, whichever occurs first.
ARTICLE VIII
INCORPORATOR
------------
The name of the person signing these Articles of Incorporation as the
Incorporator is James M. Dorman, and his address is 3200 North Military Trail,
Suite 300, Boca Raton, Florida 33431.
2
<PAGE>
ARTICLE IX
INDEMNIFICATION
---------------
This Corporation shall indemnify to the fullest extent permitted by
Florida Statute 607.0850, as may be amended from time to time, any director or
officer of the Corporation who is a party or who is threatened to be made a
party to any proceeding which is a threatened, pending or completed action or
suit brought against said officer or director in his official capacity. This
Corporation shall not indemnify any director or officer in any action or suit,
threatened, pending or completed, brought by him against the Corporation, in the
event the officer or director is not the prevailing party. Indemnification of
any other persons, such as employees or agents of the Corporation, or serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
shall be determined in the sole and absolute discretion of the Board of
Directors of the Corporation. Pursuant to Florida Statute 607.0850(9), no court
order indemnification shall, under any circumstances, be permitted.
ARTICLE X
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Florida Statute
607.0901, as amended from time to time, relating to affiliated transactions.
ARTICLE XI
CONTROL SHARE ACQUISITIONS
--------------------------
This Corporation expressly elects not to be governed by Florida Statute
607.0902, as amended from time to time, relating to control share acquisitions.
IN WITNESS WHEREOF, the undersigned Incorporator ahs executed the
foregoing Articles of Incorporation on May 15, 1997.
/S/ JAMES M. DORMAN
-----------------------------
JAMES M. DORMAN, Incorporator
STATE OF FLORIDA )
) SS.
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me on May 15, 1997, by
James M. Dorman, as Incorporator. Mr. Dorman is personally known to me and did
take an oath.
3
<PAGE>
/S/ SYDNEY MONDA
-----------------------------
Notary Public
My Commission Expires:
SYDNEY MONDA
(SEAL) Notary Public State of Florida
My Comm. Expires Apr. 22, 1998
No. CC 359676
Bonded Thru Official Notary Services
SYDNEY MONDA
Notary Public State of Florida
My Comm. Expires Apr. 22, 1998
No. CC 359676
Bonded Thru Official Notary Services
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
---------------------------------
FSGI CORPORATION, a Corporation existing under the laws of the State of
Florida with its principal office at 3200 North Military Trail, Suite 300, Boca
Raton, Florida 33431, has named James M. Dorman, whose address is 3200 North
Military Trail, Suite 300, Boca Raton, Florida 33431, as its agent to accept
service of process within the State of Florida.
ACCEPTANCE:
-----------
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law.
4
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FSGI CORPORATION
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of FSGI Corporation, a corporation
organized and existing under and by virtue of the Business Corporation Act of
the State of Florida (the "Corporation"), does hereby certify:
That pursuant to Unanimous Written Consent of the Board of Directors of
said Corporation dated December 21, 1998, the Board of Directors approved the
amendment to the Corporation's Articles of Incorporation as follows:
ARTICLE I
NAME
----
The name of the Corporation shall be changed FROM FSGI Corporation TO
TMAN Global.Com, Inc.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 1000
Universal Studios Plaza #22, Orlando, FL 32819.
ARTICLE V
REGISTERED AGENT
----------------
The Registered Agent will be:
Ron Tramontano
1000 Universal Studios Plaza, #22
Orlando, FL 32819
<PAGE>
ARTICLE VII
BOARD OF DIRECTORS
------------------
The new Board of Directors will be:
Tony Interdonato
1000 Universal Studios Plaza
Orlando, FL 32819
Ron Tramontano
1000 Universal Studios Plaza
Orlando, FL 32819
The foregoing amendment was adopted by the Board of Directors of the
Corporation pursuant to Unanimous Written Consent pursuant to Section 607.0704
of the Florida Business Corporation Act, on December 21, 1998.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of December 21, 1998.
FSGI CORPORATION
By: /S/ RON TRAMONTANO
---------------------
Ron Tramontano
President
EXHIBIT 3.2
-----------
BY-LAWS
OF
FSGI CORPORATION
a Florida corporation
<PAGE>
INDEX
-----
PAGE
----
ARTICLE I
---------
OFFICES
-------
Section 1.01 Principal Office................................ 1
----------------
Section 1.02 Registered Office............................... 1
-----------------
Section 1.03 Other Offices................................... 1
-------------
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
------------------------
Section 2.01 Annual Meeting.................................. 1
--------------
Section 2.02 Special Meetings................................ 1
----------------
Section 2.03 Place of Meetings............................... 1
-----------------
Section 2.04 Voting Lists.................................... 1
------------
Section 2.05 Closing of Transfer Books and
------------------------------
Fixing Record Date.............................. 2
------------------
Section 2.06 Notice of Meetings.............................. 3
------------------
Section 2.07 Precondition to Delivery of Notice of
--------------------------------------
Special Meeting of Shareholders Called
--------------------------------------
by Shareholders................................. 3
---------------
Section 2.08 Quorum.......................................... 3
------
Section 2.09 Adjournment..................................... 3
-----------
Section 2.10 Organization.................................... 4
------------
Section 2.11 Voting.......................................... 4
------
Section 2.12 Proxies......................................... 5
-------
Section 2.13 Action by Shareholders Without a Meeting........ 5
----------------------------------------
<PAGE>
ARTICLE III
-----------
BOARD OF DIRECTORS
------------------
Section 3.01 Powers and Duties............................... 6
-----------------
Section 3.02 Qualification and Election...................... 7
--------------------------
Section 3.03 Number and Term of Office....................... 8
-------------------------
Section 3.04 Organization.................................... 8
------------
Section 3.05 Place of Meetings............................... 8
-----------------
Section 3.06 Annual Meetings................................. 8
---------------
Section 3.07 Regular Meetings................................ 8
----------------
Section 3.08 Special Meetings................................ 8
----------------
Section 3.09 Action by Written Consent Without
---------------------------------
Meeting........................................ 8
-------
Section 3.10 Conference Telephone Meetings................... 9
-----------------------------
Section 3.11 Quorum.......................................... 9
------
Section 3.12 Voting.......................................... 9
------
Section 3.13 Adjournment..................................... 9
-----------
Section 3.14 Compensation.................................... 9
------------
Section 3.15 Resignations.................................... 9
------------
Section 3.16 Vacancies....................................... 9
---------
Section 3.17 Removal......................................... 10
-------
Section 3.18 Executive and Other Committees.................. 10
------------------------------
ARTICLE IV
----------
NOTICE AND WAIVER OF NOTICE
---------------------------
Section 4.01 Notice.......................................... 11
------
Section 4.02 Waiver of Notice................................ 11
----------------
ii
<PAGE>
ARTICLE V
---------
OFFICERS
--------
Section 5.01 Number and Qualifications....................... 12
-------------------------
Section 5.02 Election and Term of Office..................... 12
---------------------------
Section 5.03 Subordinate Officers, Committees and Agents..... 12
-------------------------------------------
Section 5.04 The Chairman of the Board....................... 12
-------------------------
Section 5.05 The President................................... 12
-------------
Section 5.06 The Vice Presidents............................. 13
-------------------
Section 5.07 The Secretary................................... 13
-------------
Section 5.08 The Treasurer................................... 13
-------------
Section 5.09 Salaries and Compensation....................... 14
-------------------------
Section 5.10 Resignations.................................... 14
------------
Section 5.11 Removal......................................... 14
-------
Section 5.12 Vacancies....................................... 14
---------
ARTICLE VI
----------
CERTIFICATES OF STOCK, TRANSFER
-------------------------------
Section 6.01 Share Certificate, Issuance..................... 14
---------------------------
Section 6.02 Transfer........................................ 15
--------
Section 6.03 Registered Shareholders......................... 15
-----------------------
Section 6.04 Lost, Destroyed or Mutilated
----------------------------
Certificates................................... 15
------------
ARTICLE VII
-----------
INDEMNIFICATION OF DIRECTORS, OFFICERS AND AGENTS
-------------------------------------------------
Section 7.01 Directors, Officers, Employees and Agents....... 16
-----------------------------------------
iii
<PAGE>
Section 7.02 Expenses........................................ 17
--------
Section 7.03 Determination of Standard of Conduct............ 17
------------------------------------
Section 7.04 Independent Legal Counsel....................... 17
-------------------------
Section 7.05 Advance Expenses................................ 17
----------------
Section 7.06 Benefit......................................... 17
-------
Section 7.07 Insurance....................................... 18
---------
Section 7.08 No Rights of Subrogation........................ 18
------------------------
Section 7.09 Indemnification for Past Directors.............. 18
----------------------------------
Section 7.10 Affiliates...................................... 18
----------
Section 7.11 Reliance and Non-exclusivity.................... 18
----------------------------
Section 7.12 Miscellaneous................................... 19
-------------
Section 7.13 Application of Florida Law...................... 19
--------------------------
ARTICLE VIII
------------
MISCELLANEOUS
-------------
Section 8.01 Corporate Seal.................................. 19
--------------
Section 8.02 Checks.......................................... 19
------
Section 8.03 Dividends....................................... 19
---------
Section 8.04 Deposits........................................ 19
--------
Section 8.05 Fiscal Year..................................... 19
-----------
Section 8.06 Reports......................................... 19
-------
Section 8.07 Corporate Records............................... 20
-----------------
Section 8.08 Amendment of Bylaws............................. 21
-------------------
Section 8.09 Severability.................................... 21
------------
Section 8.10 Contracts or Transactions With Interested
-----------------------------------------
Directors or Officers........................... 21
---------------------
iv
<PAGE>
ARTICLE I
OFFICES
-------
Section 1.01 PRINCIPAL OFFICE. The principal office of the corporation
in the State of Florida shall be established at such places as the board of
directors shall from time to time determine.
Section 1.02 REGISTERED OFFICE. The registered office of the
corporation in the State of Florida shall be at the office of its registered
agent as stated in the articles of incorporation or as the board of directors
shall from time to time determine.
Section 1.03 OTHER OFFICES. The corporation may have additional offices
at such other places, either within or without the State of Florida, as the
board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
------------------------
Section 2.01. ANNUAL MEETING. The annual meeting of shareholders shall
be held on such business day as determined by the board of directors. The
shareholders entitled to vote at such meeting shall elect the directors and
shall transact such other business as may properly be brought before the
meeting.
