SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
March 1, 2000
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Date of Report
(Date of Earliest Event Reported)
COSMOZ.COM, INC.
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(Exact Name of Registrant as Specified in its Charter)
1515 S. El Camino Real
San Mateo, California 94402
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(Address of principal executive offices)
650/358-1188
650/358-0188(fax)
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Registrant's telephone number
IVORY ACQUISITION CORPORATION
1504 R Street, NW
Washington, DC 20009
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Former name and former address
Delaware 0-28377 94-3319536
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization and Plan of
Acquisition (the "Acquisition Agreement") dated January 5, 2000, between
Cosmoz.com, Inc., ("Cosmoz" or the "Company"), a Delaware corporation, and Ivory
Acquisition Corporation, ("Ivory"), a Delaware Corporation, all the outstanding
shares of common stock of Ivory Acquisition Corporation were exchanged for
250,000 shares of common stock of Cosmoz.com, Inc.Thereafter, Cosmoz effected a
short form merger with its wholly-owned subsidiary, Ivory, and in a transaction
in which Cosmoz was the surviving company.
The Acquisition Agreement and the subsequent merger were adopted by the
unanimous consent of the Board of Directors of Ivory and approved by the
unanimous consent of the shareholders of Ivory. The Acquisition is intended to
qualify as reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
Prior to the acquisition of and merger with Ivory, Cosmoz.com had
61,034,5456 shares of common stock issued and outstanding, and there are
60,284,546 shares issued and outstanding following the acquisition. As a result
of the Acquisition Transaction, Cosmoz acquired 100% of the issued and
outstanding common stock of Ivory.
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Upon effectiveness of the acquisition and the merger, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and Exchange
Commission, Cosmoz became the successor issuer to Ivory for reporting purposes
under the Securities Exchange Act of 1934 and elects to report under the Act
effective as of the date of the merger.
The officers of Cosmoz will continue as officers of the successor
issuer. See "Management" below. The officers, directors, and by-laws of Cosmoz
will continue without change as the officers, directors, and by-laws of the
successor issuer.
A copy of the Acquisition Agreement was previously filed and is
incorporated in its entirety herein by reference to that previous filing. A copy
of the certificate of ownership and merger is filed herewith.
(b) The following table contains information regarding the
shareholdings of Cosmoz' current directors and executive officers and those
persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the warrants and options held by each such
person or entity):
Number of shares Percent of
of Common Stock Common Stock
Beneficially Owned Beneficially
Owned(1)
------------------ ------------
Name
Wilfred Shaw 1,526,798 2.53%
Chairman and Chief
Executive Officer
Asia Pacific Ventures (2) 6,000,000 9.94%
Suite 1-3 16th Floor,
Kinwick Centre,
32 Hollywood Road
Central Hong Kong, Hong Kong
Times Square International, Inc. 7,500,000 12.43%
P.O.Box 107
Oceanic House
Grand Turk
Turks and Caicos Islands
Corworth Investment, Inc. (4) 7,356,117 12.19%
P.O.Box 107
Oceanic House
Grand Turk
Turks and Caicos Islands
Justin Keener, 405,000 0.7%
Director and Chief
Operating Officer
Wing Yu, (5) 275,000 0.5%
Director and
Vice President
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(1) The following percentages are based upon 60,309,545 shares of the
Company common stock outstanding.
(2) Asia Pacific Ventures is a related party to Mr. Wilfred Shaw, Chairman
and Chief Executive Officer.
(3) Received in exchange for a $150,000 loan secured by a promissory note
under which MIS International, Inc., the Company's predecessor, was
obligated to repay the loan amount to Times Square International, Inc.
with shares of common stock of MIS International, Inc., at $0.02 per
share.
(4) Received in exchange for a $147,122 loan secured by a promissory note
under which MIS International, Inc., the Company's predecessor, was
obligated to repay the loan amount to Corworth Investment, Inc., with
shares of common stock of MIS International, Inc., at $.02 per share.
(5) This figure includes Mr. Yu's stock options of 100,000 shares at a
strike price of $1.50 per share. Mr. Yu may exercise his stock options
until May 31, 2003.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Acquisition Agreement
was negotiated between Ivory and Cosmoz.
In evaluating Cosmoz as a candidate for the proposed Acquisition, Ivory
used criteria such as the value of the assets of Cosmoz, its ability to compete
in the information technology market, the increased use of the Internet for
commerce, its current and anticipated business operations, and its business
reputation in the Internet venture capital community. In evaluating Ivory,
Cosmoz placed a primary emphasis on Ivory's status as a reporting company under
Section 12(g) of the Securities Exchange Act of 1934, as amended, (the "Act")
and the acquisition of Ivory facilitating Cosmoz becoming a reporting company
under the Act.
(b) The Company intends to strengthen its position in the Internet
portal line by further development of its World Wide Web ("WEB") technologies
and existing Internet properties, and WEB sites. The Company plans to meet its
strategic objectives through acquisitions of companies that share the Company's
focus and have synergy with the Company's current properties.
BUSINESS
Company
Cosmoz was incorporated in the State of Delaware on October 15, 1996,
as MIS International, Inc., which merged with MIS Multimedia Interactive
Services, Inc., a Canadian corporation, as of July 1, 1997. MIS Multimedia
Interactive Services, Inc. and its subsidiaries, Pretzel Franchising, Inc. and
Wheel to Wheel Franchising, Inc., were engaged in the business of operating
retail stores and selling franchises. Presently, the headquarters of Cosmoz are
located in San Mateo, California.
Cosmoz.com is a leading Internet holding and venture company that
funds, acquires, and monetizes various Internet companies. Primarily focused on
investing in business-to-business (B2B) Internet companies, Cosmoz.com is at the
cutting-edge of the Internet revolution. The Company's strategic business model
allows it to capitalize on the future value, growth, and technology of
tomorrow's leading Internet companies. Cosmoz.com's strategy of investing in
early-stage Internet companies at favorable valuations facilitates growth,
synergy, and value, and allows the Company to maximize return on its investments
and the Cosmoz.com network as a whole.
Through the World Wide Web, the Company offers a network of branded,
technology and community-driven Web sites focused on personal finance,
investing, Internet search, business-to-business commerce and games. The
strategy behind these acquisitions is for increasing the user base, cash flows,
and exposure. The Company targets businesses that it believes exhibit a
potential for an exponential rate of growth and a strong return on investment.
After identifying such a business, the Company offers it the cash and other
business resources (financial, management and marketing expertise) it needs to
become profitable. Additionally, Cosmoz develops Web related software and
technology to support its portal line of business.
Currently, the Company has five wholly owned subsidiaries, which are
BuckInvestor.com, Inc., KingFine, Inc., MB Technologies, Inc., StreetIQ.com,
Inc., and iTrack, Inc. Shares of the Company's common stock were the sole
consideration in the Company's acquisition of these five entities.
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BuckInvestor.com, Inc., ("BuckInvestor") provides a variety of
investment information, financial advice and education in an easy-to-understand
format geared towards investors under age 35. Cosmoz acquired BuckInvestor on
April 27, 1999. Some of the services and benefits featured on the WEB site
include original articles on the basics of investing, personal financial advice,
daily market news, commentary from certified financial consultants, stock
quotes, and message boards. BuckInvestor also contains a large online directory
of approximately 700 investment clubs from around the world. BuckInvestor was
formerly based in Raleigh, North Carolina, but has moved its operations to the
Company headquarters in San Mateo.
KingFine, Inc., D/B/A MonsterPick.com, provides personal online
investing and day trading contests. MonsterPick.com has created and maintained
an online investment community setting where investor participation is achieved
by the exchange of ideas and opinions through message boards and playing in the
"Pick of the Day" contests. MonsterPick.com members scoring the greatest
cumulative gains each month based on their stock picks win prizes provided by
sponsors and advertisers. MonsterPick.com was formerly based in Auburn, Indiana,
but has moved its operations to the Company headquarters in San Mateo.
MB Technologies, Inc., D/B/A TickerZone.com, is a message board
community solutions provider acquired by Cosmoz on July 20th, 1999. The
technology available to the members of this WEB community allows its users to
customize the look of their message boards, to include additional HTML code to
the message boards, to use cascading style sheets and to schedule advertising
banners. Users can also restrict access to the board through a variety of
controls. The message board is located at http://www.tickerzone.com. The
TickerZone.com WEB site also profiles and promotes affiliated WEB sites. The
Company's intention is to use this turnkey solution to pool the fragmented
message board traffic from numerous other financial WEB sites into one forum.
TickerZone.com was formerly based in Arcadia, California, but has moved its
operations to the Company headquarters in San Mateo.
StreetIQ, Inc., ("StreetIQ"), is a women's online community, acquired
by Cosmoz.com on August 25, 1999. The WEB site is located at and currently
reaches approximately 250,000 online users in the United States. The StreetIQ
WEB site offers several online services including stock quotes, personal stock
portfolios, stock research, broker ratings, initial public offering information,
free electronic mail, and a variety of commentary and discussion forums
targeting women.
iTrack, Inc., ("iTrack"), is an online auction monitoring service that
lets auction shoppers stay on top of key product types or product categories and
also lets them to monitor auctions for rare and unusual items on ten of the top
Web auction sites. These Web sites include Amazon.com Auctions, Auction
Universe, boxLot Online Auctions, Gold's Auctions, Haggle Online (part of the
Go2Net Network), OnSale, UBid, Xoom Auctions, and Yahoo!. iTrack is located at .
This service enables users of the WEB to track online auctions at no initial
cost. iTrack also delivers its search results via electronic mail Auctions.
iTrack was formerly based in Los Gatos, California, but has moved its operations
to the Company headquarters in San Mateo.
Additionally, the Company wholly owns two inactive subsidiaries,
Pretzel Franchising, Inc., and Wheel to Wheel Franchising, Inc., in Canada. The
Company is in the process of closing down both of these subsidiaries.
In March of 1999, Cosmoz Online Ltd., a privately held foreign
corporation, ("Cosmoz Online") entered into an exclusive marketing arrangement
with the Company for a sole purpose of developing and promoting Cosmoz Online's
online casinos. Under the terms of this marketing arrangement, the Company
agreed to promote Cosmoz Online's online casinos as stand alone businesses. In
exchange for its services, the Company has received a one-time fee of $20,000
and a 5% commission on all player deposits generated from the casinos' online
activities. Cosmoz Online currently operates five online casinos:
DragonCasino.com, RealBet.com, Tikicasino.com, DesertCasino.com and
KingsCourtCasino.com.
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The Company has a minority ownership interest in iPing, Inc.,
("iPing"). It is the first WEB based wake-up call, reminder, and notification
service, MrWakeUp.com, located at . This service utilizes iPing's unique
application for connecting the Internet with the telephone. Mr.WakeUp is a free
service supported by advertisers and sponsors such as Amazon.com and
1-800presents.com. Service users can go to MrWakeUp.com and schedule customized
phone calls to wake them up and remind them about meetings and other important
time-sensitive events. Users can also set customized phone calls to send
information such as headline news, horoscopes, weather and motivational tips
from the Internet at their requested time. Currently, approximately
approximately 30,000 subscribers use Mr.WakeUp.com's services.
The Company also has made an indirect investment through Ridgewood
Capital, an Internet business- to-business investment fund, in several Internet
based companies. The portfolio of companies include Medibuy.com., an electronic
commerce business-to-business service matching online buyers and sellers of
medical supplies, products and equipment where registered buyers can post a
request for proposal on the site and registered vendors will respond with their
bids, Metasound, an Internet telecommunications company, Quantum Conveyors, an
automated package handling technology company, InViso, a maker of screens for
portable Internet devices, Marketfusion.com., a business-to-business electronic
commerce company, Sycon, specialized computer chip design software maker, and
Feedroom.com, a broadband Internet channel.
Cosmoz, management believes that its focus on providing resources for
personal investing and making calculated investments in other technology
companies will allow it to compete successfully with other Internet companies.
There is no assurance that the Company will be able to secure any or all funding
necessary for its future growth and expansion. There is also no assurance that
even if the Company manages to obtain adequate funding to complete any
contemplated acquisition, such acquisition will succeed in enhancing the
Company's business and will not ultimately have an adverse effect on the
Company's business and operations.
The Company intends to continue future investments and acquisitions of
the Internet companies that fit the Company's general acquisition criteria.
