SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
May 11, 2000
Date of Report
(Date of Earliest Event Reported)
International Solutions For Business, Inc.
(Exact name of Registrant as Specified in its Charter)
Internet House, Canal Basin, Coventry, England
(Address of Principal Executive Offices)
44-24-76-633177
(Registrant's Telephone Number)
Not Applicable
(Former name and former address)
Nevada 000-27761 86-0889110
------ --------- ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Merger Agreement. Pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of May 11, 2000 between Chauvin Enterprises, Inc.,
a Delaware corporation ("Chauvin"), and Internet Solutions For Business, Inc., a
Nevada corporation ("ISFB"), all the outstanding shares of common stock of
Chauvin were exchanged for 100,000 shares of common stock of ISFB and other
consideration consisting of cash and payment of certain fees and expenses in an
aggregate amount equal to $144,970, in a transaction in which ISFB was the
surviving corporation.
The Merger Agreement was adopted by the unanimous consent of the Board of
Directors of Chauvin and approved by the unanimous consent of the shareholders
of Chauvin on May 4, 2000. The Merger Agreement was adopted by the unanimous
consent of the Board of Directors of ISFB on May 4, 2000. A copy of the Merger
Agreement is filed as an exhibit to this Form 8-K and is incorporated in its
entirety herein. The foregoing description is modified by such reference.
Prior to the merger, Chauvin had 1,627,000 shares of common stock
outstanding which shares were exchanged for 100,000 shares of common stock of
ISFB. By virtue of the merger, ISFB acquired 100% of the issued and outstanding
common stock of Chauvin.
The officers, directors, and by-laws of ISFB will continue without change
as the officers, directors, and by-laws of the successor issuer. See "Item 2.
Acquisition or Disposition of Assets - ISFB's Directors, Executive Officers,
Promoters and Control Persons and Key Employees" below.
(b) Control of ISFB:
On May 11, 2000, ISFB had 14,512,071 shares issued and outstanding. The
following table sets forth certain information regarding the beneficial
ownership of the Common Stock of ISFB as of May 11, 2000 of (1)each person who
is known to ISFB to own beneficially more than 5% of ISFB's outstanding Common
Stock, (2) each of ISFB's directors and officers, and (3) all directors and
officers of ISFB as a group:
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<TABLE>
<CAPTION>
Position with Amount of Stock
Name and Address The Company Beneficially Owned Percentage
---------------- ----------- ------------------ ----------
of Class
--------
<S> <C> <C> <C>
Lawrence Shaw Chief Executive 4,498,452 31.2%
180 Rugby Road Officer and
Binley Woods Coventry UK Director
Ronald Shaw Director 185,000 1.28%
57 Nunts Lane
Coventry CV6 4GZ, UK
Edward Fitzpatrick (1) Director 234,286 1.625%
Riddings Place, Hampton Lane
Knowle B92 6PA, UK
Heritage Equities Ltd. None 1,171,429 8.128%
Boca Raton, Florida
Officers and Directors as a Group 4,917,738 34.1%
</TABLE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Criteria for Merger. The consideration exchanged pursuant to the Merger
Agreement was negotiated between Chauvin and ISFB.
In evaluating ISFB as a candidate for the proposed merger, Chauvin used
criteria such as the value of the assets of ISFB and its subsidiaries, the
anticipated operations and acquisitions, material contracts, business name and
reputation, quality of management, and current and anticipated operations.
Chauvin determined that the consideration for the merger was reasonable.
(b) Corporate History of ISFB. ISFB intends to continue to develop its
business by focusing on project incubation and software development, security,
web and interconnection and communications technologies including but not
limited to WAP, ADSL and ASP for Web site development technologies, Internet and
e-commerce activities.
ISFB was incorporated in the State of Nevada on September 5, 1987, under
the name of "Universal Funding Services Inc." The name was changed to "Universal
Reduction Melting Technologies Inc." on June 30, 1998 and Internet Solutions for
Business, Inc. on March 9, 1999.
On February 28, 1999 ISFB acquired all the outstanding capital stock of
Internet Solutions for Business Limited ("ISFB, Ltd."), a corporation formed
under the laws of the United Kingdom ("UK"), in exchange for 7,000,000 shares of
ISFB's Common
- ----------
1 Edward Fitzpatrick is a principal of Noguchi Partnership (formerly known as
the Heritage Equities Ltd.) owning 20% of the equity thereof. Accordingly,
beneficial ownership of 20% of the shares owned directly by Noguchi Partnership
are attributed to Mr. Fitzpatrick.
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Stock. ISFB, Ltd. was formed on March 17, 1997. It is a turnkey Internet
solution provider, web-application developer and system integrator based in the
UK. ISFB maintains its principal office at Internet House, Canal Basin,
Coventry, England. It's telephone number is 011 44 24 76 633177.
(c) ISFB's Business. ISFB, through ISFB, Ltd., provides
business-to-business web-enabled solutions. Its clients are in the
manufacturing, technology, media, publishing, commerce and government sectors.
ISFB has adopted the philosophy of providing a web product for small to medium
sized enterprises and corporations. To date, ISFB's marketing efforts have been
limited to the UK.
ISFB's strategy is to focus on market led product development to exploit
the opportunities presented by the World-Wide-Web. ISFB offers products and
services to aid clients to successfully migrate marketing, trading,
communication and business initiatives to the World-Wide-Web. Value added
services offered by ISFB include consultancy services on web design and
functionality as part of an e-commerce solution and project management of
external resources which integrate with ISFB product offerings, graphics partner
used for corporate brochures, and house style.
The Internet marketplace is diverse and clients require a cross-section of
solutions. ISFB is continually attempting to develop new markets and software to
help its clients disseminate information, procure products and make available
investor information.
Employees
ISFB Ltd. has approximately 16 employees most of whom specialize in
technical development and design. In addition, from time to time, ISFB employs
independent consultants.
The Products, Services and Technology
ISFB Ltd. has developed a range of products and services the details of
which are set out below:
o Standard core products with customized illustrative design based on its
clients logo, selling message and house style;
o Value added services ranging from consultancy through to preparation of web
enabled business solution specifications;
o Maintenance of Web sites including search engine management, market and
client profiling and data analysis;
o Web Hosting; and
o Internet Service Provider (ISP).
The product range also includes access statistics products, search engine
optimizers, registration systems and a track and trace Anti-Spam product to
filter out junk
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e-mails. Every product is completely compatible so that any product can simply
be plugged into an existing ISFB site. This standardization is achieved while
allowing the graphic design to be unique to every client. These products have
significant market potential over a life expectancy of more than five years.
The sales strategy is not only to sell products directly to the end users
but also to use peer group partner companies who will embed such products into
their own solutions for their customers.
Technology
The changing needs of the market sector require the employees of ISFB to
continuously review the market needs and trends, development products, services
and the like. ISFB believes in the importance of staff development, offering
cross training, allowing the working on both standard product and project
developments ensuring the ongoing nurturing of skill sets.
ISFB provides clients the facility for design, development, integration and
support on Unix / Dos / Novell / Windows (NT, 95 and 3.x) / Mac / Acorn
environments in addition to application development in VB 4/5, CGI, Perl, Active
X, C, C++, Java / Java Script, SQL and ODBC operating systems and/or languages.
The ISFB Technical Department is responsible for running the Unix and Windows NT
machines.
ISFB has:
o The ability to install and configure the operating systems listed above on
many hardware set-ups;
o Programming abilities including CGI, Shell, Perl, C, C++, and Lite;
o Experience in SMTP, Sendmail, httpd (Apache, NCSA), IIS, Mailing lists
(major-domo, listserv), IP routing (BGP4, Cisco IOS), Databases (Unix, NT),
news (inn), ftp, dns, pop3, finger, and telnet;
o A detailed knowledge of the major hardware architectures, specifically
desktop and server PC configurations; and
o All ongoing technical services to manage and support systems on a 24 hour
daily basis.
Intellectual Property
Intellectual property is accumulated by ISFB, Ltd. and incorporated in the
products it develops and services it offers. ISFB owns these rights and has the
potential to assign these to specialist market/product focused groups which
could then become subsidiary companies in their own right thus creating and
enhancing shareholder value.
Markets
ISFB sells to businesses only and does not deal directly with consumers.
Estimating the current size of the addressable market is difficult. However, the
principal
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market served by ISFB is the small and medium sized enterprise market in the UK
where IT Services/e-commerce spending could vary between 0.5 % and 1.5% of such
a company's sales depending on processes. This would yield an approximate market
size addressed by ISFB in the year 2001 of approximately 2 to 4 billion dollars
in the geographic area in which it currently operates. ISFB believes that this
represents approximately 10% of the total estimated UK IT services market for
e-commerce products and services.
It has been a strategic decision to limit customers to companies located
within 80 miles of ISFB's base in Coventry, England initially before addressing
the wider geographic market. It is anticipated that future growth will be
generated not only through internal expansion but through geographical expansion
in the UK, the United States and other international centers, as well as through
acquisitions and strategic alliances. ISFB's business will be further developed
along market led lines, capitalizing on the expertise of ISFB to supply selected
market sectors with the solutions they need.
Traditional industries, such as manufacturing, that have thought about IT
investment in the past must now Web-enable their businesses on-line or face
being uncompetitive. ISFB is poised to generate revenues by meeting the needs of
the increasing number of companies and organizations who recognize the value of
Internet solutions.
It is anticipated that future growth will be generated not only through
internal expansion but through acquisitions and partnerships as well.
Partnerships are invaluable for both sales and development.
Competitors
In each of the identified sectors in which ISFB operates, the "Internet
Solutions Business" is fragmented and highly competitive with relatively low
barriers to entry. Competition and ISFB's competitive position vary across the
industries served. Competition is usually regional in nature with few companies
specializing in full turnkey solutions.
Management believes that ISFB's competitiveness is based on its ability to
understand a client's specific needs, and to deliver solutions well matched to
those needs as well as on the pricing of its value added services. The principal
competitive factors in attracting projects are track record, pricing, benefits,
availability and duration together with the specification proposed. Management
believes that potential clients only have a small number of preferred suppliers
for Internet Solutions. Increasing demand for online trading has left a gap in
the market to serve clients who require intermediate solutions as a
stepping-stone to full back-office integration. Therefore, ISFB's reputation and
its ability to offer appropriate products and services are important factors in
ISFB's ability to attract projects. The ability to secure such projects from
blue-chip clients will determine competitive advantage and will help to attract
other clients through referral.
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Although a very young company in conventional business terms, ISFB has the
advantage of longevity in the marketplace, being operational in the first
instant as a private and then public entity for more than five years.
(d) Risk Factors Associated with ISFB and its Business
The following risks should be considered carefully. ISFB's business,
financial condition and results of operations could be materially and adversely
affected by any of the following risks.
ISFB's limited operating history makes the evaluation of ISFB's current business
and the forecasting of ISFB's future results difficult.
ISFB has only a limited operating history upon which an evaluation of
ISFB's current business and prospects can be based, each of which must be
considered in light of the risks, expenses and problems frequently encountered
by all companies in the early stages of development, and particularly by such
companies entering new and rapidly developing markets like the Internet.
Risks related to the Internet may affect ISFB's success.
There are many risks associated with operations on the Internet that may
adversely affect ISFB's success. Such risks include, without limitation, the
following:
o the possibility that the Internet will fail to achieve broad acceptance;
o ISFB's inability to attract or retain clients;
o a new and relatively unproven business model;
o ISFB's ability to anticipate and adapt to a developing market;
o the failure of ISFB's network infrastructure (including its servers,
hardware and software) to efficiently handle its Internet traffic;
o changes in laws that may adversely affect ISFB's business;
o ISFB'S ability to manage effectively rapidly expanding operation, including
the amount and timing of capital expenditures and other costs relating to
the expansion of ISFB's operations;
o the introduction and development of different or more extensive solutions
by ISFB's direct and indirect competitors (including those with greater
financial, technical and marketing resources) which may cause loss of
market share;
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o ISFB's inability to maintain and support increased levels of traffic on
ISFB's installed sites;
o ISFB's inability to attract, retain and motivate qualified personnel;
Future growth predictions may be inaccurate.
ISFB's limited operating history makes the prediction of future results
difficult or impossible. Furthermore, ISFB's limited operating history leads
ISFB to believe that period-to-period comparisons of ISFB's operating results
may not be meaningful and that the results for any particular period should not
be relied upon as an indication of future performance. To the extent that
revenues do not grow at anticipated rates, ISFB's business, results of
operations and financial condition would be materially and adversely affected.
ISFB anticipates that losses may continue.
ISFB anticipates incurring losses for the 12 month period ending March 31,
2000 and that it may continue to incur net monthly losses on occasion. ISFB had
a loss of $820,000 for the 9 month period ended December 31, 1999. The extent of
future losses will depend, in part, on the amount of growth in revenues from
products and Internet Solution services. As of March 31, 1999, ISFB had a small
operating income of $435,841. ISFB expects that operating costs will increase
during the next several years, especially in the areas of sales and marketing,
product development and general and administrative expenses as it pursues its
expansion strategy. Thus, ISFB will need to generate increased revenues faster
than the rate of growth in costs to achieve profitability. To the extent that
increases in its operating expenses precede or are not subsequently followed by
corresponding increases in revenues, or if it is unable to adjust operating
expense levels accordingly, ISFB's business, results of operations and financial
condition would be materially and adversely affected. There can be no assurance
that ISFB will sustain profitability or that its operating losses will not
increase in the future.
ISFB's future success is dependent on the continued growth in use of and the
commercial viability of the internet.
ISFB's future success is substantially dependent upon the continued growth
in the use of the Internet. To support product and solution sales revenues, the
Internet's recent and rapid growth must continue, and use of the Internet must
become widespread. None of these can be assured. The Internet may prove not to
be a viable information communications medium and information marketplace. If
use of the Internet does not continue to grow, ISFB's business, results of
operations and financial condition would be materially and adversely affected.
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Additionally, there are several issues that could lead to resistance
against the acceptance of the Internet as a viable commercial marketplace. To
the extent that the Internet continues to experience significant growth in the
number of users and the level of use, there can be no assurance that its
technical infrastructure will continue to be able to support the demands placed
upon it. The necessary technical infrastructure for significant increases in
electronic news dissemination and e-commerce related to it, such as a reliable
network backbone, may not be timely and adequately developed. In addition,
performance improvements, such as high-speed modems, may not be introduced in a
timely fashion. Furthermore, security and authentication concerns with respect
to transmission over the Internet of confidential information, such as credit
card numbers, may remain. Also, the Internet could lose its viability due to
delays in the development or adoption of new standards and protocols required to
handle increased levels of activity, or due to increased governmental
regulation. Changes in or insufficient availability of telecommunications
services could result in slower response times and adversely affect usage of the
Internet. To the extent the Internet's technical infrastructure does not
effectively support the growth that may occur, ISFB's business, results of
operations and financial condition would be materially and adversely affected.
ISFB's business model and acceptance of ISFB's products is unproven in the
developing market in which ISFB operates.
ISFB's business model is new and relatively unproven. The model depends
upon ISFB's ability to generate multiple revenue streams by diversifying ISFB's
product offerings. To be successful, ISFB must, among other things, develop and
market products and services that achieve broad market acceptance by its client
companies. No assurance can be given that ISFB's business model will be
successful or that it can sustain revenue growth or be profitable. The market
for ISFB's products and services is new, rapidly developing and characterized by
an increasing number of market entrants. As is typical of any new and rapidly
evolving market, demand and market acceptance for recently introduced products
and services are subject to a high level of uncertainty and risk. Moreover,
because this market is new and rapidly evolving, it is difficult to predict its
future growth rate, if any, and its ultimate size. If the market fails to
develop, develops more slowly than expected or becomes saturated with
competitors, or if ISFB's products and services do not achieve or sustain market
acceptance, ISFB's business, results of operations and financial condition would
be materially and adversely affected.
Potential fluctuations in ISFB's operating results and quarterly fluctuations
may adversely affect ISFB's trading price.
