<PAGE>
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
/ / Preliminary Information Statement
Confidential, for use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
/X/ Definitive Information Statement
INETVISIONZ.COM, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Amendments Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction
applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Amendments Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state
how it was determined):
$___ per share*
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$_______
--------------------------------------------------------------------------------
(5) Total fee paid:
$_______
--------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Amendments Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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copies to: Lawrence W. Horwitz, Esq.
Horwitz & Beam
Two Venture Plaza, Suite 350
Irvine, CA 92618
Telephone: (949) 453-0300
Facsimile: (949) 453-9416
<PAGE>
INETVISIONZ.COM, INC.
6033 WEST CENTURY BOULEVARD, SUITE 500
LOS ANGELES, CA 90045
This is to inform you that on August 29, 2000, the Board of Directors of
Inetvisionz.com, Inc. (the "Company") approved and recommended that the
following amendments to the Company's Articles of Incorporation (the "Charter
Amendments") be adopted:
1. to change the name of the Company to "Inetvisionz, Inc.";
2. to increase the number of authorized shares of common stock, par
value $.001 (the "Common Stock"), of the Company to 100,000,000 shares from
71,428,572 shares, with certain voting, dividends and liquidation rights;
3. to authorize a class of preferred stock, par value $.001 (the
"Preferred Stock"), of the Company, consisting of 10,000,000 authorized shares,
which may be issued in one or more series, with such rights, preferences,
privileges and restrictions as shall be fixed by the Company's board of
directors from time to time;
4. to designate 2,000,000 shares of Preferred Stock "Series A Preferred
Stock", with such rights, preferences, privileges and restrictions as fixed by
the Company's board of directors in a certificate of designations which the
board of directors shall have authority to execute and file as required by law.
On August 29, 2000, the holders of 50.4% of the outstanding shares of
Common Stock executed a written consent adopting these Charter Amendments.
Pursuant to the provisions of Delaware law and the Company's Articles of
Incorporation, the holders of at least a majority of the outstanding voting
shares are permitted to approve the Charter Amendments by written consent in
lieu of a meeting, provided that prompt notice of such action is given to the
other shareholders. This written consent assures that the Charter Amendments
will occur without your vote. Pursuant to the rules and regulations promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), an information statement must be sent to
the holders of voting stock who do not sign the written consent at least 20 days
prior to the effective date of the action. This notice, which is being sent to
all holders of record on August 29, 2000, is intended to serve as such notice
under Delaware law and as the Information Statement required by the Exchange
Act.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Please note that this is not an offer to purchase your shares.
The date of this information statement is October 25, 2000.
Sincerely,
/s/ Noreen Khan
----------------------------
Noreen Khan, President
INETVISIONZ.COM, INC.
6033 WEST CENTURY BOULEVARD, SUITE 500
LOS ANGELES, CA 90045
<PAGE>
TABLE OF CONTENTS TO
SCHEDULE 14C
INFORMATION STATEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION..............................................................................1
QUESTIONS AND ANSWERS ABOUT THE AMENDMENTS................................................2
AMENDMENT TO THE ARTICLES OF INCORPORATION................................................3
Proposal and Board Recommendation.................................................3
DESCRIPTION OF SECURITIES.................................................................5
Description of Common Stock.......................................................5
Description of Preferred Stock....................................................5
SECURITY OWNERSHIP........................................................................8
FINANCIAL INFORMATION.....................................................................9
MANAGEMENT DISCUSSION AND ANALYSIS.......................................................10
ANNEX A Certificate of Amendment to Articles of Incorporation ..........................A-1
ANNEX B Certificate of Designations.....................................................B-1
ANNEX C Written Consent of the Holders of a Majority of the Common Stock
of Inetvisionz.com, Inc., dated August 29, 2000.................................C-1
ANNEX D Written Consent of the Directors of Inetvisionz.com, Inc.,
dated August 29, 2000...........................................................D-1
ANNEX E Financial Statements............................................................E-1
</TABLE>
<PAGE>
INTRODUCTION
On August 29, 2000, the Board of Directors of Inetvisionz.com, Inc. (the
"Company") approved and recommended that the following amendments to the
Company's Articles of Incorporation (the "Charter Amendments") be adopted:
1. to change the name of the Company to "Inetvisionz, Inc.";
2. to increase the number of authorized shares of common stock, par
value $.001 ("Common Stock"), of the Company to 100,000,000 shares from
71,428,572 shares, with certain voting, dividends and liquidation rights;
3. to authorize a new class consisting of 10,000,000 shares of preferred
stock, par value $.001 ("Preferred Stock"), of the Company, which may be issued
in one or more series, with such rights, preferences, privileges and
restrictions as shall be fixed by the Company's board of directors from time to
time;
4. to designate 2,000,000 shares of Preferred Stock "Series A Preferred
Stock", with such rights, preferences, privileges and restrictions as fixed by
the Company's board of directors in a certificate of designations ("Certificate
of Designations") which the board of directors shall have authority to file as
required by law.
On August 29, 2000, the holders of 50.4% of the outstanding shares of
Common Stock executed a written consent adopting these Charter Amendments. As of
the close of business on August 29, 2000, Company records indicated that
11,840,959 shares of the Company's Common Stock were issued and outstanding.
A copy of the Charter Amendments is attached hereto as Annex A, and
incorporated herein by reference. A copy of the Certificate of Designations is
attached hereto as Annex B, and incorporated herein by reference.
The Board of Directors determined that the increase of Common Stock and
the authorization of the "blank- check" Preferred Stock would allow the Company
to meet its future financing requirements and to utilize equity, rather than
cash, to complete strategic acquisitions. In addition, by authorizing the Board
of Directors to issue various series of Preferred Stock without additional
shareholder approval, the Company will have flexibility to take advantage of
financing opportunities in a competitive environment. The Board of Directors
currently intends to authorize the creation of a Series A Convertible Preferred
Stock upon the effectiveness of the Charter Amendments.
This Information Statement is being mailed on or about November 1, 2000
to holders of record of Common Stock at the close of business on October 25,
2000 pursuant to Section 14(c) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Regulation 14C promulgated thereunder. The
written consent of the majority of shareholders of the Company adopting the
Charter Amendments will be effective on or about twenty (20) days following the
mailing of this Information Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
1
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE AMENDMENTS
Q. Why did I receive this Information Statement?
A. Applicable laws require us to provide you information regarding the
Charter Amendments even though your vote is neither required nor
requested to complete the Charter Amendments.
Q. What will I receive if the Charter Amendments is completed?
A. Nothing. The Charter Amendment will only modify the Articles of
Incorporation.
Q. When do you expect the Amendments to be completed?
A. The Charter Amendments have been completed and the Company expects to
file them at least 20 days after an information statement will be sent
to you.
Q. Why am I not being asked to vote?
A. The Majority Stockholders own enough Shares to approve the Charter
Amendments without your vote, and have already given their approval of
the Charter Amendments.
Q. What do I need to do now?
A. Nothing. This Information Statement is purely for your information, and
does not require or request you to do anything. If you need information
about the Amendments, please contact the Information Agent.
Q. Whom can I call with questions?
A. If you have any questions about the Amendments, please contact Noreen
Khan at (310) 338-9822 (the "Information Agent").
For more detailed information on the Company, including financial
statements, you may refer to the Company's Form 10-SB and Schedule 14A, filed
with the SEC on January 11, 2000, or to the Company's latest Amended Form 10-SB
filed with the SEC on September 11, 2000. For the latest quarterly available
reported information you may also refer to the Company's Form 10-QSB filed with
the SEC on August 21, 2000. These documents are available on the SEC's EDGAR
database at www.sec.gov or can be requested by calling the Information Agent.
2
<PAGE>
AMENDMENT TO THE ARTICLES OF INCORPORATION
PROPOSALS AND BOARD RECOMMENDATION
On August 29, 2000, our Board of Directors, believing it to be in the
best interests of the Company and its shareholders, approved, and recommended
that the shareholders of the company approve an amendment to Article I of the
company's Articles of Incorporation to change the name of the Company to
"Inetvisionz, Inc." and, an amendment to Article IV of the Company's Articles of
Incorporation to: (i) increase the number of authorized shares of common stock,
par value $.001 (the "Common Stock"), of the Company to 100,000,000 shares from
71,428,572 shares, with certain voting and dividend rights; and, (ii) authorize
a class of blank check preferred stock, par value $.001, of the Company,
consisting of 10,000,000 authorized shares, which may be issued in one or more
series, with such rights, preferences, privileges and restrictions as shall be
fixed by the Company's Board of Directors from time to time in a certificate of
designations which the board of directors shall have authority to file from time
to time as required by law. A copy of the Charter Amendments is included in
Annex A.