However, currently, the Company does not have a fixed source of capital to
finance such future acquisitions. In this respect, the Company intends to
accomplish its acquisition plans by exchange of the Company's common stock
alone. There is no assurance given as to the trading price of the Company stock
or liquidity of its common stock. Low trading price or poor liquidity of the
Company's common stock may adversely affect the Company's ability to engage in
future acquisitions and to accomplish its growth objectives.
Current Operations
The Company's current operations primarily consist of identifying and
making acquisitions of other small information technology and Internet based
companies that share the focus and quality specific to the Company's current
portfolio of acquisitions. During 1999, the Company completed for common-stock
only acquisitions of BuckInvestor.com, Inc., and KingFine, Inc. In addition to
this aspect of its business, the Company is in the process of developing and
maintaining its technology infrastructure to maximize speed, reliability and
security with a fully scaleable foundation. The Company Web systems are
maintained in secure, climate controlled locations with load balancing and fault
tolerance.
Marketing
The Company intends to focus its promotional efforts on mass media and
public relations to create product awareness in order to develop a
broader user base. This advertising campaign is intended to raise
general awareness of the Cosmoz.com branding through the placement of
print advertisements in major metropolitan newspapers and nationally
circulated print media. The Company intends to target Web users through
placement of banner advertisements on all major portals and sites, e.g.
Hotbot, Yahoo!, Lycos, Ask Jeeves, The Globe, Go.com, Alta Vista, etc.,
in the upcoming months to promote its portal. The Company also plans to
have a contest with a possibility of giving away books and Apple iMac
computers as prizes. As a part of its general advertising campaign, the
Company also plans to secure advertising space in the trade magazines
targeting specific market niches.
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The Company's current advertising and promotional efforts engage
several forms of mass media. More specifically, the Company has placed
advertisements in major metropolitan newspapers (e.g., The New York Times and
Los Angeles Times) with year to date advertising expenses of $25,597, radio
advertisements placed with Metro Networks Communications incurred $176,038 in
expenses to date, and advertisements placed in a specialty publication (e.g.,
Barron's and Investor's Business Daily) totaled $43,863 in expenses to date. The
Company intends to continue and expand its promotional efforts in order to reach
wider user audience.
Trademarks and Patents
The Company has no patents or trademarks. The Company has filed
applications to secure Company's existing Internet domain names including
Cosmoz.com, StreetIQ.com, MonsterQuote.com, iTrack.com and BuckInvestor.com.
These applications are currently pending approval.
Suppliers
The Company employs services of a number of suppliers whose services
range from providing high speed Internet access to financial and other news
content providers. Among many service providers are the following companies:
Comtex Scientific Corporation, an electronic news service provider
since December 1999 for a monthly fee of $900.00 plus one time start up fee in
the amount of $2,500.00. A total of $8,350 has been paid to date in costs.
Go2Net, Inc., a Washington company that provides search engine
technology from July 1, 1999 to December 31, 1999. A total of $35,000 has been
paid to date in costs.
AboveNet Communications, a California company that provides domain
hosting and server services and is located at 50 West San Fernando Street, Suite
1010, San Jose, California, 95113. A total of $12,615 has been paid to date in
costs.
iSyndicate, a California company that provides syndicated content
services including Associated Press news feed, general domestic, entertainment,
sports, business and accurate weather news. A total of $16,600 has been paid to
date in costs.
Stockpoint, Inc., an Iowa company that provides real-time stock quote
services, variety of charting options on a specific stock, and other performance
indicators for all stocks and mutual funds quoted on the US stock markets (e.g.,
NYSE, AMEX and NASDAQ). Stockpoint, Inc., is located at 2600 Crosspark Road,
Coralville, Iowa 52241. A total of $ 19,000 has been paid to date in costs.
Property
Since May 1, 1999 the Company's principal executive offices are at a
2,054 square foot facility at 55 Hawthorne Street, Suite 550, San Francisco,
California 94105. All operations including system development, control and
maintenance are performed at this facility. This facility is leased for three
years from G & I Howard, LLC, with no option to extend the lease, at an annual
rate of $36.00 per square foot. Monthly lease payments in subsequent years are
based on 1.53% of increases in operating expenses and property taxes paid or
incurred by landlord in subsequent years over the first (base) year. The company
intends to add another 3,000 square feet facility.
The Company leases a living facility to accommodate out of town
employees for business meetings.
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Litigation
There is no outstanding litigation in which the Company is involved and
the Company is unaware of any pending actions or claims against it.
Employees
The Company currently employs 14 full-time employees. Upon securing of
additional funding, the Company intends to hire additional 10 to 15 full-time
employees during next several months.
Description of Securities
The Company has an authorized capitalization of 200,000,000 share of
Common Stock, $.001 par value per share, of which 61284,546 shares have been
issued and are outstanding, and of 50,000,000 shares of Preferred Stock, $.001
par value per share, of which no shares are issued and outstanding.
MARKET FOR THE COMPANY'S SECURITIES
The Company has been a non-reporting publicly traded company with
certain of its securities exempt from registration under the Securities Act of
1933 pursuant to Rule 504 of Regulation D of the General Rules and Regulations
of the Securities and Exchange Commission. The Company's common stock is traded
on the NASD OTC Bulletin Board under the symbol CMOZ. 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.
The Company was required to become a reporting company by the close of
business on February 28, 2000 or no longer be listed on the OTC Bulletin Board.
Cosmoz concluded the acquisition of all the outstanding shares of Ivory, and
became a successor issuer pursuant to Rule 12g-3 in order to comply with the
reporting company requirements implemented by the NASDAQ Stock Market.
The following table represents the average prices for the Company's
common stock:
<TABLE>
<CAPTION>
Open High Low Closing
Price Bid Bid Bid Volume
<S> <C> <C> <C> <C> <C>
January 2000 1.118 1.25 1.12 1.19 313,705
December 1999 1.50 1.75 1.31 1.50 517,359
November 1999 1.00 1.531 0.906 1.375 322,100
October 1999 1.469 1.531 1.00 1.00 145,600
September 1999 1.938 1.938 1.438 1.50 185,100
August 1999 2.156 2.156 1.781 1.875 243,600
July 1999 2.312 2.312 2.094 2.156 218,800
June 1999 2.844 2.875 2.156 2.281 262,400
May 1999 1.469 2.875 1.375 2.75 631,000
April 1999 1.312 1.562 1.125 1.375 441,400
March 1999 1.875 2.00 1.00 1.203 449,000
February 1999 2.875 3.00 1.75 1.875 1,513,800
January 1999 3.812 4.188 1.938 2.75 5,361,000
</TABLE>
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Management
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Wilfred Shaw 29 Chairman and Chief Executive Officer, Director
Justin Keener 25 Chief Operating Officer and Vice President
of Business Development
Wing Yu 31 Vice President of Information Technology
</TABLE>
Wilfred Shaw has been Chairman of the Board of Directors of the Company
since its formation. The Company has entered into a consulting contract with
Sharpmangement.com, Inc., for the services of Mr. Shaw to perform the duties of
the Chief Executive Officer. Mr. Shaw owns Sharpmanagement.com, Inc..
Mr. Shaw has spent the last eight years in the venture capital and
investment industries, serving as Vice President for Business Development for
Intertech Group, a conglomerate of small companies. From 1994 to 1996, Mr. Shaw
was employed as the Vice President for Business Development for IG
International, Inc., a pharmaceutical company based in the San Francisco Bay
area. Mr. Shaw earned his Bachelor of Arts in Economics degree at Saint Mary's
College.
Justin Keener, Chief Operating Officer and Vice President of Business
Development of the Company, co-founded a Web design firm, AdTech Promotions and
the financial investment WEB site, BuckInvestor.com Inc. Mr. Keener joined the
Cosmoz management team during the spring 1999 as a result of the acquisition of
BuckInvestor.com, Inc., by the Company. Mr. Keener previously served as an
Executive Vice President at R&S Distributing Company, Inc., where he managed
company assets for more than four years, and was vice president of marketing for
PilloRest, Inc. Mr. Keener holds a finance degree with honors from North
Carolina State University.
Wing Yu, Vice President of Information Technology, was an educator and
a freelance Apple Macintosh developer for 6 years. While coordinating online
advertising for Ticketmaster.com-CitySearch.com Online, he developed various WEB
sites as a freelance Web developer. He holds a Bachelor of Arts in History from
Occidental College, and a Masters in Arts degree in Instructional Technology.
Executive Compensation
Sharpmangement.com, Inc., ("Sharpmanagement") receives $180,000
annually plus an initial bonus of $180,000 for providing financial management
services, specifically the services of Mr. Shaw to be the Chief Executive
Officer of Cosmoz. In January 2000, The Company paid Sharpmagement 1,250,000
shares of its common stock, having a market value of $1,562,500, as a bonus. The
management services contract with Sharpmanagement, commenced on January 1, 2000.
Mr. Shaw is the majority shareholder of Sharpmanagement.
Justin Keener, Chief Operating Officer and Vice President of Business
Development, receives $96,000 per annum. In January 2000, he received 875,000
shares of Cosmoz common stock, having a market value of $1,093,750, as a bonus.
Wing Yu, Vice President of Information Technology, receives $120,000
per annum. In January 2000, he received 625,000 shares of Cosmoz common stock,
having a market value of $781,250, as a bonus.
The Company provides basic health and dental insurance. There is no
life insurance provided.
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RISK FACTORS
Limited History of Operations; History of Losses. The Company and its
subsidiaries have only a limited history of operations with periods of net
operating losses. During the period from July 1, 1999 to December 31, 1999, the
Company experienced a loss from its operations in the amount of $2,108,629 and a
unrealized gain from its investments in the amount of $50,395. The Company
operations are subject to the risks and competition inherent in the
establishment of a relatively new business enterprise in a competitive field of
Internet start-up companies. There can be no assurance that future operations
will be profitable. Revenues and profits, if any, will depend upon various
factors, including market acceptance of its concepts, market awareness, its
ability to expand its network of Internet companies, reliability and acceptance
of the Internet commerce, dependability of its advertising and recruiting
network, and general economic conditions. There is no assurance that the Company
will achieve its expansion goals and the failure to achieve such goals would
have an adverse impact on it.
Adverse Economic Conditions or a Change in General Market Patterns. A
weak economic environment could adversely affect the Company sales and
promotional efforts. General economic condition impact Internet based and
related commerce and demand and interest for the Company's Internet services may
decline at any time, especially during recessionary periods. Many factors beyond
the Company's control may decrease overall demand for Internet portal services
including, among other things, decrease in the entry costs by other similarly
situated companies, increase in the overall unemployment rate, additional
government regulation. There can be no assurance that the general market demand
for Internet portal services and related fields will remain the same or will not
decrease in the future.
Reliance on Future Acquisitions Strategy. The Company expects to
continue to rely on acquisitions as a primary component of its growth strategy.
The Company regularly engages in evaluations of potential target candidates,
including evaluations relating to acquisitions that may be material in size
and/or scope. There is no assurance that the Company will continue to be able to
identify potentially successful companies that provide suitable acquisition
opportunities or that the Company will be able to acquire any such companies on
favorable terms. Also, acquisitions involve a number of special risks including
the diversion of management's attention, assimilation of the personnel and
operations of the acquired companies, possible loss of key employees. There is
no assurance that the acquired companies will be able to successfully integrate
into the Company's existing infrastructure or to operate profitably. There is
also no assurance given as to the Company's ability to obtain adequate funding
to complete any contemplated acquisition or that such acquisition will succeed
in enhancing the Company's business and will not ultimately have an adverse
effect on the Company's business and operations.
Lack of Continued Development of E-commerce Market. The use of the
Internet and the World Wide Web for commercial purposes is expanding
dramatically. There is no assurance, however, that as increased commerce takes
place on the Internet that unforeseen overloads, lack of sufficient hardware,
telephone availability or other problems may develop. In addition, consumer use
of the Internet for purchases, banking, and other commercial uses may decline
for any number of reasons such as security problems, overload difficulties,
shopping trends, or slow Internet access. These difficulties may undermine
Company's expansion and promotional efforts. There is no assurance that the
Company will be able to successfully overcome these difficulties and maintain
its competitive pricing and services.
Loss of the Company Key Employees May Adversely Affect Growth
Objectives. The Company success in achieving its growth objectives depends upon
the efforts of Wilfred Shaw, Chairman and Chief Executive Officer of the Company
since its inception as well as other key management personnel. His experience
and industry-wide contacts significantly benefit the Company. The loss of the
services of this individual could have a material adverse effect on our
business, financial condition and results of operations. There is no assurance
that the Company will be able to maintain and achieve its growth objectives
should it lose any of its key management members' services.