Our operating results may fluctuate significantly in the future as a result
of a variety of factors, many of which are outside of ISFB's control. As a
strategic response to changes in the competitive environment, ISFB may from time
to time make certain pricing, service or marketing decisions or acquisitions
that could have a material short-
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term or long-term adverse effect on ISFB's business, results of operations and
financial condition.
ISFB is controlled by its officers, directors and entities affiliated with them.
In the aggregate, ownership of ISFB shares by management represents a large
proportion of ISFB issued and outstanding shares of common stock. These
stockholders, if acting together, will be able to significantly influence all
matters requiring approval by ISFB's stockholders, including the election of
directors and the approval of mergers or other business combination
transactions.
ISFB's future performance is dependent on key personnel.
ISFB's performance is substantially dependent on the performance of ISFB's
senior management and key technical personnel. In particular, ISFB's success
depends on the continued efforts of ISFB senior management team, especially
ISFB's Chief Executive Officer, Lawrence Shaw. The loss of the services of any
of ISFB executive officers or other key employees could have a material adverse
effect on ISFB business, results of operations and financial condition.
ISFB's future success also depends on ISFB's continuing ability to retain
and attract highly qualified technical, editorial and managerial personnel. ISFB
anticipates that the number of ISFB's employees will increase significantly in
the next 12 months. Wages for managerial and technical employees are increasing
and are expected to continue to increase in the foreseeable future due to the
competitive nature of this job market. There can be no assurance that ISFB will
be able to retain ISFB's key managerial and technical personnel or that it will
be able to attract and retain additional highly qualified technical and
managerial personnel in the future. The inability to attract and retain the
technical and managerial personnel necessary to support the growth of ISFB's
business, due to, among other things, a large increase in the wages demanded by
such personnel, could have a material adverse effect upon ISFB's business,
results of operations and financial condition.
A majority of ISFB's senior management is inexperienced in managing a public
company.
To manage its potential growth, ISFB must continue to implement and improve
its operational and financial systems, and must expand, train and manage its
employee base. Moreover the existing senior management has not had any previous
experience managing a growing public company. There can be no assurance that
ISFB will be able to effectively manage the expansion of its operations, that
ISFB systems, procedures or controls will be adequate to support its operations
or that its management will be able to achieve the rapid execution necessary to
fully exploit the market opportunity for its products and services. Any
inability to manage growth effectively could have a material adverse effect on
ISFB's business, results of operations and financial condition.
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The Internet industry is characterized by rapid technological change which may
affect ISFB's ability to respond to the evolving demands of ISFB's market place.
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. These market
characteristics are exacerbated by the emerging nature of the market and the
fact that many companies are expected to introduce new Internet products and
services in the near future. ISFB's future success will depend in significant
part on its ability to continually improve the performance, features and
reliability of the site in response to both evolving demands of the marketplace
and competitive product and service offerings, and there can be no assurance
that ISFB will be successful in doing so. In addition, the widespread adoption
of developing multimedia enabling technologies could require fundamental and
costly changes in ISFB's technology and could fundamentally affect the nature,
viability and measurability of Internet-based advertising, which could adversely
affect ISFB's business, results of operations and financial condition.
ISFB may suffer system failures on its web server system which could result in
negative publicity, and adversely affect ISFB's market acceptance.
There is a reliance on third parties for both services and equipment by
ISFB and its suppliers, all of which are a vital element to the operation of the
business.
In the past, users have occasionally experienced difficulties with Internet
and online services due to system failures, including failures unrelated to ISFB
systems. Any disruption in Internet access provided by third parties could have
a material adverse effect on ISFB's business, results of operations and
financial condition.
Our operations are dependent in part upon ISFB ability to protect ISFB
operating systems against damage from human error, fire, floods, power loss,
telecommunications failures, break-ins and similar events. ISFB does not
presently have redundant, multiple-site capacity in the event of any such
occurrence. ISFB's servers are also vulnerable to computer viruses, break-ins
and similar disruptions from unauthorized tampering with ISFB's computer
systems. The occurrence of any of these events could result in the interruption,
delay or cessation of service, which could have a material adverse effect on
ISFB's business, results of operations and financial condition. In addition,
ISFB's reputation and the smallcapcenter.com brand could be materially and
adversely affected.
There are security risks to ISFB's network.
Experienced programmers ("hackers") have attempted on occasion to penetrate
ISFB's network security. ISFB expects that these attempts will continue to occur
from time to time. Since a hacker who is able to penetrate ISFB's network
security could misappropriate proprietary information or cause interruptions in
ISFB's products and services or do other damage, ISFB may be required to expend
significant
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capital and resources to protect against or to alleviate problems caused by such
parties. Additionally, ISFB's may not have a timely remedy against a hacker who
is able to penetrate ISFB network security. Such purposeful security breaches
could have a material adverse effect on ISFB's business, results of operations
and financial condition. In addition to purposeful security breaches, the
inadvertent transmission of computer viruses could expose ISFB to a material
risk of loss or litigation and possible liability.
In offering certain payment services for some products and services, ISFB
could become increasingly reliant on encryption and authentication technology
licensed from third parties to provide the security and authentication necessary
to effect secure transmission of confidential information, such as customer
credit card numbers. Advances in computer capabilities, discoveries in the field
of cryptography and other discoveries, events, or developments could lead to a
compromise or breach of the algorithms that ISFB licensed encryption and
authentication technology used to protect such confidential information. If such
a compromise or breach of ISFB licensed encryption authentication technology
occurs, it could have a material adverse effect on ISFB's business, results of
operations and financial condition. ISFB may be required to expend significant
capital and resources to protect against the threat of such security, encryption
and authentication technology breaches or to alleviate problems caused by such
breaches. Concerns over the security of Internet transactions and the privacy of
users may also inhibit the growth of the Internet generally, particularly as a
means of conducting commercial transactions.
ISFB's ability to attract additional financing as needed may affect its future
success.
Additional financing will be required by ISFB as it expects negative
operating cash flow for the coming months until the routine income from
installed Web has grown to cover the cost of their support and development. Such
financing, if obtained by ISFB, may result in the issuance of additional
securities and may not be available on terms favorable to it.
ISFB expects that it will continue to experience negative operating cash
flow on occasion for the foreseeable future as a result of significant spending
on product development and infrastructure. Accordingly, ISFB will need to raise
additional funds in a timely manner in order to fund ISFB's anticipated
expansion and new enhanced services or products, respond to competitive
pressures or acquire complementary products, businesses or technologies.
Additional funds will have to be raised through the issuance of equity or
convertible debt securities causing the percentage of ownership of ISFB's
current stockholders to be reduced, stockholders to experience additional
dilution and such securities may have rights, preferences or privileges senior
to those of the holders of the common stock.
ISFB does not have any contractual restrictions on ISFB's ability to incur
debt and, accordingly, ISFB could incur significant amounts of indebtedness to
finance its operations. Any such indebtedness could contain covenants, which
would restrict ISFB's operations. There can be no assurance that additional
financing if and when
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needed will be available on terms favorable to ISFB, or at all. If adequate
funds are not available or are not available on acceptable terms, it would have
a material adverse effect on ISFB's ability to fund its expansion, take
advantage of acquisition opportunities, develop or enhance services or products
or respond to competitive pressures.
Future acquisitions of other business entities by ISFB would entail numerous
risks and uncertainties which could have an adverse affect on its operations and
financial condition.
As part of ISFB's business strategy, it expects to review acquisition
prospects that would complement its existing business, augment the distribution
of its products or enhance its technological capabilities. Future acquisitions
by ISFB could result in potentially dilutive issuances of equity securities,
large and immediate write-offs, the incurrence of debt and contingent
liabilities or amortization expenses related to goodwill and other intangible
assets, any of which could materially and adversely affect ISFB's business,
results of operations and financial condition.
Furthermore, acquisitions entail numerous risks and uncertainties,
including difficulties in the assimilation of operations, personnel,
technologies, products and information systems of the acquired companies, the
diversion of management's attention from other business concerns, the risks of
entering geographic and business markets in which ISFB has no or limited prior
experience and the potential loss of key employees of acquired organizations.
ISFB has only made two small acquisitions in the past. No assurance can be
given as to ISFB's ability to successfully integrate any businesses, products,
technologies or personnel that might be acquired in the future, and ISFB's
failure to do so could have a material adverse effect on its business, results
of operations and financial condition.
ISFB may be unable to protect the intellectual property rights upon which its
business relies, which could harm its competitiveness and cause customer
confusion.
ISFB regards substantial elements of its Web site designs and underlying
technology as proprietary and will attempt to protect them by relying on
intellectual property laws, including trademark, service mark, copyright and
trade secret laws and restrictions on disclosure and transferring title and
other methods. ISFB will also generally enter into confidentiality agreements
with its employees and consultants and in connection with its license agreements
with third parties. ISFB seeks to control access to and distribution of ISFB
technology, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use ISFB's proprietary information without authorization or to develop
similar technology independently. ISFB is pursuing the registration of ISFB
trademarks in the United Kingdom and internationally. Effective trademark,
service mark, copyright and trade secret protection may not be available in
every
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country in which ISFB services are distributed or made available through the
Internet, and policing unauthorized use of ISFB proprietary information is
difficult.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving, and no assurance can be given as to the future
viability or value of any of ISFB's proprietary rights. There can be no
assurance that the steps taken by ISFB will prevent misappropriation or
infringement of its proprietary information, which could have a material adverse
effect on ISFB business, results of operations and financial condition.
Litigation may be necessary in the future to enforce ISFB intellectual
property rights, to protect ISFB trade secrets or to determine the validity and
scope of the proprietary rights of others. Such litigation might result in
substantial costs and diversion of resources and management attention.
Furthermore, there can be no assurance that ISFB business activities will not
infringe upon the proprietary rights of others, or that other parties will not
assert infringement claims against ISFB including claims that by directly or
indirectly providing hyperlink text links to Web sites operated by third
parties, ISFB has infringed upon the proprietary rights of other third parties.
Moreover, from time to time, ISFB may be subject to claims of alleged
infringement by ISFB of the trademarks, service marks and other intellectual
property rights of third parties. Such claims and any resultant litigation,
should it occur, might subject ISFB to significant liability for damages, result
in invalidation of ISFB's proprietary rights and, even if not meritorious, could
result in substantial costs and diversion of resources and management attention,
any of which could have a material adverse effect on ISFB's business, results of
operations and financial condition.
As ISFB continues to introduce new products and services that incorporate
new technologies, it may be required to license additional technology from
others. There can be no assurance that these third-party technology licenses
will continue to be available to ISFB on commercially reasonable terms, if at
all. As a result, any inability on ISFB's part to obtain any of these technology
licenses could result in delays or reductions in the introduction of new
services or could adversely affect the performance of ISFB's existing services
until equivalent technology can be identified, licensed and integrated.
It is unclear how any existing and future laws enacted will be applied to the
Internet industry and what affect such laws will have on ISFB.
A number of legislative and regulatory proposals under consideration in the
US that may also be adopted by the UK and foreign governmental organizations may
lead to laws or regulations concerning various aspects of the Internet,
including, but not limited to, online content, user privacy, taxation, access
charges, liability for third-party activities and jurisdiction. Additionally, it
is uncertain how existing laws will be applied by the judiciary to the Internet.
The adoption of new laws or the application of existing laws may decrease the
growth in the use of the Internet, which could in turn decrease the
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<PAGE>
demand for ISFB's products and services, increase ISFB's cost of doing business
or otherwise have a material adverse effect on ISFB's business, results of
operations and financial condition.
Internet user privacy has become an issue both in the UK and abroad. ISFB
cannot predict the exact form of the regulations that the UK government may
adopt to protect such privacy. Any such action could affect the way in which
ISFB is are allowed to conduct its business, especially those aspects that
involve clients being restricted in the collection or use of personal
information, and could have a material adverse effect on ISFB business, results
of operations and financial condition.
The tax treatment of the Internet and e-commerce is currently unsettled. A
number of proposals have been made by working groups and by UK government
departments. Governments could impose taxes on the sale of goods and services
and certain other Internet activities. Recently, the Internet Tax Freedom Act
was signed into law in the US, placing a three-year moratorium on new state and
local taxes on certain aspects of Internet commerce in the US. However, there
can be no assurance that future laws imposing taxes or other regulations on
commerce over the Internet would not substantially impair the growth of
e-commerce and as a result have a material adverse effect on ISFB's business,
results of operations and financial condition.
Although ISFB's servers are located in the UK, the governments of other
foreign countries might attempt to take action against ISFB for violations of
their laws. There can be no assurance that violations of such laws will not be
alleged or charged by provincial, state or foreign governments and that such
laws will not be modified, or new laws enacted, in the future. Any of the
foregoing could have a material adverse effect on ISFB's business, results of
operations and financial condition.
ISFB's strategy to move into international operations and other expansions
exposes ISFB to several risks that could have an adverse affect on its business,
results of operations and financial condition.
A part of ISFB strategy is to expand its sales offices network throughout
the UK and into the United States and other international markets. There can be
no assurance that ISFB's products or services will become widely accepted for
corporate clients in any international markets. In addition, ISFB expects that
the success of any additional foreign operations which it initiates in the
future will also be dependent upon local service providers and/or partners. If
revenues from international ventures are not adequate to cover the investments
in such activities, ISFB's business, results of operations and financial
condition could be materially and adversely affected.
ISFB may experience difficulty in managing international operations as a
result of difficulty in locating effective foreign service providers and/or
partners, competition, technical problems, local laws and regulations, distance
and language and cultural differences. There can be no assurance that ISFB or
its international partners will be able to successfully market and operate in
foreign markets. ISFB also
15
<PAGE>
believes that, in light of substantial anticipated competition, it will be
necessary to aggressively market ISFB's products and services into the UK and
international markets in order to effectively obtain market share, and there can
be no assurance that ISFB will be able to do so. There are certain risks
inherent in doing business on an international level, such as unexpected changes
in regulatory requirements, trade barriers, difficulties in staffing and
managing foreign operations, fluctuations in currency exchange rates, longer
payment cycles in general, problems in collecting accounts receivable,
difficulty in enforcing contracts, political and economic instability, seasonal
reductions in business activity in certain other parts of the world and
potentially adverse tax consequences. There can be no assurance that one or more
of such factors will not have a material adverse effect on ISFB's future
international operations and, consequently, on ISFB's business, results of
operations and financial condition.
Any significant deterioration in the general economic conditions would have an
adverse effect on ISFB's business, result of operations or financial condition.
Time spent on the Internet by individuals, purchases of new computers and
purchases of membership subscriptions to Internet sites are typically
discretionary for consumers and may be particularly affected by adverse trends
in the general economy. The success of ISFB's operations depends to a
significant extent upon a number of factors relating to discretionary consumer
spending, including economic conditions (and perceptions of such conditions by
consumers) affecting disposable consumer income such as employment, wages and
salaries, business conditions, interest rates, availability of credit and
taxation for the economy as a whole and in regional and local markets where ISFB
operate. There can be no assurance that consumer spending will not be adversely
affected by general economic conditions, which could negatively impact ISFB's
results of operations or financial condition. Any significant deterioration in
general economic conditions or increases in interest rates may inhibit
consumers' use of credit and cause a material adverse effect on ISFB's revenues
and profitability. In addition, ISFB's business strategy relies on advertising
by and agreements with other Internet companies. Any significant deterioration
in general economic conditions that adversely affects these companies could also
have a material adverse effect on ISFB's business, results of operations and
financial condition.
If the trading price of ISFB's common stock remains volatile, the long-term
trading price may be adversely affected regardless of ISFB's performance and a
class action litigation may be instituted against ISFB which would have an
adverse effect on ISFB's business, results of operations and financial
condition.
The trading price of ISFB's common stock has been volatile and may continue
to be subject to wide fluctuations in response to quarterly variations in
operating results, announcements of technological innovations or new products
and services by ISFB or its competitors, changes in financial estimates by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable to ISFB and other events or
factors. In addition, the stock market in general, and the market prices
16
<PAGE>
for Internet-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may adversely affect the
trading price of ISFB's common stock, regardless of ISFB's operating
performance. In the past, following periods of volatility in the market price of
the Company's securities, securities class action litigation has often been
instituted against the Company. Such litigation, if instituted, whether or not
successful, could result in substantial costs and a diversion of Management's
attention and resources, which would have a material adverse effect on the
Company's business, results of operations and financial condition.
