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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
iNetvisionz.com, Inc.
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(Name of Small Business Issuer in its charter)
Delaware 33-0285179
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(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
19951 Mariner Ave., Torrance, CA 90503
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(Address of principal executive offices) (Zip Code)
(310) 921-1999
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
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None None
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Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, par value $.001
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(Title of Class)
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PART I
ITEM 1: DESCRIPTION OF BUSINESS
The letters and numbers set forth in Item 1. of this Form 10 correspond
to each of the letters and numbers set forth in Item 101 of Regulation S-K.
(a) GENERAL DEVELOPMENT OF THE BUSINESS
(1) ORGANIZATION AND MATERIAL TRANSACTIONS.
iNetvisionz.com., Inc. (unless otherwise indicated, all references to
the "Company" and iNet include iNetvisionz. Com, Inc., a Delaware corporation,
and its wholly owned subsidiary iNetversity, Inc., a California corporation) was
first incorporated as Martinique Ventures Corporation, a Delaware corporation on
February 18, 1988. On August 13, 1997, it filed an amendment to its articles of
incorporation changing its name to Zebulon Enterprises, Inc. On April 21, 1998,
a subsequent amendment to its articles of incorporation was filed changing
Zebulon Enterprises, Inc. to Tao Partners Inc. In September, 1998 the Company
acquired certain assets from NovaQuest InfoSystems, Inc., in exchange for
$500,000 and 520,000 of Tao Partners shares of common stock. These assets were
eventually transferred to the Company's wholly owned subsidiary Inetversity,
Inc. These assets constituted less than 1% of the aggregate assets of NovaQuest
at the time of the acquisition. NovaQuest did not seperately account for the
revenues and expenses associated with the operations of these assets and there
was no separate subsidiary or division through which these assets were operated
while controlled by NovaQuest. Finally, on April 30, 1999, Tao Partners Inc.
filed an amendment to its articles of incorporation changing its name to
Inetvisionz.com, Inc. (the "Company" or "iNet"). iNet presently trades on the
over-the-counter Bulletin Board as "INVZ". The Company has not had any
bankruptcies, receiverships or similar proceedings. As set forth below, the
Company commenced the implementation of a new business plan on October 1, 1999.
(2) BUSINESS OF ISSUER
(B) As the Company operates on a calendar year, the following
discussion is intended to comply with Item 101 Section 2(B) of Regulation S-K.
(1)
(1) ITEM 101(a)(2)(B)(1) IS NOT APPLICABLE IN THAT THE SUBJECT
FILING IS NOT AN S-1.
(2) MATERIAL PRODUCTS AND RESEARCH AND DEVELOPMENT.
The Company has never had a formal research and development department.
Since October 1, 1999 the Company attempts to continuously monitor developments
on the Internet (through information provided by Inetproz (defined below)
corporate clients and through its Inetcommerce (defined below) internet site
development and then adjusts the course offerings of Inetversity according to
the provided information. While these divisions are currently at an extremely
early juncture, since their inception on October 1, 1999 these divisions have
provided information to Inetversity which Inetversity has begun to incorporate
into its course offerings.
(3) MATERIAL ACQUISITION OF PLANT AND EQUIPMENT.
As noted below, during the month of December, 1999 the Company
completed a debt offering of $250,000. It is anticipated that approximately
66.66% of these funds shall be utilized to acquire additional computer equipment
and hardware and software required to access the internet (collectively,
"Hardware and Software"). As also noted below, the Company has entered into a
Selling Agreement with Travis Morgan Securities for the purpose of raising up to
$1.25 million during the first quarter of the year 2000. Assuming the maximum
amount is raised, the Company intends to utilize approximately 25% of these
funds to acquire additional Hardware and Software.
(4) NUMBER OF EMPLOYEES.