(A) CHANGE TO THE COMPANY'S NAME. The Company's current name is
Inetvisionz.com, Inc. The Company is in the business of providing educational
training and consulting services, mainly through classroom based instruction at
its Los Angeles physical facilities. The Board of Directors believes that the
".com" suffix does not accurately characterize the present operations of the
Company and that it is in the best interest of the Company to delete the ".com"
suffix from the Company's name and to rename the Company "iNetVisionz, Inc."
(B) INCREASE IN AUTHORIZED COMMON STOCK OF THE COMPANY. The Company's
Articles of Incorporation currently authorize the Company to issue up to
71,428,572 shares of Common Stock. As of August 29, 2000, Company records
indicate that the Company had issued and outstanding 11,840,959 shares of Common
Stock and had reserved an additional 1,816,000 shares of Common Stock for
issuance upon exercise of outstanding warrants and options of the Company. As a
result, the number of authorized, non-designated shares of Common Stock
available for issuance by the Company in the future has been reduced, and the
Company's flexibility with respect to possible future stock splits, equity
financings, stock-for-stock acquisitions, stock dividends or other transactions
that involve the issuance of Common Stock has been diminished. The Board of
Directors believes that by increasing the number of shares of authorized Common
Stock to 100,000,000 shares from 71,428,572 shares, the Company will improve its
ability to take such actions. The Board of Directors also believes that it would
be beneficial to state the voting, dividends and liquidation rights of the
Common Stock in the articles of incorporation.
(C) AUTHORIZATION OF "BLANK CHECK" PREFERRED STOCK. The term "blank
check" preferred stock refers to stock for which the designations, preferences,
conversion rights, cumulative, relative, participating, optional or other
rights, including voting rights, qualifications, limitations or restrictions
thereof are determined by the board of directors of a company. Upon
effectiveness of the Charter Amendments, the Board of Directors of the Company
will be entitled to authorize the designation and issuance of up to 10,000,000
shares of Preferred Stock in one or more series with such limitations and
restrictions as may be determined in the board's sole discretion, with no
further authorization by shareholders required for the creation and issuance
thereof. When required by law and in accordance with the provisions of Section
151 of the General Corporations Law of the state of Delaware, the Board of
Directors of the Corporation shall have the express authority to execute,
acknowledge and file a certificate of designations setting forth, any and all
powers, designations, preferences, rights, qualifications, limitations or
restrictions on the stock. The Board of Directors believes that having such
blank check Preferred Stock available for, among other things, the proposed
financing transaction described below, as well as possible issuances in
connection with such activities as public or private offerings of shares for
cash, dividends payable in stock of the Company, acquisitions of other companies
or businesses, and otherwise, is in the best interest of the Company and its
shareholders.
3
<PAGE>
(D) DESIGNATION OF SERIES A PREFERRED STOCK. Pursuant to its authority
to designate and issue the foregoing blank check Preferred Stock, the Board of
Directors intends to designate 2,000,000 shares of its authorized Preferred
Stock as Series A Preferred Stock at $0.001 par value. All powers, designations,
preferences, rights, qualifications, limitations or restrictions on the Series A
Preferred Stock are set forth in a certificate of designations, the full text of
which is included as Annex B, that the Board of Directors executed on August 29,
2000 and that the Company intends to file with the Delaware Secretary of State
at least 20 days after an information statement is sent to the shareholders.
APPROVAL BY SHAREHOLDERS. As of August 29, 2000, the Company had
11,840,959 shares of its Common Stock issued and outstanding. As of this same
date, shareholders representing 5,992,435 shares of Common Stock, or 50.4% of
the issued and outstanding shares of Common Stock, approved the proposals to
amend the Company's Articles of Incorporation to: (i) change the Company's name
to Inetvisionz, Inc.; (ii) increase the number of authorized shares of Common
Stock of the Company to 100,000,000 shares from 71,428,572 shares; with certain
voting, dividend and liquidation rights; (iii) authorize a class of blank check
Preferred Stock, par value $.001, of the Company, consisting of 10,000,000
authorized shares, which may be issued in one or more series, with such rights,
preferences, privileges and restrictions as shall be fixed by the Company's
board of directors from time to time; and, (iv) designate 2,000,000 of these
shares Series A Preferred Stock, with such rights, preferences, privileges and
restrictions as fixed by the Company's board of directors in a certificate of
designations which the board of directors shall have authority to file from time
to time as required by law. The full text of the Charter Amendments in included
as Annex A of this Information Statement. Pursuant to the provisions of Delaware
law and the Company's Articles of Incorporation, the holders of at least a
majority of the outstanding voting shares are permitted to approve the Charter
Amendments by written consent in lieu of a meeting, provided that prompt notice
of such action is given to the other shareholders. Pursuant to the rules and
regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), an information
statement must be sent to the holders of voting stock who do not sign the
written consent at least 20 days prior to the effective date of the action. This
notice, which is being sent to all holders of record on August 29, 2000, is
intended to serve as such notice under Delaware law and as the Information
Statement required by the Exchange Act.
The Company anticipates that the Charter Amendments will be effective 20
days after the mailing of this Information Statement, November 21, 2000 or
shortly thereafter.
THE CHARTER AMENDMENTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE FAIRNESS OR MERIT OF THE CHARTER AMENDMENTS NOR UPON
THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS INFORMATION
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
PLEASE NOTE THAT THIS IS NEITHER A REQUEST FOR YOUR VOTE NOR A PROXY
STATEMENT, BUT RATHER AN INFORMATION STATEMENT (THE "INFORMATION STATEMENT")
DESIGNED TO INFORM YOU OF THE AMENDMENTS THAT WILL OCCUR IF THE AMENDMENTS ARE
COMPLETED AND TO PROVIDE YOU WITH INFORMATION ABOUT THE AMENDMENTS AND THE
BACKGROUND OF THESE TRANSACTIONS.
PLEASE NOTE ALSO THAT THIS IS NOT AN OFFER TO PURCHASE YOUR SHARES.
4
<PAGE>
DESCRIPTION OF SECURITIES
DESCRIPTION OF COMMON STOCK
After adoption of the Charter Amendments, the Company's Articles of
Incorporation will authorize the issuance of 100,000,000 shares of common stock,
$.001 par value per share, of which 11,840,959 shares were outstanding on August
29, 2000. All of the outstanding shares of Common Stock are fully paid and
non-assessable.
VOTING RIGHTS. Holders of shares of common stock are entitled to one
vote for each share on all matters to be voted on by the stockholders. Holders
of common stock have no cumulative voting rights. Accordingly, the holders of in
excess of 50% of the aggregate number of shares of Common Stock outstanding will
be able to elect all of the directors of the Company and to approve or
disapprove any other matter submitted to a vote of all shareholders.
DIVIDENDS; LIQUIDATION. Holders of shares of common stock are entitled
to share ratably in dividends, if any, as may be declared, from time to time, by
the Board of Directors in its discretion, from funds legally available therefor.
The Company does not currently anticipate paying any dividends on its Common
Stock. In the event of a liquidation, dissolution or winding up of the Company,
the holders of shares of common stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities.
OTHER. Holders of Common Stock have no preemptive rights to purchase the
Company's Common Stock. There are no conversion rights or redemption or sinking
fund provisions with respect to the Common Stock.
TRANSFER AGENT. Shares of Common Stock are registered at the transfer
agent and are transferable at such office by the registered holder (or duly
authorized attorney) upon surrender of the Common Stock certificate, properly
endorsed. No transfer shall be registered unless the Company is satisfied that
such transfer will not result in a violation of any applicable federal or state
securities laws. The Company's transfer agent for its Common Stock is Alpha Tech
Stock Transfer, whose address is 929 E. Spiers, Draper, Utah 84020.
REGISTRATION RIGHTS. The Company has currently granted piggyback
registration rights with respect to approximately 1,816,000 shares of its Common
Stock issuable pursuant to outstanding options and warrants. In addition, in
connection with the Proposed Transaction (this term is defined below under the
Proposed Issuance section) the Company may enter into any registration rights
agreement obligating the Company to register the resale of any shares of Common
Stock received upon conversion.