The value and transferability of ISFB shares may be adversely impacted by the
limited trading market for ISFB common stock, the penny stock rules and futures
share issuance. There is a limited market for ISFB's common stock.
No assurance can be given that a market for ISFB's common stock will be
sustained or that the common stock will be quoted on the NASD's Over the Counter
Bulletin Board.
The sale or transfer of ISFB common stock by shareholders may be subject to
the so-called "penny stock rules."
Under Rule 15g-9 of the Exchange Act, a broker or dealer may not sell a
"penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny
stock by any person unless:
(a) such sale or purchase is exempt from Rule 15g-9;
(b) prior to the transaction the broker or dealer has (1) approved the
person's account for transaction in penny stocks in accordance with
Rule 15g-9, and (2) received from the person a written agreement to
the transaction setting forth the identity and quantity of the penny
stock to be purchased; and
(c) the purchaser has been provided an appropriate disclosure statement as
to penny stock investment.
The Securities and Exchange Commission adopted regulations that generally
define a penny stock to be any equity security other than a security excluded
from such definition by Rule 3a51-1. Such exemptions include, but are not
limited to (1) an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operations
for at least three years, (ii) net tangible assets of at least $5,000,000, if
such issuer has been in continuous operation for less than three years, or (iii)
average revenue of at least $6,000,000 for the preceding three years; (2) except
for purposes of Section 7(b) of the Exchange Act and Rule 419, any security that
has a price of $5.00 or more; and (3) a security that is authorized or approved
for authorization upon notice of issuance for quotation on the NASDAQ Stock
Market, Inc.'s Automated Quotation System.
17
<PAGE>
It is likely that shares of common stock, assuming a market were to develop
therefore, will be subject to the regulations on penny stocks; consequently, the
market liquidity for the common stock may be adversely affected by such
regulations limiting the ability of broker/dealers to sell ISFB common stock and
the ability of shareholders to sell their securities in the secondary market.
Moreover, ISFB shares may only be sold or transferred by ISFB shareholders
in those jurisdictions in which an exemption for such "secondary trading" exists
or in which the shares may have been registered.
ISFB has not declared any dividends since inception, and has no present
intention of paying any cash dividends on its common stock in the foreseeable
future. The payment by ISFB of dividends, if any, in the future, rests in the
discretion of ISFB's Board of Directors and will depend, among other things,
upon ISFB's earnings, its capital requirements and financial condition, as well
as other relevant factors.
Potential future 144 sales may impact the value of ISFB stock .
As of May 11, 2000, of the shares of ISFB common stock authorized, there
were issued and outstanding 14,512 071 shares of which 9,375,971 are "restricted
shares" as that term is defined under the Securities Act, and in the future may
be sold in compliance with Rule 144 of the Securities Act, or pursuant to a
Registration Statement filed under the Securities Act. Rule 144 provides, in
essence, that a person holding restricted securities for a period of 1 year may
sell those securities in unsolicited brokerage transactions or in transactions
with a market maker, in an amount equal to the greater of (i) 1% of ISFB
outstanding common stock or (ii) the average weekly trading volume for the four
week period prior to the proposed date of sale, every 3 months as reported on an
automated quotation system (as to which the `pink sheets' would not qualify) .
Additionally, Rule 144 requires that an issuer of securities make available
adequate current public information with respect to the issuer. Such information
is deemed available if the issuer satisfies the reporting requirements of
Sections 13 or 15(d) of the Exchange Act and of Rule15c2-11 thereunder. Rule 144
also permits, under certain circumstances, that sale of shares by a person who
is not an affiliate (and has not been an affiliate for the 90 day period
preceding the proposed sale) of ISFB and who has satisfied a 2 year holding
period without any quantity limitation and whether or not there is adequate
current public information available.
The possible issuance of additional shares may impact the value of ISFB stock.
ISFB is authorized to issue up to 50,000,000 shares of common stock. It is
ISFB's intention to issue more shares. Sales of substantial amounts of common
stock (including shares issuable upon the exercise of stock options, the
conversion of the notes and the exercise of the warrants), or the perception
that such sales could occur, could materially adversely affect prevailing market
prices for the common stock and the ability of ISFB to raise equity capital in
the future.
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<PAGE>
ISFB's inability to supply demanded functionality may affect its success.
ISFB maintains a close relationship with Warwick University - one of the
UK's top academic institutions in IT and e-commerce. This enables ISFB's
technology potential to be renewed and its technology team to be strengthened
when needed through a pipeline for resource. This relationship may not continue
to operate as we expect and changes in University policy may not allow graduates
and research fellows to support ISFB.
ISFB inability to provide on-line services may affect our success.
ISFB and its suppliers rely on third parties for both services and
equipment, which are a vital element to the operation of the business. ISFB uses
an external company to provide networks in the Internet Service Provider (ISP)
portion of its business. Intermittent or permanent loss of this service to ISFB
clients may result in their Web Sites not functioning properly resulting in loss
of business.
ISFB's ability to generate revenue from installed sites may affect its success.
ISFB receives a portion of its income from on-going license fees as a
source of internal funds. This is set to increase as more products are
installed. If the products are not upgraded to meet new processes, there may be
a tendency to replace ISFB products with alternatives as they become available
from competitors.
(e) Management's Discussion And Analysis Or Plan Of Operation
1. Operations To Date
Following its formation in 1997, the Company built its reputation as being
a small problem-solving company using the Internet as a `means to an end' rather
than `an end in itself.' The solutions were being sold at that time on various
platforms including PC, Mini and mainframe computers. During the next couple of
years a tool set was developed to satisfy data flow and security requirements to
enable common components to be integrated successfully and these formed the
basis of the Internet and the Web products. The tools were then implemented in a
number of UK corporations, including Volvo, IMI, London Taxis International and
Courtaulds, allowing the building of a considerable 'user base' of demonstrable
sites. These formed the reference components for the products assembled during
year ended March 31, 1999.
Initial financing to launch the business was received from a combination of
invested capital from the original business owners and use of self funded
contracts. Investment was limited, however, allowing the Company to grow only
slowly during its first and second years of business, while continuing to expand
its client base. The nature of the business is such that the cost of sales
arises largely from software and design labor. Payment terms on contracts are
heavily front end loaded to fund the contract costs.
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<PAGE>
Margins are such that the bulk of the software production overhead expense can
be borne by the contracts. Finance is needed to fund Marketing, Sales, Research
and Development in core products and the unfunded work-in-progress in delayed
contracts. After about 9 months of focus development resource, the ISFB product
components were available to the market.
ISFB intends to raise up to $4,500,000 in a direct private placement
offering pursuant to the terms of Regulation S. Such offering will be
self-underwritten.
ISFB has developed a range of products that are beginning to sell well and
as the Internet grows ISFB believes such markets will expand. The business will
be further developed, capitalizing on the expertise of ISFB to supply selected
market sectors with the solutions they need, thereby maximizing growth and
revenue.
Future growth will be generated through the expansion of ISFB's sales
network throughout the UK, Europe and into the United States and other
international markets as well as through acquisitions and partnerships which
provide strategic benefit both in generating products with high earning
potential and also in creating a wider range of channels to market.
Another area of growth is the use of Wireless Application Protocol devices.
ISFB has already developed a demonstrator and will be seeking investment to
expand its activities in this field
2. Nine Month Period Ended December 31, 2000
The Company has a core team of 16 full time staff backed by associate
programmers, designers and system architects able to customize ISFB products
into bespoke system solutions. The new team now has the ability to take on
larger, more complex contracts in line with the new corporate strategic
direction.
Technical and production headcount has been increased by 12 during the nine
month period ended December 31, 1999 to extend and enhance the Company's range.
In addition to the technical headcount, new sales personnel were engaged in
August/September to boost the falling sales volumes. The impact of the new
personnel did not start to benefit ISFB until the last quarter of the fiscal
year due to the learning curve associated with the Company's products.
3. Fiscal Year Ended March 31, 1999
This was the first year that ISFB Ltd. commenced operations. Initial sales
were secured and personnel resources were `bought in' resulting in the incursion
of consultancy costs and related charges for technical work and marketing.
No value was attributed to the developed products when ISFB Ltd. was formed
resulting in a low value attributed to cost of sales and thus the subsequent
high level of gross profit in relation to the sales.
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<PAGE>
Work in Progress accounting was not applied in this year due to the limited
information available to attribute costs accurately to specific orders and the
resulting sales. All costs were therefore expensed.
4. Changes in Accounting Policy
During the year ended March 31, 2000, Management decided to change the
Company's accounting policy to take into account the increase in value of the
intellectual property rights invested in products.
The development of ISFB's core products and the related technical personnel
costs have now been charged to development.
During the nine month period ended December 31, 1999 new products were
developed, replacing some of the products in the portfolio that were sold in the
prior year and introduced into the Company. This resulted in a poor trading
performance which is attributable to not having engaged the sales personnel at
the crucial time when sales volume began to fall, and new products were not
sufficiently advanced in their development cycle to compensate for the decline.
Work in Progress accounting was introduced in the last quarter of the 1999
calendar year to reflect the increased number of orders and the time to
customize those orders.
Overhead costs included all personnel costs as in the prior year, but in
2000/01 the costs of sales are budgeted on the basis of attributing the costs of
the technical personnel more directly to specific orders and subsequent sales.
With the introduction of the work in progress policy in the last quarter, it was
not considered appropriate or feasible to allocate such costs retrospectively to
the accounts and thus all technical and production costs are reflected in the
overhead value.
Improved controls on development work, and the effectiveness of the sales
personnel that have been introduced will benefit the performance in the fiscal
year ending March 31, 2001.
The principal variances from the previous financial year are as follows:-
$K
Volume 272
Technical personnel costs 32
Recruitment 80
Marketing costs 64
Sales personnel 320
-----
768
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Actual costs of technical personnel are greater than the above value but
their costs are primarily charged to work in progress or development costs and
thus have a limited impact on the variances.
ISFB, Ltd., ISFB's wholly owned subsidiary has been operating during
1999/2000 with a very low operating capital of $16,000 and an overdraft facility
of $104,000. This funding level has created operating issues during the year and
has been totally inadequate for the day to day requirements of the Company.
However, until ISFB can complete a financing, the activities of ISFB, Ltd. have
been substantially contained. This will result in lower revenues being realized.
5. Plan of Operation
ISFB's plan of operation for the year ending March 31, 2001 anticipates an
increase in employees to 30 people. New premises have been identified which are
more appropriate to a developing company and negotiations have commenced.
Sales are budgeted to increase from the start of the year as new products
come on stream. Recently secured orders from government and the media underpin
this forecast.
Overhead expenses have been reduced and the Company expects this to
continue. General investment in product development is budgeted to continue at
the low level of $128K per annum pending agreement on specific product
investments which will be treated as projects external to the current budget.
The budgeted increase in gross profit, arising from an increase in volume
and increased control of costs, indicates that overall ISFB, Ltd. should be
profitable on a month by month basis from the end of the fiscal year.
The cash forecast based upon the budgeted trading performance would
indicate a monthly positive cash flow occurring month on month from December and
therefore there is a requirement for short term funding both to fund working
capital and cover any product specific additional R&D investment.
6. Forward Looking Statements
This report includes `Forward Looking Statements' within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act.
Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words or phrases
such as "expects" or "does not expect", "is expected", "anticipates" or "does
not anticipate", "plans", "estimates" or "intends", or stating that certain
actions, events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved) are not statements of historical fact and may be "forward
looking statements". Such statements are included among other places
22
<PAGE>
in this Form 8K, in the sections entitles "Management's Discussion and Analysis
or Plan of Operation", "ISFB's Business" and "Risk Factors Associated with ISFB
and its Business". Forward-Looking Statements are based on expectations,
estimates and projections at the time the statements are being made that involve
a number of risks and uncertainties which could cause actual results or events
to differ materially from those presently anticipated. See "Risk Factors
Associated with ISFB and Its Business" herein. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct.
(f) Description Of Property
ISFB currently occupies three adjacent office suites - the total measuring
about 3000 sq. ft.- in the Centre of Coventry in the West Midlands of England.
The offices are leasehold and comprise self contained units each dedicated to a
functional team within ISFB. The offices also include a high security area
containing racks of computer servers which host web sites for key clients. The
Company pays $4,044 per month rent and the leasehold expires in September 2000.
Availability of suitable office accommodation is considerable because the
West Midlands of England enjoys the benefit of National and Regional Government
attention set on regenerating the area following the closure of automobile and
associated industrial plants.
The Company is planning to enter new premises in Coventry in mid to late
2000 when the current leases expire to accommodate the expected increase in
staff and new demonstration areas and a lecture room. It is anticipated by ISFB
that any increase in rent may be offset by grants and agreements with Coventry
City Council and Warwick University with whom the Company is currently in
negotiations.
(g) ISFB's Directors, Executive Officers, Promoters And Control Persons And Key
Employees
The following persons are the directors, executive officers, promoters,
control persons and/or key employees of the Company:
Name Position Term of Office
Lawrence Shaw(1) CEO/President/Director 02/26/99 - Present
Ronald Shaw(2) Director 02/26/99 - Present
Edward Fitzpatrick(3) Director 01/13/00 - Present
Niall Duggan(4) Treasurer and Financial Director 02/26/99 - 03/00
(resigned March 2000)
Milan Levnajic(5) VP Operations 10/99 - Present
James Ponder VP Web Services 02/26/99 - Present
Jon Ribbens VP Technical Systems 02/26/99 - Present
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<PAGE>
(1) Mr. Lawrence Shaw also serves as the Chairman and sales Director of ISFB,
Ltd.
(2) Mr. Ronald Shaw also serves as Director of ISFB, Ltd.
(3) Mr. Edward Fitzpatrick also serves as Director of ISFB, Ltd.
(4) Mr. Niall Duggan also served as Financial Director of ISFB, Ltd. The
Noguchi Partnership is also a Director of IS4B, Ltd.
(5) Mr. Milan Levnajic has a contract with ISFB, Ltd.
Lawrence Shaw (CEO and President)- previous experience includes 10 years
developing business systems with clients and partners including Boeing, Rolls
Royce, British Airways, IBM and SAP. Studies include Aeronautical Physics and
MBA modules at Warwick Business School.
Ronald Shaw (Director) - Mr. Shaw is an experienced plant manager working in the
automotive components industry and brings a wealth of experience on application
and quality matters to ISFB. He has recently joint Midd Engineering in Coventry,
England having previously worked with Halcran Engineering Ltd. where he was
Quality Manager for five years. Prior to this, Mr. Shaw held the position of
Works Manager with Tralawny Pnuematic Tools. He holds an HNC in Production
Engineering.
Edward Fitzpatrick (Director) - For the last ten years Mr. Fitzpatrick has
worked in corporate finance focusing for the last five year on raising finance
for public companies and providing structuring advice and consultancy. Mr.
Fitzpatrick has raised funding for numerous NASDAQ companies especially in the
technology and oil and gas sectors catering to both start up and established
businesses. Mr. Fitzpatrick has been involved with ISFB for the last three
years.
Key Employees:
Milan Levnajic (VP Operations) - has had a contract with ISFB, Ltd. since
October 15, 1999 and is responsible for the day-to-day operations of the
Company. He managed his own consultancy business, Millennium Management
Services, from June 1997 until he joined ISFB, Ltd. This consultancy specialized
in Project Management training and systems development with respect to IT and
ERP Software (SAP, BAAN, JDE, Peoplesoft). Between 1992 and 1997 he worked for
Project Aerospace Group (now First Automotive plc) on project management
consultancy. Milan holds a BSc (Hons) in Mathematics and a MSc (Eng) in
Operational Research. In consideration for his services, Mr. Levnajic will
secure, upon the approval of the Board of Directors, 25,000 shares of ISFB's
Common Stock.