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The Company's Involvement in the Marketing of Online Casinos. The
Company is involved in the marketing of online casinos. Future legislative
efforts to regulate online gaming acts may adversely affect the Company's
exclusive marketing arrangement with an online gaming firm. There is no
assurance that the Company will be successful in maintaining and expanding its
online gaming marketing efforts. There is also no assurance that the Company's
online gaming marketing efforts will not tarnish the general public's perception
of the Company's public image and good will.
Competition from Larger and More Established Companies May Hamper
Marketability. The competition in the Internet and electronic commerce industry
is intense. Large and highly fragmented, this industry hosts a number of
well-established competitors, including national, regional and local companies
possessing greater financial, marketing, personnel and other resources than the
Company. There is no assurance that the Company will be able to market or sell
its products if faced with direct product and services competition from these
larger and more established Internet portal services providers.
Failure to Attract Qualified Personnel. A change in labor market
conditions that either further reduces the availability of employees or
increases significantly the cost of labor could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company's business is dependent upon its ability to attract and retain highly
trained and qualified technical personnel and corporate management. There is no
assurance that the Company will be able to employ a sufficient number of
qualified training personnel in order to achieve its growth objectives.
Issuance of Future Shares May Dilute Investor Share Value. The
Certificate of Incorporation, as amended, of the Company authorizes the issuance
of 200,000,000 shares of common stock and 50,000,000 shares of preferred stock.
The future issuance of all or part of the remaining authorized common stock
and/or all or part of the preferred stock may result in substantial dilution in
the percentage of the Company's common stock held by the its then existing
shareholders. Moreover, any common stock issued in the future may be valued on
an arbitrary basis by the Company. The issuance of the Company's shares for
future services or acquisitions or other corporate actions may have the effect
of diluting the value of the shares held by investors, and might have an adverse
effect on any trading market, should a trading market develop for the Company's
common stock.
Penny Stock Regulation. Penny stocks generally are equity securities
with a price of less than $5.00 per share other than securities registered on
certain national securities exchanges or quoted on the NASDAQ Stock Market,
provided that current price and volume information with respect to transactions
in such securities is provided by the exchange or system. The Company's
securities may be subject to "penny stock rules" that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the "penny stock rules" require the delivery, prior
to the transaction, of a disclosure schedule prescribed by the Commission
relating to the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to sell the Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such securities
maintain a market price of $5.00 or greater. There can be no assurance that the
price of the Company's securities will reach or maintain such a level.
10
<PAGE>
Computer Systems Redesigned for Year 2000. Many existing computer
programs use only two digits to identify a year in such program's date field.
These programs were designed and developed without consideration of the impact
of the change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer applications could
fail or create erroneous results by or following the year 2000 (the "Year 2000
problem"). The companies or governments operating such programs have corrected
many of the computer programs containing such date language problems. The
Company's operations are substantially dependent upon properly functioning
computer equipment, which may fail because of such Year 2000 problems. The
Company does not know what steps, if any, have been taken by any of its business
partners in regard to the Year 2000 problems. The Company's operations will be
severally curtailed if one or more of its business partners were to suffer Year
2000 problems. Furthermore, it is impossible to predict if the basic utilities
serving the Company will continue uninterrupted.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and Regulations of the
Securities and Exchange Commission, upon effectiveness of the Acquisition, the
Company became the successor issuer to Ivory for reporting purposes under the
Securities Exchange Act of 1934 and elects to report under the Act effective
January 5, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The sole officer and director of Ivory has resigned upon closing of the
Acquisition.
ITEM 7. FINANCIAL STATEMENTS
Unaudited financial statements as of December 31, 1999 and for the six
month period then ended are filed herewith. The audited financial statements of
Cosmoz as of June 30, 1999 and for the year then ended are filed herewith.
11
<PAGE>
COSMOZ.COM, INC.
Consolidated Balance Sheets
December 31, 1999 and June 30, 1999
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
---------------- ----------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 89,494 $ 424,781
Short-term investments in
marketable securities 304,631 1,565,270
Accounts receivable - trade, net 43,855 24,846
Prepaid expenses 247,899 -
Note receivable - related party - 900,000
Amounts due from shareholders 188,142 188,142
------------------- -------------------
Total Current Assets 874,021 3,103,039
------------------- -------------------
Property and Equipment
Office furniture 24,636 13,127
Leasehold Improvements 2,350 -
Equipment 104,709 55,519
------------------- ----------------
131,695 68,646
Accumulated depreciation (13,515) (1,136)
------------------- -------------------
Total Property and Equipment 118,180 67,510
------------------- -------------------
Other Assets:
Long-term investments 625,000 145,000
Deposits 19,086 18,486
Intangible assets, net 3,723,007 1,092,943
------------------- -------------------
Total Other Assets 4,367,093 1,256,429
------------------- -------------------
Total Assets $ 5,359,294 $ 4,426,978
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
COSMOZ.COM, INC.
Consolidated Balance Sheets (Continued)
December 31, 1999 and June 30, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
--------------------- ---------------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 144,744 $ 81,849
Reserve for discontinued operations 85,623 85,623
Accrued expenses - discontinued operations 116,696 116,696
Accrued expenses and other current liabilities 132,195 162,320
Due to related parties - 596,875
Notes payable - other 14,589 14,589
--------------------- ---------------------
Total Current Liabilities 493,847 1,057,952
--------------------- ---------------------
Stockholders' Equity
Preferred stock, $0.001 par value; 50,000,000
shares authorized; none issued or outstanding - -
Common stock, $0.001 par value; 200,000,000
shares authorized; 61,034,546 and 58,899,546
issued and outstanding respectively 61,034 58,899
Additional paid-in-capital 12,811,937 9,259,417
Accumulated other comprehensive income (loss) 4,803 (45,592)
Accumulated deficit (8,012,327) (5,903,698)
--------------------- ---------------------
Total Stockholders' Equity 4,865,447 3,369,026
--------------------- ---------------------
Total Liabilities and Stockholders' Equity $ 5,359,294 $ 4,426,978
===================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
COSMOZ.COM, INC.
Consolidated Statements of Operations
For the three months ended September 30, 1999 and six months ended December
31, 1999
<TABLE>
<CAPTION>
three months six months
ended ended
September 30, 1999 December 31, 1999
<S> <C> <C>
Revenues:
Net revenues (Note 1) $ 71,745 $ 116,854
Costs of revenues -
--------------------- ---------------------
--------------------- ---------------------
71,745 116,854
--------------------- ---------------------
--------------------- ---------------------
Operating Expenses:
Sales and marketing 259,645 419,750
Product development 76,464 203,983
General and administrative 500,973 1,308,579
Amortization of intangibles 66,089 207,878
Non-recurring costs - acquisitions - 100,462
Depreciation and amortization 3,761 12,379
--------------------- ---------------------
--------------------- ---------------------
Total operating expenses 906,932 2,253,031
--------------------- ---------------------
--------------------- ---------------------
Loss from operations (835,187) (2,136,177)
--------------------- ---------------------
--------------------- ---------------------
Other Income (loss):
Interest income 3,374 4,390
Interest expense (131) (131)
Dividend income 8,675 23,289
--------------------- ---------------------
--------------------- ---------------------
Total other income 11,918 27,548
--------------------- ---------------------
--------------------- ---------------------
Net loss before taxes (823,269) (2,108,629)
Provision for income tax - -
--------------------- ---------------------
--------------------- ---------------------
Loss after income taxes from
operations (823,269) (2,108,629)
Net loss $ (823,269) $ (2,108,629)
===================== =====================
===================== =====================
Net loss per share:
Net loss per share - basic $ (0.014) $ (0.035)
===================== =====================
===================== =====================
Net loss per share - diluted $ (0.013) $ (0.033)
===================== =====================
===================== =====================
Shares used in per share
calculation - basic 59,237,324 60,060,878
===================== =====================
===================== =====================
Shares used in per share
calculation - diluted 63,847,324 64,740,878
===================== =====================
===================== =====================
See accompanying notes to consolidated financial statements.
</TABLE>
14
<PAGE>
COSMOZ.COM, INC.
Consolidated Statements of Operations (Continued)
For the three months ended September 30, 1998 and
six months ended December 31, 1998
<TABLE>
<CAPTION>
three months six months
ended ended
September 30, 1998 December 31, 1998
--------------------- ---------------------
--------------------- ---------------------
<S> <C> <C>
Revenues:
Sales $ 64,769 $ 64,769
Franchise fees - -
Less costs of revenues (16,016) (16,016)
--------------------- ---------------------
--------------------- ---------------------
Gross profit 48,753 48,753
--------------------- ---------------------
--------------------- ---------------------
Operating expenses:
Personnel 20,855 20,855
General and Administrative 97,308 97,808
--------------------- ---------------------
--------------------- ---------------------
Operating expenses 118,163 118,663
--------------------- ---------------------
--------------------- ---------------------
Loss on disposal of operations,
including a provision of
$98,685 for loss contingency 227,535 227,535
--------------------- ---------------------
--------------------- ---------------------
Loss before taxes (296,945) (297,445)
--------------------- ---------------------
--------------------- ---------------------
Provision for income tax - -
--------------------- ------------------
--------------------- ------------------
Net loss from discontinued
operations (296,945) (297,445)
--------------------- ---------------------
--------------------- ---------------------
Net loss $ (296,945) $ (297,445)
===================== =====================
===================== =====================
Net loss per share:
Net loss per share - basic and diluted $ (0.007) $ (0.007)
===================== =====================
===================== =====================
Shares used in per share calculation -
basic and diluted 41,348,546 41,348,546
===================== =====================
===================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
COSMOZ.COM, INC.
Consolidated Statement of Changes in
Shareholders' Equity
for the six month period ended December 31, 1999
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in
Shares Amount Shares Amount Capital
---------- ---------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1999 - $ - 58,899,546 $ 58,899 $ 9,259,417
Comprehensive income (loss):
Net loss from operations during
the period
Net unrealized gain on securities
Issuance of commons stock for
acquisitions 550,000 550 1,114,800
Issuance of common stock for
services 100,000 100 204,585
Compensation expense recognized
on grants 201,400
Balance, September 30, 1999 - - 59,549,546 59,549 10,780,202
---------- ---------- ----------- ------------- ----------------
Comprehensive income (loss):
Net loss from operations during
the period
Net unrealized gain on securities
Issuance of commons stock for
acquisitions 1,225,000 1,225 1,721,370
Issuance of common stock for
services 260,000 260 310,365
Balance, December 31, 1999 - $ - 61,034,546 $ 61,034 $ 12,811,937
========== ========== =========== ============= ================
</TABLE>
16
<PAGE>
COSMOZ.COM, INC.
Consolidated Statement of Changes in
Shareholders' Equity
for the six month period ended December 31, 1999
<TABLE>
<CAPTION>
Accumulated
Other Total
Comprehensive Accumulated Shareholders' Comprehensive
Income (loss) Deficit Equity Income (loss)
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance, June 30, 1999 $ (45,592) $ (5,903,698) $ 3,369,026 $ (1,353,065)
Comprehensive income (loss):
Net loss from operations during the period (823,269) (823,269) (823,269)
Net unrealized gain on securities 44,375 44,375 44,375
Issuance of commons stock for acquisitions 1,115,350
Issuance of common stock for services 204,685
Compensation expense recognized on grants 201,400
Balance, September 30, 1999 (1,217) (6,726,967) 4,112,784 (778,894)
------------- -------------- -------------- --------------
Comprehensive income (loss):
Net loss from operations during the period (1,285,360) (1,285,360) (1,285,360)
Net unrealized gain on securities 6,020 6,020 6,020
Issuance of commons stock for acquisitions 1,722,595
Issuance of common stock for
services 310,625
Balance, December 31, 1999 $ 4,803 $ (8,012,327) $ 4,865,447 $ (2,058,234)
============= ============== ============== ==============
</TABLE>
17
<PAGE>
COSMOZ.COM, INC.