DESCRIPTION OF PREFERRED STOCK
After adoption of the Charter Amendments, the Company's Articles of
Incorporation will authorize the issuance of up to 10,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Stock") in one or more
series with such limitations and restrictions as may be determined in the
board's sole discretion, with no further authorization by shareholders required
for the creation and issuance thereof. Shares of Preferred Stock will be
registered on the books of the Company. The Company currently anticipates that
the Preferred Stock will not be registered with the Commission pursuant to
Securities Exchange Act of 1934, as amended. No transfer shall be registered
unless the Company is satisfied that such transfer will not result in a
violation of any applicable federal or state securities laws.
5
<PAGE>
PROPOSED ISSUANCE
The Board of Directors intends to issue 1,833,333 shares of convertible
preferred stock to certain accredited investors (the "Proposed Transaction").
Upon the effectiveness of the Charter Amendments, the Board of Directors intends
to designate a series of preferred stock entitled the Series A Convertible
Preferred Stock (the "Series A Shares") for issuance in connection with the
Proposed Transaction. The issuance of the Series A Shares is subject to various
conditions, including approval of the Charter Amendments, negotiation and
execution of documentation mutually acceptable to the Company and the Preferred
Investors and other terms customary for a private placement of equity. The
Company currently anticipates that the material terms of the Shares will
include:
PRIORITY VALUE. The Series A Shares will have preference in liquidation
distributions (to the extent of the Offering Price per Share) over the Company's
Common Stock. In the event of any Liquidation Event, the holders of Series A
Shares will be entitled to receive $1.00 per Series A Share before the holders
of Common Stock receive any distributions. A "LIQUIDATION EVENT" means any
liquidation, dissolution or winding-up of the Company.
CONVERSION RIGHTS. Each Share is convertible into one share of the
Company's Common Stock. In the event the shares of common stock of the Company
close at a trading price (the average between the bid and ask) of at least $1.50
for 15 consecutive trading days, then the Company shall have the right to
require the conversion of the preferred stock in accordance with the terms of
the placement. If the gross revenues of the Company for calendar 2000 are $5.0
million or greater, there will be no adjustment to the conversion ratio. If such
gross revenues are less than $5.0 million, the conversion ratio will be reduced
on a pro rata basis. For example, if the 2000 gross revenues are $4.0 million,
the conversion ratio will be reduced by 20% so that four Shares shall be
convertible into five shares of common stock.
DIVIDENDS. In the event that the Company shall declare a distribution
payable wholly or partially in securities or in cash, each Series A Share has a
quarterly cumulative dividend of $0.025 per share accruing each January 1, April
1, July 1 and October 1, commencing on October 1, 2000. The dividend accrual on
October 1, 2000 and January 1, 2001 will be pro rated to actual date of
issuance.
REGISTRATION RIGHTS. The Company is obligated to register the underlying
shares of Common Stock in any subsequent registration statement filed by the
Company with the Securities and Exchange Commission, so that holders of the
Convertible Preferred Stock shall, after conversion into Common Shares, be
entitled to sell the same simultaneously with and upon the terms and conditions
as the securities sold for the account of the Company are being sold pursuant to
any such registration statement, subject to lock-up provisions as may be
proposed by the underwriter or the Company, not to exceed 90 days from the
effective date of such registration statement (the "Piggyback Registration
Right").
VOTING. The Series A Shares will be entitled to votes equal to the
number of shares of Common Stock into which such Shares are convertible.
PROTECTIVE RIGHTS. The conversion ratio of the Series A Shares will be
adjusted in the event of any stock splits, stock dividends, or other adjustments
to the Company's capital structure.
INFORMATION RIGHTS. The Company will provide holders of Series A Shares
with all notices, reports and other information provided the holders of the
Company's Common Stock.
RESTRICTIONS ON TRANSFERABILITY. The Series A Shares offered hereby have
not been registered pursuant to the Securities Act and are offered for sale
under applicable exemptions from registration. Persons acquiring Series A Shares
may not transfer or dispose of such securities unless the shares are registered
or an exemption from registration is then available, in the opinion of counsel
to the Company.
The Series A Shares, when issued, will be "RESTRICTED SECURITIES" as
defined in Rule 144 and generally may be sold publicly only after a registration
statement becomes effective, in reliance upon Rule 144, or in reliance on
another applicable exemption from registration requirements of the Securities
Act. The discussion of restrictions on transferability set forth herein is not
intended to be comprehensive.
6
<PAGE>
POSSIBLE ANTI-TAKEOVER EFFECTS
In addition to financing purposes, the Company could also issue shares
of Common Stock or Preferred Stock that may, depending on the terms of such
series, make more difficult or discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or other means. When,
in the judgment of the Board of Directors, this action will be in the best
interest of the shareholders and the Company, such shares could be used to
create voting or other impediments or to discourage persons seeking to gain
control of the Company. Such shares also could be privately placed with
purchasers favorable to the Board of Directors in opposing such action. In
addition, the Board of Directors could authorize holders of a series of Common
or Preferred Stock to vote either separately as a class or with the holders of
the Company's Common Stock, on any merger, sale or exchange of assets by the
Company or any other extraordinary corporate transaction. The existence of the
additional authorized shares could have the effect of discouraging unsolicited
takeover attempts. The issuance of new shares also could be used to dilute the
stock ownership of a person or entity seeking to obtain control of the Company
should the Board of Directors consider the action of such entity or person not
to be in the best interest of the shareholders of the Company.
DILUTIVE EFFECT OF ADDITIONAL STOCK
"Dilution" represents the difference between the offering price per
Preferred Share and the net tangible book value per share of Common Stock
immediately after the completion of this Offering. "Net tangible book value" is
the amount that results from subtracting the total liabilities of the Company
from its total tangible assets. Dilution arises mainly from an arbitrary
decision by the Company with respect to the offering price per Preferred Share.
Shareholders should be aware that the issuance of additional shares of Common
Stock and convertible Preferred Stock could have a dilutive effect on earnings
per share and on the equity ownership of the present holders of Common Stock. In
addition, the Board of Directors will be permitted to authorize the issuance of
one or more series of convertible preferred stock, such as the proposed issuance
of Series A Shares, whose conversion rate is dependent on market price of the
Company's Common Stock. As a result, the Company would be unable to calculate
the exact amount of Common Stock that would be issuable upon conversion of such
a series of convertible Preferred Stock. In addition, the issuance of the Common
Stock, upon conversion of the preferred stock, could cause a downward pressure
on the market price of the Common Stock, thereby requiring the Company to issue
additional shares of Common Stock. Furthermore, future sales of substantial
amounts of our Common Stock in the public market, or the perception that these
sales might occur, could adversely affect the prevailing market price of the
Company's Common Stock or limit the Company's ability to raise additional
capital.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of August 29, 2000, by (i) each person who is known
by the Company to beneficially own 5% or more of the Common Stock, (ii) each
director of the Company, (iii) the Named Executive Officers, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME SHARES BENEFICIALLY OWNED(1) OF CLASS(2)
<S> <C> <C>
Noreen Khan(3) 1,761,435(4) 12.9%
Lawrence Horwitz(5) 1,040,000(6) 7.6%
Ramsey Hakim(7) 378,000(8) 2.8%
Tariq Khan(9) 3,201,667 23.4%
All Officers and Directors 6,381,102(10) 46.7%
</TABLE>
Unless otherwise indicated, the address of each of the beneficial owners is 6033
West Century Boulevard, Suite 500, Los Angeles, CA 90045
------------------------
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities. All Shares of Common Stock subject to options or warrants are
deemed outstanding for purposes of computing the percentage of any other
person.
(2) These percentages are calculated on 11,840,959 outstanding shares of common
stock plus 1,816,000 options and warrants that were granted to purchase shares
of common stock, for a total of 13,656,959 shares.
(3) President, Chief Financial Officer and Director of the Company.
(4) This amount does not include 3,201,667 shares that are held by Tariq Khan,
son of Noreen Khan, and that are separately accounted for below; however this
amount includes 394,000 options to purchase shares of the Company's common
stock.
(5) Secretary and Director of the Company.
(6) This amount includes 200,000 shares held in trust for Floyd and Frances
Horwitz, parents of Lawrence Horwitz, 475,000 shares held by Strawberry Canyon
Capital, Inc., an entity controlled by Lawrence Horwitz, and 25,000 shares held
by Laguna Pacific Partners L.P., an entity whose general partner is Strawberry
Canyon Capital, Inc., and 315,000 options to purchase shares of the Company's
common stock.