Section 2.02. SPECIAL MEETINGS. Special meetings of the shareholders of
the corporation may be called, for any purpose or purposes permitted by law, by
the board of directors on its own initiative and shall be called by the board of
directors upon written request by the chairman of the board, president of the
corporation, or the holders of not less than one-tenth of all the shares
entitled to vote at the meeting which request shall be delivered to the
secretary and shall state the purpose of such meeting. Notice of such meeting
shall be given by the secretary as provided herein.
Section 2.03. PLACE OF MEETINGS. All meetings of the shareholders of
the corporation shall be held at such place within or without the State of
Florida as shall be designated from time to time by the board of directors and
stated in the notice of such meeting or in a duly executed waiver of notice
thereof.
<PAGE>
Section 2.04. VOTING LISTS. The officer or agent of the corporation
having charge of the stock transfer books for shares of the corporation shall
make, at least ten days before each meeting of shareholders, a complete list of
the shareholders entitled to vote at the meeting and any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each shareholder, which list shall be kept on file at the registered
office of the corporation or its principal place of business or at the office of
its registrar or transfer agent for a period of at least ten days prior to the
meeting, and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof, shall be PRIMA FACIE evidence as to who
are the shareholders entitled to examine such list or share ledger or transfer
book, or to vote, in person or by proxy, at any meeting of the shareholders.
This section shall not apply if, during the entire period sixty days prior to
such meeting, the corporation has less than six shareholders.
Section 2.05. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. In
order that the corporation may determine the 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 other distribution or allotment
of any rights, or entitled to exercise any rights in respect to any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the board of directors may provide that the stock transfer books shall be closed
for a stated period not to exceed, in any case, sixty days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of, or vote at, a meeting of shareholders, such books shall
be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the board of directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty days and, in the
case of a meeting of shareholders, not less than ten days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken.
2
<PAGE>
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, a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which the secretary mails the notice of the meeting or the
date on which the resolution of the board of directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the board of directors fixes a new
record date under this section for the adjourned meeting.
Section 2.06. NOTICE OF MEETINGS. Written notice stating the place, day
and hour of every meeting of the shareholders shall be given by the secretary to
each shareholder entitled to vote at such meeting, either personally or by first
class mail, at least ten days, but not more than sixty days, prior to the day
named for the meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States first-class mail postage prepaid, addressed
to the shareholder at his address as it appears on the stock transfer books of
the corporation.
Section 2.07. PRECONDITION TO DELIVERY OF NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS CALLED BY SHAREHOLDERS. The secretary shall inform shareholders who
have delivered a written request for a special meeting and otherwise complied
with section 2.02 of the reasonably estimated costs of preparing and mailing a
notice of the meeting, and, on payment of these costs to the corporation, the
Secretary shall deliver notice of such meeting to each shareholder entitled
thereto.
Section 2.08. QUORUM. The presence, in person or by proxy, of
shareholders entitled to cast a majority of the votes which all shareholders are
entitled to cast shall constitute a quorum for such meeting. Treasury shares,
shares of this corporation's stock which are owned by another corporation the
3
<PAGE>
majority of the voting stock of which is owned by this corporation, and shares
of this corporation's stock held by another corporation in a fiduciary capacity
for the benefit of this corporation shall not be counted in determining the
total number of outstanding shares for voting purposes at any given time. After
a quorum has been established at a shareholders' meeting, the subsequent
withdrawal of shareholders, so as to reduce the number of shareholders 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. When
a specified item of business is required to be voted on by any class or series
of stock, a majority of the shares of such class or series shall constitute a
quorum for transaction of such item of business by that class or series.
Section 2.09. ADJOURNMENT. When a meeting which is properly called and
at which a quorum is present is adjourned to another time or place, it shall not
be necessary to give any notice of the adjourned meeting if the time and place
to which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date or place of the
meeting. If, however, after the adjournment the board fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to vote at such
meeting.
Section 2.10. ORGANIZATION. At every meeting of the shareholders, the
chairman of the board, if there be one, or in the case of vacancy in office or
absence of the chairman of the board, one of the following officers present in
the order stated: the vice chairman of the board, if there be one, the
president, the vice presidents in their order of rank and then seniority, or a
chairman chosen by the shareholders entitled to cast a majority of the votes
which all shareholders present in person or by proxy are entitled to cast, shall
act as chairman, and the secretary, or, in his absence, an assistant secretary,
or, in the absence of both the secretary and assistant secretaries, a person
appointed by the chairman, shall serve as secretary.
4
<PAGE>
Section 2.11. VOTING. If a quorum is present at any meeting, the
affirmative vote of the 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 question is one for which, by express provision of the law or of the
articles of incorporation or these bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Except as may be otherwise provided in the articles of incorporation,
every shareholder of record shall have the right, at every shareholders'
meeting, to one vote for every share, and to a fraction of a vote equal to every
fractional share, the stock of the corporation standing in his name on the books
of the corporation. A shareholder may vote either in person or by proxy.
Treasury shares, shares of this corporation's stock which are owned by
another corporation the majority of the voting stock of which is owned by this
corporation, and the shares of this corporation's stock held by another
corporation in a fiduciary capacity for the benefit of this corporation shall
not be voted, directly or indirectly, at any meeting of shareholders.
At each election for directors, every shareholder entitled to vote
shall have the right to vote 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 or, if cumulative voting is authorized by the articles of
incorporation, to accumulate his votes by giving one candidate a number of votes
equal to the number of directors to be elected at that time multiplied by the
number of his votes or distribute such number of votes among any number of
candidates.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the bylaws
of the corporate shareholder; or, in the absence of any applicable bylaw, by
such person as the board of directors of the corporate shareholder may
designate. Proof of such designation may be made by presentation of a certified
copy of the bylaws or other instrument of the corporate shareholder. In the
absence of any such designation, or in case of conflicting designation, by the
corporate shareholder, the chairman of the board, president, any vice president,
secretary and treasurer of the corporate shareholder shall be presumed to
possess, in that order, authority to vote such shares.
5
<PAGE>
Shares held by an administrator, executor, guardian or conservator may
be voted by such person, either in person or by proxy, without a transfer of
such shares into the name of such person.
Shares standing in the name of a trustee may be voted by such trustee,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by such trustee without a transfer of such shares into the name of such
trustee. Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver, may be voted by such
receiver without the transfer thereof into the name of the receiver, if
authority to do so is contained in an appropriate order of the court by which
such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or the nominee of the pledgee shall be entitled to vote
the shares so transferred.
Section 2.12. PROXIES. Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy in accordance with applicable laws.
Section 2.13. ACTION BY SHAREHOLDERS WITHOUT MEETING. Unless otherwise
provided in the articles of incorporation, 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 the 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 by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. If any class of shares is
entitled to vote thereon as a class, such written consent shall be required of
the holders of a majority of the shares of such class and of the total shares
entitled to vote.
6
<PAGE>
Within ten days after obtaining such authorization by written consent,
notice must be given to those shareholders who have not consented in writing.
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 by Florida General 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
provisions regarding the rights of dissenting shareholders.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.01. POWERS AND DUTIES. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, a board of directors,
except as may be otherwise provided in the Florida General Corporation Act or
the articles of incorporation. If any such provision is made in the articles of
incorporation, the powers and duties conferred or imposed upon the board of
directors by the Florida General Corporation Act shall be exercised or performed
to such extent and by such person or persons as shall be provided in the
articles of incorporation.
A director shall perform his duties as a director, including duties as
a member of any committee of the board upon which the director may serve, in
good faith, in a manner the director reasonably believes to be in the best
interests of the corporation, and with such care as an ordinary prudent person
in a like position would use under similar circumstances. In performing his
duties, a director shall be entitled to rely on information, opinions, reports
or statements, including financial statements and other financial data, in each
case prepared or presented by:
7
<PAGE>
(1) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented,
(2) counsel, public accountants or other persons as to matters
which the director reasonably believes to be within such person's professional
or expert competence, or
(3) a committee of the board upon which the director does not
serve, duly designated in accordance with provisions of the articles of
incorporation or these bylaws, as to matters within its designated authority,
which committee the director reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if the
director has knowledge concerning the matter in question that would cause such
reliance described in the preceding subsection to be unwarranted.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
corporation.
A director of the corporation who is present at a meeting of the board
of directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken, unless the director votes against such
action or abstains from voting in respect thereto because of an asserted
conflict of interest.
Section 3.02. QUALIFICATION AND ELECTION. Unless otherwise provided in
the articles of incorporation, directors need not be residents of Florida or
shareholders in the corporation. Except in the case of vacancies, directors
shall be elected by the shareholders. Upon the demand of any shareholder or his
proxy at any meeting of shareholders for the election of directors, the chairman
of the meeting shall call for and shall afford a reasonable opportunity for the
making of nominations for the office of director. Any shareholder or his proxy
may nominate as many persons for the office of director as there are positions
to be filled by providing the secretary with a written acceptance of nomination
as director executed by such nominee. If nominations for the office of director
have been called for as herein provided, only candidates who have been nominated
in accordance therewith shall be eligible for election. If the board of
8
<PAGE>
directors is classified with respect to the power to elect directors or with
respect to the terms of directors and if, due to a vacancy or vacancies, or
otherwise, directors of more than one class are to be elected, each class of
directors to be elected at the meeting shall be nominated and elected
separately. The candidates receiving the greatest number of votes, up to the
number of directors to be elected, shall be elected directors.
Section 3.03. NUMBER AND TERM OF OFFICE. The board of directors shall
consist of no less than one nor more than seven directors. The number of
directors may be increased or decreased from time to time by amendment to these
bylaws, but no decrease shall have the effect of shortening the term of any
incumbent director. Each director shall serve until the next annual meeting of
the shareholder and until his successor shall have been elected and qualified or
until his earlier resignation, removal from office or death.
Section 3.04. ORGANIZATION. At every meeting of the board of directors,
the chairman of the board, if there be one, or in the absence of the chairman of
the board, the president of the corporation or a chairman chosen by a majority
of the directors present, shall preside, and the secretary or any person
appointed by the chairman of the meeting, shall act as secretary.
Section 3.05. PLACE OF MEETINGS. Meetings of the board of directors of
the corporation, regular or special, may be held either within or without the
State of Florida.
Section 3.06. ANNUAL MEETINGS. The board of directors shall hold an
annual meeting each year immediately following the annual meeting of the
shareholders at the place where such meeting of the shareholders was held for
the purpose of election of officers and consideration of any other business that
may be properly brought before the meeting. Notice of such annual meetings need
not be given to either old or new members of the board of directors.