Consolidated Statements of Cash Flows
For the six months ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- -----------------
<S> <C> <C>
Operating Activities:
Net Loss $ (2,108,629) (297,445)
Adjustments to reconcile net (loss) to
net cash provided by (used in) operating activities:
Intangible amortization 207,878 -
Stock compensation 201,400 -
Amortization and depreciation 12,379 -
Issuance of common stock for services 515,310 -
Currency translation - 7,079
Changes in operating assets and liabilities:
Accounts receivable - trade, net (19,009) 8,820
Inventory - 16,583
Reserve for discontinued operations - 98,039
Accrued expenses -discontinued operations - (618)
Prepaid expenses (247,899) -
Accounts payable 62,895 -
Deposits (600) -
Accrued expenses and other current liabilities (30,125) -
------------------ --------------------
Net cash used in operating activities (1,406,400) (167,542)
------------------ --------------------
Investing activities:
Sale of of marketable securities 1,311,037 -
Other investments (480,000) -
Disposal of property and equipment - 124,596
Purchases of property and equipment (63,049) -
------------------ --------------------
Net cash used in investing activities 767,988 124,596
------------------ --------------------
Financing activities:
Payments received on note receivable - related party 900,000 -
Payments on amounts due to related parties (596,875) -
------------------ --------------------
Net cash provided by financing activities 303,125 -
------------------ --------------------
(Decrease) increase in cash and cash equivalents (335,287) (42,946)
Cash and cash equivalents, beginning of period 424,781 42,946
------------------ --------------------
Cash and cash equivalents, end of period $ 89,494 $ -
================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE>
COSMOZ.COM, INC.
Consolidated Statements of Cash Flows (Continued)
For the six months ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 131 $ -
Taxes $ - $ -
The following noncash transactions occurred during the year ended June 30,
1999:
Acquisition of StreetIQcom, Inc.
Intangibles $ 800,200
Issuance of common stock for acquisition (800,200)
------------------
Cash received $ -
==================
Acquisition of MBMagic, Inc.
Intangibles $ 315,150
Issuance of common stock for acquisition (315,150)
------------------
Cash received $ -
==================
Acquisition of iTrack.com, Inc.
Intangibles $ 1,722,595
Issuance of common stock for acquisition (1,722,595)
------------------
Cash received $ -
==================
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
CASH FLOW WORKSHEET
<TABLE>
<CAPTION>
6/30/
MKT SECURITY OTHER
CASH SEC A/R INVENTORY DEPOSIT REC'BLE PPE DEPRE.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/98 42,946 - 8,820 16,583 - 33,230 95,458 (16,557)
6/30/99 424,782 1,565,270 24,845 - 18,487 - 85,202 (17,693)
NET CHANGE 381,836 1,565,270 16,025 (16,583) 18,487 (33,230) (10,256) (1,136)
NET LOSS
MKT SEC (1,599,975)
UNREAL LOSS 34,705
A/R (16,025)
INVENTORY 16,583
SEC DEPOSIT (18,487)
OTHER REC 33,230
PPE 10,256
DEPRE. 1,136
INTG ASSET
ACCU AMORT
REL PARTY LOAN
OTHER INVEST.
A/P
ACCU LIAB
LOAN PMT
DUE TO REL PARTY
RES FOD DISCONT
OUTST STOCK OP
CS FOR CASH
DEBT CONVERSION
FOR SERVICE
FOR ACQN
PAID IN CAP
UNREAL LOSS
TRANSL LOSS
CASH BEG
CASH END
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
INTG'BLE ACCU OTHER ACC. LOANS
ASSETS AMORT. CURR ASSET A/P LIAB PAY
<S> <C> <C> <C> <C> <C> <C>
6/30/98 - - - - (217,794) (195,364)
6/30/99 1,119,599 (26,656) 1,045,000 (81,849) (277,418) 173,553
NET CHANGE 1,119,599 (26,656) 1,045,000 (81,849) (59,624) 368,917
NET LOSS
MKT SEC
UNREAL LOSS
A/R
INVENTORY
SEC DEPOSIT
OTHER REC
PPE
DEPRE.
INTG ASSET (1,135,943)
6,000
5,543
4,801
ACCU AMORT 26,656
REL PARTY LOAN (900,000)
OTHER INVEST. (145,000)
A/P 81,849
ACCU LIAB 59,624
LOAN PMT (361,000)
(7,917)
DUE TO REL PARTY
RES FOD DISCONT
OUTST STOCK OP
CS FOR CASH
DEBT CONVERSION
FOR SERVICE
FOR ACQN
PAID IN CAP
UNREAL LOSS
TRANSL LOSS
CASH BEG
CASH END
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
(N/C) (N/C)
RESERVE OUTST (N/C)
DUE TO FOR STOCK COMMON COMPRE.
REL PARTY DISCONT OPTION STOCK LOSS EQUITY
<S> <C> <C> <C> <C> <C> <C>
6/30/98 - 12,941 - (4,376,489) - 4,596,226 -
6/30/99 (596,875) (85,623) (65,896) (9,252,420) 45,592 5,902,100 -
NET CHANGE (596,875) (98,564) (65,896) (4,875,931) 45,592 1,305,874 -
NET LOSS 1,305,874 (1,305,874)
MKT SEC (1,599,975)
UNREAL LOSS 34,705
A/R (16,025)
INVENTORY 16,583
SEC DEPOSIT (18,487)
OTHER REC 33,230
PPE 10,256
DEPRE. 1,136
INTG ASSET (1,135,943)
6,000
5,543
4,801 *
ACCU AMORT 26,656
REL PARTY LOAN (900,000)
OTHER INVEST. (145,000)
A/P 81,849
ACCU LIAB 59,624
LOAN PMT (361,000)
(7,917)*
DUE TO REL PARTY596,875 596,875
RES FOD DISCONT 98,039 98,039
525 525 *
OUTST STOCK OP 65,896 65,896
CS FOR CASH 717,383 717,383
DEBT CONVERSION 2,750,000 2,750,000
FOR SERVICE 272,605 272,605
FOR ACQN 1,135,943 1,135,943
PAID IN CAP -
UNREAL LOSS (34,705) (34,705)
TRANSL LOSS (10,887) (10,887)*
CASH BEG 42,946
CASH END 424,782 (13,478)
13,665
187
</TABLE>
22
<PAGE>
Cosmoz.com, Inc.,
Notes to the Financial Statements
1. Summary of Significant Accounting Policies
------------------------------------------
A. General Description of Business
Cosmoz.com, Inc., ("Cosmoz" or the "Company"), a Delaware corporation,
(http://www.cosmoz.com), offers through the World Wide Web a network of
branded, technology and community-driven Websites focused on the
following categories: personal finance and investing, search and
directory; commerce; and games. The Company also develops Web-related
software, and provides venture or seed capital to emerging companies
that are developing Internet Websites or Web-enabling technologies.
23
<PAGE>
The Company was incorporated in Delaware on October 15, 1996, as MIS
International, Inc., which merged with MIS Multimedia Interactive
Services Inc., a Canadian corporation, as of July 1, 1997. MIS
Multimedia Interactive Services, Inc., and its subsidiaries (Pretzel
Franchising, Inc. and Wheel to Wheel Franchising, Inc.) were engaged in
the business of developing and selling franchises. Wheel to Wheel
Franchising, Inc., (WTW) concentrated on the marketing of franchises
for automotive service centers that used recycled automotive parts, and
it operated an automotive service center in Ontario, Canada. Pretzel
Franchising, Inc., (PFI) concentrated on the marketing of franchises
for "Pretzel Twister", and it operated a store in Toronto, Ontario. The
two subsidiaries in Canada, Pretzel Franchising, Inc., and Wheel to
Wheel Franchising, Inc., are inactive as of September 30, 1998.
During the six months ended December 31, 1999, the Company consummated
the acquisitions of StreetIQ, Inc., iTrack, Inc., and the remaining 51%
interest in MB Technologies, Inc. The shareholders of these
corporations exchanged all of their shares for shares of the Company's
Common Stock in business combinations that were accounted for under the
purchase method.
The Company's properties include:
BuckInvestor.com, Inc. (http://www.buckinvestor.com) provides financial
and investment information in a format targeted to investors under the
age of 35; KingFine, Inc. (http://www.monsterpick.com) provides online
investing and trading information to individual day-traders, and it
operates an online investor discussion groups; MB Technologies, Inc.
(http://www.mbmagic.com), a message board community solutions provider;
StreetIQ, Inc. ( http://www.streetiq.com) provides focused online
investment information and a community for women.; iTrack, Inc.
(http://www.itrack.com) is an online auction monitoring service that
allows consumers to track specific products on the various online
auction houses. Other Company Websites include
http://www.monsterquote.com and htttp://www.casinowhiz.com.
B. Basis of Presentation and Organization
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. and with the instructions to Form
10-QSB Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended June 30, 1999
included in Exhibit __ of this Form 10-QSB.
These financial statements represent the financial activity of
Cozmos.com, Inc., a publicly traded company listed and traded on the
NASDAQ Over the Counter Bulletin Board ("OTC BB"). In December 1998,
the Company changed its focus from operating and franchising pretzel
kiosks and retail stores under the name "Pretzel Twister" and operating
an automotive service center, "Wheel to Wheel" in Canada to becoming a
major force in Internet related businesses and web-based technologies.
The Company has acquired a number of websites whose central theme is to
provide both a content source and an application source for investors.
24
<PAGE>
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. All inter-company
transactions have been eliminated. The equity and net loss attributable
to the minority shareholder interests that related to the Company's
subsidiaries are shown separately in the consolidated balance sheet and
consolidated statement of operations, respectively. Losses in excess of
the minority interest in equity would be charged against the Company.
These financial statements should be read in conjunction with the
Company's audited financial statements and related notes for the year
ended June 30, 1999, (refer to Exhibit __). The results of operations
for the three month period ended September 30, 1999 and the six month
period ended December 31, 1999 are not necessarily indicative of the
results to be expected for any subsequent quarter or for the entire
fiscal year ending June 30, 2000.
C. Cash and Cash Equivalents, Short and Long-Term Investments
For purposes of cash flows, the Company considers all highly liquid
investments purchased with a maturity of three months or less to be
cash equivalents, those with original maturities greater than three
months and current maturities less than twelve months from the balance
sheet date are considered short-term investments, and those with
maturities greater than twelve months from the balance sheet date are
considered long-term investments.
The Company invests in equity instruments of privately held information
technology companies for business and strategic purposes. These
investments are included in other long-term assets and are accounted
for under the cost method when ownership is less than 20%. For these
non-quoted investments, the Company's policy is to regularly review
each such investment and the assumptions underlying the operating
performance and cash flow forecasts in assessing the carrying values.
The Company identifies and records impairment losses on long-lived
assets when events and circumstances indicate that such assets might be
impaired. To date, no such impairment has been recorded.
D. Property and Equipment
Property and equipment are recorded at cost and are depreciated over
the estimated useful lives of the assets using the straight-line
method. The cost and related accumulated depreciation of all property
and equipment retired or otherwise disposed of are removed from the
accounts. Any gain or loss is recognized in the current period. Various
accelerated methods are used for tax purposes. Leasehold improvements
are amortized on a straight-line basis over the term of the lease.
25
<PAGE>
Maintenance and repair costs are charged to expense as incurred, and
renewals and improvements that extend the useful lives of the assets
are added to the property and equipment.
E. Revenue Recognition
The Company's revenues are derived principally from the sale of banner
and sponsorship advertisements. The Company's standard rates for banner
advertising currently range from approximately $1 per thousand
impressions for run of network to $30 per thousand impressions for
highly targeted audiences and properties. To date, the duration of the
Company's banner advertising commitments has ranged from one week to 2
months.
Sponsorship advertising contracts have longer terms (ranging from one
month to one year) than standard banner advertising contracts and also
involve more integration with Cosmoz services, such as the placement of
buttons that provide users with direct links to the advertiser's Web
site. Advertising revenues on both banner and sponsorship contracts are
recognized ratably over the period in which the advertising is
displayed, provided that no significant Company obligations remain at
the end of a period and collection of the resulting receivable is
probable.
Company obligations typically include guarantees of minimum number of
"impressions," or times that an advertisement appears in pages viewed
by users of the Company's on-line properties. If minimum guaranteed
impressions are not met, the Company defers recognition of the
corresponding revenues until the remaining guaranteed impression levels
are achieved. The Company has agreements that provide revenue from
electronic commerce transactions. These revenues are recognized by the
Company upon notification from the advertiser of revenues earned by
Cosmoz.
F. Product and Web-site Development
Costs incurred in the development of new products or properties and
enhancements to existing products are charged to expense as incurred.
Material software development costs incurred subsequent to the
establishment of technological feasibility are capitalized.