(7) Director and Chairman of the Board until October 3, 2000.
(8) This amount includes 28,000 options to purchase shares of the Company's
common stock.
(9) This amount does not include 1,761,435 shares and 394,000 options to
purchase shares of common stock of the Company that are held by Noreen Khan,
mother of Tariq Khan, and that are separately accounted for above. This
amount includes 66,667 shares held by Manhattan West, Inc., an entity
controlled by Mr. Khan.
(10) This amount includes 3,201,667 shares that are held by Tariq Khan, son of
Noreen Khan, and that are separately accounted for above.
8
<PAGE>
FINANCIAL INFORMATION
The financial statements required to be included herein are attached hereto as
ANNEX E.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is management's discussion and analysis of iNetVisionz.com's
financial condition and results of operations. Detailed information is contained
in the financial statements included in this document. This section contains
forward-looking statements that involve risks and uncertainties, such as
statements of the company's plans, objectives, expectations and intentions. The
cautionary statements made in this document should be read as being applicable
to all related forward-looking statements wherever they appear in this document.
SIX MONTHS ENDING JUNE 30, 2000 (UNAUDITED) COMPARED TO THE SIX MONTHS ENDING
JUNE 30, 1999 (UNAUDITED).
Revenues for the six month period ended June 30, 2000 increased 88% to
$2,691,139 from $1,429,305 in the year ago period. The revenue increase
reflected strong demand in the technical training field. The Company formed a
separate department in the quarter ended March 31, 2000, to create, develop and
maintain web sites. The department earned $769,000 for the quarter ended June
30, 2000. Another department of the Company, iNet-Proz, which is an internship
program for trainees to get real world hands on experience, started working full
force in the quarter ended March 31, 2000.
The increase in gross profit from 60.5% in last year's six months ending June
30, 2000 to 75.5%, in the year ago period, reflects better management and cost
control by the Company in the current period. The Company hired several
instructors on a full time basis resulting in decrease in cost of sales
percentage as compared to prior periods when the Company used outside
contractors at three to four times cost of an on staff instructor. In addition
the Company earned $769,000 in its new technology consulting segment which
produced a higher than average gross margin due to the nature of the work
performed.
Operating expenses increased to 65.2% revenue in the six months ended June 30,
2000 as compared to 68.2% of revenue in the last years period. The Company had
$1,753,338 in operating expenses for the quarter ended June 30, 2000, as
compared to $975,011 of such expense for the same period in 1999. The increase
in operating expenses is primarily attributed to the increase in facilities and
the increase in number of employees and key personnel to accommodate the growing
needs of the Company.
As a result of the above factors, net income increased $278,624 or $0.02 per
share in 2000 from a loss of $109,928 or $0.01 per share.
THREE MONTHS ENDING JUNE 30, 2000 (UNAUDITED) COMPARED TO THE THREE MONTHS
ENDING JUNE 30, 1999 (UNAUDITED).
Revenues for the three month period ended June 30, 2000 increased 139% to
$1,681,505 from $703,594 in the year ago period. The revenue increase reflected
strong demand in the technical training field. The Company formed a separate
department in the quarter ended March 31, 2000, to create, develop and maintain
web sites. The department earned $769,000 for the quarter ended June 30, 2000.
Another department of the Company, iNet-Proz, which is an internship program for
trainees to get real world hands on experience, started working full force in
the quarter ended March 31, 2000.
The increase in gross profit from 59.9% in last year's three months ending June
30, 2000 to 81.9%, in the year ago period, reflects better management and cost
control by the Company in the current period. The Company hired several
instructors on a full time basis resulting in decrease in cost of sales
percentage as compared to prior periods when the Company used outside
contractors at three to four times cost of an on staff instructor. In addition
the Company earned $769,000 in its new technology consulting segment which
produced a higher than average gross margin due to the native of the work
performance.
Operating expenses decreased to 63.3% revenue in the three months ended June 30,
2000 as compared to 67.7% of revenue in the last years period. The Company had
$1,064,432 in operating expenses for the quarter ended June 30, 2000, as
compared to $476,218 of such expense for the same period in 1999. The increase
in operating expenses is primarily attributed to the increase in facilities and
the increase in number of employees and key personnel to accommodate the growing
needs of the Company.
As a result of the above factors, net income increased $278,624 or $0.02 per
share in 2000 from a loss of $109,928 or $0.01 per share.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had cash and cash equivalent balance of $86,916
as compared to $1,000 as of December 31, 1999.
The Company increased cash flows used in operations by $634,212 from $106,974 to
$741,186 for the six months ended June 30, 1999 and 2000, due primarily to
payments for a license and increased operating activity related to the Company's
growth.
Net investing activities consumed $52,426 for the six months ended as compared
to $121,577 in the corresponding period last year.
The Company intends to find future capital expenditures and working capital
requirements through anticipated cash flows from operations. Although the
Company believes that funding will be sufficient, the Company may also consider
the use of funds from other external sources, including, but not limited to
public or private offerings of debt or equity. The Company's auditors have
issued a going concern opinion for the year ended December 31, 1999. While
management believes that private sources of funding should be sufficient to
continue as its operations, there is no guaranty that such funding will be
available to the Company as needed or on terms favorable to the Company.
Cash provided by financing activities amounted to $879,528 as compared to
$296,322 in the same period last year. The increase primarily reflects increased
borrowing from related parties.
11
<PAGE>
ANNEX A
AMENDMENT TO THE ARTICLES OF INCORPORATION
A-1
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
INETVISIONZ.COM, INC.
A DELAWARE CORPORATION
FIRST: That at a meeting of the Board of Directors on INETVISIONZ.COM, INC.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST" so that, as amended,
said Article shall be read as follows:
"The name of this Corporation shall be "iNetVisionz, Inc."
RESOLVED FURTHER, 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 read as follows:
"The Corporation shall be authorized to issue 100,000,000 (One Hundred
Million) shares of Common Stock at $0.001 par value. Holders of shares
of Common Stock are entitled to one vote for each share on all matters
to be voted on by the stockholders and to share ratably in dividends, if
any, as may be declared, from time to time, by the Board of Directors in
its discretion, from funds legally available therefor. The Corporation
shall also be authorized to issue 10,000,000 (Ten Million) shares of
Preferred Stock at $0.001 par value issuable in one or more series with
such powers, designations, preferences, rights, qualifications,
limitations or restrictions as may be determined in the board's sole
discretion, with no further authorization by shareholders required for
the creation and issuance thereof. When required by law and in
accordance with the provisions of Section 151 of the General
Corporations Law of the state of Delaware, the board of directors of the
Corporation shall have the express authority to execute, acknowledge and
file a certificate of designations setting forth, any and all powers,
designations, preferences, rights, qualifications, limitations or
restrictions on the stock."
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 shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendments were 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.
A-2
<PAGE>
IN WITNESS THEREOF, the undersigned do make, file and record this Certificate
and do hereby certify that the facts herein stated are true and they have
accordingly hereunto set their hands this day of _____________, A. D. 2000.
By: /s/ Noreen Khan By: /s/ Lawrence Horwitz
------------------------------------ -----------------------------------
Noreen Khan, President Lawrence Horwitz, Secretary
A-3
<PAGE>
ANNEX B
CERTIFICATE OF DESIGNATIONS FOR SERIES A PREFERRED STOCK
B-1
<PAGE>
STATE OF DELAWARE
CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED STOCK
OF
INETVISIONZ.COM, INC.,
A DELAWARE CORPORATION
A.
CERTIFICATION
Noreen Khan and Lawrence Horwitz certify that they are President and
Secretary, respectively, of Inetvisionz.com, Inc., a Delaware corporation (the
"Corporation"), and that, pursuant to the Corporation's Articles of
Incorporation, as amended, and Delaware General Corporation Law, the Board of
Directors of the Corporation adopted the following resolutions on August 29,
2000; at which point none of the Series A Preferred Stock had been issued.
B.
SERIES A PREFERRED STOCK
1. CREATION AND DESIGNATION OF SERIES A PREFERRED STOCK. The
Corporation is authorized to issue 10,000,000 (Ten Million) shares of preferred
stock, $.001 par value, of which 2,000,000 (Two Million) shares are designated
as the Series A Preferred Stock (the "Shares"), having the voting powers,
preferences, relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
2. PRIORITY VALUE. The Shares will have preference in liquidation
distributions (to the extent of the Offering Price per Share) over the Company's
Common Stock. In the event of any Liquidation Event, the holders of Shares will
be entitled to receive $1.00 per Share before the holders of Common Stock
receive any distributions. A "LIQUIDATION EVENT" means any liquidation,
dissolution or winding-up of the Company.