Section 3.07. REGULAR MEETINGS. The board of directors shall hold
regular meetings on the third Tuesday of each month, if other than a holiday and
if a holiday then the next business day, unless the board of directors decides
otherwise, to conduct such business as the board determines appropriate. Notice
of such regular meetings need not be given to any member of the board of
directors.
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Section 3.08. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by any two directors, the chairman of the board or the
president on two days' prior written notice.
Section 3.09. ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
of the board of directors or of any committee thereof, which is required or
permitted to be taken at a regular or special meeting, may be taken without a
meeting if consent in writing, setting forth the action so to be taken, signed
by all of the members of the board of directors or of the committee, as the case
may be, is filed in the minutes of the proceedings of the board of directors or
committee.
Section 3.10. CONFERENCE TELEPHONE MEETINGS. One or more members of the
board of directors may participate in meetings of the board or a committee of
the board by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
Section 3.11. QUORUM. A majority of the directors in office shall be
present at each meeting in order to constitute a quorum for the transaction of
business. Interested directors may be counted in determining the presence of a
quorum at a meeting of the board of directors which authorizes, approves or
ratifies such contract or transaction.
Section 3.12. VOTING. Except as otherwise specified in the articles of
incorporation or these bylaws or provided by statute, the acts of a majority of
the directors present at a meeting at which a quorum is present shall be the
acts of the board of directors.
Section 3.13. ADJOURNMENT. A majority of the directors present,
regardless of whether or not a quorum exists, may adjourn any meeting of the
board of directors, to another time and place and no notice of any adjourned
meeting need be given, other than by announcement at the meeting.
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Section 3.14. COMPENSATION. The board of directors shall have the
authority to fix the compensation of directors for their attendance at meetings
of the board of directors or committees thereof, and such compensation may
include expenses, if any, associated with attendance at such meetings.
Section 3.15. RESIGNATIONS. Any director of the corporation may resign
at any time by giving written notice to the president or the secretary of the
corporation. Such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3.16. 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. A director elected to fill a vacancy shall hold office only
until the next election of directors by the shareholders.
Section 3.17. REMOVAL. At any special meeting of shareholders called
for the purpose of removing or electing directors, directors may be removed from
office, with or without cause, by a vote of the holders of a majority of the
shares then entitled to vote. In case the board of directors or any such class
of the board of directors, or any one or more directors be so removed, new
directors may be elected at the same meeting. If the corporation has cumulative
voting and if less than the entire board is to removed, no individual director
may be removed if the votes cast against the resolution for his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board or a class of which he is part.
Section 3.18. EXECUTIVE AND OTHER COMMITTEES. The board of directors,
by resolution adopted by a majority of the entire board, may designate from
among its members an executive committee and one or more other committees, each
committee to consist of two or more directors. The board may designate as
alternate members of any committee, one or more directors who may replace any
absent or disqualified member at any meeting of the committee.
The executive committee or other committee shall have and exercise all
of the authority of the board to the extent provided in the resolution
designating the committee, except that no such committee of the board shall have
the authority of the board to:
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(1) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders;
(2) designate candidates for office of director, for purposes of
proxy solicitation or otherwise;
(3) fill vacancies on the board of directors or any committee
thereof;
(4) amend these bylaws;
(5) authorize or approve the re-acquisition of shares unless
pursuant to a general formula or method specified by the board of directors; or
(6) authorize or approve the issuance or sale of, or any contract
to issue or sell, shares or designate the terms of a series of a class of
shares, unless pursuant to a general formula or method specified by the board of
directors, within specifications authorized by law.
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A majority of the directors in office designated to a committee, or
directors designated to replace them as provided in this section, shall be
present at each meeting to constitute a quorum for the transaction of business
and the acts of a majority of the directors in office designated to a committee
or their replacements shall be the acts of the committee.
Each committee shall keep regular minutes of its proceedings and report
such proceedings periodically to the board of directors.
Sections 3.05, 3.06, 3.07, 3.08, 3.09 and 3.11 shall be applicable to
committees of the board of directors.
ARTICLE IV
NOTICE AND WAIVER OF NOTICE
---------------------------
Section 4.01. NOTICE. Whenever written notice is required to be given
to any person under the provisions of the articles of incorporation, these
bylaws, or the Florida General Corporation Act, it shall be deemed given upon
personal delivery or upon deposit in the United States first-class mail, postage
prepaid or delivery to a telegraph or cable office for transmission upon
telegram or cablegram, charges prepaid, to the address of such person appearing
on the books of the corporation, or supplied by such person to the corporation
for the purpose of notice.
A notice of a meeting shall specify the place, day and hour of the
meeting. Notices to shareholders shall be given as provided in Section 2.06
hereof. Notices to directors shall be given as provided in Section 3.07 hereof.
Section 4.02. WAIVER OF NOTICE. Whenever any notice is required to be
given under the Florida General Corporation Act, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein shall be deemed equivalent to the giving of such notice.
Except in the case of a special meeting of the shareholders, neither the
business to be transacted at, nor the purpose of, the meeting need be specified
in the waiver of notice of such meeting.
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Attendance of a person, either in person or by proxy, at any meeting,
shall constitute a waiver of notice of such meeting, except where a person
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
ARTICLE V
OFFICERS
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Section 5.01. NUMBER AND QUALIFICATION. The officers of the corporation
shall consist of a president, a secretary, a treasurer, and such other officers
and agents as may be deemed necessary by the board of directors. All officers
and agents of the corporation shall be elected by the board of directors in
accordance with the provisions of this Article. One person may hold more than
one office. Officers may but need not be directors or shareholders of the
corporation. The board of directors may elect from among the members of the
board a chairman of the board who, if elected, shall be an officer of the
corporation. Failure to elect such officers shall not affect the existence of
the corporation.
Section 5.02. ELECTION AND TERM OF OFFICE. Except such officers as may
be elected pursuant to Section 5.03 or 5.12 of this Article, the officers of the
corporation shall be elected annually by the board of directors to hold office
until the next annual organizational meeting of directors and until a successor
shall have been duly elected and qualified, or until his death, resignation or
removal.
Section 5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS. The board of
directors may from time to time elect such officers and appoint such committees,
employees or other agents as the board deems the business of the corporation may
require, to hold office for such period, have such authority, and perform such
duties as are provided in these bylaws, or as the board of directors may
delegate.
Section 5.04. THE CHAIRMAN OF THE BOARD. The chairman of the board, if
elected, shall be the chief executive officer of the corporation and have
general powers of supervision, direction and control over the business and
operations of the corporation, subject to the authority of the board of
directors. The chairman of the board shall preside at all meetings of the
shareholders and of the board of directors, and shall perform such other duties
as may from time to time be requested of him by the board of directors.
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Section 5.05. THE PRESIDENT. The president shall be the chief operating
officer of the corporation and shall have general supervision, direction and
control over the business and operations of the corporation, subject however, to
the authority of the chairman of the board and the board of directors. If the
board of directors fails to elect a chairman f the board, then the president
shall also be the chief executive officer of the corporation. He shall sign,
execute, and acknowledge, in the name of the corporation, deeds, mortgages,
bonds, contracts or other instruments except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors, or by
these bylaws, to some other officer or agent of the corporation; and, in
general, shall perform all duties incident to the office of president and such
other duties as from time to time may be assigned to him by the chairman of the
board and board of directors.
Section 5.06. THE VICE PRESIDENTS. The vice presidents shall perform
duties as may from time to time be assigned to them by the board of directors,
the chairman of the board or the president.
Section 5.07. THE SECRETARY. The secretary shall attend all meetings of
the board of directors and committees thereof and shall record the time and
place of holding of such meeting, whether regular or special, and if special,
how authorized, the notice given, the names of those present at directors'
meetings or the number of shares present or represented at shareholders'
meetings in books to be kept for that purpose; shall see that notices are given
and records and reports properly kept and filed by the corporation as required
by law; shall be the custodian of the seal of the corporation and see that it is
affixed to all documents to be executed on behalf of the corporation under its
seal; and, in general, shall perform all duties incident to the office of
secretary, and such other duties as may from time to time be assigned to him by
the board of directors, the chairman of the board or the president.
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Section 5.08. THE TREASURER. The treasurer shall have or provide for
the custody of the funds or other property of the corporation and shall keep a
separate book account of the same to his credit as treasurer; shall keep and
maintain, or cause to be kept and maintained, adequate and correct accounts of
the properties and business transactions of the corporation, including, but not
limited to, accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital-surplus and shares; shall collect and receive or provide for the
collection and receipt of moneys earned by or in any manner due to or received
by the corporation; shall deposit all funds in his custody as treasurer in such
banks or other places of deposit as the board of directors may from time to time
designate; shall, whenever so required by the board of directors, render an
accounting showing his transactions as treasurer and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned to him by the board of directors, the chairman of the
board or the president. The books of account shall be open at all reasonable
times to inspection by any director.
Section 5.09. SALARIES AND COMPENSATION. The salaries, if any, of the
officers elected by the board of directors shall be fixed from time to time by
the board of directors or by such officer as may be designated by resolution of
the board. The salaries or other compensation of any officers, employees and
agents elected, appointed or retained by an officer or committee which the board
of directors has delegated such a power shall be fixed from time to time by such
officer or committee. No officer shall be prevented from receiving such salary
or other compensation by reason of the fact that he is also a director of the
corporation.
Section 5.10. RESIGNATIONS. Any officer or agent may resign at any time
by giving written notice of resignation to the board of directors or to the
president or the secretary of the corporation. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5.11. REMOVAL. Any officer, committee member, employee or agent
of the corporation may be removed, either for or without cause, by the board of
directors or other authority which elected or appointed such officer, committee
member or other agent.
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Section 5.12. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the board of directors or by the officer or committee to which the power to fill
such office has been delegated, as the case may be, and if the office is one for
which these bylaws prescribe a term, shall be filled for the unexpired portion
of such term.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER
-------------------------------
Section 6.01. SHARE CERTIFICATES, ISSUANCES. Every shareholder shall be
entitled to have a certificate representing all shares to which he is entitled;
and such certificate shall be signed by the chairman of the board, if any, or by
the president or a vice president and by the secretary or any assistant
secretary of the corporation and may be sealed with the corporate seal or a
facsimile thereof. The signature of the chairman of the board, president or vice
president and the secretary or assistant secretary or any corporate officer may
be a facsimile if the certificate is manually signed on behalf of a transfer
asset or a registrar other than the corporation itself or an employee of the
corporation. In the event any officer who has signed, or whose facsimile
signature has been placed upon any share certificate shall have ceased to be
such officer because of death, resignation or otherwise, before the certificate
is issued, it may be issued with the same effect as if the officer had not
ceased to be such at the date of its issues. Certificates representing shares of
the corporation shall be in such form as provided by statute and approved by the
board of directors. The share record books and the blank share certificate books
shall be kept by the secretary or by any agency designated by the board of
directors for that purpose. Every certificate exchanged or returned to the
corporation shall be marked "CANCELLED", with the date of cancellation.