Technological feasibility is determined based on the completion of a
working model. The Company has not incurred material software
development costs and accordingly has not capitalized any software
development costs.
26
<PAGE>
G. Marketable Securities
The Company's marketable securities are classified as
available-for-sale as of the balance sheet date and are reported at
fair value, with unrealized gains and losses, net of tax recorded in
shareholders' equity. The Company invests its excess cash in mutual
funds and equity securities traded on national stock markets. Realized
gains or losses and permanent declines in value, if any, on
available-for-sale securities are reported in other income or expense
as incurred. As of December 31, 1999, the Company recorded a net
unrealized gain of $15,690 on these types of investments.
The Company invests in equity instruments of privately held, Internet
and information technology companies for business and strategic
purposes. These investments are included in other long-term assets and
when ownership interest is less than 20% are accounted for under the
cost method. For these non-quoted investments, the Company's policy is
to regularly review such investments and the assumptions underlying the
operating performance and cash flow forecasts in assessing the carrying
values. The Company identifies and records impairment losses on
long-lived assets when events and circumstances indicated that such
assets might be impaired. To date, no such impairment has been
recorded.
H. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Management makes estimates that affect reserves for discontinued
operations, deferred income tax assets and reserve for discontinued
operations. Any adjustments applied to estimates are recognized in the
year in which such adjustments are determined.
I. Earnings per Share
The Company follows SFAS No. 128, "Earnings per Share," which
establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly held common stock or
potential common stock. SFAS No. 128 replaces the presentation of
primary EPS with basic EPS, and fully diluted EPS with diluted EPS. It
also requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted
EPS computation.
Basic EPS is computed by dividing net income (loss) by the weighted
average number of common shares outstanding. The diluted EPS
calculation gives effect to all financial securities and instruments
that potentially convert into common shares, such as stock options or
warrants, which were outstanding during the period. Shares issued
during the period and shares repurchased by the Company are weighted
for the portion of the period that they were outstanding for both basic
and diluted EPS calculations.
27
<PAGE>
J. Segments of an Enterprise and Related Information
The Company follows SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires that a
public business enterprise report financial and descriptive information
about its reportable operating segments on the basis that is used
internally for evaluating segment performance and deciding how to
allocate resources to segments. The Company has reported its
franchising operations in Canada as discontinued operations, and the
results of its Internet operations as continuing operations.
K. Comprehensive Income
The Company adopted SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial
statements. Comprehensive income consists of net income and unrealized
gains (losses) on available for sale marketable securities and is
presented in the consolidated statements of shareholders' equity and
comprehensive income. The Statement requires only additional
disclosures in the consolidated financial statements and does not
affect the Company's financial position or results of operations.
L. Business Risks and Credit Concentrations
The Company operates in the Internet-Portal industry segment, which is
relatively new, rapidly evolving and highly competitive. The Company
relies on third-party suppliers of topical and relevant information
content. There can be no assurance that the Company will be able to
continue product development and secure content sufficient to support
its operations.
Financial instruments that potentially subject the Company to
significant concentration of credit risk consist primarily of cash,
cash equivalents, short and long-term investments, and accounts
receivable. Substantially all of the Company's cash, cash equivalents,
and short and long-term investments are managed by two financial
institutions.
Accounts receivable are typically unsecured. The Company performs
ongoing credit evaluations of its customers' financial condition. It
generally requires no collateral and maintains reserves for potential
credit losses on customer accounts when necessary. Management estimates
that no such reserves are warranted at December 31, 1999. One customer
comprises over 85% of accounts receivable, and it accounted for
approximately 60% of revenue for the period then ended.
28
<PAGE>
M. Foreign Currency and International Operations
The functional currency of the Company's international subsidiaries,
PFI and WTW, is the Canadian dollar. The financial statements of these
subsidiaries are translated to US dollars using period-end rates of
exchange for assets and liabilities, and average rates of exchange for
the year for revenues, costs, and expenses. Net gains and losses
resulting from foreign exchange rate changes are included in the
consolidated statement of operations and were not significant during
the periods presented. There were no foreign exchange transactions
during the six month period ended December 31, 1999.
Foreign operations were discontinued as of August 1998, and there are
no foreign assets as of December 31, 1998.
N. Recent Accounting Pronouncements
The FASB issued SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS 133 establishes methods of accounting for
derivative financial instruments and hedging activities related to
those instruments as well as other hedging activities, effective for
fiscal years beginning after June 15, 1999. The Company is currently
not engaged in hedging activities nor does it have any derivative
instruments, thus there is no impact on the current period financial
statements.
The American Institute of Certified Public Accountants issued Statement
of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This standard
requires companies to capitalize qualifying computer software costs,
which are incurred during the application development stage and
amortize them over the software's estimated useful life. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. The
Company has adopted SOP 98-1 and it deemed to not have a material
impact on the financial statements and related disclosures.
O. Intangibles
Intangible assets consist of goodwill and are being amortized on a
straight-line basis over 7 years.
29
<PAGE>
2. Investments
-----------
At June 30, 1999, short and long-term investments in marketable
securities were classified as available-for-sale as follows:
<TABLE>
<CAPTION>
Gross Amortized Gross Unrealized Gross Estimated
Cost Gain Unrealized Loss Fair Value
----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Mutual Funds $ 288,940 $ 15,690 - $ 304,630
Corporate equity
securities,
privately-held 625,000 - - 625,000
----------------- --------------- ---------------- ---------------
Total $ 913,9400 $ 15,690 - $ 929,630
================= =============== ================ ===============
</TABLE>
Investments in corporate equity securities of privately held companies,
in which the Company holds a less than 20% equity interest, are
classified as long-term.
The Company made an investment of $375,000 in preferred stock of iPing,
Inc. ("iPing"), a New York based Internet company that operates
MrWakeup.com. MrWakeup.com is a service provider that allows users to
set customized phone calls to send information such as headline news,
horoscopes and weather from the Internet at a requested time. The
investment in iPing was for less than a 20% equity interest.
3. Stock Option Plan
-----------------
The Board of Directors has granted management the authority to issue
non-statutory stock options to employees and consultants of the
Company. Non-statutory stock options issued as of June 30, 1999 are
summarized as follows:
Options Weighted Average
Outstanding Price per Share
----------- ---------------
Balance as of June 30, 1999 200,000 $1.25
Options granted 1,060,000 3.32
Options canceled - -
Options exercised - -
----------- ------------
Balance at December 31, 1999 1,260,000 2.99
The non-statutory stock options are for periods of three to four years.
Options to purchase 610,000 shares were vested as of December 31, 1999.
Through December 31, 1999, the Company recorded compensation expense
related to certain stock options issued with exercise prices below fair
market value of the related common stock. Under APB-25, the cost of
compensation is measured by the excess of the quoted market price of
the stock over the option price on the measurement date. This is
referred to as the intrinsic value method. The Company recorded
compensation expense in the amount of $201,400 for the six month period
ending December 31, 1999.
30
<PAGE>
Options are usually granted at the prices equal to the current fair
value of the Company's common stock at the date of grant. The vesting
period is usually related to the length of employment or consulting
contract period.
4. Acquisitions
------------
A. Acquisition of Street IQ, Inc.
On August 9, 1999, the Company completed the acquisition of all
outstanding shares of StreetIQ, Inc. ("StreetIQ.com"), a privately-held
online financial information content provider (focusing on women
investors), through the issuance of 400,000 shares of Cosmoz Common
Stock, a market value of $800,000 at the time of the transaction. The
acquisition was accounted for as a purchase in accordance with the
provisions of APB 16.
Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
fair values at the date of the acquisition. The excess purchase price
over the estimated fair value of the assets acquired and liabilities
assumed has been allocated to goodwill. Results of operations for
StreetIQ, Inc. have been included with those of the Company subsequent
to the date of acquisition. The Company estimated that the economic
useful life of the goodwill was seven years. Upon acquisition, the
historical financial results of StreetIQ, Inc. were de minimis.
B. Acquisition of iTrack, Inc.
On October 7, 1999, the Company completed the acquisition of all
outstanding shares of iTrack, Inc. ("iTrack"), a privately-held online
auction monitoring service that lets users track specific products on
various online auction houses, through the issuance of 1,225,000 shares
of Cosmoz Common Stock, a market value of $1,722,595 at the time of the
transaction, for all of iTrack's outstanding shares. The acquisition
was accounted for as a purchase in accordance with the provisions of
APB 16.
Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
fair values at the date of the acquisition. The excess purchase price
over the estimated fair value of the assets acquired and liabilities
assumed has been allocated to goodwill. Results of operations for
iTrack have been included with those of the Company subsequent to the
date of acquisition. The Company estimated that the economic useful
life of the goodwill was seven years. Upon acquisition, the historical
financial results of iTrack were de minimis.
C. Acquisition of MB Technologies, Inc.
On July 30, 1999 the Company completed the acquisition of the remaining
51% of the outstanding shares of MB Technologies, Inc. ("MB"), a
privately held operator of online message boards. Under the terms of
the acquisition, the Company exchanged 150,000 shares of Cosmoz Common
Stock with a market value of $315,000 for 102 shares of MB
Technologies. The difference between the amount paid and the value of
the pro rata share of MB's stockholders' equity was recorded as
goodwill. The Company estimated that the economic useful life of the
goodwill was seven years. The financial results of MB were de minimis
prior to MB becoming a wholly-owned subsidiary of Cosmoz.
31
<PAGE>
5. Discontinued Operations
-----------------------
The Company's management and its Board of Directors decided to
discontinue operations in Canada in July 1998. Operations in Canada
consisted of operating and franchising "Pretzel Twister" stores, and
the operation of an automotive service center "Wheel to Wheel". To
implement this decision, the Company concluded the following
transactions:
A. On August 31, 1998, the Company abandoned all operations of
Wheel to Wheel, including its facilities lease. The Company
disposed of the assets of the Wheel to Wheel store and used
the proceeds to settle liabilities to the extent of available
funds.
B. In July 1998, the Company abandoned all operations of Pretzel
Franchising, Inc. The Company informed its franchisees that
PFI will cease to operate, and the Company-operated store in
Toronto, Ontario was closed.
In consideration of the issues listed above, the Company continues to
maintain a reserve for potential loss contingencies from discontinued
operations of approximately $85,000.
There are no assets from discontinued operations on the balance sheet.
The liabilities attributable to discontinued operations are identified
as such on the balance sheet.
6. Common Stock Transactions
-------------------------
The company concluded several acquisitions through the issuance of its
common stock during the period ending December 31,1999 and it issued
its common stock in lieu of cash for professional services performed by
third-parties.
The Company issued 360,000 shares which had a market value of $515,310
for public and investor relations services. The Company also issued
common stock to individuals and companies in lieu of cash compensation.
The Company has outstanding warrants to purchase 4,000,000 shares of
its common stock at an exercise price of $0.75. The warrants are for a
three- year period and it expires on February 9, 2002.
7. Related Party Transactions
--------------------------
The following transactions occurred between the Company and certain
related parties:
32
<PAGE>
A. Asia Pacific Ventures
Asia Pacific Ventures (APV) is a company whose headquarters are in Hong
Kong, and its authorized representative was Wilfred Shaw, the current
CEO of Cosmoz. APV has loaned money to the Company in previous years.
The net of advances due from shareholders and officers consists of
overpayments by Cosmoz on loans made by APV to the Company.
Additionally, APV is a shareholder holding greater than 10% of the
outstanding common stock of the company and whose current authorized
representative is a family member of Wilfred Shaw, current CEO of the
Company. The amounts due from shareholder at June 30, 1999 totaled
$188,142.
B. Wilfred Shaw
The following transactions took place between the Company and Wilfred
Shaw ("Mr. Shaw"), the CEO and Chairman of the Board of Directors: The
Company repaid to Mr. Shaw $596,875 in the form of publicly traded
securities for full settlement of the outstanding debt of the Company
to Mr. Shaw. The borrowing did not bear any interest.
Mr. Shaw repaid the Company $900,000 for full settlement of the
advances made to him by the Company. The loan to Mr. Shaw did not bear
any interest.
Mr. Shaw has been performing the duties of President and CEO of Cosmoz
starting July 1, 1998 to December 31, 1999, and he has received no
remuneration for his services. He has performed these services pro
bono.
Mr. Shaw also does not receive any compensation for the period starting
July 1, 1998 to December 31, 1999 for serving as the Chairman of the
Board of Directors. Mr. Shaw has $60,000 in director fees due from the
Company for serving as the Chairman of the Board of Directors for the
period prior to June 30, 1998. The amount is included in the
liabilities for discontinued operations.