3. CONVERSION RIGHTS. Each Share is convertible into one share of
the Company's Common Stock. In the event the shares of common stock of the
Company close at a trading price (the average between the bid and ask) of at
least $1.50 for 15 consecutive trading days, then the Company shall have the
right to require the conversion of the preferred stock in accordance with the
terms of this Memorandum. If the gross revenues of the Company for calendar 2000
are $5.0 million or greater, there will be no adjustment to the conversion
ratio. If such gross revenues are less than $5.0 million, the conversion ratio
will be reduced on a pro rata basis. For example, if the 2000 gross revenues are
$4.0 million, the conversion ratio will be reduced by 20% so that four Shares
shall be convertible into five shares of common stock.
B-2
<PAGE>
4. DIVIDENDS. Each Share has a quarterly cumulative dividend of
$.025 per share accruing each January 1, April 1, July 1 and October 1,
commencing on October 1, 2000. The dividend accrual on October 1, 2000 and
January 1, 2001 will be pro rated to actual date of issuance.
5. REGISTRATION RIGHTS. The Company is obligated to register the
underlying shares of Common Stock in any subsequent registration statement filed
by the Company with the Securities and Exchange Commission, so that holders of
the Convertible Preferred Stock shall, after conversion into Common Shares, be
entitled to sell the same simultaneously with and upon the terms and conditions
as the securities sold for the account of the Company are being sold pursuant to
any such registration statement, subject to lock-up provisions as may be
proposed by the underwriter or the Company, not to exceed 90 days from the
effective date of such registration statement (the "Piggyback Registration
Right").
6. VOTING. The Shares will be entitled to votes equal to the number
of shares of Common Stock into which such Shares are convertible.
7. PROTECTIVE RIGHTS. The conversion ratio of the Shares will be
adjusted in the event of any stock splits, stock dividends, or other adjustments
to the Company's capital structure.
8. INFORMATION RIGHTS. The Company will provide holders of Shares
with all notices, reports and other information provided the holders of the
Company's Common Stock.
9. RESTRICTIONS ON TRANSFERABILITY. The Shares offered hereby have
not been registered pursuant to the Securities Act and are offered for sale
under applicable exemptions from registration. Persons acquiring Shares must
acknowledge their understanding that they may not transfer or dispose of such
securities unless the shares are registered or an exemption from registration is
then available, in the opinion of counsel to the Company.
The Shares, when issued, will be "RESTRICTED SECURITIES" as defined in
Rule 144 and generally may be sold publicly only after a registration statement
becomes effective, in reliance upon Rule 144, or in reliance on another
applicable exemption from registration requirements of the Securities Act. The
discussion of restrictions on transferability set forth herein is not intended
to be comprehensive. A prospective investor should consider consulting with
legal counsel concerning the consequences of ownership of restricted securities.
10. NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
a. No fractional shares shall be issued upon the conversion
of any share or shares of the Series A Preferred Stock and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
b. Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Series A Preferred Stock, this Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series A
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
This Corporation shall, upon the written request at any time of any
B-3
<PAGE>
holder of Series A Preferred Stock furnish or cause to be furnished to such
holder a like certificate setting forth (A) such adjustment and readjustment,
(B) the Conversion Price for such series of Preferred Stock at the time in
effect, and (C) the number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of a
share of Series A Preferred Stock
11. NOTICES OF RECORD DATE. In the event of any taking by this
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
Corporation shall mail to each holder of Series A Preferred Stock, at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
12. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such Preferred Stock, this Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite shareholder approval on any necessary amendment
to these articles.
13. NOTICES. Any notice required to be given to the holders of
shares of Series A Preferred Stock shall be deemed given if deposited in the
United States mail, postage prepaid, and addressed to each holder of record at
his address appearing on the books of this Corporation. Further, the Corporation
will provide holders of Series A Preferred Stock with all notices, reports and
other information provided to the holders of the Corporation's Common Stock.
B-4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Preferred Stock to be duly executed by its President and
attested to by its Secretary and has caused its corporate seal to be affixed
hereto, this __th day of _______, 2000.
/s/ Noreen Khan
---------------------------------------
Noreen Khan, President
/s/ Lawrence Horwitz
---------------------------------------
Lawrence Horwitz, Secretary
B-5
<PAGE>
ANNEX C
ACTION BY MAJORITY WRITTEN CONSENT
OF THE SHAREHOLDERS OF
INETVISIONZ.COM, INC.
a Delaware Corporation
C-1
<PAGE>
WRITTEN CONSENT
OF THE SHAREHOLDERS OF
INETVISIONZ.COM, INC.
A DELAWARE CORPORATION
IN LIEU OF MEETING
The undersigned shareholders of Inetvisionz.com, Inc. (the "Company"),
acting pursuant to Section 228 of Delaware General Corporations Law, hereby
consent to take the following actions and adopt the following resolution
effective as of August 29, 2000.
COMPANY'S NAME CHANGE
WHEREAS, the Board of Directors has resolved that it is in the best
interest of the Company to delete the ".com" suffix from the Company's name and
rename the Company "iNetVisionz, Inc.";
WHEREAS, such resolution is now subject to shareholders' approval;
NOW, THEREFORE, IT IS HEREBY
RESOLVED, that shareholders approve the board of directors' resolution
whereby the Company's name shall be changed to "iNetVisionz, Inc.";
RESOLVED FURTHER, that the shareholders approve the board of directors'
resolution whereby officers of the Company shall take any and all necessary
steps to effectuate the Company's name change;
RESOLVED FURTHER, that the shareholders approve the board of directors'
resolution whereby appropriate officers are authorized to file any and all
documents with the Securities and Exchange Commission that are necessary to
reflect this change.
INCREASE IN AUTHORIZED STOCK
WHEREAS, the Board of Directors has resolved that subject to approval by
a majority of the shareholders, effective as of the date hereof, the articles of
incorporation shall be amended to increase the authorized stock to 100,000,000
(One Hundred Million) shares of common stock at $0.001 par value with voting,
dividends and liquidation rights as indicated in the hereto attached EXHIBIT
"A";
RESOLVED that the Shareholders of the Corporation approve this
resolution.
C-2
<PAGE>
AUTHORIZATION OF PREFERRED STOCK
WHEREAS, the Board of Directors resolved that subject to approval by a
majority of the shareholders, effective as of the date hereof, the articles of
incorporation shall be amended to authorize 10,000,000 (Ten Million) shares of
Preferred Stock at $0.001 par value;
RESOLVED that the Shareholders of the Corporation approve this
resolution.
DESIGNATION OF SERIES A PREFERRED STOCK
WHEREAS, the Board of Directors resolved that, subject to approval by a
majority of the shareholders, effective as of the date hereof that the articles
of incorporation shall be amended to designate 2,000,000 (Two Million) shares of
its authorized Preferred Stock as Series A Preferred Stock at $0.001 par value;
RESOLVED that the Shareholders of the Corporation approve this
resolution.
AUTHORITY TO EXECUTE CERTIFICATE OF DESIGNATION
WHEREAS, the Board of Directors resolved that subject to shareholders'
approval, the articles of incorporation of the Corporation shall be amended to
authorize the board of directors of the Corporation to execute, acknowledge and
file a certificate of designations setting forth, any and all powers,
designations, preferences, rights, qualifications, limitations or restrictions
on the stock as required by law and in accordance with the provisions of Section
151 of the General Corporations Law of the state of Delaware;
RESOLVED that the Shareholders of the Corporation approve this
resolution.
EXECUTION OF CERTIFICATE OF DESIGNATION
WHEREAS, the Board of Directors has designed, directed the drafting of,
reviewed and approved the Certificate of Designation of Series A Preferred Stock
for the Corporation containing the rights, privileges, and preferences of the
Series A Preferred Stock which is attached hereto as EXHIBIT "B" (the
"Certificate");
WHEREAS the Board of Directors, subject to approval by a majority of the
shareholders, has approved and authorized in its entirety the Certificate, a
copy of which is attached hereto as EXHIBIT "B".
RESOLVED that the Shareholders of the Corporation approve this
resolution.