As noted below, prior to June 30, 1999 the Company was in the exclusive
business of providing Education Services (defined below). As of December 15,
1999 the Company had sixty employees divided as follows: ten in
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general administration, 24 providing Education Services through iNetversity,
18 providing Consulting and Placement Services through iNetproz and 8 developing
Internal and External Business Plans through iNetcommerce.
On or about October 1, 1999 the Company elected to divide its
operations into three separate divisions: (a) Inetversity; (b) Inetproz; and (c)
Inetcommerce. The business plan for each of these divisions is set forth below
under (C) Description of Business. Only Inetversity is operated as a separate
corporation, the other two divisions operate within the Company. The Company
anticipates that during calendar 2000 it shall add an average of one employee
during each month to Inetversity, three employees each month to Inetproz and two
employees each month to Inetcommerce. There is no assurance that the Company
will grow at the rate set forth above; further, in the event the Company is
unsuccessful in raising outside capital it may be forced to curtail the growth
set forth above.
(5) OTHER BUSINESS PECULIARITIES
In the opinion of management, the key to understanding the Company is
to understand the strategic information provided by each of the divisions to the
other divisions. For example, if a number of Inetproz corporate customers began
demanding a certain type of programming expertise, Inetproz would advise
Inetversity to adjust its course composition accordingly. In summary, the
Company is not a "dot com" firm, relying upon an Internet site to provide its
primary source of revenues. Instead it is a company which trains, educates,
consults and develops primarily for other companies, requiring computer
software/hardware and/or internet based assistance.
(B) FINANCIAL INFORMATION.
Prior to June 30, 1999 100% of the Company's revenues and expenses were
generated through providing Education Services. Between July 1, 1999 and
September 30, 1999, 90% of the Company's revenues and expenses were generated
through providing Education Services and 10% of the Company's revenues and
expenses were generated through providing Consulting and Placement Services.
During the fourth quarter of 1999 the Company anticipates that 75% of its
revenue and expenses shall be generated through providing Education Services,
20% through the providing of Consulting and Placement Services and 5% through
its Inetcommerce division (exclusively through its contract with RxAlternative).
As a result of the uncertainties arising from operating in the Internet industry
it is difficult to project the amount and areas of growth that the Company will
experience during the year 2000. In this regard, while there is no assurance,
the Company anticipates that the Consulting and Placement Services provided by
the Inetproz division will experience the greatest degree of growth. The Company
bases this conclusion upon the following: (a) the increasing demand for software
programmers capable and experienced in operating internet based programs and
sites; and (b) Inetversity's "graduates" which will provide a ready source of
talent for both consulting and placement services.
(C) DESCRIPTION OF THE BUSINESS.
(i) and (ii) PRINCIPAL PRODUCTS AND SERVICES
iNet's exclusive business prior to June 30, 1999 was the providing of
classroom based education. These classes primarily taught either computer
software programming or training of a customer's employees in the utilization of
the customer's computer system ("Education Services").
During the period between June 30, 1999 and September 30, 1999 Inet
expanded its operations to providing consulting services in connection with the
operation of a customer's computer system and the permanent and temporary
placement of Inet's students as employees of its customers ("Consulting and
Placement Services").
In October, 1999 the Company began the implementation of a business
plan pursuant to which the Company would operate through three separate
divisions: (a) Inetversity; (b) Inetproz; and (c) Inetcommerce (only Inetversity
is formed as a separate corporation, Inetproz and Inetcommerce operate as part
of the Company, but constitute unincorporated divisions within the Company) A
graphical overview of this business plan may be reviewed at www.inetvisionz.com.
While the Company currently intends to implement the business plan set forth
below, there is no assurance that the Company will be successful in implementing
this plan. Further, Company management may materially revise this plan based
upon the business environment, market conditions and capital requirements.
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iNetversity currently intends to continue to provide Education Services
and has developed a series of Internet based education programs allowing
students to move at their own pace by accessing information over the Internet
which is based upon iNet's classroom programs. While some of these Internet
based programs have been deployed, as of December 1, 1999 the Company has not
generated material revenues through the utilization of these internet programs.