C. Wing Yu
Mr. Wing Yu, ("Mr. Yu"), an executive officer of the Company, held a
25.5% in MB Technologies which was acquired by Cosmoz on July 30, 1999.
As a result of this transaction, Mr. Yu received 75,000 shares of
Cosmoz Common Stock in exchange for his 25.5% interest in MB
Technologies, Inc.
8. Commitments and Contingencies
-----------------------------
A. Legal
The Company is periodically involved in legal actions and claims that
arise as a result of events that occur in the normal course of
operations, including claims of alleged infringement of trademarks,
copyrights and other intellectual property rights. The Company is not
currently aware of any legal proceedings or claims that the Company
believes will have, individually or in the aggregate, a material
adverse effect on the Company's financial position or results of
operations.
33
<PAGE>
B. Operating Leases
The Company is obligated under a three-year non-cancelable operating
lease agreement for its office facilities. Rent expense was $18,486 and
$36,972 for the three and six months ended December 31, 1999,
respectively.
Future lease payments for fiscal years ending June 30, 2000, 2001 and
2002 are $73,944, $73,944, and $61,620, respectively.
The Company leases an apartment in San Francisco to accommodate
out-of-town employees for business meetings. The lease expires on March
31, 2000. The lease payment is $2,510 per month. Future lease payments
for fiscal year ending June 30, 2000 are $10,530.
9. Going Concern Uncertainties
---------------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, the Company
has experienced recurring operating losses and negative cash flows from
operations. The Company's continued existence is dependent upon its
ability to increase operating revenues and/or raise additional equity
financing.
In view of these matters, management believes that actions presently
being taken to expand the Company's operations and to continue its
web-site development activity provide the opportunity for the Company
to return to profitability. The Company is currently in negotiations to
obtain additional equity financing, which enable it to achieve its
strategic objectives.
The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
10. Subsequent Events
-----------------
A. Acquisition
On January 5, 2000, the Company concluded the acquisition of Ivory
Acquisition Corporation ("Ivory"), a fully reporting company under
regulation 12(g) of the Securities Exchange Act of 1934. Ivory has no
material assets or liabilities. The business combination will be
accounted for under the pooling method of accounting. The operations of
Ivory previous to the acquisition date were de minimis.
The Company paid the transaction costs of acquisition and initial
filing in the amount of $100,000, and issued 250,000 shares of its
common stock.
34
<PAGE>
B. Facilities Lease
The Company has entered into a five-year non-cancelable operating lease
agreement for its new headquarters in San Mateo California. The lease
commences on March 1, 2000. The base rent is $26,600 per year, and
there is a clause for the lessee's share of operating expense
increases. The Company is required to have a standing letter of credit
in the amount of $125,000 for the duration of the lease term. The
Company has obtained a stand-by letter of credit in favor of the lessor
from Shanghai Commercial Bank, and there are no borrowings under this
agreement to date. Under the terms of the letter of credit agreement,
the Company has placed $125,000 in a fixed time deposit, earning 6.35%
per annum, as collateral.
Future lease payments for fiscal years ending June 30, 2000, 2001,
2002, 2003, 2004, and 2005 are $105,400, $319,200, $319,200, $319,200,
$319,200 and $212,800, respectively.
C. Common Stock Transactions and Executive Compensation
On January 10, 2000, the Company issued 3,375,000 shares of its common
stock, subject to legend pursuant to Rule 144 of the Rules and
Regulations of the US Securities & Exchange Act of 1933, having a
market value of $4,218,750 to three executive officers, who are also
directors of the Company, and an employee.
D. Amounts due to Related Parties
In February 2000, Asia Pacific Ventures, a related party, advanced to
the Company $250,000. The note payable is due upon demand and bears an
annual interest of 12%.
35
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable. The Company has a fiscal year ending on June 30.
EXHIBITS
2 Agreement and Plan of Reorganization between Cosmoz.com, Inc. and Ivory
Acquisition Corporation, dated January 5, 2000.
Certificate of Ownership and Merger Merging Ivory Aquisition
Corporation into Cosmoz.com, Inc.
3.(I) Articles of Incorporation of Cosmoz.com, Inc.
3.(II) By-Laws of Cosmoz.com, Inc.
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.
COSMOZ.COM, INC.
By/s/Wilfred Shaw
-----------------
Wilfred Shaw
Chairman and Chief Executive Officer
Date: March 3, 2000.
24
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") among IVORY ACQUISITION
CORPORATION, a Delaware corporation ("Ivory"), COSMOZ.COM, INC., a Delaware
corporation ("Cosmoz.com") and the persons listed in Exhibit A hereof
(collectively the "Shareholders"), being the owners of record of all of the
issued and outstanding stock of Ivory.
Whereas, Cosmoz.com wishes to acquire and the Shareholders wish to transfer
all of the issued and outstanding securities of Ivory in a transaction intended
to qualify as a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
Now, therefore, Ivory, Cosmoz.com and the Shareholders adopt this plan of
reorganization and agree as follows:
1. Exchange of Stock
1.1. Number of Shares. The Shareholders agree to transfer to Cosmoz.com at the
Closing (defined below) the number of shares of common stock of Ivory, $.001 par
value per share, shown opposite their names in Exhibit A, in an exchange for an
aggregate of250,000 shares ofvoting common stock of Cosmoz.com, $.001 par value
per share.
1.2. Exchange of Certificates. Each holder of an outstanding certificate or
certificates theretofore representing shares of Ivory common stock shall
surrender such certificate(s) for cancellation to Cosmoz.com, and shall receive
in exchange a certificate or certificates representing the number of full shares
of Cosmoz.com common stock into which the shares of Ivory common stock
represented by the certificate or certificates so surrendered shall have been
converted. The transfer of Ivory shares by the Shareholders shall be effected by
the delivery to Cosmoz.com at the Closing of certificates representing the
transferred shares endorsed in blank or accompanied by stock powers executed in
blank.
1.3. Fractional Shares. Fractional shares of Cosmoz.com common stock shall not
be issued, but in lieu thereof Cosmoz.com shall round up fractional shares to
the next higher whole number.
1.4. Further Assurances. At the Closing and from time to time thereafter, the
Shareholders shall execute such additional instruments and take such other
action as Cosmoz.com may request in order more effectively to sell, transfer,
and assign the transferred stock to Cosmoz.com and to confirm Cosmoz.com's title
thereto.
2. Ratio of Exchange. The securities of Ivory owned by the Shareholders, and
the relative securities of Cosmoz.com for which they will be exchanged, are set
out opposite their names in Exhibit A.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 2
- --------------------------------------------------------------------------------
3. Closing.
3.1. Time and Place. The Closing contemplated herein shall be held as soon as
possible at the offces of Cassidy & Associates at 1504 R Street, NW, Washington,
D.C. unless another place or time is agreed upon in writing by the parties
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. The date of Closing may be accelerated or extended by
agreement of the parties.
3.2. Form of Documents. 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 ofthe entire original writing or
transmission or original signature.
4. Unexchanged Certificates. Until surrendered, each outstanding certificate
that prior to the Closing represented Ivory common stock shall be deemed for all
purposes, other than the payment of dividends or other distributions, to
evidence ownership of the number of shares of Cosmoz.com common stock into which
it was converted. No dividend or other distribution shall be paid to the holders
of certificates of Ivory common stock until presented for exchange at which time
any outstanding dividends or other distributions shall be paid.
5. Representations and Warranties of the Shareholders
The Shareholders, individually and separately, represent and warrant as
follows:
5.1. Title to Shares. The Shareholders, and each of them, are the owners, free
and clear of any liens and encumbrances, of the number of Ivory shares which are
listed in the attached schedule and which they have contracted to exchange.
5.2. Litigation. There is no litigation or proceeding pending, or to any
Shareholder's knowledge threatened, against or relating to shares of Ivory held
by the Shareholders.
6. Representations and Warranties of Ivory. Ivory represents and warrants
that:
6.1. Corporate Organization and Good Standing. Ivory 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.
6.2. Reporting Company Status. Ivory 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 and is a reporting
company pursuant to ss. 12(g) thereunder.
<PAGE>
AGREEMENT AND PLAN OF REORGANI7aTION PAGE NUMBER 3
- --------------------------------------------------------------------------------
6.3. Reporting Company Filings. Ivory has timely filed and is current on all
reports required to be filed by it pursuant toss.13 of the Securities Exchange
Act of 1934.
6.4. Capitalization. Ivory's authorized capital stock consists of 100,000,000
shares of Common Stock, $.0001 par value per share, of which 5,000,000 shares
are issued and outstanding, and 20,000,000 shares of Preferred Stock, $.0001 par
value per share, of which no shares are issued or outstanding.
6.5. Issued Stock. All the outstanding shares of its Common Stock are duly
authorized and validly issued, fully paid and non-assessable.
6.6. Stock Rights. Except as set out by schedule attached hereto, there are no
stock grants, options, rights, warrants or other rights to purchase or obtain
Ivory Common or Preferred Stock issued or committed to be issued.
6.7. Corporate Authority. Ivory 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.
6.8. Authorization. Execution of this agreement has been duly authorized and
approved by Ivory's board of directors.
6.9. Subsidiaries. Except as set out by the schedule attached hereto, Ivory
has no subsidiaries.
6.10. Financial Statements. Ivory's financial statements dated as of October 31,
1999 copies of which will have been delivered by Ivory to Cosmoz.com prior to
the Closing Date (the "Ivory Financial Statements"), fairly present the
financial condition of Ivory 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.
6.11. Absence of Undisclosed Liabilities. Except to the extent reflected or
reserved against in the Ivory Financial Statements, Ivory 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.
6.12. No Material Changes. Except as set out by attached schedule, there has
been no material adverse change in the business, properties, or financial
condition of Ivory since the date of the Ivory Financial Statements.
6.13. Litigation. Except as set out by attached schedule, there is not, to the
knowledge of Ivory ,any pending, threatened, or existing litigation, bankruptcy,
criminal, civil, or regulatory proceeding or investigation, threatened or
contemplated against Ivory or against any of its officers.
6.14. Contracts. Except as set out by attached schedule, Ivory is not a party
to any material contract not in the ordinary course ofbusiness that is to be
performed in whole or in part at or after the date of this agreement.
<PAGE>
AGREEMENT AND PLAN OF REORCIANUATION PAGE NUMBER 4
- --------------------------------------------------------------------------------
6.15. Title. Except as set out by attached schedule, Ivory has good and
marketable title to all the real property and good and valid title to all other
property included in the Ivory Financial Statements. Except as set out in the
balance sheet thereof, the properties of Ivory 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 Ivory .
6.16. Tax Returns. Except as set out by attached schedule, all required tax
returns for federal, state, county, municipal, local, foreign and other taxes
and assessments have been properly prepared and filed by Ivory 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 Ivory Financial
Statements are adequate to cover any such taxes that may be assessed against
Ivory in respect of its business and its operations during the periods covered
by the Ivory Financial Statements and all prior periods.
6.17. No Violation. The Closing 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 Ivory is subject or by which Ivory is bound.
7. Representations and Warranties of Cosmoz.com. Cosmoz.com represents and
warrants that:
7.1. Corporate Organization and Good Standing. Cosmoz.com 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 proRerty or business requires such
qualification.
7.2. Capitalization. Cosmoz.com's authorized capital stock consists of
200,000,000 shares of Common Stock, $.001 par value per share, of which
58,259,543 shares have been issued and are outstanding, and 50,000,000 shares of
Preferred Stock, $.001 par value per share of which no shares have been issued
and outstanding.
7.3. Issued Stock. All the outstanding shares of its Common Stock are duly
authorized and validly issued, fully paid and non-assessable.
7.4. Stock Rights. Except as set out by attached schedule, there are no stock
grants, options, rights, warrants or other rights to purchase or obtain
Cosmoz.com Common or Preferred Stock issued or committed to be issued.
7.5. Corporate Authority. Cosmoz.com 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.
<PAGE>
AGREEMENT AND PLAN OF REOROAMLATION PAGE NUMBER 5
- --------------------------------------------------------------------------------
7.6. Authorization. Execution of this agreement has been duly authorized and
approved by Cosmoz.com's board of directors.
7.7. Subsidiaries. Cosmoz.com has five wholly owned active and two inactive
subsidiaries.