James Ponder - VP Web Services - is responsible for the network aspects of ISFB,
Ltd. including databases, networks, inter/intranet technologies. He has been in
this role since ISFB acquired Oaktree Internet Solutions Ltd. in April 1999. He
was cofounder and a Director of Oaktree since it was formed in 1996 prior to
which he ran a partnership of software programmers called DoggySoft Limited -
joining them in 1994. James is a member of USENIX, SAGE UK UUG and the British
Computer Society and he holds a B.Eng ( Hons) in Computer System Engineering
from Warwick University
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Jon Ribbens - VP Technical Systems - responsible for systems related solutions.
He has written software for Acorn RISC computer including the preferred web
browser, a USENET newsever and various network communication tools. He has been
in this role since ISFB acquired Oaktree Internet Solutions Ltd. in April 1999.
He was a co-founder of Oaktree in 1996 and before this was a software engineer
with DoggySoft Ltd. He was a Founder Member and is now sitting on Nominet
council and he is an adviser to RASC Security Council. He holds a BA(Hons.) in
Computer Systems Engineering from Warwick University.
ISFB recently contracted the services of the following two individuals
acting as consultants on a part-time contract basis to assist with improvements
in the top level management operations and compliance, and the day to day
management systems of ISFB, Ltd. and also to support Mr. Lawrence Shaw in his
task of securing additional funds for the Company.
David Anthony Overton has been a Consultant and Module Tutor with Warwick
University since 1993 specializing in e-Commerce and Change Management. He was
Managing Director of MacLellan International, a $140m facilities management
company, within the Haden MacLellan Group with subsidiaries in the UK, US,
Germany, Brazil and Portugal from 1994 to 1998. Prior to this he was Managing
Director of Marconi Radar Systems, a $256m Electronics and Software business
within Marconi in the General Electric Company plc of the UK. David holds an MBA
( Cranfield) and MSc. (Cranfield). In consideration for his services, Mr.
Overton will secure, upon the approval of the Board of Directors, 50,000 shares
of ISFB's Common Stock.
Malcolm Quaterman has been a Consultant since January 2000. He is a Chartered
Accountant (FCA). After working with Price Waterhouse he took major accountancy
roles in Guiness plc, and Torrington Bearings (a subsidiary of Ingersoll Rand)
before becoming Commercial Director of Simac Ltd. ( a subsidiary of Smiths
Industries plc). In 1990 he took the role of Finance Director of CompAir
Hydrovane before becoming Managing Director of this $35m business. In 1997 he
moved to Serck Audio Valves ($27.2m) as Managing Director and left at the end of
1999. In consideration for his services Mr. Quaterman receives a per diem
compensation of $833 and will secure, upon the approval of the Board of
Directors, 5,000 shares of ISFB's Common Stock.
Each officer and director generally serves for a term of one year and until
his successor shall be duly elected and qualified.
25
<PAGE>
<TABLE>
<CAPTION>
(h) Executive Compensation.
- --------------------------------------------------------------------------------
Summary Compensation Table
- --------------------------------------------------------------------------------
Executive Annual Bonus Other Awards Restricted Stock Securities LTIP
Name/Position Salary Comp. Payouts awards underlying payouts
99/00 options
/SARs
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence Shaw - CEO $96,000 Nil Nil Nil Nil Nil Nil
Gary Mays(1) - Managing $80,000 Nil Nil Nil 14,000 shares Nil Nil
Director 160,000 shares
Anthony Cox (2) - Sales $64,000 $15,795 Nil Nil 3,000 shares Nil Nil
Manager
</TABLE>
(1) Resigned on March 31, 2000
(2) Resigned on February 28, 2000. The $15,795 bonus was received as a
severance package.
(3) Resigned on March 31, 2000
Lawrence Shaw is the principal shareholder of ISFB and he is the son of Mr.
Ronald Shaw. Both have shares in ISFB.
There is no known relationship between any of the Directors and Control
persons with major clients or providers of essential products and technology,
nor are there any known related transactions following the resignation of Mr.
Gary Mays and Mr. Cameron Buxton who own Cephalopod Ltd.(Commercially trading as
Octopus) which provides some non-core design work.
(i) Description Of Securities.
The Company is authorized to issue 50,000,000 shares of the Common Stock of
which 14,512,071 shares were issued and outstanding as of May 11, 2000. Each
outstanding share of the Common Stock entitles the holder to one vote, either in
person or by proxy, on all matters that may be voted upon by the owners thereof
at meetings of the shareholders.
The holders of the Common Stock (i) have equal rights to dividends from
funds legally available therefore, when, and if, declared by the Board of
Directors of the
26
<PAGE>
Company; (ii) are entitled to share ratably in all of the assets of the Company
available for distribution to the holders of the Common Stock upon liquidation,
dissolution or winding up of the affairs of the Company; (iii) do not have
preemptive, subscription or conversion rights; and (iv) are entitled to one
non-cumulative vote per share on all matters on which shareholders may vote at
all meetings of shareholders.
The holders of the Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all directors of the
Company if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
(j) Litigation
ISFB is not party to any litigation and has no knowledge of any threatened
or pending litigation against ISFB.
(k) Market For ISFB's Securities
ISFB has been a `non-reporting' publicly traded company since March 19,
1999.
ISFB's common stock has been quoted on the NASD OTC Bulletin Board
originally under the symbol "URMT " and since March 11, 1999 under the symbol
"ISFB". The Nasdaq Stock Market has implemented a change in its rules requiring
all companies trading securities on the NASD OTC Bulletin Board to become
reporting companies under the Securities Exchange Act of 1934.
ISFB was required to become a reporting company in full compliance by the
close of business on May 6, 2000. It did not do so and as a result its Common
Stock is quoted on the over the counter market on the `pink sheets'.
Subsequently ISFB effected a merger with Chauvin and has become a successor
issuer thereto in order to comply with the reporting requirements implemented by
the Nasdaq Stock Market. ISFB anticipates that its Common Stock will be quoted
on the OTC Bulletin Board as soon as these requirements are met.
The following table represents the average prices for ISFB's Common Stock
for the following periods:
Quarter Ending High Bid Low Bid
- -------------- -------- -------
June 30th 1999 $5.3 $3.7
September 30th 1999 $5.5 $4.0
December 31st 1999 $6.8 $3.5
Bid prices for the OTC Bulletin Board reflect inter-dealer prices, do not
include retail mark-ups, mark-downs and commissions, and do not necessarily
reflect actual transactions.
27
<PAGE>
On May 10, 2000 the closing bid price for the Company's Common Stock was
$1.15.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election
Upon effectiveness of the merger on May 11, 2000, pursuant to Rule 12g-3(a)
of the General Rules and Regulations of the Securities and Exchange Commission,
ISFB became the successor issuer to Chauvin for reporting purposes under the
Securities Exchange Act of 1934 (the "Exchange Act") and elects to report under
the Exchange Act effective May 11, 2000.
ITEM 6. RESIGNATION OF DIRECTORS AND EXECUTIVE OFFICERS
The President and sole director of Chauvin, Herbert Maxwell, resigned such
offices as a result of the merger with ISFB. The officers and directors of ISFB
will continue as the officers and directors of the successors issuer.
28
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Unaudited Consolidated Financial Statements:
Report of Independent Certified Public Accountant dated May 8, 2000
Consolidated Balance Sheet as at December 31, 1999
Consolidated Statement of Operations for the period of April 1, 1999 to
December 31, 1999
Consolidated Statement of Changes in Stockholders' Equity as at
December 31, 1999
Consolidated Statement of Cash Flows for the period of April 1, 1999
to December 31, 1999
Notes to Consolidated Financial Statements
Unaudited Balance Sheet as at December 31, 1999 and September 30, 1999
Unaudited Profit and Loss Account for the nine months ended December 31, 1999
Unaudited Statement of Cash Flows for the nine months ended December 31, 1999
Audited Consolidated Financial Statements:
Report of Independent Auditor dated November 18, 1999
Consolidated Balance Sheet as at March 31, 1999
Consolidated Statement of Operations for the period of January 1, 1999 to
March 31, 1999
Consolidated Statement of Changes in Stockholders' Equity as at March 31,
1999
Consolidated Statement of Cash Flows for the period of
January 1, 1999 to March 31, 1999
Notes to Consolidated Financial Statements as at March 31, 1999
29
<PAGE>
<TABLE>
<S> <C> <C>
Member American Institute KDS Member Nevada Society
of Certified Public Accountants KURT D. SALIGER, C.P.A. of Certified Public
Certified Public Accountant Accountants
</TABLE>
Board of Directors
Internet Solutions For Business, Inc.
Las Vegas, Nevada
I have compiled the accompanying consolidated balance sheet of Internet
Solutions For Business, Inc. and subsidiaries as of December 31, 1999 and the
related consolidated statement of operations, consolidated changes in
stockholders' equity and consolidated cash flow for the nine month period from
April 1, 1999 to December 31, 1999 in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.
/s/Kurt D. Saliger, C.P.A.
Kurt D. Saliger, C.P.A.
May 08, 2000
5000 W. Oakey o Suite A-4 o Las Vegas, Nevada 89146
Phone: (702) 367-1988 Fax: (702) 870-8388
30
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(See Accountant's Compilation Report)
ASSETS
CURRENT ASSETS
Cash $ 0
Receivables $ 290,654
-----------
TOTAL CURRENT ASSETS $ 290,654
-----------
PROPERTY AND EQUIPMENT, NET $ 94,707
OTHER ASSETS - RESEARCH and DEVELOPMENT $ 200,000
INVESTMENTS IN SUBSIDIARIES $ 696,000
NOTE RECEIVABLE $ 535,040
-----------
TOTAL ASSETS $ 1,816,401
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 437,067
Accrued liabilities $ 604,811
Current portion of long-term debt $ 256,000
-----------
TOTAL CURRENT LIABILITIES $ 1,297,878
-----------
LONG-TERM DEBT $ 546,357
SHAREHOLDERS' EQUITY
Common Stock, $.001 per value
Authorized 50,000,000 shares issued
and outstanding at December 31, 1999
14,424,571 shares $ 14,425
Additional Paid in Capital $ 474,572
Retained Earnings (Deficit) ($ 516,831)
-----------
TOTAL SHAREHOLDERS' EQUITY ($ 27,834)
-----------
TOTAL LIABILITIES AND $ 1,816,401
SHAREHOLDERS EQUITY ===========
See accompanying notes to consolidated financial statements.
31
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
April 1, 1999 to December 31, 1999
(See Accountant's Compilation Report)
Revenue $ 532,707
Cost of revenue:
Cost of goods sold $ 108,230
------------
Gross profit $ 424,477
Operating costs and expenses:
Amortization and depreciation $ 0
Selling, general and administrative $ 1,227,054
Other operating costs $ 10,958
------------
Total operating costs and expenses $ 1,238,012
------------
Operating income (loss) ($ 813,536)
------------
Internet expense $ 17,446
------------
Income (loss) before income taxes ($ 830,982)
------------
Income tax expense $ 0
Net income (loss) ($ 830,982)
============
BASIC INCOME (LOSS) PER SHARE ($ 0.0576)
============
DILUTED INCOME (LOSS) PER SHARE ($ 0.0576)
============
AVERAGE SHARES USED IN PER SHARE COMPUTATIONS:
BASIC 14,424,571
============
DILUTED 14,424,571
============
See accompanying notes to consolidated financial statements.
32
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1999
(See Accountant's Compilation Report)
Common Stock
<TABLE>
<CAPTION>
(Deficit)
Accumulated
Additional During
Paid in Development
Number of Shares Amount Capital Stage
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance December 31, 1997 450,000 $450 $35,550 ($5,564)
10: 1 forward stock split
March 06, 1998 4,050,000 $4,050 ($4,050)
Net (loss) year ended ($25,394)
December 31, 1998 ----------- ----------- ----------- ------------
Balance December 31, 1998 4,500,000 $4,500 $31,500 ($30,958)
February 27, 1999
Issued for acquisition of
Internet Solutions For 7,000,000 $7,000 $9,500
Business Ltd
Dec 15, 1999
Issued for acquisition of 2,924,571 $2,925 $433,572
subsidiary and services
rendered
Net Income three months $345,109
ended March 31, 1999
Net income (loss) nine ($830,982)
month ended Dec 31,1999 ----------- ----------- ----------- ------------
Balance Dec 31, 1999 14,424,571 $14,425 $474,572 ($516,831)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
33
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
April 1, 1999 to December 31, 1999
(See Accountant's Compilation Report)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) ($830,982)
Adjustments to reconcile net income to cash provided
by operating activities:
Amortization and depreciation $ 0
Increase in accounts receivable ($119,029)
Increase in accounts payable $ 322,942
Decrease in accrued liabilities ($269,848)
Increase in short term debt $ 256,000
---------
Net cash provided by operating activities ($640,917)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment $ 2,810
---------
($638,107)
CASH FLOWS FROM FINANCING ACTIVITIES
Long term debt borrowings $ 546,357
---------
Net increase (decrease) in cash ($ 91,750)
Cash, April 1, 1999 $ 11,097
---------
Cash, December 31, 1999 ($ 80,653)
=========
See accompanying notes to consolidated financial statements.
34
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organised in September 5, 1997 under the laws of the State
of Nevada as Universal Funding Services, Inc. The Company currently is an
international internet solutions specialist that provided real business
solutions and consulting services.
On June 30, 1998 the name of the Company was changed to Universal Reduction
Melting Technologies, Inc.
On February 26, 1999 the name of the Company was changed to Internet
Solutions for Business, Inc.
On September 5, 1997 the company issued 150,000 shares of its $0.001 par
value common stock for $6,000 in cash.
On December 22, 1997 the Company issued 300,000 shares of its $0.001 par
value common stock for $30,000 in cash under Regulation D, Rule 504.
On February 27, 1999 the Company issued 7,000,000 shares of its $0.001 par
value common stock for 100% of the stock of a United Kingdom company named
Internet Solutions for Business Limited.
During October 1999 the Company issued 1,424,000 shares of its $0.001 par
value common stock to employees and consultants for payment of services
rendered.
On December 15, 1999 the Company issued 1,500,571 shares of its $0.001 par
value common stock being the balance owed for the purchase of its subsidiary.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts
of the Company and its wholly owned subsidiary. All significant intercompany
transactions and balances are eliminated.
Revenue Recognition
Revenue is generally recognized when the company has completed
substantially all consulting and/or internet development to customer
specifications, testing has been completed and the product has been shipped.
Additionally, for internet systems where installation requirements are the
responsibility of the Company and payment terms are related to installation
completion, revenue is generally recognized when the system has been shipped to
the customer's final site for installation.
Research and Development
Research and development costs are capitalized and amortized over a period
of 3 years.
35
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Use of Estimates
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenue and
expenses. Actual results could vary from the estimates that were used.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a
straight-line basis over their estimated useful lives as follows:
Furniture and fixtures and equipment 5 years
Computer equipment 2 years
Automobiles 3 years
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109)
"Accounting for Income Taxes." A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
Earnings Per Share
Earnings per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per Share." Basic
earnings per share is computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects per share amounts that would
have resulted if dilutive common stock equivalents had been converted to common
stock. The common stock equivalents outstanding at December 31, 1999 are
antidilutive.
Recently Issued Accounting Standards
Management expects none of the recently issued accounting standards to have
a material affect on the Company's financial statements at December 31, 1999.
36
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
NOTE 3 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
NOTE 4 - EXCHANGE RATE
The exchange rate of U.K. pound equal to 1.60 U.S. dollar has been used
throughout the audit.
NOTE 5 - LEASE COMMITMENTS
At December 31, 1999 the Company had annual commitments of $8,557 under
non-cancellable operating leases, which expire within two to five years.