C-3
<PAGE>
RATIFICATION OF ACTIONS
RESOLVED, that all actions taken by the directors of the Company at the
last meeting of the Directors be, and they hereby are ratified, approved and
confirmed in all respects; except those acts which are violations of law, public
policy or the fiduciary duty existing between said persons and the Company.
RESOLVED, that the authority given hereunder shall be deemed retroactive
and any and all agreements, instruments and documents, and all amendments
thereto, and acts authorized hereunder executed, delivered or performed prior to
the passage of these resolutions are hereby confirmed, ratified and approved.
RESOLVED FURTHER, that the Secretary of the Company is authorized to
certify a copy of these resolutions and deliver the same as evidence of the
foregoing authorization to act on behalf of the Company.
The undersigned hereby consent to this action and the resolutions set
forth above and direct and authorize that a copy of this Written Consent of
Shareholders in Lieu of Meeting be placed by the Company's secretary with the
minutes of the proceedings of the shareholders in the official records of the
Company.
Dated: August 29, 2000
[SIGNATURE PAGE FOLLOWS]
C-4
<PAGE>
SIGNATURE PAGE
<TABLE>
<CAPTION>
SHAREHOLDER SHARES HELD SIGNATURE
----------- ----------- ---------
<S> <C> <C>
Noreen Khan 1,367,435 /s/ Noreen Khan
--------------------------
Tariq Khan 3,135,000 /s/ Tariq Khan
--------------------------
Manhattan West, Inc. 66,667 /s/ Tariq Khan
--------------------------
By: Tariq Khan
Its: President
Ramsey Hakim 350,000 /s/ Ramsey Hakim
--------------------------
Knightrider Investments, Inc. 333,333 /s/ John King
--------------------------
By: John King
Its: President
Lawrence Horwitz 40,000 /s/ Lawrence W. Horwitz
--------------------------
Floyd & Frances Horwitz Trust 200,000 /s/ Floyd Horwitz
--------------------------
By: Floyd Horwitz
Its: Trustee
Strawberry Canyon Capital, Inc. 475,000 /s/ Lawrence Horwitz
--------------------------
By: Lawrence Horwitz
Its: President
TOTAL VOTING SHARES 5,967,435 (50.4%)
TOTAL OUTSTANDING SHARES 11,840,959 (100%)
</TABLE>
C-5
<PAGE>
ANNEX D
ACTION BY UNANIMOUS WRITTEN CONSENT
OF THE DIRECTORS OF
INETVISIONZ.COM, INC.
a Delaware Corporation
D-1
<PAGE>
WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
INETVISIONZ.COM, INC.
A DELAWARE CORPORATION
IN LIEU OF MEETING
The undersigned constituting all of the Board of Directors of
Inetvisionz.com, Inc. (the "Corporation"), acting pursuant to Section 141(f) of
the Delaware General Corporation Law, hereby consent to take the following
actions and adopt the following resolutions effective as of August 29, 2000.
CORPORATION'S NAME CHANGE
WHEREAS, the Corporation is in the business of providing educational
training and consulting services, mainly through classroom based instruction at
its Los Angeles physical facility;
WHEREAS, the Board of Directors believes that the ".com" suffix does not
accurately characterize the present operations of the Corporation;
WHEREAS, the Board of Directors believes that it is in the best interest
of the Corporation to delete the ".com" suffix from the Corporation's name and
rename the Corporation "iNetVisionz, Inc.";
RESOLVED, that subject to the approval of shareholders, the
Corporation's name shall be changed to "iNetVisionz, Inc.";
RESOLVED FURTHER, that the board of directors authorizes the appropriate
officers of the Corporation to take any and all necessary steps to effectuate
the Corporation's name change;
RESOLVED FURTHER, that the appropriate officers are authorized to file
any and all documents with the Securities and Exchange Commission that are
necessary to reflect this change.
INCREASE IN AUTHORIZED STOCK
WHEREAS, the Corporation currently has 71,428,572 (Seventy One Million
Four Hundred Twenty Eight Thousand Five Hundred Seventy Two) shares of
authorized stock,
WHEREAS, the Board of Directors deems it to be in the best interest of
the Corporation to amend the articles of incorporation of the Corporation to
increase the authorized stock to 100,000,000 (One Hundred Million) shares of
common stock at $0.001 par value with voting, dividends and liquidation rights
as indicated in the hereto attached EXHIBIT "A";
D-2
<PAGE>
RESOLVED, that subject to approval by a majority of the shareholders,
effective as of the date hereof, the articles of incorporation shall be amended
to increase the authorized stock to 100,000,000 (One Hundred Million) shares at
$0.001 par value with voting, dividends and liquidation rights as indicated in
the hereto attached EXHIBIT "A".
AUTHORIZATION OF PREFERRED STOCK
WHEREAS, the Corporation currently does not have any authorized shares
of Preferred Stock;
WHEREAS, the Board of Directors deems it to be in the best interest of
the Corporation to amend the articles of incorporation of the Corporation to
authorize 10,000,000 (Ten Million) shares of Preferred Stock at $0.001 par value
RESOLVED, that, subject to approval by a majority of the shareholders,
effective as of the date hereof that the articles of incorporation shall be
amended to authorize 10,000,000 (Ten Million) shares of Preferred Stock at
$0.001 par value.
DESIGNATION OF SERIES A PREFERRED STOCK
WHEREAS, the Board of Directors deems it to be in the best interests of
the Corporation to amend the article of incorporation of the Corporation to
designate 2,000,000 (Two Million) shares of its authorized Preferred Stock as
Series A Preferred Stock at $0.001 par value;
RESOLVED, that, subject to approval by a majority of the shareholders,
effective as of the date hereof that the articles of incorporation shall be
amended to designate 2,000,000 (Two Million) shares of its authorized Preferred
Stock as Series A Preferred Stock at $0.001 par value.
AUTHORITY TO EXECUTE CERTIFICATE OF DESIGNATION
WHEREAS, the board of directors believes that it is in the best interest
of the Corporation to amend the article of incorporation of the Corporation to
authorize the board of directors of the Corporation to execute, acknowledge and
file a certificate of designations setting forth, any and all powers,
designations, preferences, rights, qualifications, limitations or restrictions
on the stock as required by law and in accordance with the provisions of Section
151 of the General Corporations Law of the state of Delaware;
RESOLVED, that subject to shareholders' approval, the articles of
incorporation of the Corporation shall be amended to authorize the board of
directors of the Corporation to execute, acknowledge and file a certificate of
designations setting forth, any and all powers, designations, preferences,
rights, qualifications, limitations or restrictions on the stock as required by
law and in accordance with the provisions of Section 151 of the General
Corporations Law of the state of Delaware.
D-3
<PAGE>
EXECUTION OF CERTIFICATE OF DESIGNATION
WHEREAS, the Corporation intends to issue 1,833,333 shares of Series A
Preferred Stock;
WHEREAS, prior to issuing these shares any and all powers, designations,
preferences, rights, qualifications, limitations or restrictions on these shares
shall be set forth in a certificate of designations in accordance with the
provisions of Section 151 of the General Corporations Law of the state of
Delaware;
WHEREAS, the Board of Directors has designed, directed the drafting of
and reviewed the Certificate of Designation of Series A Preferred Stock for the
Corporation containing the rights, privileges, and preferences of the Series A
Preferred Stock which is attached hereto as EXHIBIT "B" (the "Certificate").
RESOLVED, that, subject to approval by a majority of the shareholders,
the Certificate, a copy of which is attached hereto as EXHIBIT "B", is approved
and authorized in its entirety by the Corporation effective as of the date
hereof.
RESOLVED FURTHER, that the appropriate officers are authorized to file
any and all documents with the Securities and Exchange Commission that are
necessary to reflect this transaction.
RATIFICATION OF ACTIONS
RESOLVED, that all actions taken by the officers and directors of the
Corporation since the last meeting of the Directors be, and they hereby are
ratified, approved and confirmed in all respects; except those acts which are
violations of law, public policy or the fiduciary duty existing between said
persons and the Corporation.
IN WITNESS WHEREOF, the undersigned have set forth their hand as of this 29th
day of August 2000.