7.8. Financial Statements. Cosmoz.com's financial statements dated as of
September 30, 1999, copies of which will have been delivered by Cosmoz.com to
Ivory prior to the Closing Date (the "Cosmoz.com Financial Statements"), fairly
present the financial condition of Cosmoz.com 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.
7.9. Absence of Undisclosed Liabilities. Except to the extent reflected or
reserved against in the Cosmoz.com Financial Statements, Cosmoz.com 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.
7.10. No Material Changes. Except as set out by attached schedule, there has
been no material adverse change in the business, properties, or financial
condition of Cosmoz.com since the date of the Cosmoz.com Financial Statements.
7.11. Litigation. Except as set out by attached schedule, there is not, to the
knowledge of Cosmoz.com, any pending, threatened, or existing litigation,
bankruptcy, criminal, civil, or regulatory proceeding or investigation,
threatened or contemplated against Cosmoz.com or against any of its officers.
7.12. Contracts. Except as set out by attached schedule, Cosmoz.com 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.
7.13. Title. Except as set out by attached schedule, Cosmoz.com has good and
marketable title to all the real property and good and valid title to all other
property included in the Cosmoz.com Financial Statements. Except as set out in
the balance sheet thereof, the properties of Cosmoz.com 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
ofCosmoz.com.
7.14. Tax Returns. Except as set out by attached schedule, all required tax
returns for federal, state, county, municipal, local, foreign and other taxes
and assessments have been properly prepared and filed by Cosmoz.com 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
Cosmoz.com Financial Statements are adequate to cover any such taxes that may be
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 6
- --------------------------------------------------------------------------------
assessed against Cosmoz.com in respect of its business and its operations during
the periods covered by the Cosmoz.com Financial Statements and all prior
periods.
7.15. No Violation. The Closing 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 Cosmoz.com is subject or by which Cosmoz.com is bound.
8. Conduct Pending the Closing
Ivory, Cosmoz.com and the Shareholders covenant that between the date of
this Agreement and the Closing as to each of them:
8.1. No change will be made in the charter documents, by-laws, or other
corporate documents of Ivory.
8.2. Ivory 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.
8.3. No change will be made in the charter documents, by-laws, or other
corporate documents of Cosmoz.com.
8.4. Cosmoz.com 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.
8.5. None of the Shareholders will sell, transfer, assign, hypothecate, lien, or
otherwise dispose or encumber the Ivory shares of common stock owned by them.
9. Conditions Precedent to Obligation of the Shareholders
The Shareholder's obligation to consummate this exchange shall be subject
to fulfillment on or before the Closing of each of the following conditions,
unless waived in writing by the Shareholders as appropriate:
9.1. Cosmoz.com's Representations and Warranties. The representations and
warranties of Cosmoz.com set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as afected by transactions
contemplated hereby.
9.2. Cos moz.com's Covenants. Cosmoz.com shall have performed all covenants
required by this Agreement to be performed by it on or before the Closing.
9.3. Board of Director Approval. This Agreement shall have been approved by
the Board of Directors of Cosmoz.com.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 7
- --------------------------------------------------------------------------------
9.4. Supporting Documents of Cosmoz.com. Cosmoz.com shall have delivered to
the Shareholders supporting documents in form and substance reasonably
satisfactory to the Shareholders, to the effect that:
(a) Agood standing certificate from the jurisdiction ofCosmoz.com's
organization stating that Cosmoz.com is a corporation duly organized, validly
existing, and in good standing;
(b) Secretary's certificate stating that Cosmoz.com's authorized capital
stock is as set forth herein;
(c) Certified copies of the resolutions of the board of directors of
Cosmoz.com authorizing the execution of this Agreement and the consummation
hereof;
(d) Secretary's certificate of incumbency of the officers and directors
of Cosmoz.com;
(e) Cosmoz.com's Financial Statements; and
(f) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
10. Conditions Precedent to Obligation of Cosmoz.com
Cosmoz.com's obligation to consummate this exchange shall be subject to
fulfillment on or before the Closing of each of the following conditions, unless
waived in writing by Cosmoz.com:
10.1. Shareholders' Representations and Warranties. The representations and
warranties of the Shareholders set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
10.2. Shareholders' Covenants. The Shareholders shall have performed all
covenants required by this Agreement to be performed by them on or before the
Closing.
10.3. Ivory's Representations and Warranties. The representations and
warranties of Ivory set forth herein shall be true and correct at the Closing as
though made at and as of that date, except as affected by transactions
contemplated hereby.
10.4. Ivory's Covenants. Ivory shall have performed all covenants required by
this Agreement to be performed by them on or before the Closing.
10.5. Board of Director Approval. This Agreement shall have been approved by
the Board of Directors of Ivory.
10.6. Supporting Documents of Ivory. Ivory shall have delivered to the
Shareholders supporting documents in form and substance reasonably satisfactory
to the Shareholders, to the effect that:
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 8
- --------------------------------------------------------------------------------
(a) A good standing certificate from the jurisdiction of Ivory's
organization stating that Ivory is a corporation duly organized, validly
existing, and in good standing;
(b) Secretary's certificate stating that Ivory's authorized capital stock
is as set forth herein;
(c) Certified copies of the resolutions of the board of directors of
Ivory authorizing the execution of this Agreement and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers and directors
of Ivory;
(e) Ivory's Financial Statements; and
(f) Any document as may be specified herein or required to satisfy the
conditions, representations and warranties enumerated elsewhere herein.
11. Shareholder Representative. The Shareholders hereby irrevocably designate
and appoint Cassidy & Associates, 1504 R Street, N.W. Washington, District of
Columbia 20009, as their agent and attorney in fact (the "Shareholders'
Representative") with full power and authority until the Closing to execute,
deliver, and receive on their behalf all notices, requests, and other
communications hereunder; to fix and alter on their behalf the date, time, and
place of the Closing; to waive, amend, or modify any provisions of this
Agreement, and to take such other action on their behalf in connection with this
Agreement, the Closing, and the transactions contemplated hereby as such agent
or agents deem appropriate; provided, however, that no such waiver, amendment,
or modification may be made if it would decrease the number of shares to be
issued to the Shareholders hereunder or increase the extent of their obligation
to indemnify Reorganization hereunder.
12. Termination. This Agreement may be terminated (1) by mutual consent in
writing; (2) by any of the Shareholders, Cosmoz.com or Ivory if there has been a
material misrepresentation or material breach of any warranty or covenant by any
other party; or (3) by any of the Sharel-plders, Cosmoz.com or Ivory if the
Closing shall not have taken place within 15 days following execution of this
Agreement, unless adjourned to a later date by mutual consent in writing.
13. Survival of Representations and Warranties. The representations and
warranties of the Shareholders, Cosmoz.com and Ivory set out herein shall
survive the Closing.
14. Arbitration
14.1. 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 any other cause, will
be resolved by arbitration before the American Arbitration Association within
the District of Columbia.
14.2. Consent to Jurisdiction, Situs and Judgement. The parties hereby
irrevocably consent to the jurisdiction of the American Arbitration Association
<PAGE>
AGREEMFNT AND PLAN OF REORGANIZATION PAGE NUMBER 9
- --------------------------------------------------------------------------------
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.
14.3. Applicable Law. The law applicable to the arbitration and this agreement
shall be that of the State of Delaware, determined without regard to its
provisions which would otherwise apply to a question of conflict of laws.
14.4. 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.
14.5. 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.
14.6. 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.
14.7. 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.
14.8. Covenant Not to Sue. The parties covenant that under no conditions will
any party or any affliate 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.
14.9. Intention. It is the intention of the parties and their affliates 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 affliate 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 affliates.
14.10. Survival. The provisions for arbitration contained herein shall survive
the termination of this agreement for any reason.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 10
- --------------------------------------------------------------------------------
15. General Provisions.
15.1. 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.
15.2. 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.
15.3. 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.
15.4. 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 Ivory, to:
Ivory Acquisition Corporation
1504 R Street, N. W.
Washington, D.C. 20009
If to Cosmoz.com, to:
Cosmoz.com, Inc.
55 Hawthorne Street, Suite 550
San Francisco, California 94105
If to the Shareholders, to:
Cassidy & Associates
1504 R Street, N.W.
Washington, D.C. 20009
15.5. Governing Law. This agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
15.6. 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.
15.7. 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.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 11
- --------------------------------------------------------------------------------
15.8. Exchange Agent and Closing Date. The Exchange Agent shall be the law firm
of Cassidy & Associates, Washington, D.C. 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.
15.9. 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.
15.10. Schedules. All schedules attached hereto, ifany, shall be acknowledged by
each party by signature or initials thereon and shall be dated.
15.11. Effective Date. This effective date of this agreement shall be January 5,
2000.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 12
- --------------------------------------------------------------------------------
Signature Page to Agreement and Plan of Reorganization
among Ivory, Cosrnoz.corn and the Shareholders of Ivory
IN WITNESS WHEREOF, the parties have executed this agreement.
IVORY ACQUISITION CORPORATION
By/s/James M. Cassidy
---------------------
James M. Cassidy
COSMOZ.COM, C.
By/s/Wilfred Shaw
-----------------
Wilfred Shaw, Chairman and CEO
THE SHAREHOLDERS OF IVORY
ACQUISITION CORPORATION:
TPG CAPITAL CORPORATION:
By/s/James M. Cassidy
---------------------
James M. Cassidy, President
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION PAGE NUMBER 13
- --------------------------------------------------------------------------------
Exhibit A
Number of Number of
Ivwy Cosmos.com Name of
Share To Be Shares To Be Shareholder
Exchanged Received
- ----------- ------------ ----------
5,000,000 250,000 TPG Capital Corporation
Address
- -------
1504 R St. NW, Washington DC 20009
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
IVORY ACQUISITION CORPORATION
INTO
COSMOZ.COM, INC.
(PURSUANT TO SECTION 253 OF THE GENERAL
CORPORATION LAW OF DELAWARE)
COSMOZ.COM, INC., a Delaware corporation (the "Corporation"), does hereby
certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of Ivory Acquisition Corporation, a Delaware
corporation.
THIRD: That the Corporation, by the following resolutions of its Board of
Directors, duly adopted on the 16th of February 2000, determined to merge into
itself Ivory Acquisition Corporation on the conditions set forth in such
resolutions:
RESOLVED, that Cosmoz.com, Inc. (this "Corporation") merge into
itself its subsidiary, Ivory Acquisition Corporation, and assume all of
said subsidiary's liabilities and obligations;
FURTHER RESOLVED, That the President and the Secretary of this
Corporation be and they hereby are directed to make, execute and
acknowledge a certificate of ownership and merger setting forth a copy of
the resolution to merge said Ivory Acquisition Corporation into this
Corporation and to assume said subsidiary's liabilities and obligations
and the date of adoption thereof and to file the same in the office of
the Secretary of State of Delaware.
IN WITNESS WHEREOF, Cosmoz.com, Inc. Has caused this certificate to be
signed by Wilfred Shaw, its authorized officer, on the 16th day of February,
2000.
COSMOZ.COM, INC., a Delaware corporation
By:/s/Wilfred Shaw
------------------
Wilfred Shaw
Its: President and Chief Executive Officer
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 07:30 PM 10/16/1996
850201147 - 267 4098
State of Delaware
Certificate of Incorporation
MIS International, Inc.
FIRST: The name of this Delaware corporation is:
MIS International, Inc.
SECOND: The name and address of the Corporation's Registered Agent is:
Corporate Creations Enterprises, Inc.
686 North Dupont Boulevard #302
Milford DE 19963
Kent County
THIRD: The purpose of the Corporation is to engage in any lawful act or activity
for which corporation may be organized under Delaware law.
FOURTH: The corporation shall have the authority to issue 50,000,000 shares of
common stock, per value $0.01 per share.
FIFTH: The directors shall be protected from personal liability to the fullest
extent permitted by law.
SIXTH: The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive, Suite 312, Door Code #125
Miami Beach FL 33139-6629
The undersigned incorporator through its authorized representative executed this
Certificate of Incorporation on October 15, 1996
Corporate Creations International Inc.
By:/s/ Brian R. Fotis, Vice President
<PAGE>
MINUTES OF SPECIAL MEETING
OF
BOARD OF DIRECTORS
MIS INTERNATIONAL, INC.
On December 7, 1998 at 2:00 PM Pacific time, a meeting of the Board of
Directors of MIS INTERNATIONAL, INC., (the "Company"), a Delaware corporation,
was convened at 111 Deerwood Rd., Suite 200, San Ramon, CA 94383. Participating
in the meeting was Wilfred Shaw the Chairman and sole director of the Company
Directors.