The offline courses offered by iNet have been offered in connection with: (a)
retraining laid-off aeospace and Fortune 500 employers or employees; (b)
providing on the job training for Inetproz and Inetcommerce employees (discussed
below) and (c) participating internship programs for disadvantaged individuals
(for example, the Company was recently awarded a $488,000 grant by the state of
California's Employment Training Program to provide scholarships for
disadvantaged individuals to take the Company's courses). The Company
anticipates that it will add an average of one employee per month during the
year 2000 to Inetversity's operations. The Company also utilizes independent
contractors to teach courses outside the scope of Inetversity's expertise.
Inetversity is a wholly owned subsidiary of the Company.
Inetproz currently intends to expand the Consulting and Placement
Services initially provided by the Company during the third quarter of 1999.
These services are primarily comprised of the following: (a) consulting
services, typically billed on an hourly basis, for technical aspects associated
with internal computer network (sometimes referred to as an intranet) and
internet operations; (b) temporary placement of technical personnel, in exchange
for a percentage of their hourly wage; and (c) permanent placement of technical
personnel with the Company's customers. The Company anticipates that it will add
approximately two employees to this division each month during calendar year
2000. These employees will be approximately divided equally between sales and
marketing employees (who will present the Inetproz's program to potential
customers) and technical employees (who will do the actual consulting and
temporary and permanent placement). Inetproz is a tradename of the Company, but
it is not a separate corporation.
The Company's Education Consulting and Placement Services customers
include the South Bay Private Industry Council, Xerox Corporation, Boeing North
America, Inc., Honda R&D North America, Inc., Transamerica, Ernst & Young, Mobil
Oil, Lexus Motor Corporation, Toyota Motor Sales and UCLA Medical Center.
Approximately 19% of the Company's revenues in calendar year 1998 were generated
through the South Bay Private Industry Council. During the nine months ended
September 30, 1999 South Bay Private Industry Council accounted for
approximately 30% of the gross revenues of the Company. There is no other
customer which constituted greater than 5% of the aggregate revenues of the
Company in 1998 or 1999.
iNetcommerce is what is increasingly characterized in the internet
industry as an "internet incubator". This division will implement primarily
internet based business plans developed either internally by the Company
("Internal Business Plans") or by third parties ("External Business Plans").
While the Company is considering a number of Internal Business Plans, it does
not anticipate implementing any Internal Business Plan during calendar year
1999. In October, 1999 the Company entered into three separate agreements with
RxAlternative.com. In summary, these agreements provided for the development of
a test website (Beta Website Development Agreement) and if this test website
proved successful, then the Company would develop two additional websites
(Permanent Website Development Agreement) and a website maintenance agreement
(Website Maintenance Agreement). The initial website was successfully deployed
and the Company received $27,000 in cash and a nominal number of shares in
RxAlternative pursuant to the Beta Website Development Agreement. The Permanent
Website Development Agreement provides that the Company shall develop two
websites for RxAlternative in exchange for a 4.17% nondilutive interest in
RxAlternative (this percentage shall be not be diluted unless and until
RxAlternative completes a public offering) and the Website Maintenance Agreement
provides that the Company shall be paid $10,000 per month for its initial 40
hours of monthly maintenance services and $150 per hour for all services
provided over this initial 40 hours. Inetcommerce is operated as a separate
unincorporated division within the Company. During the fourth quarter of 1999
the Company secured a 50% interest in Liquidationbid.com. While development of
Liquidationbid's website has not yet commenced, Liquidation bid is currently
intended to be an internet based company which provides on-line auctions for
excess merchandise in a variety of industries. There is no assurance that the
Company will complete development of Liquidationbid's website or that is such
website is completed, that Liquidationbid will successfully implement its
business plan.