37
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS LTD
Balance Sheet as at 31 December 1999
<TABLE>
<CAPTION>
31 December 1999
(pound) (pound) $ $
-----------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Equipment Fixtures Fittings 59,192 94707
Intangible Assets(Development Costs) 125,000 200000
--------
184,192 294,707
Notes Receivable 334,400 535040
Current assets
Trade Debtors 125,079 200126
WIP 40,000 64000
Other Debtors 11,111 17778
-------- ---------
Current Assets 176,190 281,904
-------- ---------
Current Liabilities
Trade creditors 273,167 437067
Bank Overdraft 50,408 80653
Others 67,384 107814
Taxes 200,719 321150
Corporation Tax 54,989 87982
-------- ---------
646,667 1,034,667
-------- ---------
Net Current Assets (470,477) (752,763)
-------- --------
Total Assets less Liabilities 48,115 76,984
Long Term Loans (341,473) (546,357)
-------- --------
Total Assets less Liabilities (293,358) (469,373)
======== ========
Capital & Reserves
Share Capital 10,000 16000
Reserves
B/fwd 209,157 334651
P & L (512,515) (820,024)
-------- ---------
(303,358) (485,373)
-------- --------
Total Capital and Reserves (293,358) (469,373)
======== ========
-----------------------------------------------------
<CAPTION>
30 September 1999
(pound) (pound) $ $
-----------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Equipment Fixtures Fittings 57,107 91371
Intangible Assets(Development Costs) 85,000 136000
--------
142,107 227,371
Notes Receivable 334,400 535040
Current assets
Trade Debtors 161,443 258309
WIP 35,000 56000
Other Debtors 11,111 17778
-------- ---------
Current Assets 207,554 332,086
-------- ---------
Current Liabilities
Trade creditors 172,388 275821
Bank Overdraft 92,146 147434
Others 63,042 100867
Taxes 124,693 199509
Corporation Tax 54,989 87982
-------- ---------
507,258 811,613
-------- ---------
Net Current Assets (299,704) (479,526)
-------- --------
Total Assets less Liabilities 176,803 282,885
Long Term Loans (200,173) (320,277)
-------- --------
Total Assets less Liabilities (23,370) (37,392)
======== ========
Capital & Reserves
Share Capital 10,000 16000
Reserves
B/fwd 209,157 334651
P & L (242,527) (388,043)
-------- ---------
(33,370) (53,392)
-------- --------
Total Capital and Reserves (23,370) (37,392)
======== ========
-----------------------------------------------------
</TABLE>
38
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS LTD
PROFIT & LOSS ACCOUNT
FOR THE 9 MONTHS TO DECEMBER 31 1999
<TABLE>
<CAPTION>
Apr - Dec 99 Oct -Dec 99
-------------------------- -----------------------------
(pound) $ (pound) $
<S> <C> <C> <C> <C>
Revenue 332,932 532,691 95,774 153,238
Cost of revenue
Cost of goods sold 67,644 108,230 21,253 34,005
-------- --------- -------- --------
GROSS PROFIT 265,288 424,461 74,521 119,234
Operating costs and expenses
Amortisation and Depreciation
Selling,general and administration 766,899 1,227,038 336,368 538,189
-------- --------- -------- --------
Total operating Cost and Expenses 766,899 1,227,038 336,368 538,189
-------- --------- -------- --------
Operating Income (501,611) (802,578) (261,847) (418,955)
Interest expense (10,904) (17,446) (8,141) (13,026)
-------- --------- --------
Income before income tax (512,515) (820,024) (269,988) (431,981)
Income tax expense
-------- --------- -------- --------
NET INCOME (512,515) (820,024) (269,988) (431,981)
======== ========= ======== ========
-------------------------- -----------------------------
</TABLE>
39
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS LTD
CASH FLOW FOR 9 MONTHS TO 31 DECEMBER 1999
<TABLE>
<CAPTION>
Apr- Dec 99
-------------------------------------------------
(pound) (pound) $ $
<S> <C> <C> <C> <C>
Cash flow from Operating Activities
Net Income before taxation (512,515) (820,024)
Adjustments to reconcile net income
to cash provided by operating activities
Amortisation Depreciation
(Incr) Decr in accounts Receivable (74,393) (119,029)
Incr (Decr) in accounts payable 207,582 332,131
(Incr) Decr in other receivables 10,805 17,288
Incr(Decr) in other accounts payable 67 107
Incr(Decr) in taxes/VAT 200,719 321,150
Increase in Development Costs (125,000) (200,000)
Incr Decr in other working capital (40,000) (64,000)
-------- --------
Net cash provided by operating activities 179,780 287,648
Purchase of Assets (24,673) (39,477)
Total in Cash Flow (357,408) (571,853)
CASH FLOWS FROM FINANCING ACTIVITIES
Long Term Debt 301,473 482,357
Incr (Decr)in Cash at Bank 55,935 (89,496)
Cash April 1 1999(October 1 1999) 5,527 8,843
-------- --------
Cash December 31 1999 (50,408) (80,653)
======== ========
<CAPTION>
-------------------------------------------------
Oct - Dec 99
-------------------------------------------------
(pound) (pound) $ $
<S> <C> <C> <C> <C>
Cash flow from Operating Activities
Net Income before taxation (269,988) (431,981)
Adjustments to reconcile net income
to cash provided by operating activities
Amortisation Depreciation
(Incr) Decr in accounts Receivable 36,364 58,182
Incr (Decr) in accounts payable 100,779 161,246
(Incr) Decr in other receivables
Incr(Decr) in other accounts payable 4,342 6,947
Incr(Decr) in taxes/VAT 76,026 121,642
Increase in Development Costs (40,000) (64,000)
Incr Decr in other working capital (5,000) (8,000)
------- -------
Net cash provided by operating activities 172,511 276,018
Purchase of Assets (2,085) (3,336)
Total in Cash Flow (99,562) (159,299)
CASH FLOWS FROM FINANCING ACTIVITIES
Long Term Debt 141,300 226,080
Incr (Decr)in Cash at Bank 41,738 66,781
Cash April 1 1999(October 1 1999) (92,146) (147,434)
------- --------
Cash December 31 1999 (50,408) (80,653)
======= ========
-------------------------------------------------
</TABLE>
40
<PAGE>
Member American Institute KDS Member Nevada Society
of Certified Public Accountants KURT D. SALIGER, C.P.A. of Certified Public
Certified Public Accountant Accountants
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Internet Solutions For Business, Inc.
Las Vegas, Nevada
I have audited the accompanying consolidated balance sheet of Internet
Solutions For Business, Inc. and subsidiary (the "Company") as of March 31,
1999, and the related consolidated statement of operations, changes in
stockholders' equity and cash flows for the period January 1, 1999 to March 31,
1999. These financial statement are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit. I did not audit the financial statements of
Internet Solutions For Business Limited, a wholly owned subsidiary, which
statements reflect total assets and revenues constituting 98 per cent and 100
per cent, respectively, of the related consolidated basis. Those statements were
audited by other auditors whose report has been furnished to me, and my opinion,
insofar as it relates to the amounts included for Internet Solutions For
Business Limited, is based solely on the report of the other auditors.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Internet
Solutions For Business, Inc. as of March 31, 1999 and the consolidated results
of its operations and its cash flows for the period of January 1, 1999 to March
31, 1999 in conformity with generally accepted accounting principles.
/s/Kurt D. Saliger, C.P.A.
Kurt D. Saliger, C.P.A.
November 18, 1999
5000 W. Oakey o Suite A-4 o Las Vegas, Nevada 89146
Phone: (702) 367-1988 Fax: (702) 870-8388
42
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 11,097
Receivables $128,543
Inventories $ 0
Other Current Assets $ 0
--------
TOTAL CURRENT ASSETS $139,640
PROPERTY AND EQUIPMENT, NET $608,716
ORGANIZATION COSTS, NET $ 225
--------
TOTAL ASSETS $748,581
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $114,125
Accrued liabilities $267,805
Current portion of long-term debt $ 0
--------
TOTAL CURRENT LIABILITIES $381,930
LONG-TERM DEBT $ 0
SHAREHOLDERS' EQUITY
Common Stock, $.001 per value
Authorized 30,000,000 shares issued
And outstanding at March 31, 1999
11,500,000 shares $ 11,500
Additional Paid in Capital $ 41,000
Retained Earnings $314,151
--------
TOTAL SHAREHOLDERS' EQUITY $366,651
--------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $748,581
--------
See accompanying notes to consolidated financial statements.
43
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
January 1, 1999 to March 31, 1999
Revenue $ 1,037,223
Cost of revenue:
Cost of goods sold $ 176,006
-----------
Gross profit $ 861,218
-----------
Operating costs and expenses:
Amortization and depreciation $ 19,232
Selling, general and administrative $ 405,485
-----------
Total operating costs and expenses $ 424,717
-----------
Operating income $ 436,501
Internet expense $ 660
-----------
Income before income taxes $ 435,841
Income tax expense $ 90,732
-----------
Net income $ 345,109
===========
BASIC INCOME PER SHARE $ 0.0300
===========
DILUTED INCOME PER SHARE $ 0.0300
===========
AVERAGE SHARES USED IN PER SHARE COMPUTATIONS: 11,500,000
BASIC & DILUTED ===========
See accompanying notes to consolidated financial statements.
44
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
March 31, 1999
Common Stock
(Deficit)
Accumulated
During
Number of Additional Development
Shares Amount Paid in Capital Stage
-------------------------------------------------
Balance December 31, 1997 450,000 $ 450 $ 35,550 ($ 5,564)
10: 1 forward stock split
March 06, 1998 4,050,000 $ 4,050 ($ 4,050)
Net (loss) year ended
December 31, 1998 ($ 25,394)
----------- ----------- --------- ---------
Balance December 31, 1998 4,500,000 $ 4,500 $ 31,500 ((pound)30,958)
February 27, 1999
Issued for acquisition of
Internet Solutions For
Business Limited 7,000,000 $ 7,000 $ 9,500
Net Income three months
ended March 31, 1999 $ 345,109
----------- ----------- --------- ---------
Balance March 31, 1999 11,500,000 $ 11,500 $ 41,000 $ 314,151
=========== =========== ========= =========
45
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
January 1, 1999 to March 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 345,109
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization and depreciation $ 19,232
Increase in accounts receivable ($128,543)
Increase in accounts payable $ 114,125
Increase in accrued liabilities $ 267,805
---------
Net cash provided by operating activities $ 617,728
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment ($606,631)
---------
$ 11,097
CASH FLOWS FROM FINANCING ACTIVITIES $ 0
---------
Net increase (decrease) in cash $ 11,097
Cash, January 1, 1999 $ 0
---------
Cash, March 31, 1999 $ 11,097
=========
See accompanying notes to consolidated financial statements.
46
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organised in September 5, 1997 under the laws of the State
of Nevada as Universal Funding Services, Inc. The Company currently is an
international internet solutions specialist that provided real business
solutions and consulting services.
On June 30, 1998 the name of the Company was changed to Universal Reduction
Melting Technologies, Inc.
On February 26, 1999 the name of the Company was changed to Internet
Solutions for Business, Inc.
On September 5, 1997 the company issued 150,000 shares of its $0.001 par
value common stock for $6,000 in cash.
On December 22, 1997 the Company issued 300,000 shares of its $0.001 par
value common stock for $30,000 in cash under Regulation D, Rule 504.
On February 27, 1999 the Company issued 7,000,000 shares of its $0.001 par
value common stock for 100% of the stock of a United Kingdom company named
Internet Solutions for Business Limited.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts
of the Company and its wholly-owned subsidiary. All significant intercompany
transactions and balances are eliminated.
Revenue Recognition
Revenue is generally recognized when the company has completed
substantially all consulting and/or internet development to customer
specifications, testing has been completed and the product has been shipped.
Additionally, for internet systems where installation requirements are the
responsibility of the Company and payment terms are related to installation
completion, revenue is generally recognized when the system has been shipped to
the customer's final site for installation.
Research and Development
Research and development costs are expensed as incurred.
47
<PAGE>
INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Use of Estimates
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenue and
expenses. Actual results could vary from the estimates that were used.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a
straight-line basis over their estimated useful lives as follows:
Furniture and fixtures and equipment 5 years
Computer equipment 2 years
Automobiles 3 years
Organization Costs
Organization costs of $330 are being amortized over a period of (60) months
commencing September 5, 1997.
Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109)
"Accounting for Income Taxes." A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
Earnings Per Share
Earnings per share is provided in accordance with Statement of Financial
Accounting Standards No. 128 (SFAS 128) "Earnings Per Share." Basic earnings per
share is computed by dividing earnings available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share reflects per share amounts that would have resulted if
dilutive common stock equivalents had been converted to common stock. The common
stock equivalents outstanding at March 31, 1999 are antidilutive.
Recently Issued Accounting Standards
Management expects none of the recently issued accounting standards to have
a material affect on the Company's financial statements at March 31, 1999.
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INTERNET SOLUTIONS FOR BUSINESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
NOTE 3 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
NOTE 4 - EXCHANGE RATE
The exchange rate of U.K. pound equal to 1.65 U.S. dollar has been used
throughout the audit.
NOTE 5 - LEASE COMMITMENTS
At March 31, 1999 the Company had annual commitments of $8,557 under
non-cancellable operating leases which expire within two to five years.
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ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
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EXHIBITS
2.1 Agreement and Plan of Merger between Chauvin Enterprises, Inc. and Internet
Solutions for Business, Inc. dated as of May 11, 2000
3.1 Articles of Incorporation of Internet Solutions For Business, Inc.
3.2 Certificate of Amendment of Articles of Incorporation
3.3 By-laws of Internet Solutions For Business, Inc.
27.1 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
Internet Solutions For Business, Inc.
By: /s/ Lawrence Shaw
-------------------------------
President, Chief Executive Officer
Dated: May 11, 2000
52
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER between CHAUVIN ENTERPRISES, INC., a Delaware
corporation ("Chauvin"), and INTERNET SOLUTIONS FOR BUSINESS, INC., a Nevada
corporation (the "IS4B"), Chauvin and IS4B being sometimes referred to herein as
the "Constituent Corporations."
WHEREAS, the board of directors of each Constituent Corporation deems it
advisable that the Constituent Corporations merge into a single corporation (the
"Merger");
NOW, THEREFORE, in consideration of the premises and the respective mutual
covenants, representations and warranties herein contained, the parties agree as
follows:
1. SURVIVING CORPORATION. Chauvin shall be merged with and into IS4B which
shall be the surviving corporation in accordance with the applicable laws of its
state of incorporation.
2. MERGER DATE. The Merger shall become effective (the "Merger Date") upon
the completion of:
2.1. Adoption of this agreement by Chauvin pursuant to the General
Corporation Law of Delaware and by IS4B pursuant to Nevada Revised Statutes and
the Nevada General Corporation Law; and
2.2. Execution and filing by IS4B of Articles of Merger with the Department
of State of the State of Nevada in accordance with the Nevada Revised Statutes.
2.3. Execution and filing by Chauvin of a Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the General
Corporation Law of Delaware.
3. TIME OF FILINGS. The Articles of Merger shall be filed with the
Department of State of the State of Nevada and the Certificate of Merger shall
be filed with the Secretary of State of Delaware upon the approval, as required
by law, of this agreement by the Constituent Corporations and the fulfillment or
waiver of the terms and conditions herein.
4. GOVERNING LAW. The surviving corporation shall be governed by the laws
of the State of incorporation of IS4B.
5. CERTIFICATE OF INCORPORATION. The Articles of Incorporation of IS4B
shall be the Articles of Incorporation of the surviving corporation from and
after the Merger Date, subject to the right of IS4B to amend its Articles of
Incorporation in accordance with the laws of the State of its incorporation.
6. BYLAWS. The Bylaws of the surviving corporation shall be the Bylaws of
IS4B as in effect on the date of this agreement.
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7. BOARD OF DIRECTORS AND OFFICERS. The officers and directors of IS4B, or
such other persons as shall be selected by it, shall be the officers and
directors of the surviving corporation following the Merger Date.
8. NAME OF SURVIVING CORPORATION. The name of the surviving corporation
will continue as "Internet Solutions For Business, Inc." unless changed by IS4B.