/s/ Ramsey Hakim
----------------------------------
RAMSEY HAKIM, Director and
Chairman of the Board
/s/ Noreen Khan
----------------------------------
NOREEN KHAN, Director
/s/ Lawrence Horwitz
----------------------------------
LAWRENCE HORWITZ, Director
D-4
<PAGE>
ANNEX E
FINANCIAL DATA SCHEDULE
INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 86,916 $ 1,000
Cash-restricted - 107,957
Accounts receivable,
net of allowance for doubtful accounts
of $150,000 as of June 30, 2000 and
$112,941 as of December 31, 1999 755,918 333,639
Common stock receivable - 50,000
Inventory 36,791 -
License 250,000 -
Other current assets 78,267 23,220
-----------------------------
Total Current Assets 1,207,892 515,816
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 473,353 402,396
OTHER ASSETS:
Customer lists, net 177,436 205,436
Product license, copyrights, trademark
and concept, net 158,425 183,425
Covenant not to compete, net 31,685 36,685
Loan receivable-related party 14,500 12,750
Investment in non-marketable
equity securities 1,125,000 -
------------ ------------
Total Assets $ 3,188,291 $ 1,356,508
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
E-1
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited)
June 30 December 31
2000 1999
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,223,449 $ 1,164,457
Deferred consulting revenues 675,000 -
Deferred tuition 27,000 90,451
Loan payable, bank - 100,015
Notes payable, related parties,
net of debt discount 451,333 250,000
Advances, related parties 429,543 -
Convertible debt, net of debt discount 234,157 -
------------------------------
Total Current Liabilities 3,040,482 1,604,923
STOCKHOLDERS' DEFICIT
Common stock; $0.001 par value,
71,428,571 shares authorized,
11,207,626 shares issued
and outstanding 11,207 11,207
Additional Paid in Capital 3,169,810 3,052,210
Accumulated Deficit (3,033,208) (3,311,832)
------------------------------
Total Stockholders' deficit 147,809 (248,415)
------------------------------
Total Current Liabilities and
Stockholder's deficit $ 3,188,291 $ 1,356,508
==============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
E-2
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Six months ended Six months ended
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
NET REVENUES $ 2,691,139 $ 1,429,305
COST OF REVENUES 659,177 564,222
------------ ------------
GROSS PROFIT 2,031,962 865,083
OPERATING EXPENSES 1,753,338 975,011
------------ ------------
NET INCOME (LOSS) $ 278,624 $ (109,928)
------------ ------------
NET INCOME (LOSS) PER SHARE $ 0.02 $ (0.01)
basic and diluted ------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
basic and diluted 11,207,626 8,358,358
------------ ------------
<CAPTION>
(unaudited) (unaudited)
Three months ended Three months ended
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
NET REVENUES $ 1,681,505 $ 703,594
COST OF REVENUES 304,312 282,269
------------ ------------
GROSS PROFIT 1,377,193 421,325
OPERATING EXPENSES 1,064,432 476,218
------------ ------------
NET INCOME (LOSS) $ 312,761 $ (54,893)
------------ ------------
NET INCOME (LOSS) PER SHARE $ 0.03 $ (0.01)
------------ ------------
basic and diluted
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
basic and diluted 11,207,626 8,697,253
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
E-3
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
as at as at
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
CASH FLOWS (USED FOR) OPERATING ACTIVITIES:
Net income (loss) $ 278,624 $ (109,928)
------------ ------------
ADJUSTMENTS TO RECONCILE NET INCOME
< LOSS > TO NET CASH (USED IN) OPERATING
ACTIVITIES:
Depreciation and amortization 145,676 94,111
Non-cash revenue (450,000) --
Estimated value of options granted to employees 25,000 --
Debt discount amortization 28,090 --
Changes in operating assets and liabilities
Accounts receivable, net (422,279) (100,824)
License (250,000) --
Other current assets (91,838) 32,237
Accounts payable and accrued expenses 58,992 (29,955)
Deferred tuition revenue (63,451) 7,385
------------ ------------
Total adjustments (1,019,810) 2,954
------------ ------------
Net cash used in operating activities (741,186) (106,974)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash-restricted (restriction released) 107,957 --
Advances on loan receivable (1,750) (44,116)
Payments to acquire property, equipment and intangibles (158,633) (77,461)
------------ ------------
Net cash used in investing activities (52,426) (121,577)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances payable, related parties 429,543 296,322
Proceeds from notes payable, related parties 250,000 --
Repayment of loan payable, bank (100,015) --
Proceeds from collection of common stock receivable 50,000 --
Proceeds from convertible debt 250,000 --
------------ ------------
Net cash provided by financing activities 879,528 296,322
------------ ------------
NET INCREASE (DECREASE) IN CASH 85,916 67,771
CASH, beginning of year 1,000 7,160
------------ ------------
CASH, end of year 86,916 74,931
============ ============
</TABLE>
See the accompanying notes to consolidated financial statements for non-cash
financing and investing activities. The accompanying notes are an integral part
of the financial statements.
E-4
<PAGE>
INETVISIONZ.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED FOR THE 6 MONTHS ENDED JUNE 30, 2000 & 1999)
NOTE 1 BASIS OF PRESENTATION
The financial statements of iNetVisionz.com (the "Company") for the
three and six months ended June 30, 2000 and 1999 are unaudited. Certain
information and note disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
audited financial statements and notes thereto as of and for the year ended
12/31/99 included in the Company's Form 10. In the opinion of management, the
financial statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of the Company
for the periods presented. The interim operating results may not be indicative
of operating results for the full year or for any other interim periods.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
Inetvisionz.com, Inc. (the "Parent"), and its wholly owned subsidiaries. All
material intercompany transactions have been eliminated in consolidation.
BUSINESS ACTIVITY:
The Company is in the business of providing technology training services in
technology consulting, and technology job placement services. The foundation in
training, "Train, Skill & Development", refers to the Company's migration
towards a full service technology training and service information provider.
REVENUE RECOGNITION:
TUITION REVENUES
The Company recognizes tuition revenue from corporate and individual customers
(excluding JTPA and ETP) as services are performed over the term of each
enrollment, usually ranging from 1 week to 20 weeks.
The Company also provides tuition services and technical training under Federal
and State funded Job Training Programs, which are as follows:
Job Training Placement Act ("JTPA"): The Company currently has yearly contracts
with nine Southern California organizations under the JTPA. Pursuant to these
agreements, the Company recognizes tuition revenue at various stages as services
are performed, which are as follows:
25% - Upon enrollment in the training program and attainment of one learning
objective of core training (not less than 15 hours) and submission of
verification of enrollment, timesheets and corresponding invoice by the Company
to the respective agency.
50% - Upon satisfactory completion of at least 50% of the designated course
hours and competencies as outlined in the course curriculum and attainment of
test scores or achievement levels prescribed in the curriculum. The Company is
responsible for submitting corresponding timesheets, performance evaluations and
test scores documenting activity and related invoice to the respective agency.
25% - Upon satisfactory completion of the remaining curriculum hours and being
placed in unsubsidized employment of 8
E-5
<PAGE>
hours or more. The Company is responsible for submitting corresponding
timesheets, correspondence documenting activity, evidence of employment with
certain information and related invoice to the respective agency.
Employment Training Panel ("ETP") - The Company currently has a contract under
the ETP and is funded by the State of California. Pursuant to this agreement,
the Company recognizes tuition revenue at various stages as services are
performed, which are as follows:
20% - Upon services rendered in connection with enrollment of students in the
training program and submission of verification of enrollment, timesheets and
corresponding invoice by the Company to the respective agency.
80% - Upon satisfactory completion of the curriculum hours and continual
employment for 91 consecutive days after placement by the Company. The Company
is responsible for submitting corresponding timesheets, correspondence
documenting activity, evidence of employment with certain information and
related invoice to the respective agency.
CONSULTING REVENUES
The Company plans to provide computer consulting and technical support on
internal computer networks on an hourly basis, temporary placement of technical
personnel in exchange for a percentage of their hourly wage rates, and permanent
placement of technical personnel with the Company's customers at revenue amounts
to be determined on an individual basis.
The Company plans to implement primarily internet based business plans developed
internally and externally. The Company recognizes revenues at various stages of
the business plan development process as outlined in each individual agreement.
DEFERRED TUITION REVENUES
Deferred revenue represents amounts received as non-refundable deposits on
student enrollments for which the revenue is not yet recognizable as the
services have not yet been performed. The deposits received are non-refundable.
However, the Company honors delayed enrollments at a future date, for as long as
a timely notice as determined on an individual basis is provided to the Company.
DEFERRED CONSULTING REVENUES
Deferred consulting revenues represents amounts received for providing computer
consulting and technical support that has not yet been earned.