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(iii) SOURCES OF RAW MATERIALS.
While this section is not applicable to the Company, clearly the
Company will have a continuous need during the foreseeable future for computer
equipment and hardware and software which facilitate internet access.
(iv) EFFECT OF PATENTS AND TRADEMARKS.
Currently, the Company does not hold patents on any of its products or
processes under development. The Company does, however, treat its technical data
as confidential and relies on internal nondisclosure safeguards, as well as on
laws protecting trade secrets, to protect its proprietary information. There can
be no assurance that these measures will adequately protect the confidentiality
of the Company's proprietary information or that others will not independently
develop products or technology that are equivalent or superior to those of the
Company. The Company may receive in the future communications from third parties
asserting that the Company's products infringe the proprietary rights of third
parties. There can be no assurance that any such claims would not result in
protracted and costly litigation.
As noted below, the Company currently has four trademarks pending:
"Inet Interns", "Business Visioneer", "The Job you Want, the Education you Need,
the Career you Earn" and "Synergistic Minds @ Work". The Company currently
utilizes many of these slogans in its marketing materials summarizing the
education and training programs offered by the Company. Company management
believes that these slogans focus upon the Company's business plan of not just
functioning as a technical education center, but in fact providing on the job
training for its students and eventual permanent placement.
(v) SEASONALITY OF THE BUSINESS
The Company has only provided Education Services for a little over one
year. The Inetproz and Inetcommerce divisions were launched on October 1, 1999.
As a result it is difficult to predict whether the Company's revenues will
materially fluctuate during its calendar year. Company management is not aware
of any factor which might give rise to such a fluctuation.
(vi) WORKING CAPITAL ITEMS
The Company is a service company and as a result it does not have any
trade inventory that it carries. In the event an Inetversity student is
dissatisfied with his/her class, she/he is provided with a one-time opportunity
to take the class again. The Company's providing of Consulting and Placement
Services is at a very early juncture. As of the date of this filing the Company
has not provided any warranty or guarantee associated with its Consulting or
Placement Services.
(vii) DEPENDENCE UPON LARGE CUSTOMERS
The Company is not dependent upon any one customer. As noted above, the
Company does provide Education and Consulting and Placement Services to a number
of large corporations, however, none of these customer's provided in excess of
10% of the Company's gross revenues. The iNetcommerce division is currently
dependent upon the RxAlternative transaction (discussed above) to generate
approximately 100% of its revenues through the first quarter of 2000. In the
event RxAlternative were to cease performing under its Agreement with
iNetvisionz, inetvisionz would redeploy the Inetcommerce personnel into: (a)
other Inetproz consulting projects; (b) other internally or exertanally
generated business plans developed throughits iNetcommerce division or (c)
outsource such individuals on a temporary or permanent basis through its
iNetproz division.
(viii) BACKLOG ORDERS
The Company's "backlog" is not comprised of what would traditionally be
characterized as a backlog of orders by a manufacturing company. The Company
does believe that the combination of its agreements with RxAlternative
(discussed above) and its agreement with ETP (discussed below) provide the
Company with contractual commitments for certain revenues through at least
January, 2000.
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(ix) GOVERNMENT CONTRACTS
The Company participates in both state and federal government programs
providing financing for technical training and education primarily through its
iNetversity subsidiary. Most of these programs require that students qualify
under Title III of the federally promulgated Job Training Placement Act. These
requirements provide that a student must be eligible for or has exhausted
his/her unemployment benefits through the state of California.