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Section 6.02. TRANSFER. Transfers of shares shall be made on the books
of the corporation upon surrender of the certificates therefor, endorsed by the
person named in the certificate or by an attorney lawfully constituted in
writing.
Section 6.03. REGISTERED SHAREHOLDERS. The corporation shall be
entitled to (1) recognize a person registered on its books in whose name any
shares of the corporation are registered as the absolute owner thereof with the
exclusive rights to receive dividends, and to vote such shares as owner, and (2)
to hold such person liable for calls, to the extent permitted by law. Except as
otherwise provided by law, the corporation shall not be bound to recognize any
equitable or other claim regardless of whether the corporation shall have
express or other notice thereof.
Section 6.04. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of
any shares of the corporation shall immediately notify the corporation of any
loss, destruction or mutilation of the certificates therefor, and the board of
directors may, in its discretion, cause new certificates to be issued to him,
upon satisfactory proof of such loss, destruction, or mutilation and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
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ARTICLE VII
Indemnification of Directors,
OFFICERS, EMPLOYEES AND AGENTS
------------------------------
Section 7.01. DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The
corporation shall 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 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 any other corporation, partnership,
joint venture, trust or other enterprise against liability incurred in
connection with such proceeding, including any appeal thereof, if he acted in
good faith in a manner he reasonably believed to be in, or not opposed to the
best interests of the corporation, and with respect to any criminal action or
proceedings, had no reasonable cause to believe that his conduct was unlawful.
The termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not create, of itself, a
presumption that the person did not act in good faith or in a manner which he
reasonably believed to be in, or not opposed to, the best interest of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The corporation shall 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 he is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses 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, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
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corporation unless, and only to the extent that, the court in which such action
or suit 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.
Section 7.02. EXPENSES. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any proceeding referred to above, or in any defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 7.03. DETERMINATION OF STANDARD OF CONDUCT. Any indemnification
hereunder, unless pursuant to a determination by a court, shall be made by the
corporation as authorized upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth above. Such
determination shall be made either (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
proceeding, (2) by the shareholders who were not parties to such proceedings, or
(3) by independent legal counsel in a written opinion.
Section 7.04. INDEPENDENT LEGAL COUNSEL. Independent legal counsel may
be appointed by the board of directors, even if a quorum consisting of directors
who were not parties to a third party proceeding or derivative action is not
available or by a person designated by the board of directors. Independent legal
counsel shall not include any employee of the corporation or any person who has
or who is a member of employee of any firm which has rendered services to the
corporation during the preceding three years. If independent legal counsel shall
determine in a written opinion that indemnification is proper under this
Article, indemnification shall be made without further action of the board of
directors, except that no such determination shall be made by independent legal
counsel for any indemnification respecting circumstances involving gross
negligence or willful misconduct.
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Section 7.05. ADVANCE EXPENSES. Expenses, including attorney's fees
incurred in defending any action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided above or upon receipt of any
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount, unless it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized herein.
Section 7.06. BENEFIT. The indemnification provided by this Article
shall be in addition to the indemnification rights provided pursuant to Section
607 of the Florida Statutes, as amended, and shall not be deemed exclusive of
any other rights to which such person seeking indemnification may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent of the corporation
and shall insure to the benefit of the heirs, executors and administrators of
such a person.
Section 7.07. INSURANCE. The corporation shall be empowered to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions contained
herein.
Section 7.08. NO RIGHTS OF SUBROGATION. Indemnification herein shall be
a person right and, the corporation shall have no liability under this Article
VII to any insurer or any person, corporation, partnership, association, trust
or other entity (other than the heirs, executors or administrators of such
person) by reason of subrogation, assignment or succession by any other means to
the claim of any person to indemnification hereunder.
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Section 7.09. INDEMNIFICATION FOR PAST DIRECTORS. Indemnification as
provided in this section shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
Section 7.10. AFFILIATES. For the purposes of this Article, references
to "the corporation" include all constituent corporations absorbed in a
consolidation or merger, as well as the resulting or surviving corporation, so
that any person who is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation in the same capacity.
Section 7.11. RELIANCE AND NON-EXCLUSIVITY. Each person who shall act
as an authorized representative of the corporation shall be deemed to be doing
so in reliance upon such rights of indemnification as are provided in this
Article.
Section 7.12. MISCELLANEOUS. The corporation shall have the power to
make any other or further indemnification, except an indemnification against
gross negligence or willful misconduct, under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7.13. APPLICATION OF FLORIDA LAW. Whenever any provision of
these Bylaws is inconsistent with any provision of Florida Statutes, Section
607, as they may be amended, then in such instance Florida law shall prevail.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.01. CORPORATE SEAL. The corporation shall have a corporate
seal in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors.
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Section 8.02. CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may designate from time to time.
Section 8.03. DIVIDENDS. The board of directors, at any regular or
special meeting thereof, subject to any restrictions contained in the articles
of incorporation, may declare and pay dividends upon the shares of the
corporation's stock in cash, property or the corporation's shares in accordance
with the Florida General Corporation Act.
Section 8.04. DEPOSITS. All funds of the corporation shall be deposited
from time to time to the credit of the corporation in such financial
institutions or other depositaries as the board of directors may approve or
designate.
Section 8.05. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the board of directors.
Section 8.06. REPORTS. The board of directors may present a report of
the financial condition of the corporation as of the closing date of the
preceding fiscal year at the annual meeting of shareholders. Such report shall
be in such form as shall be approved by the board of directors and shall be
available for the inspection of shareholders at the annual meeting. The board of
directors may, but shall not be required to, have such report prepared and
verified by an independent certified public accountant or by a firm of
practicing accountants.
Section 8.07. CORPORATE RECORDS. There shall be kept at the registered
office or principal place of business of the corporation an original or
duplicate record of the proceedings of the meetings of the shareholders and of
the meetings of directors, and the original or a copy of the bylaws including
all amendments or alterations thereto to date, certified by the secretary of the
corporation. An original or duplicate share register shall also be kept at the
registered office or principal place of business of the corporation, or at the
office of a transfer agent or registrar, giving the names of the shareholders,
their respective addresses and the number and class of shares held by each. The
corporation shall also keep appropriate, complete and accurate books or records
of account, which may be kept at its registered office or at its principal place
of business.
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Any person who shall have been a holder of record of one-quarter of one
percent of shares or voting trust certificates therefor at least six months
immediately preceding demand, or shall be the holder of record of, or the holder
of voting trust certificates for, at least five percent of the outstanding
shares of any class or series of the corporation upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, during the usual hours for business, for any proper purpose, the share
register, books or records of account, and records of the proceedings of the
shareholders and directors, and make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's interest as a
shareholder. In every instance where any attorney or other agent shall be the
person who seeks the right to inspection, the demand shall be accompanied by a
power of attorney or such other writing which authorizes the attorney or other
agent to so act on behalf of the shareholder. The demand shall be directed to
the corporation at its registered office of Florida or at its principal place of
business. Where the shareholder seeks to inspect the books and records of the
corporation, other than its share register or list of stockholders, he shall
first establish (1) that he has complied with the provisions of this section
respecting the form and manner of making demand for inspection of such document;
and (2) that the inspection he seeks is for a proper purpose. Where the
shareholder seeks to inspect the share register or list of shareholders of the
corporation and he has complied with the provisions of this section respecting
the form and manner of making demand for inspection of such documents, the
burden of proof shall be upon the corporation to establish that the inspection
he seeks is for an improper purpose.
Section 8.08. AMENDMENT OF BYLAWS. The power to adopt, alter, amend or
repeal bylaws shall be vested in the board of directors unless reserved to the
shareholders by the articles of incorporation. Bylaws adopted by the board of
directors or by the shareholders may be repealed or changed, new bylaws may be
adopted by the shareholders, and the shareholders may prescribe in any bylaw
made by them that such bylaw shall not be altered, amended or repealed by the
board of directors.
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Section 8.09. SEVERABILITY. The provisions of these bylaws shall be
separable each from any and all other provisions of these bylaws, and if any
such provision shall be adjudged to be invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provision hereof, or the powers
granted to this corporation by the articles of incorporation or bylaws.
Section 8.10. CONTRACTS OR TRANSACTIONS WITH INTERESTED DIRECTORS OR
OFFICERS. No contract or transaction between the corporation and one or more of
its directors or officers, or any other corporation, firm, association, or
entity in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be either void or voidable because
of such relationship or because such directors or officers are present at or
participate in the meeting of the board or committee thereof which authorizes
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) the fact of such relationship or interest disclosed or known to
the board of directors or committee thereof, and the board in good faith
authorizes, approves and ratifies the contract or transactions by a vote
sufficient for such purpose without counting the votes or consents of the
interested director or directors; or
(2) the fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote thereon, and the contract or transaction is
specifically authorized, approved and ratified in good faith by vote or written
consent of the shareholders; or
(3) the contract or transactions is fair and reasonable as to the
corporation at the time it is authorized, approved or ratified, by the board of
directors, a committee or the shareholders.
25
PAR VALUE $.0001
NUMBER SHARES
+----------+ +----------+
| | | **2,000**|
+----------+ +----------+
TMANglobal.com, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
COMMON STOCK CUSIP 87257V 10 8
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
Is the owner of ***TWO THOUSAND***
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK of TMANglobal.com,
Inc., transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Date April 1, 1999 [TMANglobal.com, Inc.
corporate seal here]
/s/ Ron Tramontano /s/ Tony Interdonato
President Chief Executive Officer
Countersigned /s/
Florida Atlantic Stock Transfer, Inc.
7130 Nob Hill Road
Tamarac, FL 33321 Transfer agent
EXHIBIT 10.1
------------
CONSULTING AGREEMENT
--------------------
THIS AGREEMENT is made this 9th day of March 1999, between K. M. Ward Inc., a
California corporation (hereinafter "WARD"), and TMANGLOBAL.COM, Inc., a Florida
corporation (hereinafter "TMAN").
