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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 13, 1999
FREEDOM SURF, INC.
(Exact name of registrant as specified in its charter)
Nevada 000-28749 88-0446457
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
17011 Beach Blvd., Suite 710, Huntington Beach, California 92648
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (714) 843-6633.
Not applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Freedom Surf, Inc., a Nevada Corporation (the "Company") previously
reported that on or about December 10, 1999 the Company had purchased certain
assets valued at $5,180,000 by issuing 969,000 common shares and assuming a long
term liability in the amount of $335,000. The Company subsequently reported that
on October 19, 2000 it sold these assets, consisting of manufacturing equipment
(the "Equipment"), to Ronbridge Investments, Ltd., a Hong Kong corporation
("Ronbridge"). The sale price was $4,750,000. The Company previously reported
that Ronbridge made a cash down payment of $750,000 and agreed to pay the
balance of $4,000,000 on or before March 18, 2002 with interest payable
quarterly at the rate of 6 percent (6%) per annum. The Company also reported
that that Ronbridge assumed the Company's outstanding debt of $335,000 on its
purchase of the Equipment.
The purpose of this amendment is to amend, expand and update the
previous disclosures as follows:
(i) At the time of the sale to Ronbridge, it could be deemed to be
an affiliate of the Company in that Ronbridge's controlling
shareholder was related to Raece Richardson, who is a major
shareholder and a prior officer and director of the Company.
It is the Company's understanding that Ronbridge did not and
does not now have sufficient resources to pay the amount due
to the Company. The Company understands that Ronbridge's
intent is to resell the Equipment and use the proceeds to pay
the amount it owes the Company on this transaction. The
$750,000 payment to the Company on this transaction was
received by the Company on August 30, 2000 and the Company
understands this was paid by an individual who was assisting
Ronbridge on this transaction.
(ii) On the acquisition of the Equipment, the Company negotiated
the transaction with the owner of the Equipment who was STS de
Costa Rica, SA (the "Seller"), a Costa Rican entity. At the
time of the Company's purchase, the Equipment was being
warehoused by the Seller in Costa Rica. Based on advice from
the Company's outside consultants, the acquisition transaction
was structured so that Pacific Standard Financial Group, Inc.
("Pacific") acquired the Equipment from the Seller and resold
it to the Company.
(iii) An officer and director of the Company previously worked for
the Seller, was familiar with the Equipment; and, based on his
knowledge of the Equipment, believes the Equipment to have a
value equal or greater to the purchase price paid by the
Company. However, the Company did not obtain a report from a
licensed independent appraiser as to the valuation of the
Equipment. (iv) In accordance with the Company's agreement
with Pacific, the Company agreed to purchase the Equipment
from Pacific for a promissory note (the "Note") in the
original principal amount of $335,000 and $4,845,000 of the
Company's common stock with a value of $5.00 per share or
969,000 shares (the "Shares") of the Company's common stock.
The Note was originally due and payable in June 2000.
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(v) It is the Company's understanding that Pacific purchased the
Equipment from the Seller for the same consideration that the
Company agreed to pay Pacific except as follows: the
promissory note issued by Pacific to the Seller was in the
original principal amount of $300,000. Further, it is the
Company's understanding that Pacific transferred the Shares to
the Seller as part of its agreement with the Seller to
purchase the Equipment.
(vi) At the time of this acquisition, the Equipment was being
stored at a location in Costa Rica by the Seller. After this
transaction, the Company did not take possession of the
Equipment and it remained in storage under the control of the
Seller. As a part of the agreement, the Company was required
to pay storage fees but it has not done so. At the time of the
transaction, the Company planned to move the Equipment to a
location in Mexico and use it in the Company's proposed
manufacturing operations. Since that time, the Company decided
to not manufacture wetsuits through its own operations but to
contract with outside parties for the manufacture of its
wetsuits. Accordingly, after this transaction, the Company
decided it did not have further use for the Equipment and, for
this reason, decided to sell it to Ronbridge.
(vii) The Company has not made the required payment to Pacific of
$335,000 and Pacific has not made the required payment to the
Seller of $300,000. The Company does not have the resources at
the present time to make this payment. On November 16, 2000,
the Company received a notice ("Notice") from the Seller of
the Equipment declaring a default in the purchase of the
Equipment on account of the nonpayment of the $300,000 due the
Seller. The Notice states that the Seller is terminating the
agreement. Based on this, the Company will seek to recover
from the Seller the 969,000 common shares it paid for the
Equipment. The Company believes it can be successful in
recovering these shares of common stock but there is no
assurance that the Company will be successful in doing so.
Based on this Notice, it appears the Company is unable to
deliver the Equipment to Ronbridge. The Company has notified
Ronbridge that it is unable to deliver the Equipment and has
notified Ronbridge that it is unable to refund the $750,000
previously paid to the Company on behalf of Ronbridge. The
Company is negotiating a settlement of this matter with
Ronbridge on terms that will involve the issuance of shares of
the Company's common stock to Ronbridge in lieu of returning
the $750,000 paid on behalf of Ronbridge. The Company believes
it can be successful in negotiating a settlement of this
transaction based on the issuance of common stock but there
can be no assurance the Company will be successful in this.
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Item 5. Other Events.
By letter dated November 17, 2000 the Company received notification
from the Securities and Exchange Commission (the "Commission") that the
Commission had commenced an informal inquiry into various matters involving the
Company including the transactions described herein. The Company is cooperating
with the Commission and is taking action to resolve this inquiry as soon as
possible.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FREEDOM SURF, INC.
a Nevada corporation
Date: November 30, 2000 By: /s/ Rick Songer
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Name: Rick Songer
Title: Chief Executive Officer
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