The Company currently has nine contracts with various organizations
throughout Southern California which are financed by the federally financed Job
Training Placement Act ("JTPA"). The following is a list of these organizations:
Los Angeles City Private Industry Counsel; Los Angeles County PIC; South Bay
PIC; Beach Cities One-Stop; Career Partners, Inc.; Anaheim PIC;;
Carson/Lomita/Torrance PIC; Orange County PIC; and San Ana PIC (the "Local
Referring Agencies"). Each of the Company's contracts with these organizations
are for a one year term and terminate on June 30, 2000. These Local Referring
Agencies provide the Company with recently unemployed individuals interested in
securing technical Education Services. Upon the Company accepting a student
his/her tuition is provided by JTPA. In the event the Company's contracts with
these various Local Referring Agencies were not renewed, the Company would
attempt to secure alternative sources of financing for its students. This would
result in a substantial material delay in the Company obtaining tuition
revenues. In the event the Company were unable to secure a source of funding as
an alternative to JTPA, the Company's financial prospects would materially and
adversely effected.
The Company has also entered into an Agreement with the state of
California financed Employment Training Panel ("ETP") to provide financing for
Inetversity students. This contract is in an amount up to $488,000 and is
terminable in the event the Company fails to meet ETP's performance criteria or
misapplies the applicable FUNDING. In order to qualify for funding: (a) a
student must be unemployed or prove that he will lose his employment unless he
receives new technical skills provided by the Company and (b) the Company must
place the student and the student must remain employed for 91 consecutive days
following such placement. As of December 13, 1999, the Company has enrolled 13
students in the ETP program. It is currently the Company's intention to enroll
an additional 29 students through the end of January, 2000. Under the ETP
contract the Company is paid approximately $10,000 per student , with 20%
payable upon commencement of Education Services by the Company and 80% payable
upon the student completing 90 days of employment. The Company anticipates
submitting at least three ETP applications during the year 2000, with its second
ETP application scheduled for submission in March 2000. In the event the Company
is unable to secure ETP financing, it will continue to consider other state and
federal government programs providing financing for technical training and
education. If the Company is unable to secure additional ETP funding or is
unable to successfully apply for other government funded contracts, the
Company's future operations may be materially and adversely effected.
(x) COMPETITIVE CONDITIONS.
The Company believes that the business plan which it commenced
implementing in October, 1999 places it in the following markets:
(a) TECHNICAL EDUCATION. According to International Data Corporation, a
leading industry research firm, the worldwide market for corporate Technical
Training and Education was $16.7 billion in 1997 and is projected to grow at a
healthy rate of approximately 11.1% annually surpassing $28.3 billion by the
year 2002. The IDC further estimates that the technology-delivered training
computer based training market component will experience a compound annual
growth rate of 39.0% compared to traditional classroom or instructor-led
training which will decline at approximately 1.8% annually during the same
period. Today, the Company's competitors include 7th Street.Com which provides
interactive on-line technical training and Pinnacle Multimedia which provides
training and education for a company's management and technical teams. The
Company will provide instruction in developing software and installing hardware
and on the job training primarily, although not always, associated with internet
applications ("Technical Applications") through its iNetversity subsidiary.
While the Company's historical focus has been upon the traditional classroom
setting, it is now deploying a series of internet based classes (which the
Company calls "courseware) allowing students to work at their own pace, but
still assimilate the same information as if attending traditional classroom
settings. There are thousands of companies, junior colleges and universities
throughout the United States which provide Technical Application education to
their students. The Company is a certified solutions provider for Microsoft,
Novell and Lotus.
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(b) TECHNICAL PLACEMENT. Specifically, the Company will provide
temporary outplacement employees and permanent employment (sometimes referred to
as "headhunting") for iNetversity's students, as well as third parties with a
background in Technical Applications through its Inetproz division. The Company
believes that there are thousands of companies throughout the United States
providing temporary and permanent employment placement for individuals skilled
in Internet Applications.