RECITALS
A. TMAN wishes to retain WARD to provide advisory/business
development services.
B. WARD is willing to provide such services as are more fully
described herein.
NOW THEREFORE, in consideration of the mutual promises contained herein, it is
agreed as follows:
1. FURNISHING OF INFORMATION BY TMAN: TMAN shall furnish to WARD information
such as copies of disclosure and filing materials, financial statements,
business plans, promotional information and background of TMAN's officers
and directors ("Information Package"). TMAN shall update the Information
Package on a continuous basis. TMAN understands that the sole purpose for
providing WARD with the Information Packages is for utilization in a
management advisory service capacity. WARD is not obligated to assess the
financial viability of TMAN. WARD can only rely on, and assume the
accuracy of the Information Package provided.
2. REPRESENTATIONS AND WARRANTIES OF TMAN: TMAN represents that all
information included in the Information Package furnished to WARD shall
disclose all material facts in order for WARD to perform appropriate due
diligence and shall not omit any facts necessary to make statements on
behalf of TMAN. The parties warrant to each other that they each have
full power and authority to execute this Agreement for and on behalf of
themselves and/or their respective companies.
3. COVENANTS OF TMAN: TMAN covenants and warrants that any information
submitted shall be truthful, accurate, in compliance with all copyright
and all other applicable laws and regulations and will not be submitted
in connection with any improper or illegal acts or deeds.
4. DUTIES: Based on the Information Package, WARD will perform the services
and for a period of time more fully described in Exhibit "A" pursuant to
the terms hereof, which services shall include WARD performing management
advisory services on behalf of TMAN in introducing it to multiple
business opportunities.
5. RELATIONSHIP OF THE PARTIES: WARD and TMAN shall each appoint a
designated representative. Said designated representative shall be the
contact person for all matters relating to this service Agreement.
6. COMPENSATION: As remuneration for services performed pursuant to this
Agreement, a 25,000 shares of free-trading common stock of TMAN will be
issued to WARD, as well as an additional 25,000 restricted shares of TMAN
common stock, according to the terms outlined in Exhibit A.
a. It is understood and agreed by the Parties that the above
compensation should be handled in a timely manner upon execution
of this Agreement. The stock certificates will be shipped to
WARD within thirty (30) days from both parties signing this
Agreement.
b. The restricted shares acquired under this Agreement shall be
registered no later than the anniversary date of the Agreement,
or by way of a Piggyback Registration, whichever is earlier.
These restricted common shares fall under the registration
requirements pursuant to Rule 144 of the Securities Act.
c. This represents the entire Agreement between WARD and TMAN with
regards to compensation. No cash compensation shall be made to
WARD by TMAN for any expenses incurred by WARD on behalf of
TMAN, pursuant to this Agreement.
<PAGE>
7. ASSUMPTION OF LIABILITY AND INDEMNIFICATION: TMAN assumes and claims all
responsibility and liability for the content of all information
disseminated on behalf of TMAN which has been approved by TMAN. TMAN
shall indemnify and hold WARD harmless from and against all demands,
claims or liability arising for any reason due to the context of
information disseminated on behalf of TMAN. This indemnity shall include
any costs incurred by WARD including, but not limited to, legal fees and
expenses incurred both in administrative proceedings, at trial and
appellate levels, in settlement of claims and payment of any judgement
against WARD. WARD will also be held responsible for any material
omissions or inaccuracies caused by any of their employees or agents
with regard to TMAN, and WARD will indemnify TMAN for any actions
brought against TMAN resulting from such omissions or inaccuracies which
were directly or indirectly caused by WARD relevant to this Agreement.
8. FORCE MAJEURE: If WARD's performance of this Agreement or any obligation
hereunder is prevented, restricted, or interfered with by causes beyond
its reasonable control including, but not limited to, acts of God, fire
explosion, vandalism, cable out, storm, or other similar occurrence, any
law, order, regulation, direction, action or request of the United States
(or any governments) or state or local governments or of any one or more
said governments, or of any civil or military authority or by national
emergency, insurrection, war strike, lookout or work stoppage or other
labor difficulties, supplier failure shortage, breach or delay, then WARD
shall be excused from such performance on a day-to-day basis to the
extent of such restriction or interference. WARD shall use reasonable
efforts under the circumstances to avoid or remove such causes or
nonperformance and shall proceed to perform with reasonable dispatch
whenever such causes are removed.
9. TERMINATION FOR CAUSE: Both parties further agree that either party may
terminate this Agreement without recourse if one of the parties is found
to be in violation of rules promulgated by any United States regulatory
agency or of any state regulatory agency. TMAN also has the same recourse
if WARD fails to use the information provided and approved by TMAN.
Illegal activity shall include but not be linked to: the release of false
press releases or the payment of any securities or money to brokers. In
the event of such action, WARD will be entitled to retain only a
pro-ration of any compensation paid.
10. ASSIGNMENT AND DELEGATION: Neither party may assign any rights or
delegate any duties hereunder without the other party's express prior
written consent. This Agreement shall benefit solely the named parties
and no other person shall claim, directly or indirectly benefit
hereunder, express or implied, as a third party beneficiary or otherwise.
Wherever in this Agreement a party is named or referred to, the
successors (including heirs and personal representative of individual
parties) and permitted assigns of such party shall be deemed to be
included, and all agreements, promises, covenants and stipulations in
this Agreement shall be binding upon and inure to the benefit of their
respective successors and permitted assigns.
11. NON-CIRCUMVENTION: TMAN further agrees:
(a) That any information leading to the identification of buyer,
seller, agent, associate, contact, investor, lender, parallel
company or corporation or their representative, or any entity that
has or is about to supply or purchase, or act as agent, or contact
in any business opportunity sales or purchase, either directly, or
indirectly through either party, shall be considered the permanent
account or trade secret of the introducing Party, and the
disclosing Party shall be notified of and included in any future
sales, dealings, or commission agreements with the identified
person, firm, corporation or business opportunity or trade secret,
by separate agreement added to and made a part of this agreement.
(b) It is agreed that the introduction of prospective business
opportunities will be documented by letter, telex, fax or other
written instrument and the notified Party shall have ten (10)
business days from the date thereof to advise the disclosing Party
in writing, addressed to the disclosing Party's address below,
whether or not the other party is already conducting negotiations
with said person, firm, corporation or business opportunity or
trade secret.
<PAGE>
(c) Both Parties agree not to circumvent the other in any dealings one
may have with the other, and agree to protect the confidentiality
of the information disclosed by the other in all present and
future dealings. No disclosure of the identity of a party
introduced by one party to the other shall be made, unless it is
expressly authorized in writing by the introducing Party.
(d) This Section (11) will survive the expiration of this Agreement
for a period of one (1) year from the date of its signing.
12. ENTIRE AGREEMENT: This writing contains the entire agreement of the
parties with respect to the subject matter hereof, superseding all prior
agreements, understandings, representations and warranties. No
representations were made or relied upon by either party, other than
those expressly set forth. Furthermore, TMAN understands that WARD makes
no guarantees, assurances or representations in regard to the results of
its management advisory services. No agent, employee or other
representative of either party is empowered to alter any of the above
terms, unless done in writing and signed by an executive officer of the
respective parties.
13. SEVERABILITY: If any provision of this Agreement is held invalid,
unenforceable or void, the remainder of the Agreement shall not be
affected thereby and shall continue in full force and effect.
14. CONTROLLING LAW AND VENUE: This Agreement's validity, interpretation and
performance shall be controlled by and construed under the laws of the
State of Florida. The proper venue and jurisdiction shall be the Circuit
Court in Orange County, Florida.
15. PREVAILING PARTY: In the event of the institution of any legal
proceedings or litigation, at the trial level or appellate level, with
regard to this Agreement, the prevailing party shall be entitled to
receive from the non-prevailing party all costs, reasonable attorney's
fees and expenses.
16. FAILURE TO OBJECT NOT A WAIVER: The failure of either party to this
Agreement to object to, or to take affirmative action with respect to any
conduct of the other which is in violation of the terms of this Agreement
shall not be construed as a waiver of the violation or breach, or of any
future violation, breach or wrongful conduct.
17. NOTICES: All notices or other documents under this Agreement shall be in
writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the appropriate representative as follows:
WARD: K.M. Ward, Inc.
133 F Avenue
Coronado, CA 92118
Attn: Kevin Ward, President
TMAN: TMANGLOBAL.COM
1000 Universal Studios Plaza #22
Orlando, FL 32819
Attn: Tony Interdonato, CEO
18. HEADINGS: Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
19. TIME: For all intents and purposes, time is of the essence with this
matter. Transmission of faxed signatures are acceptable with hard copy to
follow. Once signed by WARD and faxed back to TMAN will deem this
Agreement to be in full force and effect.
<PAGE>
EXHIBIT "A"
-----------
SPECIFIC WARD SERVICES TO TMAN
DUTIES:
- -------
During the term of this Agreement, WARD shall consult with TMAN concerning
corporate/business development; those services to include, but not be limited
to:
1. The dissemination of information regarding the business of TMAN to
WARD's network of brokers;
2. Introducing TMAN to others who can affect and enhance the price
and volume of TMAN's publicly traded shares through strategic
alliance with either themselves and/or their organizations.
TERMS:
- ------
The term of this Consulting Agreement shall be for a twelve (12) month period
commencing on the date hereof with a six (6) month minimum, subject to a
performance review by TMAN, and will continue thereafter until terminated by
TMAN with a thirty (30) day written notice to WARD.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
TMANGLOBAL.COM, INC. K. M. WARD, INC.
By: /s/ Tony Interdonato By: /s/ Kevin Ward
----------------------------- ----------------------------
Tony Interdonato as CEO Kevin Ward as President
Exhibit 10.2
------------
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
This Agreement is made and entered into as of this 17th day of March,
1999 by TMANGLOBAL.COM, a Florida corporation ("TMAN" OR "COMPANY"), and
VistaQuest, Inc., a New York corporation, ("CONSULTANT").
In consideration of and for the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. PURPOSE. The Company hereby retains the Consultant during the term
specified in Section 2 hereof to render consulting advice to the Company as
relating to financial and similar matters, upon the terms and conditions set
forth in this agreement.
2. TERM. The term of this Agreement (the "TERM") shall be the period
beginning the date of this Agreement and ending twelve (12) months thereafter.