INVESTMENT IN NON-MARKETABLE EQUITY SECURITIES:
The Company owns 50% of the outstanding common stock of LiquidationBid.com, a
start-up company. This investment is accounted for by the equity method, as the
Company does not have control.
There is no cost basis in this investment and there are no assets, liabilities
nor operating activities of the investee. Pursuant to APB 18, "The Equity Method
of Accounting for Investments in Common Stock," there are no recorded amounts
included in the financial statements.
The Company entered into an agreement with RxAlternative.com in which it
received stock as compensation for services provided that the Company valued at
$1,125,000 (see Note 7).
LICENSE
The Company paid $250,000 in June 2000 for a 12 month license agreement with a
software company, which will be amortized over the contractual life of the
agreement.
NET LOSS PER SHARE:
E-6
<PAGE>
Basic and diluted net loss per share have been calculated based upon the
weighted average number of common shares outstanding during the period. Common
equivalent shares have been excluded from the calculation of diluted earnings
per share in 2000 and 1999 as their impact would be anti-dilutive.
SEGMENT:
As substantially all the Company's operations occur at the subsidiary level, and
based on the Company's integration and management strategies, the Company
currently believes it operates in two business segments, which are as follows:
- Provide education through the distant learning
environment using the internet and traditional classroom
setting;
- Provide corporations e-commerce solutions through web
consulting.
See Note 10 for segment disclosures.
RECENT ACCOUNTING PRONOUNCEMENTS:
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") 101, "Revenue Recognition," which outlines the basic criteria
that must be met to recognize revenue and provides guidance for presentation of
revenue and for disclosure related to revenue recognition policies in financial
statements filed with the Securities and Exchange Commission. The effective date
of this pronouncement is the fourth quarter of the fiscal year beginning after
December 15, 1999. The Company believes that adopting SAB 101 will not have a
material impact on its financial position and results of operations.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44").
"Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25". FIN 44 clarifies the application of
Opinion 25 for (a) the definition of employee for purposes of applying Opinion
25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence for various modifications
to the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. FIN 44
is effective July 1, 2000, but certain provisions cover specific events that
occur after either December 15, 1998,or January 12, 2000. The adoption of
certain other provisions of FIN 44 prior to March 31, 2000 did not have a
material effect on the financial statements. The Company does not expect that
the adoption of the remaining provisions will have a material effect on the
financial statements.
NOTE 3 GOING CONCERN
The Company's consolidated financial statements are prepared using the
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. This factor raises
substantial doubt about the Company's ability to continue as a going concern.
Management recognizes that the Company must generate additional
resources to enable it to continue operations. The Company intends to begin
recognizing significant revenues during early 2000. Management's plans also
include the sale of additional equity securities and debt financing from related
parties. However, no assurance can be given that the Company will be successful
in raising additional capital. Further, there can be no assurance, assuming the
Company successfully raises additional equity, that the Company will achieve
profitability or positive cash flow. If management is unable to raise additional
capital and expected significant revenues do not result in positive cash flow,
the Company will not be able to meet its obligations and will have to cease
operations.
NOTE 4 MAJOR CUSTOMERS
During the six months ended June 30, 2000, revenues from the three
largest customers accounted for approximately 45% of total revenues. Revenues
from a related party accounted for approximately 9% of revenues for the six
months ended
E-7
<PAGE>
June 30, 2000. Included in accounts receivable at June 30, 2000 is approximately
$529,000 due from these customers.
NOTE 5 PAYABLES TO RELATED PARTIES
The Company has various notes payable and advances to related parties.
The notes payable consists of the following at June 30, 2000:
<TABLE>
<S> <C>
Unsecured promissory notes, bearing interest at 8% per annum, principal
and interest due on the maturity date. Pursuant to this agreement, the
maturity date shall be one year from the execution date of the
promissory note (December 2000) or the raising of at least $1 million in
equity financing, whichever is earlier.
$250,000
Unsecured promissory notes, bearing interest at 9% per annum, principal
and interest due on the maturity date. Pursuant to this agreement, the
maturity date shall be one year from the execution date of the
promissory note (March 2001), net of unamortized discount of $48,667.
$201,333
--------
$451,333
========
</TABLE>
The total interest expense on the above notes for the three and six
month periods ended June 30, 2000 was approximately $10,000 and $17,500,
respectively.
In addition, in connection with the 9% unsecured promissory notes, the
Company issued warrants to purchase a total of 100,000 shares of common stock at
$0.80 per share, expiring March 2003, immediately exercisable. The warrants were
valued at $73,000 (based on Black-Scholes computation under SFAS 123) which was
recorded as a debt discount and will be amortized over the life of the
promissory note. The related interest expense recognized for the debt discount
amortization. For the three and six month periods ended June 30, 2000 was
approximately $24,000.
In addition, the Company, from time to time, received advances from
other related parties. The advances from related parties are unsecured,
non-interest bearing and payable on demand. At June 30, 2000, the advances
amounted to $429,543.
NOTE 6 CONVERTIBLE DEBENTURES
In June 2000, the Company issued a $250,000 secured convertible
debenture bearing interest at a rate of 8%. The notes are convertible at one
share of Company common stock per $.75 principal amount of the debenture or 70%
of the five day average of the ask price per share of the Company's common stock
based on the five days preceding the notice of intent to convert.
In connection with this discounted conversion feature the Company
recorded $19,600 of debt discount. The Company will amortize the debt discount
over the period the debt was issued to the date it becomes exercisable and has
recognized from the date $3,757 in interest expense for the three and six months
ended June 30, 2000 in the accompanying Statement of Operations.
E-8
<PAGE>
NOTE 7 CONTRACTS
The Company entered into agreements with RxAlternative.com,
Inc.("RxAlternative") to develop two websites starting January 2000 and provide
monthly technical support and maintenance services over a period of one year.
Pursuant to these agreements, the Company received 750,000 shares of
RxAlternative's (a private company) restricted common shares (4.17% undiluted
interest of RxAlternative) valued at $1.50 per share (based on recent private
sales of RxAlternative stock) for a total revenues of $1,125,000, $675,000 of
which was deferred at June 30, 2000. The Company was also granted 100,000 stock
options to purchase 100,000 shares of common stock at $1.00 per share. The
Company will also receive $10,000 per month for maintenance services for up to
40 man-hours of services rendered and plans to record this revenue over the term
of the agreement upon satisfactory completion of services and acceptance by
RxAlternative.
In June 2000, the Company entered into an agreement with a company that
is owned by a member of the Company's board of directors to develop three
websites for $250,000 which was recognized as revenue in the period ended June
30, 2000.
NOTE 8 STOCK OPTIONS
During the six months ended June 30, 2000, the Company issued 1,000,000
shares to an employee resulting in compensation expense of $250,000 which the
Company will recognize over the 5 years vesting of options. For the three and
six month periods ended June 30, 2000, the Company has recognized $25,000 of
expense.
In addition, the Company issued 100,000 warrants in connection with the
related party notes (see Note 5).
NOTE 9 PAYROLL TAX LIABILITY
In April 2000, the Company negotiated a payment plan on its delinquent
payroll taxes including approximately $154,000 in interest and penalties. Under
the payment plan, the Company will make monthly payments of $15,000 until the
liability is fully paid off. The related liability at June 30, 2000 is
approximately $550,000.
NOTE 10 SEGMENT INFORMATION
The Company's principal segments are:
- Provide education through distant learning environment using the
internet and traditional classroom settings.
- Provide corporations e-commerce solutions through web
consulting.
Financial information about industry segments as of and for the six months ended
June 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Six Months ended June 30,
2000 1999
------------ ------------
<S> <C> <C>
E-9
<PAGE>
Operating revenues:
Education $ 1,922,139 $ 1,429,305
Technological consulting 769,000 -
------------ ------------
Total operating revenues $ 2,691,139 $ 1,429,305
============ ============
Operating income (loss):
Education $ (46,217) $ (109,928)
Technological consulting 324,841 -
------------ ------------
Net operating income (loss) $ 278,624 $ (109,928)
============ ============
Identifiable assets:
Education $ 1,790,615 $ 1,766,931
Technological consulting 1,397,676 -
------------ ------------
Total $ 3,188,291 $ 1,766,931
============ ============
</TABLE>
Operating income (loss) is revenues minus operating expenses.
Identifiable assets by segment are assets used in or otherwise identifiable with
the Company's operations in each segment.
E-10