(c) TECHNICAL CONSULTING. Specifically, the Company will consult with
primarily large corporations in connection with a number of their Technical
Applications through its Inetproz division. The December 20, 1999 Los Angeles
Times reports that IDC (an internet data tracking firm) projects that the market
for Internet consulting and developing online businesses is expected to grow
from $4.6 billion in 1998 to $43.7 billion in 2002. The Technical Applications
provided by the Company have included a broad range, from a simple "help desk"
to answer basic questions to the design and development of a company-wide
"intranet". The Company believes that it has thousands of competitors in this
industry. The largest competitors in this field include: Chicago based
Whitman-Hart, Inc., which recently announced that it is acquiring USWEB/CKS
Corp. in a six billion dollar transaction to create the largest Internet
professional services firm in the world and IXL Enterprises, headquartered in
Atlanta, has over 2000 employees providing internet consulting and support
services.
(d) INTERNET COMMERCE. The Company's iNetcommerce division implements
Internal Business Plans (developed primarily by the Company) and External
Business Plans (developed primarily by third parties). As the scope of
iNetcommerce's mission is very broad, it is difficult to define its competitors
other than to state that its competition is immense. Virtually every company on
the internet is a potential customer of the iNetcommerce division.
RxAlternative, the initial External Business Plan project implemented by
iNetcommerce (discussed above) is deploying into the healthcare sector of the
internet which has major competitors such as Healtheon, Inc. and Dr.Koop.com.
Prior to October, 1999 virtually all of the Company's revenues were
generated through the providing of Education Services through its Inetversity
subsidiary. The Company has designed a series of career tracks defined by the
classes an individual should take in order to achieve a particular career
objective. The Company's Education Services focus primarily upon advanced
Technical Applications and most entrance level classes providing for the first
tier of Microsoft, Lotus and Novel certification are offered by other
competitor's programs. The Company is currently developing a series of classes
providing for Internet development utilizing the Linux platform. While the
Company believes that it has a number of better financed and larger competitors
in the field of Education Services, the Company has not identified a competitor
which primarily focuses upon advanced level classes with the objective of
achieving a specifically defined career objective.
As noted previously, the Company only commenced its iNetproz and
iNetcommerce divisions in October, 1999 thus virtually all of its competitors
are better financed and more advanced in the implementation of their business
plan. As noted above, industries associated with the providing of Technical
Placement and Consulting contain literally thousands of competitors, ranging
from small one man operations to multi-billion conglomerates specializing in
support for their proprietary products. The iNetcommerce division's potential
competitors are contingent upon the eventual business plan it elects to
commence. Clearly, its initial project, RxAlternative has many potential offline
and online competitors.
The Company believes that the principal methods of competition in all
three of iNet's divisions involve: (a) the ability to provide advanced
technology; (b) identifying at an early stage technological trends and (c)
customer satisfaction.
The Company's ability to compete in applying these methods may be
divided into negative and positive factors:
(a) NEGATIVE COMPETITIVE FACTORS. The Company believes that virtually
all of its major competitors are better financed and have a longer operating
history. Further, many of these competitors have readily recognizable industry
trade names thereby causing it to be more difficult for the Company to penetrate
the marketplace. Finally, the primary negative competitive factor is that there
is tremendous international economic activity in connection with virtually all
facets of the Internet and as a result, not only will the Company be faced
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with better financed competitors, but the Company believes that just in the
United States the number of competitors will be in the thousands.
(b) POSITIVE COMPETITIVE FACTORS. Since its inception during the fourth
quarter of 1998 the Company has focused upon providing advanced level Education
Services for Technical Applications (addressing factor (a) under principal
methods of competition above). This has provided a "pool" of technologically
advanced individuals to eventually staff the iNetproz and iNetcommerce
divisions. Thus, rather than be forced to hire people with which the Company has
no history, it has increasingly looked to Inetversity's students to fill its
other divisions. Further, iNetproz and iNetcommerce provide: (a) on the job
training for iNetversity students (something most technical education schools
cannot provide) and (b) information to iNetversity regarding technological
trends, thus allowing iNetversity to accordingly adjust its course offerings.