If at any time after five months from the date of the signing of this Agreement,
the Company or the Consultant, for valid reasons, wish to terminate this
Agreement, notice of termination after an additional thirty (30) days shall be
sent to the Company or to the Consultant by certified or registered mail,
postage prepaid. If to the Company addressed to it at: 1000 Universal Studios
Plaza - Bldg. 22A, Orlando, FL 32819 Attention: Tony Interdonato, CEO; if to the
Consultant at: VistaQuest, Inc., 380 Lexington Avenue, Suite 1700, New York, New
York, 10168, Attention: Mark Kabbash, President, with a copy to Robert Donato
III, 215-East Bay Street, Suite 500, Charleston, South Carolina, 29401 or to
such address as hereafter may be designated in writing by any of such entities
to the others. Such notice for termination and/or other communication shall be
deemed to be given on the day of receipt; and thirty (30) days, thereafter, such
Agreement shall thereupon cease to be in effect. Termination prior to twelve
(12) months from the beginning date of this Agreement shall not affect terms of
the warrant for 180,000 shares, as stated in Section 6. The Consultant shall
provide information to inquiries from the professional financial community for a
period of one and one-half years after termination of this Agreement.
3. SERVICES OF CONSULTANT. During the Term of this Agreement, the
Consultant will provide the Company with such regular and customary consulting
advice as is reasonably requested by the Company, provided that the Consultant
shall not be required to undertake duties not reasonably within the scope of the
consulting advisory services contemplated by this Agreement. In the performance
of these duties, the Consultant shall provide the Company with the benefits of
its best judgment and efforts. It is understood and acknowledged by the parties
that the value of the Consultant's advice is not measurable in any quantitative
manner, and that the Consultant shall be obligated to render advice, upon the
request of the Company, in good faith, but shall not be obligated to spend any
specific amount of time in doing so. The Consultant's duties may include, but
will not necessarily be limited to:
(a) Rendering advice and assistance in connection with the
dissemination of corporate information regarding the Company to
the investment community;
(b) Rendering advice and assistance in connection with the preparation
of annual and interim reports and press releases;
(c) Arranging meetings with securities analysts and others in the
securities business for the Company at appropriate times;
(d) Assisting in the Company's financial public relations, including
discussions between the Company and the financial community;
(e) Rendering advice with respect to internal operations, including
advice regarding:
(i) the formation of corporate goals and their implementation;
(ii) the financial structure, programs, and projects of the
Company;
(iii) corporate organization and personnel;
(f) Rendering advice with respect to any acquisition program of the
Company;
<PAGE>
4. RELATIONSHIPS WITH OTHERS. The Company acknowledges that the
Consultant and its affiliates are in the business of providing financial
services and consulting advice (of all types contemplated by this Agreement) to
others. Nothing herein contained shall be construed to limit or restrict to the
Consultant or its affiliates from rendering such services or advice to others as
long as they're not in direct competition with the Company (specifically in the
business of providing Internet services that deal with martial arts, kickboxing,
or extreme sports).
5. CONSULTANT LIABILITY. In the absence of gross negligence or willful
misconduct on the part of the Consultant, the Consultant shall not be liable to
the Company, or to any officer, director, employee, stockholder or creditor of
the Company, for any act or omission in the course of or in connection with the
rendering or providing of advice or services hereunder. Except in those cases
where the gross negligence or misconduct of the Consultant is alleged and proven
in a judicial proceeding, the Company agrees to defend, indemnify and hold the
Consultant harmless from and against any and all costs and expenses, and any
liability (including, but not limited to, attorney's fees paid in the defense of
the Consultant) which may in any way result from services rendered by the
Consultant pursuant to or in any connection with this Agreement.
6. COMPENSATION. As promptly as possible after the execution of this
Agreement, the Company will deliver to the Consultant a Warrant (the "Warrant")
for the purchase of up to one hundred eight thousand (180,000) shares (the
"Warrant shares") of the company's common stock which shall be registered under
the Securities Act of 1933, as amended representing up to 180,000 free-trading
shares (the "WARRANT SHARES") of the Company's common stock. The Warrant shall
provide for a cashless exercise, i.e., the Warrant shall provide that in lieu of
paying the exercise price in cash, the Consultant may at his option surrender
the Warrant for the cancellation of that number of Warrant Shares (the "CANCELED
WARRANT Shares"). The purchase price for the Exercised Warrant Shares shall thus
be paid with the corresponding Canceled Warrant Shares and, to the extent that
the aggregate exercise price of the Exercised Warrant Shares exceeds the
aggregate Premium of the Canceled Warrant Shares, such difference shall be paid
in cash. For purposes of this Section 6, the "Premium" of a Warrant Share is the
amount by which the market price of the Warrant Share exceeds its exercise
price. The Warrant may be exercised in whole or in part at any time, and from
time to time, commencing on or after March 17, 1999 until 5 PM New York time,
March 17, 2002 (whereupon the Warrant shall expire and be of no further force or
effect). The Warrant shall be exercised at a price of $3.00.
The exercise price shall be subject to adjustment, to protect
the Consultant against dilution, as set forth in appropriate anti-dilution
provisions in the Warrant. The Warrant shall also provide that stock
certificates for any shares purchased by the Consultant under the Warrant shall
be delivered to the Consultant no later than 10 business days after the receipt
of payment of the exercise price by the Company.
6.1 (a) If any time during the period commencing on the
date hereof, the Company proposes to file a
registration statement to register shares of its
common stock under the Act for sale to the public in
an underwritten offering, it will at each such time
promptly given written notice to the Consultant of
its intention to do so and, upon the written request
of the Consultant made within 15 calendar days after
the receipt of any such notice (which request must
specify the number of shares of registrable stock
which the Consultant intends to dispose of, and must
state the intended method of disposition thereof),
the Company will effect the registration under the
Act of the shares as and when requested by the
Consultant. The registration rights of the Consultant
shall be subject to reduction or elimination if so
required by the Company's managing underwriter;
provided, that if such offering also registers shares
for other selling shareholders, then the larger, of
(i) fifty percent or (ii) pro-rata with the largest
percentage of holdings of selling shareholders, of
the Consultant's Warrant Shares shall be included in
the registration. Absent a registration by the
company in the first six (6) months beginning the
date of this Agreement, the Consultant shall have
demand registration rights as provided in the Warrant
Agreement of March, 1999 herewith between the
Consultant and the Company.
2
<PAGE>
(b) The costs and expenses (other than underwriting
discounts and commissions) of all registrations and
qualifications under the Act and of all other actions
the Company is required to take or effect in
connection with the registration rights described
herein, shall be paid by the Company (including,
without limitation, all registration and filing fees,
printing expenses, fees and expenses of complying
with the Blue Sky laws of the State of New York, and
fees and disbursements of counsel for the Company and
of the Company's independent public accounts).
7. LIMITATION UPON THE USE OF ADVICE AND SERVICES. No person or entity
other than the Company shall be entitled to make use of or rely upon the advice
of the Consultant to be given hereunder, and the Company shall not transmit such
advice to others, or encourage or facilitate the use or reliance upon such
advice by others, without the prior written consent of the Consultant.
7.1 It is clearly understood that the Consultant, for
services rendered under this Agreement, makes no
commitment whatsoever to recommend or advise its
clients to purchase the securities of the Company.
Research reports that may be prepared by the
Consultant, when and if prepared, will be based
solely on the independent judgment or analysis of the
Consultant or senior corporate finance personnel of
the Consultant.
7.2 The use of the Consultant's name in any annual report
or other report of the company, or any release or
similar document prepared by or on behalf of the
Company, must have the prior written approval of the
Consultant unless the Company is required by law to
include the Consultant's name in such annual report,
other report or release, in which event the
Consultant will be furnished with a copy of such
annual report, other report or release using the
Consultant's name in advance of publication by or on
behalf of the Company.
7.3 The Consultant shall not disclose or use for its own
or the benefit of any other person confidential
information which it learns about the Company as a
result of its engagement hereunder, except for such
disclosure as may be required for Consultant to
perform its duties hereunder, as is agreed to in
writing by the parties, or as is ordered by a Court
having jurisdiction with respect to this Agreement.
8. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is deemed unlawful for any reason
whatsoever, such unlawfulness or invalidity shall not affect the validity of the
remainder of this Agreement.
9. MISCELLANEOUS. All notices and/or other communications shall be sent
to the Company or to the Consultant by certified or registered mail, postage
prepaid. If to the company, addressed to it at: 1000 Universal Studios Plaza -
Bldg. 22, Orlando, FL 32819 Attention: Tony Interdonato, CEO; if to the
Consultant at: VistaQuest, Inc. 380 Lexington Avenue, Suite 1700, New York, New
York, 10168, Attention: Mark Kabbash, President, - with a copy sent to Robert
Donato III, 215-East Bay Street, Suite 500, Charleston, South Carolina, 29401 or
to such address as hereafter may be designated in writing by any of such
entities to the others. Such notice and/or other communication shall be deemed
to be given on the day of receipt.
9.1 At the end of the Term, the provisions of this
Agreement relating to the duties of the Consultant
and compensation by the Company as it applies to such
Consultant shall cease to be in effect, except for
those rights and obligations that by their nature are
intended to survive the termination of this
Agreement, including but not limited to the Company's
obligations of payment for services rendered prior
thereto and the provisions set fourth in Section 6
above. This Agreement shall survive any merger of the
Company or sale of substantially all of its assets
and this Agreement shall be binding on the surviving
Company after any such merger and upon both the
Company and the acquiring company after any such
3
<PAGE>
sale. This Agreement embodies the entire agreement
and understanding between the company and the
Consultant and supersedes any and all negotiations,
prior discussions and preliminary and prior
agreements and understandings related to the subject
matter hereof effective March 17, 1999.
9.2 This Agreement has been duly authorized, executed and
delivered by and on behalf of the Company and the
Consultant.
9.3 This Agreement shall be construed and interpreted in
accordance with the laws of the States of New York
and Florida, without giving effect to conflicts of
laws in each of those states. Each party hereby
consents that the venue for jurisdiction in any
action arising out of this Agreement, will be
determined at that time by the party initiating the
action, and each party further agrees that the
service of process or of any papers upon it by
registered mail at their respective addresses set
forth herein shall be deemed good, proper and
effective service upon it.
9.4 The headings in the Sections of this Agreement are
inserted for convenience of reference only and shall
not affect or be deemed to affect the meaning of any
provision of this Agreement.
IN WITNESS WHEREOF, the parties hereunto have executed this
Agreement as of the date first above written.
TMANGLOBAL.COM, INC.