9. CONVERSION. The mode of carrying the Merger into effect and the manner
and basis of converting the shares of Chauvin into shares of IS4B are as
follows:
9.1. The aggregate number of shares of Chauvin Common Stock issued and
outstanding on the Merger Date shall, by virtue of the Merger and without any
action on the part of the holders thereof, be converted into an aggregate of
100,000 shares of IS4B Common Stock (the "IS4B shares") adjusted by any increase
for fractional shares and reduced by any Dissenting Shares (defined below).
The IS4B Common Stock to be issued hereunder ("the IS4B Shares") will be
issued pursuant to Section 4(2) of the Securities Act of 1933 and/or Rule 506 of
the General Rules and Regulations of the Securities and Exchange Commission,
will be restricted as to transferability pursuant to Rule 144 thereof, and will
bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "ACT") AND ARE
"RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT.
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF IS4B."
IS4B agrees to register the re-offer and resale by the holders of the IS4B
Shares pursuant to a registration statement filed by IS4B with the Securities
and Exchange Commission in connection with any offering of the IS4B Common Stock
(excluding registration statements filed on Forms S-4 or S-8)
9.2. Upon completion of the Merger, there shall be 14,512,071 shares of
IS4B Common Stock issued and outstanding, subject to such adjustments, held as
follows: 100,000 common shares held by the former shareholders of Chauvin and
14,412,071 common shares held by the other shareholders of IS4B.
9.3. All outstanding Common or Preferred Stock of Chauvin and all warrants,
options or other rights to its Common or Preferred Stock shall be retired and
canceled as of the Merger Date.
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9.4. Each share of Chauvin Common Stock that is owned by Chauvin as
treasury stock shall, by virtue of the Merger and without any action on the part
of Chauvin, be retired and canceled as of the Merger Date.
9.5. Each certificate evidencing ownership of shares of IS4B Common Stock
issued and outstanding on the Merger Date or held by IS4B in its treasury shall
continue to evidence ownership of the same number of shares of IS4B Common
Stock.
9.6. IS4B Common Stock shall be issued to the holders of Chauvin Common
Stock in exchange for their shares on a pro rata basis in accordance with each
holder's relative ownership of the Chauvin Common Stock that is being exchanged.
9.7. The shares of IS4B Common Stock to be issued in exchange for Chauvin
Common Stock hereunder shall be proportionately reduced by any shares owned by
Chauvin shareholders who shall have timely objected to the Merger (the
"Dissenting Shares") in accordance with the provisions of the General
Corporation Law of Delaware, as provided therein.
10. EXCHANGE OF CERTIFICATES. As promptly as practicable after the Merger
Date, each holder of an outstanding certificate or certificates theretofore
representing shares of Chauvin Common Stock (other than certificates
representing Dissenting Shares) shall surrender such certificate(s) for
cancellation to the party designated herein to handle such exchange (the
"Exchange Agent"), and shall receive in exchange a certificate or certificates
representing the number of full shares of IS4B Common Stock into which the
shares of Chauvin Common Stock represented by the certificate or certificates so
surrendered shall have been converted. Any exchange of fractional shares will be
rounded up to the next highest number of full shares. IS4B may, in its
discretion, require a bond in customary form before issuing any share
certificate where a corresponding share certificate has not been delivered by a
shareholder of Chauvin because of loss or other reason.
11. UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding
certificate that prior to the Merger Date represented Chauvin Common Stock
(other than certificates representing Dissenting Shares) shall be deemed for all
purposes, other than the payment of dividends or other distributions, to
evidence ownership of the number of shares of IS4B Common Stock into which it
was converted. No dividend or other distribution payable to holders of IS4B
Common Stock as of any date subsequent to the Merger Date shall be paid to the
holders of outstanding certificates of Chauvin Common Stock; provided, however,
that upon surrender and exchange of such outstanding certificates (other than
certificates representing Dissenting Shares), there shall be paid to the record
holders of the certificates issued in exchange therefor the amount, without
interest thereon, of dividends and other distributions that would have been
payable subsequent to the Merger Date with respect to the shares of IS4B Common
Stock represented thereby.
12. EFFECT OF THE MERGER. On the Merger Date, the separate existence of
Chauvin shall cease (except insofar as continued by statute), and it shall be
merged with and into IS4B. All the property, real, personal, and mixed, of each
of the Constituent Corporations, and all debts due to either of them, shall be
transferred to and vested in IS4B, without further act or deed. IS4B shall
thenceforth be responsible and liable for all the liabilities and obligations,
including liabilities to
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holders of Dissenting Shares, of each of the Constituent Corporations, and any
claim or judgment against either of the Constituent Corporations may be enforced
against IS4B.
13. REPRESENTATIONS AND WARRANTIES OF CHAUVIN. Chauvin represents and
warrants that:
13.1. CORPORATE ORGANIZATION AND GOOD STANDING. Chauvin is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, and is qualified to do business as a foreign corporation in
each jurisdiction, if any, in which its property or business requires such
qualification.
13.2. REPORTING COMPANY STATUS. Chauvin has filed with the Securities and
Exchange Commission a registration statement on Form 10-SB which became
effective pursuant to the Securities Exchange Act of 1934 on December 21, 1999
and is a reporting issuer pursuant to Section12(g) thereunder.
13.3. REPORTING COMPANY FILINGS. Chauvin has filed and is current on all
reports required to be filed by it pursuant to Section13 of the Securities
Exchange Act of 1934.
13.4. CAPITALIZATION. Chauvin's authorized capital stock consists of
1,000,000 shares of Common Stock, $.0001 par value, of which 1,627,000 shares
are issued and outstanding.
13.5. ISSUED STOCK. All the outstanding shares of its Common Stock are duly
authorized and validly issued, fully paid and non-assessable.
13.6. STOCK RIGHTS. Except as set out by attached schedule, there are no
stock grants, options, rights, warrants or other rights to purchase or obtain
Chauvin Common issued or committed to be issued.
13.7. CORPORATE AUTHORITY. Chauvin has all requisite corporate power and
authority to own, operate and lease its properties, to carry on its business as
it is now being conducted and to execute, deliver, perform and conclude the
transactions contemplated by this agreement and all other agreements and
instruments related to this agreement.
13.8. SUBSIDIARIES. Chauvin has no subsidiaries.
13.9. FINANCIAL STATEMENTS. Chauvin's financial statements dated October
31, 1999, copies of which will have been delivered by Chauvin to IS4B prior to
the Merger Date (the "Chauvin Financial Statements"), fairly present the
financial condition of Chauvin as of the date therein and the results of its
operations for the periods then ended in conformity with generally accepted
accounting principles consistently applied.
13.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected
or reserved against in the Chauvin Financial Statements, Chauvin did not have at
that date any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily
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reflected in a corporate balance sheet prepared in accordance with generally
accepted accounting principles.
13.11. NO MATERIAL CHANGES. There has been no material adverse change in
the business, properties, or financial condition of Chauvin since the date of
the Chauvin Financial Statements.
13.12. LITIGATION. There is not, to the knowledge of Chauvin, any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against Chauvin or
against any of its officers.
13.13. CONTRACTS. Chauvin is not a party to any material contract not in
the ordinary course of business that is to be performed in whole or in part at
or after the date of this agreement.
13.14. TITLE. Chauvin has good and marketable title to all the real
property and good and valid title to all other property included in the Chauvin
Financial Statements. The properties of Chauvin are not subject to any mortgage,
encumbrance, or lien of any kind except minor encumbrances that do not
materially interfere with the use of the property in the conduct of the business
of Chauvin.
13.15. TAX RETURNS. All required tax returns for federal, state, county,
municipal, local, foreign and other taxes and assessments have been properly
prepared and filed by Chauvin for all years for which such returns are due
unless an extension for filing any such return has been filed. Any and all
federal, state, county, municipal, local, foreign and other taxes and
assessments, including any and all interest, penalties and additions imposed
with respect to such amounts have been paid or provided for. The provisions for
federal and state taxes reflected in the Chauvin Financial Statements are
adequate to cover any such taxes that may be assessed against Chauvin in respect
of its business and its operations during the periods covered by the Chauvin
Financial Statements and all prior periods.
13.16. NO VIOLATION. Consummation of the Merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of Chauvin is subject or by which Chauvin is
bound.
14. REPRESENTATIONS AND WARRANTIES OF IS4B. IS4B represents and warrants
that:
14.1. CORPORATE ORGANIZATION AND GOOD STANDING. IS4B is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada and is qualified to do business as a foreign corporation in each
jurisdiction, if any, in which its property or business requires such
qualification.
14.2. CAPITALIZATION. IS4B's authorized capital stock consists of
50,000,000 shares of Common Stock, $.001 par value, of which 14,412,071 shares
are issued and outstanding.
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14.3. ISSUED STOCK. All the outstanding shares of its Common Stock are duly
authorized and validly issued, fully paid and non-assessable.
14.4. STOCK RIGHTS. There are no stock grants, options, rights, warrants or
other rights to purchase or obtain IS4B Common or Preferred Stock issued or
committed to be issued.
14.5. CORPORATE AUTHORITY. IS4B has all requisite corporate power and
authority to own, operate and lease its properties, to carry on its business as
it is now being conducted and to execute, deliver, perform and conclude the
transactions contemplated by this Agreement and all other agreements and
instruments related to this agreement.
14.6. SUBSIDIARIES. Except as set out in Disclosure Schedule 14.6, IS4B has
no subsidiaries.
14.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or
reserved against in the IS4B Financial Statements, IS4B did not have at that
date any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily reflected in a corporate balance sheet
prepared in accordance with generally accepted accounting principles.
14.8. NO MATERIAL CHANGES. There has been no material adverse change in the
business, properties, or financial condition of IS4B since February 28, 1999.
14.9. LITIGATION. Except as set out in Disclosure Schedule 14.10, there is
not, to the knowledge of IS4B, any pending, threatened, or existing litigation,
bankruptcy, criminal, civil, or regulatory proceeding or investigation,
threatened or contemplated against IS4B or against any of its officers.
14.10. CONTRACTS. IS4B is not a party to any material contract not in the
ordinary course of business or in the course of its proposed acquisitions that
is to be performed in whole or in part at or after the date of this Agreement.
14.11. TITLE. IS4B has good and marketable title to all the real property
and good and valid title to all other property included in the IS4B Financial
Statements. The properties of IS4B are not subject to any mortgage, encumbrance,
or lien of any kind except minor encumbrances that do not materially interfere
with the use of the property in the conduct of the business of IS4B.
14.12. TAX RETURNS. All required tax returns for federal, state, county,
municipal, local, foreign and other taxes and assessments have been properly
prepared and filed by IS4B for all years for which such returns are due unless
an extension for filing any such return has been filed. Any and all federal,
state, county, municipal, local, foreign and other taxes and assessments,
including any and all interest, penalties and additions imposed with respect to
such amounts have been paid or provided for. The provisions for federal and
state taxes reflected in the IS4B Financial Statements are adequate to cover any
such taxes that may be assessed against IS4B in respect of its business and its
operations during the periods covered by the IS4B Financial Statements and all
prior periods.
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14.13. NO VIOLATION. Consummation of the Merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of IS4B is subject or by which IS4B is
bound.
14.14 FINANCIAL STATEMENTS. IS4B's financial statements dated December 31,
1999, copies of which will have been delivered by IS4B to Chauvin prior to the
Merger Date (the "IS4B Financial Statements"), fairly present the financial
condition of IS4B as of the date therein and the results of its operations for
the periods then ended in conformity with generally accepted accounting
principles consistently applied.
15. CONDUCT OF CHAUVIN PENDING THE MERGER DATE. Chauvin covenants that
between the date of this Agreement and the Merger Date:
15.1. No change will be made in Chauvin's Certificate of Incorporation or
bylaws.
15.2. Chauvin will not make any change in its authorized or issued capital
stock, declare or pay any dividend or other distribution or issue, encumber,
purchase, or otherwise acquire any of its capital stock other than as provided
herein.
15.3. Chauvin will use its best efforts to maintain and preserve its
business organization, employee relationships, and goodwill intact, and will not
enter into any material commitment except in the ordinary course of business.
16. CONDUCT OF IS4B PENDING THE MERGER DATE. IS4B covenants that between
the date of this Agreement and the Merger Date:
16.1. No change will be made in IS4B's Articles of incorporation or bylaws.
16.2. Except for the offer and sale by IS4B of up to 1,500,000 units (each
consisting of one share of common stock and two warrants each entitling the
holder to purchase an additional share of common stock at a price of $3.00 per
share) at a price of $3.00 per Unit. IS4B will not make any change in its
authorized or issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase, or otherwise acquire any of its
capital stock otherwise than as provided herein.
16.3. IS4B will use its best efforts to maintain and preserve its business
organization, employee relationships, and goodwill intact, and will not enter
into any material commitment except in the ordinary course of business.
17. CONDITIONS PRECEDENT TO OBLIGATION OF CHAUVIN. Chauvin's obligation to
consummate the Merger shall be subject to fulfillment on or before the Merger
Date of each of the following conditions, unless waived in writing by Chauvin:
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17.1. IS4B'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of IS4B set forth herein shall be true and correct at the Merger Date
as though made at and as of that date, except as affected by transactions
contemplated hereby.
17.2. IS4B'S COVENANTS. IS4B shall have performed all covenants required by
this agreement to be performed by it on or before the Merger Date.
17.3. APPROVAL. This agreement shall have been approved by IS4B in such
manner as is required by law including all appropriate action by directors and,
if required, by shareholders.
17.4. SUPPORTING DOCUMENTS OF IS4B. IS4B shall have delivered to Chauvin
supporting documents in form and substance satisfactory to Chauvin to the effect
that:
(i) IS4B is a corporation duly organized, validly existing, and in good
standing.
(ii) IS4B's authorized and issued capital stock is as set forth herein.
(iii) The execution and adoption of this agreement have been duly
authorized by IS4B in such manner as is required by law including all
appropriate action by directors and, if required, by shareholders.
18. CONDITIONS PRECEDENT TO OBLIGATION OF IS4B. IS4B's obligation to
consummate the Merger shall be subject to fulfillment on or before the Merger
Date of each of the following conditions, unless waived in writing by IS4B:
18.1. CHAUVIN'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Chauvin set forth herein shall be true and correct at the Merger
Date as though made at and as of that date, except as affected by transactions
contemplated hereby.
18.2. CHAUVIN'S COVENANTS. Chauvin shall have performed all covenants
required by this agreement to be performed by it on or before the Merger Date.
18.3. APPROVAL. This Agreement shall have been approved by Chauvin in such
manner as is required by law including all appropriate action by directors and,
if required, by shareholders.
18.4. SUPPORTING DOCUMENTS OF CHAUVIN. Chauvin shall have delivered to IS4B
supporting documents in form and substance satisfactory to IS4B to the effect
that:
(i) Chauvin is a corporation duly organized, validly existing, and in good
standing.
(ii) Chauvin's authorized and issued capital stock is as set forth herein.
(iii) The execution and adoption of this Agreement have been duly
authorized by Chauvin in such manner as is required by law including all
appropriate action by directors and, if required, by shareholders.
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19. ACCESS. From the date hereof to the Merger Date, IS4B and Chauvin shall
provide each other with such information and permit each other's officers and
representatives such access to its properties and books and records as the other
may from time to time reasonably request. If the Merger is not consummated, all
documents received in connection with this agreement shall be returned to the
party furnishing such documents, and all information so received shall be
treated as confidential.
20. CLOSING.
20.1. The transfers and deliveries to be made pursuant to this agreement
(the "Closing") shall be made by and take place at the offices of the Exchange
Agent or other location designated by the Constituent Corporations without
requiring the meeting of the parties hereof. All proceedings to be taken and all
documents to be executed at the Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no proceeding shall be deemed taken
nor documents deemed executed or delivered until all have been taken, delivered
and executed.
20.2. Any copy, facsimile telecommunication or other reliable reproduction
of the writing or transmission required by this agreement or any signature
required thereon may be used in lieu of an original writing or transmission or
signature for any and all purposes for which the original could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission or
original signature.