The order of business was to adopt a proposal to amend the Certificate of
Incorporation to change the Company name and to increase the number of
authorized share, and to review a draft of the proxy statement to be distributed
to the shareholders for approval of such amendments.
RESOLVED, that the company name be changed to COSMOZ.COM, Inc.;
RESOLVED, that the proposed increase in the authorized number of shares of
common stock of the Company, as set forth in the draft proxy statement provided
to the director at this meeting, is hereby authorized and approved.
There being no further business to come before this meeting, upon motion
duly made, seconded and unanimously carried, the meeting was adjourned.
The undersigned certifies that the foregoing are true and accurate Minutes
of the Special Meeting of the Board of directors of the corporation, duly held
at the time and in the manner first written above.
Attest: /s/Wilfred Shaw
----------------- ---------------
Name Wilfred Shaw
CEO/Chairman
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATION OF INCORPORATION
MIS International, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of directors of MIS INTERNATIONAL, INC.,
resolutions were duly adopted setting forth proposed amendments of the
Certificate of Incorporation of said corporation, declaring said amendments to
be advisable and calling a meeting of said corporation for consideration
thereof. The resolutIons setting forth the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Articles thereof numbered "FIRST" so that, as amended, said
Article shall be and read as follows:
The name of the corporation (hereinafter called the "corporation") is
COSMOZ.COM, Inc.:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbered "FOURTH" so that, as amended, said
Article shall be and read as follows:
The total number of shares, per value $.001 per share. The total numbers of
shares of preferred stock which the corporation shall have authority to issue is
50,000.000 shares, per value $.001 per share.
the Board of Directors is allowed to assign the rights and preferences of
the preferred share holders.
SECOND: that thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and held
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of sharer as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said MIS International, Inc., has caused this certificate to
be signed by, Wilfred Shaw, an Authorized Officer, this 7th day of December,
1998.
BY:/s/ Wilfred Shaw
-------------------
Name: Wilfred Shaw
TITLE OF OFFICER; Chief Executive Officer
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 12/17/1998
981493247 - 2674098
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREED, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "MIS INTERNATIONAL INC.", CHANGING ITS NAME FROM "MIS INTERNATIONAL, INC." TO
"COSMOZ.COM, INC.", FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF DECEMBER,
A.D. 1998, AT 4:30 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN
FORWARDED TO THE KENT COUNTRY RECORDER OF DEEDS
[GRAPHIC OMITTED] Edward J. Freel, Secretary of State
2674098 8100 AUTHENTICATION: 9490713
981493247 DATE: 12-28-98
<PAGE>
MINUTES OF SPECIAL MEETING
OF
BOARD OF DIRECTORS
MIS INTERNATIONAL, INC.
On December 7, 1998 at 2:08 PM Pacific time, a meeting of the board of
Directors of MIS INTERNATIONAL, INC., (the "Company"), a Delaware corporation,
was convened at 111 Deerwood Rd., Suite 200, San Ramon, CA 94383. Participating
in the meeting was Wilfred Shaw the Chairman and sole director of the Company_
Directors.
The order of business was to adopt a proposal to amend the Certificate of
Incorporation to change the Company name and to increase the number of
authorized shares and to review a draft of the proxy statement to be distributed
to the ahareholders for approval of such amendments.
RESOLVED, that the company name be changed to COSMOZ.COM,Inc.;
RESOLVED, that the proposed increase in the authorized number of shares of
common stock of the Company, or set forth in the draft proxy statement provided
to the director at this meeting, is hereby authorized and approved.
There being no further business to come before this meeting, upon motion
duly made, seconded and unanimously carried, the meeting was adjourned.
The undersigned certifies that the foregoing are true and accurate Minutes
of the Special Meeting of the Board of Directors of the Corporation, duly held
at the time and in the manner first written above.
Attest:
-----------------
Name Wilfred Shaw
CEO/Chairman
<PAGE>
Bylaws
of
MIS International, Inc.
ARTICLE I. DIRECTORS
--------------------
Section 1. Function. All corporate powers shall be exercised by or under
the authority of the board of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Directors must be natural persons who are at least 18 years of age but need not
be shareholders of the Corporation. Residents of any estate may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
compensation of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of
the Board of Directors or a committee of the board of Directors at which
actionon amy corporate master is taken shall be presumed to have assented to the
action taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum number
of directors required by law. The number of directors many be increased or
decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect directors to hold office until the next annual meeting
or until. their earlier resignation, removal from office or death. Directors
shall be elected by a plurality of the votes cast by the shards entitled to vote
in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled by the shareholders or by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directory by the shareholders. If there are no remaining directors,
the vacancy shall be filled by the shareholders.one of the purposes of the
meeting is the removal of the director. A director may be removed only if the
number of votes cast to remove him exceeds the number of votes cast against
removal.
<PAGE>
Section 8. Quorum and Voting A majority of the number of directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and others committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members one or more cornmitteee each of which must have at least
two members - Each committee shall have the authority set forth in the
resolution designating the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time, Notice and all of Meetings. Regular meetings of the Board
of Directors shall be held without notice a.t the time and on the date
designated by resolution of the Board of Directors. Written notice of the time,
date and place of special meetings of the Board of Directors shall be given to
each director by mail delivery at ?east two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened. unless a
director objects to the transaction of business (promptly upon arrival at the
meeting) because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of any regular or special meeting
of the Board of Directors must be specified in the notice or waiver of notice of
the meeting.
A majority of the directors present, whether or not a quorum exists, may
adjoun any meeting of the Board of Directors to another time and place. Notice
of an adjourned meeting shall be given to the directors who were not present at
the time of the adjournment and, unless the time and place of the adjourned
meeting are announced at the time of the adjournment, to the other directors.
Meetings of the Board of Directors may be called by the President or the
Chairman of the Board of Directors. Members of the Board of Directors and any
committee of the Board may participaLe in a meeting by telephone conference or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation by these means constitutes
presence in person at a meeting.
2
<PAGE>
Section 12. Action By Written Consent. Any action required or permitted to be
taken at a meeting of directors may be taken without a meeting if a consent in
writing setting forth the action to be taken and signed. by all of the directors
is filed in the minutes of the proceedings of the Board. The action taken shall
be deemed effective when the last director signs the consent, unless the consent
specifies otherwise.
Saction 1. Annual Mesting. Theannual meeting of the shareholders of the
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. Only business within the purposes described in the meeting notice may be
conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the sharpholdezs wi11 be held at the
principal place of business of the Corporation or at such other place as is
designated by the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not leis than 10 nor store than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall nor
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders even if less than a quorum, may adjourn
the meeting without further notice until a quorum is obtained.
Section 6. If a quorum is present, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on the subject matter
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shall be the act of the shareholders. Each outstanding share shall be entitled
to one vote on each matter submitted to a vote at a meeting of shareholders. An
alphabetical list of all shareholders who are entitled to notice of a
shareholders' meeting along with their addresses and the number' of shares held
by each shall be produced at a shareholders' meeting upon the request of any
shareholder.
Section 7. Proxies. A shareholder antitlad to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more than
11 months after the date of its execution unless a longer term is expressly
stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting stock
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record. The acts of the meeting shall be valid,
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within l0 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders who
have not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters' rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
ARTICLE III. OFFICERS
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Section 1. Officers: Election: Resignation: Vacancies. The Corporation
shall have the officers and assistant officers that the Board of Directors
appoint from time to time. Except as otherwise provided in an employment
agreement which the Corporation has with an officer, each officer shall serve
until a successor is chosen by the directors at a regular or special meeting of
the directors or until removed. Officers and agents shall be chosen, serve for
the terms, and have the duties determined by the directors. A person may hold
two or more offices.
Any officer may resign at any time upon written notice to the Corporation. The
resignation shall be effective upon receipt, unless the notice specifies a later
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date. If the resignation is
effective at a ater date and the corporation accepts the future effective date.
the Board of Directors may fill the pending vacancy before the effective date
provided the successor officer does not take office until the future effective
date. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of officers. An officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be sarvad thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer, agent or menber of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with
financial institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
-------------------------
The Board of Directors May; from time to time, declare distributions to
its shareholders in cash. property or its own shares, unless the distribution
would cause (i) the Corporation to be unable to pay its debts as they become due
in the usual course of business, or (ii) the Corporations assets to be less than
its liabilities plus the amount necessary, if the Corporation were dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution of
corporate profits, subject to the provisions of law.
ARTICLE V CORPORATE RECORDS
---------------------------
Section 1. Corporate Records. The corporation shall maintain its records
in written form or in another form capable of conversion into written form
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within a reasonable time. The Corporation shall keep as permanent records
minutes of all meetings of its shareholders and Board of Directors, a record of
all actions taken by the shareholders or Board of Directors without a meeting,
and a record of all actions taken by a committee of the Board of Directors on
behalf of the Corporation. The Corporation Shall maintain accurate accounting
records and a record of its shareholders in a form that permits praparation of a
list of the names and addresses of all shareholders in alphabetical order by
class of shares showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles
of incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect: resolutions adopted by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting for
the past three years: written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including the
financial statements furnished for the last three years; a list of names end
business street addresses of its current directors and officers: and its most
recent annual report delivered to the Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he Wishes to inspect and copy the record(s). The demand
must be made in good faith and for a proper purpose. The shareholder must
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders' list described in this Article if the shareholder is in litigation
with the Corporation. In such a case. the shareholder shall have the same rights
as any other litigant to compel the production of corporate records for
examination.
The Corporation many deny any demand for inspection if the demand was
made for an improper purpose, or it the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or was improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
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Section 3. Financial Statements for Shareholders. Unless modified by resolution
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on chat basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within much additional time thereafter as
is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not mailed
the statements, the Corporation shall mail him the latest annual financial
statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order of action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation, or threatened litigation.
If the Corporation issues or authorizee the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
ARTICLE VI. STOCK CERTIFICATES
------------------------------
Section 1. Issuance. The Board of Directors may authorize the issuance of
some or all of the shares of any or all of its classes or series without
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certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for any share
until the share is fully paid. The Corporation shall be entitled to treat the
holder of record of shares as the holder in fact and, except as otherwise
provided by law, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on
its books only after the surrender to the Corporation of the share certificates
duly endorsed by the holder of record or attorney-in-fact. If the surrendered
certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 4. Lost. Stolen or Destroyed Certificates. If a shareholder claims
to have lost or destroyed a certificate of shares issued by the Corporation, a
new certificate shall be issued upon the delivery to the Corporation of an
affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed, and. at the discretion of the Board of Directors,
upon the deposit of a bond or other indemnity as the board reasonably requires.
ARTICLE VII. INDEMNIFICATION
----------------------------
Section I. Right to Indemnification. The corporation hereby indemnifies each
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or. officer of the Corporation to the fullest
extent permitted or authorised by current or future legislation or judicial or
administrative decision against all fines, liabilities, costs and expenses,
including attorneys' fees, arising out of his or her status as a director,
officer, agent, employee or representative. The foregoing right of
indemnification shall not be exclusive of other rights to which those seeking an
indemnification may be entitled. The Corporation may maintain insurance, at its
expense, to protect itself and all officers and directors against fines,
liabilities, costs and expenses, whether or not the Corporation would have the
legal power to indemnify them directly against such liability.
Section 2. Advances. Costs, charges and expenses (including attorneys' fees)
incurred by it person referred to in Section 1 of this Article in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition thereof upon receipt of an undertaking to repay all amounts
advanced if it is ultimately determined that the person is not entitled to be
indemnified by the Corporation as authorized by this Article, and upon
satisfaction of other conditions required by current or future legislation.
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Section 3. Savings Clause. If this Article or any portion of it is invalidated
on any ground by a court of competent jurisdiction, the corporation nevertheless
indemnifies each person described in Section 1 of this Article to the fullest
extent permitted by all portions of this article that have not been invalidated
and to the fullest extent permitted by law.
ARTICLE V111. AMENDMENT
-----------------------
These Bylaws may be altered, amended or repealed, and new
Bylaws adopted: by a majority vote of the directors or by a vote of the
shareholders holding a majority of the shares.
I certify that these are the Bylaws adopted by the Board of
Directors of the Corporation.
signature not recognizable
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Secretary
Date: Dec 7, 98
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