By: /s/ Tony Interdonato
-------------------------------
Name: Tony Interdonato
Title: CEO
VISTAQUEST, INC.
By: /s/ Mark Kabbash
-------------------------------
Name: Mark Kabbash
Title: President
4
Exhibit 10.3
------------
GENERAL AGREEMENT
This General Agreement, dated this 29th day of April, 1999, when fully
executed by the parties, will confirm the terms of agreement between Elliott,
Lane & Associates, Inc. (Elliott Lane) and TMANGLOBAL.COM, Inc.
(TMAN).
Whereas TMAN wishes to retain Elliott Lane to provide for them
investment banking and consulting services and;
Elliott Lane wishes to provide the investment banking and consulting
services required by TMAN, therefore;
According to the terms of this Agreement, Elliott Lane will consult
with TMAN with regard to developing an action plan and will assist in executing
the company's business plan. Furthermore Elliott Lane will introduce TMAN to
quality retain and wholesale market makers and will introduce TMAN to its
network of investors, at the appropriate time.
Elliott Lane will have access to all TMAN's corporate information and
to its auditors and legal council including all information related to the deal
and corporate history of the shell TMANGLOBAL.COM reversed in to. The company
will provide Elliott Lane with all the necessary information that it requires
upon request and will not withhold information from Elliott Lane. As part of
this agreement, Elliott Lane will provide written and/or verbal reports to TMAN
for any proposed plan of action, and will only execute a plan of action with the
express written agreement of TMAN.
Immediately upon the signing of this agreement and after consulting
with TMAN and assisting with the development of its business plan, Elliott Lane
will begin to source synergistic merger and/or acquisition candidate(s) and will
assist in the negotiations on behalf of TMAN. It will also assist with the
development of the pro-forma financial projections for the developing company on
a post merger or acquisition basis.
Elliott Lane will help coordinate news releases to the public through
Vista Quest (with whom Elliott Lane already has a long-term working business
relationship) which will begin with a prompt news release that Elliott Lane has
been retained for the above mentioned services.
<PAGE>
In recognition of the above services TMAN will pay Elliott Lane
according to the following terms:
1. One Hundred Thousand (100,000) shares of TMANGLOBAL.COM, Inc.,
(OTCBB - CHOP) restricted 144 common stock (one-year hold) as
compensation for services related to consulting, Investment
Banking and Mergers & Acquisitions. Such shares will be issued in
one tranche coincident with the signing of this General Agreement
as follows: Two fifty thousand share certificates will be held in
escrow with a mutually agreed upon attorney. Half of the shares
will be distributed upon execution of this General Agreement and
the balance six months thereafter provided that certain pre-set
goals are attained. The restricted stock will be subject to an
anti-dilution clause only in the event of a reverse stock split
and will have piggy-back registration rights. ----
2. Ten percent (10%) of the transaction value in equity and/or cash
for each successful acquisition and/or merger approved and
completed by TMAN initiated by Elliott Lane.
3. A one-time fee of Seven Thousand Five Hundred dollars ($7,500.00)
or an equivalent value of free trading stock (if available) at
the closing bid price on the date payment is made, at such time
as Elliott Lane advises, and the company approves, the
introduction to quality retail and wholesale market maker network
and the initiation of an investor awareness program.
Elliott Lane will have the first right of refusal to raise any equity or debt
capital for the company during the period of one year from the date of this
General Agreement.
This General Agreement will be effective for one (1) year renewable
with mutual consent of both parties.
Whereas this Agreement is hereby Agreed & Accepted to:
By: /s/ Mark R. Lane By: /s/ Tony Interdonato
--------------------------------- --------------------------------
Mark R. Lane Tony Interdonato
Elliott, Lane & Associates, Inc. TMANglobal.com, Inc.
Exhibit 10.4
------------
PURCHASE AGREEMENT
THIS AGREEMENT made this 13th day of November 1998 by and among Mr.
Bobby Davis, Ms. Deborah Lunceford, Mr. James Loflin and Mr. Charles Loflin, for
and on behalf of Bonnie Davis (hereinafter collectively referred to as
"Seller"), and FSGI Corporation, a Florida Corporation (hereinafter referred to
as "FSGI") ("Buyer");
WHEREAS, Seller has agreed to sell to FSGI and FSGI has agreed to
purchase the Business upon and subject to the terms and conditions hereof; and
WHEREAS, Seller is the legal and beneficial owner of all of the issued
and outstanding shares of the capital stock of Bonnie Davis, P.C., and
WHEREAS, in order to induce FSGI to purchase the Business, Seller has
agreed to the conditions and covenants herein contained and to make the
warranties and representations hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained the parties hereto hereby covenant and
agree as follows:
WITNESS THAT:
1. SUPERSEDING EFFECT
This Agreement supersedes all oral or written agreements, if any,
between the parties and constitutes the entire agreement between the parties
with respect to this Agreement.
2. ASSETS TO BE SOLD
A. The Seller shall sell and the Buyer shall purchase, free from all
liabilities and encumbrances the business of the Seller including access to, and
the right to service the Seller's credit union clients (hereinafter referred to
as the "Business") throughout the State of Georgia and wherever else they may be
located (the "Territory").
B. In addition to the representation and servicing of credit union
clients, the Business includes: all information regarding such clients that may
be contained in hard copy or computer software. The Business' credit union
clients and all information which pertains thereto are specifically detailed in
Exhibit "A", attached hereto and made a part hereof, entitled "Credit Union
clients of Bonnie Davis, P.C."
3. PURCHASE PRICE
FSGI shall pay to Seller or in the event of his death to his estate, a
purchase ("Purchase Price") of $80,000.00. Said price shall be paid in
restricted stock of FSGI over a 2 year period as outlined below.
<PAGE>
4. PAYMENT
The purchase price shall be paid in FSGI restricted common stock, at a
value of $2.00 per share. Therefore, FSGI will issue, after this agreement has
been signed, 40,000 shares of restricted common stock subject to the following
conditions and restrictions:
A. 20,000 shares of restricted common stock of FSGI, valued at
$2.00 per share will be issued. The stock will bear a
restrictive legend for a period of 12 months. Also, if the
average bid price for the five (5) trading days prior to the
12 month anniversary date is less than $2.00, then FSGI will
issue additional shares in order to ensure a value of
$40,000.00 to the Seller. If the five (5) day average is $2.00
or higher, no additional shares will be issued for the first
$40,000.00 (one half of the purchase price).
B. An additional 20,000 shares of restricted common stock of
FSGI, valued at $2.00 per share, will also be issued
representing the second half of the purchase price. This stock
will be bear a restrictive legend for 24 months. Also, if the
average bid price for the five (5) trading days prior to the
24 month anniversary date is less than $2.00, then FSGI will
issue additional shares in order to ensure a value of
$40,000.00 to the Seller. If the five (5) day average is $2.00
or higher, no additional shares will be issued for the second
$40,000.00 (second half of the purchase price).
C. Should the gross revenue (see Exhibit "B") for the twelve
month period immediately succeeding the consummation (closing
date) of this transaction not equal or exceed 80% of the
purchase price ($64,000.00), then the share adjustment
provisions outlined above will not apply. Said provisions
refer to the issuance of additional shares if the 5 day
average bid price falls below $2.00. As a result, the Seller
would receive a total of 40,000 shares of common stock of FSGI
and no additional shares would be given by the Buyer to the
Seller. All other terms and conditions as outlined in this
contract, will remain in full force and effect.
5. REPRESENTATIONS OF SELLER
As an inducement to FSGI to purchase the Business, the Seller warrants
and represents as follows:
A. Bobby Davis, Deborah Lunceford, James Loflin and Charles Loflin have
the full power and right to execute this Agreement and to sell the Business.
B. Bobby Davis as an officer and shareholder, is the owner of and has
good and marketable title to all the Business assets being sold hereunder, or
has the right to transfer Bonnie Davis' interest in any such asset.
<PAGE>
C. None of the Sellers, on behalf of Bonnie Davis, have entered into
any other contract to sell all or any part of the Business, nor have they
pledged any revenue from the Business to any third parties.
D. Seller or Bonnie Davis have not entered into any contracts, leases
or other agreements with respect to the Business.
E. Seller, or on behalf of Bonnie Davis, has or shall pay in full
through the Closing Date all federal, state, city or other local taxes including
withholding, personal property, sales, use, social security and unemployment.
Seller shall also pay any sales taxes resulting from the transfer of Business to
the Buyer.
F. (1) There are no suits, claims or other proceedings in law or
equity pending or to Seller's knowledge threatened against the
Business.
(2) There are no suits, claims or other proceedings in law or
equity pending or contemplated in which Bonnie Davis is a
plaintiff, petitioner or a party.
G. There is not now nor shall there be at the time of the Closing any
judgments, liens or other encumbrances outstanding against Bonnie Davis or the
Business.
H. there have been no federal, state, city or local investigations with
respect to Bonnie Davis or the Business.
I. Seller's have no power of attorney outstanding with respect to the
Business.
6. INDEMNIFICATION BY SELLER
Seller, for and on behalf of, jointly and severally, shall indemnify
and hold harmless FSGI and its successors and assigns from all demands, claims,
actions, assessments, losses, damages and attorney's fees and costs resulting
from any state of facts existing prior to the time of Closing.
7. ADDITIONAL DOCUMENTS
Seller shall execute any and all documents, prior to and after the
closing Date, that are required to implement the terms and intent of this
Agreement.
8. USE OF SELLER'S NAME
FSGI is authorized to use the trade name "Bonnie Davis, P.C." in
connection with the Business following the Closing only until all credit union
clients have been contacted, but under no circumstances longer than 180 days.
9. NOTICE TO CLIENTS
As soon as possible after signing of this agreement, Seller will issue
a joint notice to the clients of the Business advising them of the purchase of
the Business by FSGI.
<PAGE>
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of Seller, for and on behalf of
Bonnie Davis, shall survive the Closing.
11. BINDING ON SUCCESSORS
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of Seller and FSGI.
12. BROKERS
A. Seller and FSGI warrant and represent to each other than neither has
employed any broker, finder or other person or entity in connection with the
sale contemplated by this Agreement.
B. Seller and FSGI shall indemnify each other from any claim and any
costs associated therewith by any such broker, finder, person or entity.
13. CHANGES TO SELLER'S WARRANTIES AND REPRESENTATIONS
Prior to the Closing, if there are any changes to the Sellers'
warranties or representations set forth in this Agreement, Seller shall
immediately notify FSGI in writing by certified or registered mail, return
receipt requested or by delivery to FSGI in person of such writing.