20.3. At the Closing, Chauvin shall deliver to the Exchange Agent in
satisfactory form, if not already delivered to IS4B:
(i) A list of the holders of record of the shares of Chauvin Common Stock
being exchanged, with an itemization of the number of shares held by each, the
address of each holder, and the aggregate number of shares of IS4B Common Stock
to be issued to each holder;
(ii) Evidence of the execution and adoption of this Agreement in such
manner as is required by law including all appropriate action by directors and,
if required, by shareholders;
(iii) Certified copies of the resolutions of the board of directors of
Chauvin authorizing the execution of this agreement and the consummation of the
Merger;
(iv) The Chauvin Financial Statements;
(v) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein; and
(vi) The shares certificates for the outstanding Common Stock of Chauvin to
be exchanged hereunder or, where any such certificate is not delivered, an
affidavit of lost certificate or other reason for non-delivery.
20.4. At the Closing, IS4B shall deliver to the Exchange Agent in
satisfactory form, if not already delivered to Chauvin:
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(i) A list of its shareholders of record;
(ii) Evidence of the execution and adoption of this Agreement in such
manner as is required by law including all appropriate action by directors and,
if required, by shareholders;
(iii) Certificate of the Secretary of State of its state of incorporation
as of a recent date as to the good standing of IS4B;
(iv) Certified copies of the resolutions of the board of directors of IS4B
authorizing the execution of this agreement and the consummation of the Merger;
(v) The IS4B Financial Statements;
(vi) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein; and
(vii) the share certificates of IS4B (the "IS4B Certificates") to be
delivered to the shareholders of Chauvin hereunder, in proper names and amounts,
as instructed by the Exchange Agent, and bearing legends, if any, required and
appropriate under applicable securities laws.
(viii) $144,970 as follows:
(a) $44,970 in payment of fees and expenses incurred by Chauvin; and
(b) $100,000 cash consideration to the shareholders of Chauvin.
20.5 RELEASE OF CONSIDERATION. Upon filing of the Articles of Merger and
Certificate of Merger, the Exchange Agent is expressly authorized to:
(1) deliver the Chauvin Certificates to IS4B;
(2) deliver the IS4B Certificates to the Chauvin Shareholders;
(3) pay fees and expenses in the amount of $44,970; and
(4) deliver $100,000 to the Chauvin Shareholders.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Constituent Corporations set out herein shall survive the
Merger Date.
22. ARBITRATION.
22.1. SCOPE. The parties hereby agree that any and all claims (except only
for requests for injunctive or other equitable relief) whether existing now, in
the past or in the future as to which the parties or any affiliates may be
adverse parties, and whether arising out of this agreement or from
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any other cause, will be resolved by arbitration before the American Arbitration
Association within the District of Columbia.
22.2. CONSENT TO JURISDICTION, SITUS AND JUDGMENT. The parties hereby
irrevocably consent to the jurisdiction of the American Arbitration Association
and the situs of the arbitration (and any requests for injunctive or other
equitable relief) within the District of Columbia. Any award in arbitration may
be entered in any domestic or foreign court having jurisdiction over the
enforcement of such awards.
22.3. APPLICABLE LAW. The law applicable to the arbitration and this
agreement shall be that of the State of Nevada, determined without regard to its
provisions which would otherwise apply to a question of conflict of laws.
22.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion,
allow the parties to make reasonable disclosure and discovery in regard to any
matters which are the subject of the arbitration and to compel compliance with
such disclosure and discovery order. The arbitrator may order the parties to
comply with all or any of the disclosure and discovery provisions of the Federal
Rules of Civil Procedure, as they then exist, as may be modified by the
arbitrator consistent with the desire to simplify the conduct and minimize the
expense of the arbitration.
22.5. RULES OF LAW. Regardless of any practices of arbitration to the
contrary, the arbitrator will apply the rules of contract and other law of the
jurisdiction whose law applies to the arbitration so that the decision of the
arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
22.6. FINALITY AND FEES. Any award or decision by the American Arbitration
Association shall be final, binding and non-appealable except as to errors of
law or the failure of the arbitrator to adhere to the arbitration provisions
contained in this agreement. Each party to the arbitration shall pay its own
costs and counsel fees except as specifically provided otherwise in this
agreement.
22.7. MEASURE OF DAMAGES. In any adverse action, the parties shall restrict
themselves to claims for compensatory damages and\or securities issued or to be
issued and no claims shall be made by any party or affiliate for lost profits,
punitive or multiple damages.
22.8. COVENANT NOT TO SUE. The parties covenant that under no conditions
will any party or any affiliate file any action against the other (except only
requests for injunctive or other equitable relief) in any forum other than
before the American Arbitration Association, and the parties agree that any such
action, if filed, shall be dismissed upon application and shall be referred for
arbitration hereunder with costs and attorney's fees to the prevailing party.
22.9. INTENTION. It is the intention of the parties and their affiliates
that all disputes of any nature between them, whenever arising, whether in
regard to this Agreement or any other matter, from whatever cause, based on
whatever law, rule or regulation, whether statutory or common law, and however
characterized, be decided by arbitration as provided herein and that no party or
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affiliate be required to litigate in any other forum any disputes or other
matters except for requests for injunctive or equitable relief. This Agreement
shall be interpreted in conformance with this stated intent of the parties and
their affiliates.
22.10. SURVIVAL. The provisions for arbitration contained herein shall
survive the termination of this agreement for any reason.
23. GENERAL PROVISIONS.
23.1. FURTHER ASSURANCES. From time to time, each party will execute such
additional instruments and take such actions as may be reasonably required to
carry out the intent and purposes of this agreement.
23.2. WAIVER. Any failure on the part of either party hereto to comply with
any of its obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
23.3. BROKERS. Each party agrees to indemnify and hold harmless the other
party against any fee, loss, or expense arising out of claims by brokers or
finders employed or alleged to have been employed by the indemnifying party.
23.4. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to Chauvin, to: c/o Herbert Maxwell
1501 Broadway, Suite 1807
New York, New York 10036
If to IS4B, to: Internet House
Canal Basin
Coventry CV1 4LY
England
24. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
25. ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this agreement
without the written consent of the other party shall be void.
26. COUNTERPARTS. This agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
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27. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent shall be Sierchio &
Albert, P.C., New York, New York. The Closing shall take place upon the
fulfillment by each party of all the conditions of Closing required herein, but
not later than 15 days following execution of this Agreement unless extended by
mutual consent of the parties.
28. REVIEW OF AGREEMENT. Each party acknowledges that it has had time to
review this Agreement and, as desired, consult with counsel. In the
interpretation of this agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of, this Agreement.
29. SCHEDULES. All schedules attached hereto, if any, shall be acknowledged
by each party by signature or initials thereon.
30. EFFECTIVE DATE. This effective date of this agreement shall be May 11,
2000.
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SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
BETWEEN CHAUVIN ENTERPRISES, INC. AND
INTERNET SOLUTIONS FOR BUSINESS, INC.
IN WITNESS WHEREOF, the parties have executed this Agreement.
CHAUVIN ENTERPRISES, INC.
By: /s/ Herbert Maxwell
-------------------------------
Herbert Maxwell, President
INTERNET SOLUTIONS FOR BUSINESS, INC.
By: /s/ Lawrence Shaw
-------------------------------
Lawrence Shaw, President
63
Exhibit 3.1
ARTICLES OF INCORPORATION
SEP 05 1997 of
Universal Funding Services, Inc.
Know all men by these present;
That the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under and pursuant to the
provisions of Nevada Revised Statutes 78.010.to Nevada Revised Statues 78.090
inclusive, as amended, and certify that;
1. The name of this corporation is:
Universal Funding Services, Inc,
2. Offices for the transaction of any business of the Corporation,
and where meetings of the Board of Directors and of Stockholders
may be held, may be established and maintained in any part of the
State of Nevada, or in any other state, territory, or possession
of the United States.
3. The nature of the business is to engage in any lawful activity.
4. The Capital Stock shall consist of 50,000,000 shares of common
stock, $0.001 par value.
5. The members of the governing board of the corporation shall be
styled directors, of which there shall be no less than 1 nor more
than 9. The Directors of this corporation need not be
stockholders. The first Board of Directors is:
Penni E. Cress whose address is 5038 Bond St., Las Vegas, NV
89118.
6. This corporation shall have perpetual existence.
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7. The name and address of each of the incorporators signing these
Articles of Incorporation are as follows Penni E. Cress whose
address is, 5038 Bond St., NV 39118.
8. This Corporation shall have a president, a secretary, a
treasurer, and a resident agent, to be chosen by the Board of
Directors, any person may hold two or more offices.
9. The resident agent of this Corporation shall be Penni E. Cress,
5038 Bond St., Las Vegas, NV 89118.
10. The Capital Stock of the corporation, after the fixed
consideration thereof has been paid or performed, shall not be
subject to assessment, and the individual liable for the debts
and liabilities of the Corporation, and the Articles of
Incorporation shall never be amended as the aforesaid provisions.
11. No director or officer of the corporation shall be personally
liable to the corporation of any of its stockholders for damages
for breach of fiduciary duty as a director or office involving
any act or omission of any such director or officer provided,
however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer for acts or
omissions which involve intentional misconduct, fraud or a
knowing violation of' law, or the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article of the Stockholders of the
Corporation shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director of
officer of the Corporation for acts or omissions prior to such
repeal or modification.
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I, the undersigned, being the incorporator herein above named for the
purpose of forming a corporation pursuant to the general corporation law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts within stated are true and accordingly
have hereunto set my hand this 5th day of September 1997.
/s/ Penni E. Cress
Penni E. Cress
5038 Bond St.
Las Vegas,NV89118
State of NEVADA )
)ss
County of CLARK )
On 9-5-97 personally appeared before me, a notary public, personally known
to me to be the person whose name is subscribed to the above instrument who
acknowledged that he/she executed the instrument.
/s/ Cathy Souers
Signature
CATHY SOUERS
Notary Public
State of Nevada
Clark County
No. 95-1166-1
My appointment expires Oct. 13, 1999
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CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
In the matter of Universal Funding Services, Inc. I, Penni E. Cress, with
address at: 5038 Bond St., City of LAS VEGAS, County of CLARK, State of NEVADA
89103 hereby accept appointment as Resident Agent of the above-entitled
corporation in accordance with NRS 78.090.
FURTHERMORE, that the principal office in this State is located at 5038
Bond St., City of LAS VEGAS County of CLARK, State of NEVADA 89118
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of September,
1997.
/s/ Penni E. Cress
RESIDENT AGENT
NRS 78.090 Except any period of vacancy described in NRS 78.097, every
corporation shall have a resident agent, who may wither a natural person or a
corporation, resident or located in this state, in charge of its principal
office. The resident agent may be any bank, or banking corporation, or other
corporation, located and doing business in this state. The certificate of
acceptance must be filed at the time of the initial filing of the corporate
papers.
67
Exhibit 3.2
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
UNIVERSAL REDUCTION MELTING TECHNOLOGIES, INC.
Name of Corporation
We the undersigned Niall Duggan and Niall Duggan
--------------------------- --------------------------------
President or Vice President Secretary or Assistant Secretary
of UNIVERSAL REDUCTION MELTING TECHNOLOGIES, INC. do hereby certify:
---------------------------------------------
Name of Corporation
That the board of Directors of said corporation at a meeting duly convened
and held on the 26th day of February, 1999, adopted a resolution to amend the
original articles as follows:
Article I is hereby amended to read as follows:
I. The name of the corporation shall be Internet Solutions For Business, Inc.
The said change(s) and amendment has been consented to and approved by a
majority vote of the stockholders holding at least a majority of each class
of stock outstanding and entitled to vote thereon.
/s/ Niall Duggan
--------------------------------
President or Vice President
/s/ Niall Duggan
--------------------------------
Secretary or Assistant Secretary
State of U.K.
County of Middlesex
On 9th day of March 1999 personally appeared before me, a Solicitor, Niall
Duggan, who acknowledged that he/she executed the above document.
/s/ Jonathan Kosky
--------------------------------
Solicitor
(Stamp/Seal)
Jonathan Kosky
APPLE KOSKY
Solicitors
3rd Floor, Mattey House, 128-136 High Street
Edgware HA8 7EL
Tel: 0181-951 4458 Fax: 0181-905 6116
DX 55169 Edgware
68
Exhibit 3.3
BY-LAWS OF INTERNET SOLUTIONS FOR BUSINESS , INC.
ARTICLE I
MEETING OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of the Company shall be held
at its office in the City of Las Vegas, Clark County, Nevada, at 10:00 o'clock
in the Morning on the fifth day of September in each year, if not a legal
holiday, and if a legal holiday, then on the next succeeding day not a legal
holiday, for the purpose of electing directors of the company to serve during
the ensuing year and for the transaction of such other business as may be
brought before the meeting. At least five days' written notice specifying the
time and place, when and where, the annual meeting shall be convened, shall be
mailed in a United States Post Office addressed to each of the stockholders of
record at the time of issuing the notice at his or her, or its address last
known, as the same appears on the books of the company.
SECTION 2. Special meetings of the stockholders may be held at the office of the
company in the State of Nevada , or elsewhere, whenever called by the President,
or by the Board of Directors, or by vote of, or by an instrument in writing
signed by the holders of 10% of the issued and outstanding capital stock of the
company. At least ten days' written notice of such meeting, specifying the day
and hour and place, when and where such meeting shall be convened, and objects
for calling the same, shall be mailed in a United States Post Office, addressed
to each of the stockholders of record at the time of issuing the notice, at his
or her or its address last known, as the same appears on the books of the
company.
SECTION 3. If all the stockholders of the company shall waive notice of a
meeting, no notice of such meeting shall be required, and whenever all of the
stockholders shall meet in person or by proxy, such meeting shall be valid for
all purposes without call or notice, and at such meeting any corporate action
may be taken. The written certificate of the officer or officers calling any
meeting setting forth the substance of the notice, and the time and place of the
mailing of the same to the several stockholders, and their' respective addresses
to which the same were mailed, shall be prima facie evidence of the manner and
fact of the calling and giving such notice. -If the address of any stockholder
does not appear upon the books of the company, it will be sufficient to address
any notice to such stockholder at the principal office of the corporation.
SECTION 4. All business lawful to be transacted by the stockholders of the
company, may be transacted at any special meeting or at any adjournment thereof.
Only such business, however, shall be acted upon at special meeting of the
stockholders as shall have been referred to in the notice calling such meetings,
but at any stockholders' meeting at which all of the outstanding capital stock
of the company is represented, either in person or by
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proxy, any lawful business may be transacted, and such meeting shall be valid
for all purposes.
SECTION 5. At the stockholders' meetings the holders of seventy five percent (75
%) in amount of the entire issued and outstanding capital stock of the company,
shall constitute a quorum for all purposes of such meetings.
If the holders of the amount of stock necessary to constitute a quorum shall
fail to attend, in person or by proxy, at the time and place fixed by these
By-Laws for any annual meeting, or fixed by a notice as above provided for a
special meeting, a majority in interest of the stockholders present in person or
by proxy may adjourn from time to time without notice other than by announcement
at the meeting, until holders of the amount of stock requisite to constitute a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted as
originally called.
SECTION 6. At each meeting of the stockholders every stockholder shall be
entitled to vote in person or by his duly authorized proxy appointed by
instrument in writing subscribed by such stockholder or by his duly authorized
attorney. Each stockholder shall have one vote for each share of stock standing
registered in his or her or its name on the books of the corporation, ten days
preceding the day of such meeting. The votes for directors, and upon demand by
any stockholder, the votes upon any question before the meeting, shall be viva
vote.
At each meeting of the stockholders, a full, true and complete list, in
alphabetical order, of all the stockholders entitled to vote at such meeting,
and indicating the number of shares held by each, certified by the Secretary of
the Company, shall be furnished, which list shall be prepared at least ten days
before such meeting, and shall be open to the inspection of the stockholders, or
their agents or proxies, at the place where such meeting is to be held, and for
ten days prior thereto. Only the persons- in whose names shares of stock are
registered on the books of the company for ten days preceding the date of such
meeting, as evidenced by the list of stockholders, shall be entitled to vote at
such meeting. Proxies and powers of Attorney to vote must be filed with the
Secretary of the Company before an election or a meeting of the stockholders, or
they cannot be used at such election or meeting.
SECTION 7. At each meeting of the stockholders the polls shall be opened and
closed; the proxies and ballots issued, received, and be taken in charge of, for
the purpose of the meeting, and all questions touching the qualifications of
voters and the validity of proxies, and the acceptance or rejection of votes,
shall be decided by two inspectors. Such inspectors shall be appointed at the
meeting by the presiding officer of the meeting.
SECTION 8. At the stockholders' meetings, the regular order of business shall be
as follows:
1. Reading and approval of the Minutes of previous meeting or meetings;
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2. Reports of the Board of Directors, the President, Treasurer and Secretary
of the Company in the order named;
3. Reports of Committee;
4. Election of Directors;
5. Unfinished Business;
6. New Business;
7. Adjournment.
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ARTICLE II
DIRECTORS AND THEIR MEETINGS
SECTION 1. The Board of Directors of the Company shall consist of no less than
one person who shall be chosen by the stockholders annually, at the annual
meeting of the Company, and who shall hold office for one year, and until their
successors are elected and qualify.
SECTION 2. When any vacancy occurs among the Directors by death, resignation,
disqualification or other cause, the stockholders, at any regular or special
meeting, or at any adjourned meeting thereof, or the remaining Directors, by the
affirmative vote of a majority thereof, shall elect a successor to hold office
for the unexpired portion of the term of the Director whose place shall have
become vacant and until his successor shall have been elected and shall qualify.
SECTION 3. Meeting of the Directors may be held at the principal office of the
company in the state of Nevada, or elsewhere, at such place or places as the
Board of Directors may, from time to time, determine.
SECTION 4. Without notice or call, the Board of Directors shall hold its first
annual meeting for the year immediately after the annual meeting of the
stockholders or immediately after the election of Directors at such annual
meeting.
Regular meetings of the Board of Directors shall be held at the office of the
company in the City of Las Vegas , State of Nevada, or at such other venue as
decided by a unanimous vote of the Directors of the Company, on 13th of October
at 10:00 o'clock in the Morning. Notice of such regular meetings shall be mailed
to each Director by the Secretary at least three days previous to the day fixed
for such meetings, but no regular meeting shall be held void or invalid if such
notice is not given, provided the meeting is held at the time and place fixed by
these By-Laws for holding such regular meetings.
Special meetings of the Board of Directors may be held on the call of the
President or Secretary on at least three days notice by mail or telegraph.
Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without or of which notice shall have been waived
by all absentees, provided a quorum shall be present, shall be valid for all
purposes unless otherwise indicated in the notice calling the meeting or in' the
waiver of notice.
Any and all business may be transacted by any meeting of the Board of Directors,
either regular or special.
SECTION 5. A majority of the Board of Directors in office shall constitute a
quorum for the transaction of business, but if at any meeting of the Board there
be less than a quorum
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present, a majority of those present may adjourn from time to time, until a
quorum shall be present, and no notice of such adjournment shall be required.
The Board of Directors may prescribe rules not in conflict with these By-Laws
for the conduct of its business; provided, however, that in the fixing of
salaries of the officers of the corporation and in any modification to the
capital structure of the corporation, the unanimous action of all of the
Directors shall be required.
SECTION 6. A Director need not be a stockholder of the corporation.
SECTION 7. The Directors shall be allowed and paid all necessary expenses
incurred in attending any meeting of the Board, but shall not receive any
compensation for their services as Directors until such time as the company is
able to declare and pay dividends on its capital stock.
SECTION 8. The Board of Directors shall make a report to the stockholders at
annual meetings of the stockholders of the condition of the company, and shall,
at request, furnish each of the stockholders with a true copy thereof. The Board
of Directors in its discretion may submit any contract or act for approval or
ratification at any annual meeting of the stockholders called for the purpose of
considering any such contract or act, which, it approved, or ratified by the
vote of the holders of a majority of the capital stock of the company
represented in person or by proxy at such meeting, provided that a lawful quorum
of stockholders be there represented in person or by proxy, shall be valid and
binding upon the corporation and upon all the stockholders thereof, as if it had
been approved or ratified by every stockholder of the corporation.
SECTION 9. The Board of Directors shall have the power from time to time to
provide for the management of the offices of the company in such manner as they
see fit, and in particular from time to time to delegate any of the powers of
the Board in the course of the current business of the company toady standing or
special committee or to any officer or agent and to appoint .any persons to be
agents of the company with such powers (including the power to sub delegate),
and upon such terms as maybe deemed fit.
SECTION 10. The Board of Directors is vested with the complete and. Unrestrained
authority in the management of all the affairs of the company, and is authorized
to exercise for such purpose as the - General Agent of the Company, its entire
corporate authority.
SECTION 11. The regular order of business at meetings of the Board of Directors
shall be as follows:
1. Reading and approval of the minutes of any previous meeting or meetings;
2. Reports of officers and committeemen;
3. Election of officers:
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4. Unfinished business;
5. New business;
6. Adjournment.
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ARTICLE III
OFFICERS AND THEIR DUTIES
SECTION 1. The Board of Directors, at its first and after each meeting after the
annual meeting of stockholders, shall elect a President, a Vice-President, a
Secretary and a Treasurer, to hold office for one year next coming, and until
their successors are elected and qualify. The offices of the Secretary and
Treasurer may be held by one person.
Any vacancy in any of said offices may be filled by the Board of Directors.
The Board of Directors may from time to time, by resolution, appoint such
additional Vice Presidents and additional Assistant Secretaries, Assistant
Treasurer and Transfer Agents of the company as it may deem advisable; prescribe
their duties, and fix their compensation, and all such appointed officers shall
be subject to removal at any time by the Board of Directors. All officers,
agents, and factors of the company shall be chosen and appointed in such manner
and shall hold their office for such terms as the Board of Directors may by
resolution prescribe.
SECTION 2. The President shall be the executive officer of the company and shall
have the suspension and, subject to the control of the Board of Directors, the
direction of the Company's affairs,-_ with full power to execute all resolutions
and orders of the Board of Directors not especially entrusted to some other
officer of the company. He shall be a member of the Executive Committee, and the
Chairman thereof; he shall preside at all meetings of the Board of Directors,
and at all meetings of the stockholders, and shall sign the Certificates of
Stock issued by the company, and shall perform such other duties as shall be
prescribed by the Board of Directors.
SECTION 3. The Vice-President shall be vested with all the powers and perform
all the duties of the President in his absence or inability to act, including
the signing of the Certificates of Stock issued by the company, and he shall so
perform such other duties as shall be prescribed by the Board of Directors.
SECTION 4. The Treasurer shall have the custody of all the funds and securities
of the company. When necessary or proper he shall endorse on behalf of the
company for collection checks, notes, and other obligations; he shall deposit
all monies to the credit of the company in such bank or banks or other
depository as the Board of Directors may designate; he shall sign all receipts
and vouchers for payments made by the company, except as herein otherwise
provided. He shall sign with the President all bills of exchange and promissory
notes of the company; he shall also have the care and custody of the stocks,
bonds, certificates, vouchers, evidence of debts, securities, and such other
property belonging to the company as the Board of Directors shall designate; he
shall sign all papers required bylaw or by those By-Laws or the Board of
Directors to be signed by the Treasurer. Whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter
regularly in the books of the company to be kept by him for the purpose, full
and accurate accounts of all monies received and paid by him on
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account of the company. He shall at all reasonable times exhibit the books of
account to any Directors of the company during business hours, and he shall
perform all acts incident to the position of Treasurer subject to the control of
the Board of Directors.
The Treasurer shall, if required by the Board of Directors, give bond to the
company conditioned for the faithful performance of all his duties as Treasurer
in such sum, and with such surety as shall be approved by the Board of
Directors, with expense of such bond to be borne by the company.
SECTION 5. The Board of Directors may appoint an Assistant Treasurer who shall
have such powers and perform such duties as may be prescribed for him by the
Treasurer of the company or by the Board of Directors, and the Board of
Directors shall require the Assistant Treasurer to give a bond to the company in
such sum and with such security as it shall approve, as conditioned for the
faithful performance of his duties as Assistant Treasurer, the expense of such
bond to be borne by the company;
SECTION 6. The Secretary shall keep the Minutes of all meetings of the Board of
Directors and the Minutes of all meetings of the stockholders and of the
Executive Committee in books provided for that purpose. He shall attend to the
giving and serving of all notices of the company; he may sign with the President
or Vice-President, in the name of the Company, all contracts authorized by the
Board of Directors or Executive Committee; he shall affix the corporate seal of
the company thereto when so authorized by the Board of Directors or Executive
Committee; he shall have the custody of the corporate seal of the company; he
shall affix the corporate seal to all certificates of stock duly issued by the
company; he shall have charge of Stock Certificate Books, Transfer books and
Stock Ledgers, and such other books and papers as the Board of Directors or the
Executive Committee may direct, all of which shall at all reasonable times be
open to the examination of any Director upon application at the office of the
company during business hours, and he shall, in general, perform all duties
incident to the office of Secretary.
SECTION 7. The Board of Directors may appoint an Assistant Secretary who shall
have such powers and perform such duties as may be prescribed for him by the
Secretary of the company or by the Board of Directors.
SECTION 8. Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority in behalf of the company to attend and to
act and to vote at any meetings of the stockholders of any corporation in which
the company may hold stock, and at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock,
and which as the new owner thereof, the company might have possessed and
exercised if present. The Board of Directors, by resolution, from time to time,
may confer like powers on any person or persons in place of the President to
represent the company for the purposes in this section mentioned.
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ARTICLE IV
CAPITAL STOCK
SECTION 1. Any alterations to the capital stock of the Company, including but
not limited to the issue of authorized but unissued stock, shall require the
unanimous action of all the Directors of the Company.
SECTION 2. Ownership of stock in the company shall be evidenced by certificates
of stock in such forms as shall be prescribed by the Board of Directors, and
shall be under the seal of the company and signed by the President or the
Vice-President and also by the Secretary or by an Assistant Secretary. All
certificates shall be consecutively numbered; the name of the person owning the
shares represented thereby with the number of such shares and the date of issue
shall be entered on the company's books. No certificates shall be valid unless
it is signed by the President or Vice-President and by the Secretary or
Assistant Secretary. All certificates surrendered to the company shall be
canceled and no new certificate shall be issued until the former certificate for
the same number of shares shall have been surrendered or canceled.
SECTION 3. No transfer of stock shall be valid as against the company except on
surrender and cancellation of the certificate therefor, accompanied by an
assignment or transfer by the owner therefor, made either in person or under
assignment, a new certificate shall be issued therefor. Whenever any transfer
shall be expressed as made for collateral security and not absolutely, the same
shall be so expressed in the entry of said transfer on the books of the company.
SECTION 4. The Board of Directors shall have power and authority to make all
such rules and regulations not inconsistent herewith as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
the capital stock of the company. The Board of Directors may appoint a transfer
agent and a registrar of transfers and may require all stock certificates to
bear the signature of such transfer agent and such registrar of transfer.
SECTION 5. The Stock Transfer Books shall be closed for all meetings of the
stockholders for the period of ten days prior to such meetings and shall be
closed for the payment of dividends during such- periods as from time to time
may be fixed by the Board of Directors, and during such periods no stock shall
be transferable.
SECTION 6. Any person or persons applying for a certificate of stock in lieu of
one alleged to have been lost or destroyed, shall make affidavit or affirmation
of the fact, and shall deposit with the company an affidavit. Whereupon, at the
end of six months after the deposit of said affidavit and upon such person or
persons giving Bond of Indemnity to the company with surety to be approved by
the Board of Directors in double the current value of stock against any damage,
loss or inconvenience to the company, which may or can arise in consequence of a
new or duplicate certificate being issued in lieu of the one lost or missing,
the Board of Directors may cause to be issued to such person or persons a
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new certificate, or a duplicate of the certificate, so lost or destroyed. The
Board of Directors may, in its discretion refuse to issue such new or duplicate
certificate save upon the order of some court having jurisdiction in. such
matter, anything herein to the contrary notwithstanding.
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ARTICLE V
OFFICES AND BOOKS
SECTION 1. The principal office of the corporation, in Nevada shall be at 5038
Bond St., Las Vegas and the company may have a principal office in any other
state or territory as the Board of Director may designate.
SECTION 2. The Stock and Transfer Books and a copy of the By-Laws and Articles
of Incorporation of the company shall be kept at its principal office in the
County of Clark, state of Nevada, for the inspection of all who are authorized
or have the right to see the same, and for the transfer of stock. All other
books of the company shall be kept at such places as may be prescribed by the
Board of Directors.
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ARTICLE VI
MISCELLANEOUS
SECTION 1. The Board of Directors shall have power to reserve over and above the
capital stock paid in, S&I an amount in its discretion as it may deem advisable
to fix as a reserve fund, and may, from time to time, declare dividends from the
accumulated profits of the company in excess of the amounts so reserved, and pay
the same to the stockholders of the company, and may also, if it deems the same
advisable, declare stock dividends of the unissued capital stock of the company.
SECTION 2. No agreement, contract or obligation (other than checks in payment of
indebtedness incurred by authority of the Board of Directors) involving the
payment of monies or the credit of the company for more than $10,000 dollars,
shall be made without the authority of the Board of Directors, or of the
Executive Committee acting as such.
SECTION 3. Unless otherwise ordered by the Board of Directors, all agreements
and contracts shall be signed by the President and the Secretary in the name and
on behalf of the company, and shall have the corporate seal thereto affixed.
SECTION 4. All monies of the corporation shall be deposited when and as received
by the - Treasurer in such bank or banks or other depository as may from time to
time be designated by the Board of Directors, and such deposits shall be made in
the name of the company.
SECTION 5. No note, draft, acceptance, endorsement or other evidence of
indebtedness shall be valid or against the company unless the same shall be
signed by the President or a Vice-President, and attested by the Secretary or an
Assistant Secretary, or signed by the Treasurer or an Assistant Treasurer, and
countersigned by the President, Vice-President, or Secretary, except that the
Treasurer or an Assistant Treasurer may, without countersignature, make
endorsements for deposit to the credit of the company in all its duly authorized
depositories.
SECTION 6. No loan or advance of money shall be made by the company to any
stockholder or officer therein, unless the Board of Directors shall otherwise
authorize.
SECTION 7. No director nor executive officer of the company shall be entitled to
any salary or compensation for any services performed for the company, unless
such salary or compensation shall be fixed by resolution of the Board of
Directors, adopted by the unanimous vote of all the Directors voting in favor
thereof.
SECTION 8. The company may take, acquire, hold, mortgage, sell, or otherwise
deal in stocks or bonds or securities of any other corporation, if and as often
as the Board of Directors shall so elect.
80
<PAGE>
SECTION 9. The Directors shall have power to authorize and cause to be executed,
mortgages, and liens without limit as to amount upon the property and franchise
of this corporation, and pursuant to the affirmative vote, either in person or
by proxy, of the holders of a majority of the capital stock issued and
outstanding; the Directors shall have the authority to dispose in any manner of
the whole property of this corporation.
SECTION 10. Any motion to dispose of more than 25% of the Company's interest in
any subsidiary company shall require the unanimous vote of the entire Board of
Directors of the Company.
81
<PAGE>
ARTICLE VII
AMENDMENT OF BY-LAWS
SECTION 1. Amendments and changes of these By-Laws may be made at any regular or
special meeting of the Board of Directors by a vote of not less than all of the
entire Board, or may be made by a vote of, or a consent in writing signed by the
holders of fifty-one percent (51%) of the issued and outstanding capital stock.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, being the directors of
the above named corporation, do hereby consent to the foregoing By-Laws and
adopt the same as and for the By-Laws of said corporation.
IN WITNESS WHEREOF, we have hereunto set our hands this 26th day of February
1999.
Niall Duggan
82
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