14. ARTICLE HEADINGS
The heading or subheadings of articles contained hereto are used for
convenience and ease of reference and shall not limit the scope or intent of the
article.
15. ARBITRATION AND APPLICABLE LAW
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration to be held in Atlanta,
Georgia in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. This Agreement shall be
governed by the laws of the State of Georgia.
16. NOTICES AND CORRESPONDENCE
A. To Seller: Bobby Davis
2093 Weems Road
Locust Grove, GA 30248
<PAGE>
B. To FSGI: FSGI Corporation
300 Willowbend Rd.
Suite H
Peachtree City, GA 30269
or any address provided prior written notice is given to the other
party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
which is effective as of November 23, 1998.
Witness: BOBBY DAVIS
/s/ Bobby Davis
- ----------------------------- ------------------------------
By: Bobby Davis
Witness: DEBORAH LUNCEFORD
/s/ Deborah Lunceford
- ----------------------------- ------------------------------
By: Deborah Lunceford
Witness: CHARLES LOFLIN
/s/ Charles Loflin
- ----------------------------- ------------------------------
By: Charles Loflin
Witness: JAMES LOFLIN
/s/ James Loflin
- ----------------------------- ------------------------------
By: James Loflin
Witness: FSGI CORPORATION
/s/ Jason Lents
- ----------------------------- ------------------------------
By: Jason Lents
President
Exhibit 11
----------
COMPUTATION OF PER SHARE EARNINGS
6/30/99 9/30/98 9/30/97
------- ------- -------
Net Loss ($423,849) ($1,027) ($8,323)
========== ========== ==========
Weighted average 5,799,230 3,000,000 3,000,000
========== ========== ==========
(Loss) per share $0.07 $0.00 $0.00
========== ========== ==========
Exhibit 21
----------
SUBSIDIARIES OF THE REGISTRANT
Financial Standards Group, Inc., a Florida corporation, wholly-owned by
TMANglobal.com, Inc.
DASZKAL, BOLTON, MANELA, DEVLIN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN. CPA, P.A.
MICHAEL S. KRIDEL, CPA, P.A.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
--------------------------------------------------
We hereby consent to the use in this Registration Statement on Form 10-SB of
TMANglobal.com,Inc. for the years ended September 30, 1998 and 1997, of our
report dated July 7, 1999, and of FSGI Corporation and subsidiary for the year
ended September 30, 1998 and the three months ended December 31, 1998, of our
report dated June 24, 1999.
/s/Daszkal, Bolton, Manela, Devlin & Co., CPAs
Boca Raton, Florida
October 6, 1999 Daszkal, Bolton, Manela, Devlin & Co., CPAs
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001096275
<NAME> TMANglobal.com, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 185,825
<SECURITIES> 0
<RECEIVABLES> 42,730
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 256,810
<PP&E> 35,120
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,651,281
<CURRENT-LIABILITIES> 174,547
<BONDS> 0
0
0
<COMMON> 594
<OTHER-SE> 3,439,568
<TOTAL-LIABILITY-AND-EQUITY> 3,651,281
<SALES> 655,592
<TOTAL-REVENUES> 655,592
<CGS> 460,769
<TOTAL-COSTS> 1,079,441
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (423,849)
<INCOME-TAX> 0
<INCOME-CONTINUING> (423,849)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (423,849)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
<PAGE>
TMANGLOBAL.COM, INC.
PRO FORMA FINANCIAL STATEMENTS
On December 21, 1998, FSGI Corporation acquired all of the outstanding common
stock of The Martial Arts Netowrk, On-Line, Inc. For accounting purposes, the
acquisition has been treated as an acquisition of FSGI Corporation by The
Martial Arts Netowrk, On-Line, Inc., and as a recapitalization of The Martial
Arts Netowrk, On-Line, Inc. The historical financial statements prior to
December 31, 1998, are those of The Martial Arts Netowrk, On-Line, Inc. The
Martial Arts Netowrk, On-Line, Inc. subsequently changed its name to
TMANglobal.com, Inc.
The following Pro Forma Combined Balance Sheet of the Registrant has been
prepared by management of the Registrant based upon the balance sheets of the
Registrant as of September 30, 1998. The Pro Forma Combined Statement of
Operations was prepared based upon the statement of operations for the
Registrant for the twelve months ended September 30, 1998 and the nine months
ended June 30, 1999. The pro forma statement of operations also includes FSGI
Corporation's statement of operations for the twelve months ended September 30,
1998, and the 3 months ended December 31, 1998. The pro forma statements give
effect to the transaction under the purchase method of accounting and the
assumptions and adjustments in the accompanying notes to pro forma combined
financial statements. The pro forma combined balance sheet gives effect to the
acquisition as if it had occurred as of September 30, 1998. The pro forma
combined statement of operations for the year ended September 30, 1998, gives
effect to the acquisition as if it had occurred as of October 1, 1997. The pro
forma combined statement of operations for the nine months ended June 30, 1999,
gives effect to the acquisition as if it had occurred as of October 1, 1998.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma combined
financial statements do not purport to represent what the combined companies'
financial position or results of operations would actually have been had the
acquisition occurred on such date or as of the beginning of the period
indicated, or to project the combined companies' financial position or results
of operations for any future period.
<PAGE>
<TABLE>
TMANGLOBAL.COM, INC.
PRO FORMA COMBINED BALANCE SHEETS
SEPTEMBER 30, 1998
<CAPTION>
TMANglobal.com FSGI Corporation Pro Forma
September 30, 1998 September 30, 1998 Total Adjustments Combined
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash 0 52,025 52,025 52,025
Accounts receivable 0 65,009 65,009 65,009
Prepaid and other assets 0 18,966 18,966 18,966
------------------------------------------------------------------------------------------------
Total current assets 0 136,000 136,000 0 136,000
Property and equipment, net 0 1,279 1,279 (a) 34,243 35,522
------------------------------------------------------------------------------------------------
Other assets:
Goodwill, net 0 0 0 (a) 3,495,281 3,495,281
------------------------------------------------------------------------------------------------
Total other assets 0 0 0 3,495,281 3,495,281
------------------------------------------------------------------------------------------------
Total assets 0 137,279 137,279 3,529,524 3,666,803
================================================================================================
Current liabilities:
Accounts payable 0 69,370 69,370 69,370
Accrued expenses 0 23,647 23,647 23,647
Checks outstanding in excess
of bank balance 15 0 15 15
Shareholder loans 8,097 0 8,097 8,097
Due to affiliate 1,000 0 1,000 1,000
Current maturity of long term debt 0 30,129 30,129 30,129
------------------------------------------------------------------------------------------------
Total current liabilities 9,112 123,146 132,258 0 132,258
Long term debt 0 55,396 55,396 55,396
Ecess of fair value of net
assets of co. acquired 0 22,913 22,913 (a) (22,913) 0
------------------------------------------------------------------------------------------------
Total liabilities 9,112 201,455 210,567 (22,913) 187,654
Stockholders' equity (deficit):
Common stock 300 199 499 (a) 55 554
Additional paid in capital (200) 334,801 334,601 (a) 3,153,206 3,487,807
Subsriptions receivable 0 0 0 0
Subscriptions payable 0 0 0 0
Accumulated deficit (9,212) (399,176) (408,388)(a) 399,176 (9,212)
------------------------------------------------------------------------------------------------
Total stockholders' equity (deficit) (9,112) (64,176) (73,288) 3,552,437 3,479,149
------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity 0 137,279 137,279 3,529,524 3,666,803
================================================================================================
</TABLE>
1. The Pro Forma Balance Sheet at September 30, 1998 is based upon the balance
sheets of the Registrant and FSGI Corporation as of September 30, 1998.
(a) The purchase price for the acquisition of all the common stock of FSGI
Corporation was 2,542,833 shares at $1.01 per share and $920,000 for stock
options for a total of $3,488,261. Goodwill of $3,495,281 was recorded.
<PAGE>
<TABLE>
TMANGLOBAL.COM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1998
<CAPTION>
TMANglobal.com FSGI Corporation Pro Forma
September 30, 1998 September 30,1998 Total Adjustments Combined
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues earned 0 1,311,979 1,311,979 1,311,979
Cost of revenues earned 0 916,796 916,796 916,796
Gross profit 0 395,183 395,183 395,183
Selling, general and administrative
expenses 1,027 598,210 599,237 (b) 233,019 832,256
Loss from operations (1,027) (203,027) (204,054) (233,019) (437,073)
Other income (expense):
Amortization of excess of fair value of net
assets of company acquired over cost 0 6,317 6,317 6,317
Bad debts 0 (68,586) (68,586) (68,586)
Interest income 0 3,499 3,499 (3,499)
Interest expense 0 (2,522) (2,522) (2,522)
------------------------------------------------------------------------------------------------
Total other income (expense) 0 (61,292) (61,292) 0 (61,292)
------------------------------------------------------------------------------------------------
Net loss (1,027) (264,319) (265,346) (233,019) (498,365)
================================================================================================
</TABLE>
1. The Pro Forma Statement of Operations for the year ended September 30, 1998
is based upon the twelve months ended September 30, 1998 for the Registrant
and FSGI Corporation and gives effect to the acquisition as if it had
occurred on October 1, 1997.
(b) Amount represents the amortization of goodwill of $ 3,495,281 over 15 years
using the straight line method.
<PAGE>
<TABLE>
TMANGLOBAL.COM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
(UNAUDITED)
FOR THE PERIOD ENDED JUNE 30, 1999
<CAPTION>
TMANglobal.com FSGI Corporation
Nine months ended Three months ended Pro Forma
June 30, 1999 December 31, 1998 Total Adjustments Combined
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues earned 655,592 358,327 1,013,919 1,013,919
Cost of revenues earned 460,769 211,203 671,972 671,972
Gross profit 194,823 147,124 341,947 341,947
Selling, general and administrative
expenses 618,672 208,470 827,142 (c) 56,713 883,855
------------------------------------------------------------------------------------------------
Net loss (423,849) (61,346) (485,194) (56,713) (541,908)
================================================================================================
</TABLE>
1. The Pro Forma Statement of Operations for the nine months ended June 30,
1999 is based on the nine months ended June 30, 1999 of the Registrant and
three months ended December 31, 1998 of FSGI Corporation. The Pro Forma
gives effect to the acquisition as if it had occured on October 1, 1998.
(c) Amount represents the amortization of the goodwill of $ 3,402,777 over 15
years using the straight line method.