These last two items address the second factor set forth above under principal
methods of competition: early identification of technological trends. The
Company believes that if it is to be successful and provide a high level of
customer satisfaction (the third principal method of competition set forth
above) then there must be a continuous flow of information between its various
divisions. For example, iNetcommerce and iNetproz must identify employment needs
in the marketplace and iNetversity must then educate and train to address these
needs.
(xi) RESEARCH AND DEVELOPMENT.
The Company has never had a formal research and development
department. Since October 1, 1999 the Company has attempted to continuously
monitor developments on the Internet (through information provided by it
Inetproz (defined below) corporate clients and through its Inetcommerce (defined
below) internet site development) and then adjusts the course offerings of
Inetversity according to the provided information. While these divisions are
currently at an extremely early juncture, since their inception on October 1,
1999 these divisions have provided information to Inetversity which Inetversity
has begun to incorporate into its course offerings.
(xii) ENVIRONMENTAL LAWS.
The Company's operations do not give rise to any material issues
arising from state or federal environmental laws.
(xiii) EMPLOYEES.
As noted below, prior to June 30, 1999 the Company was in the exclusive
business of providing Education Services (defined below). As of December 15,
1999 the Company had sixty employees divided as follows: ten in general
administration, 24 providing Education Services through iNetversity, 18
providing Consulting and Placement Services through iNetproz and 8 developing
Internal and External Business Plans through iNetcommerce.
On or about October 1, 1999 the Company elected to divide its
operations into three separate divisions: (a) Inetversity; (b) Inetproz; and (c)
Inetcommerce. The business plan for each of these divisions is set forth below
under (C) Description of Business. Only Inetversity is operated as a separate
corporation, the other two divisions operate within the Company. The Company
anticipates that during calendar 2000 it shall add an average of one employee
during each month to Inetversity (90% of which shall be instructors and 10% of
which shall assist in class-room set-up and administration), three employees
each month to Inetproz (approximately divided 33% to temporary and permanent
placement and 66% to Technical Application consulting) and two employees each
month to Inetcommerce (approximately divided 50% to the development of Internal
Business Plans and 50% to the development of External Business Plans). The
Company also anticipates that it will add 5-10 general accounting and
administration employees during calendar year 2000. There is no assurance that
the Company will grow at the rate set forth above; further, in the event the
Company is unsuccessful in raising outside capital it may be forced to curtail
the growth set forth above.
(D) GEOGRAPHIC AREA FINANCIAL INFORMATION.
As noted below, 100% of the Company's revenues are generated either
through its Torrance, California facility or its Irvine, California facility. As
these two facilities are within 40 miles, there is no material distinction
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between the two operations arising from geographical location. Further, the
Company currently has not operations outside the United States.
(E) AVAILABLE INFORMATION.
The Company is currently not a Reporting Company within the meaning of
the Securities Exchange Act of 1934. The Company intends to file its first Form
10Q for the first quarter of the calendar year 2000. Once the Company begin
filing under the Exchange Act the public may read and copy materials filed by
the Company at the Security Exchange Commission's Public Reference Room, 450
Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Once the Company commences filing under the Exchange Act it will file electronic
reports, proxy and information statements that maybe accessed at
http:\\www.sec.gov. The primary internet address of the Company is
www.iNetvisionz.com.
(F) REPORTS TO SECURITY HOLDERS.
As noted above, the Company's initial Exchange Act filing shall be its
Form 10Q for the first quarter of 1999. Thus, it shall not file a Form 10k for
the year 1999 nor shall it file a related Annual Report to Shareholders. The
Company intends to become a Reporting Company 60 days after the filing of this
Form 10. As a result it shall comply with all proxy, quarterly and annual
reporting requirements thereafter. The quarterly reports shall contain financial
statements reviewed by an independent certified public accountant and the annual
report shall contain financial statements audited by an independent certified
public accountant.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information below and elsewhere contains certain forward-looking
statements which reflect the current view of the Company with respect to future
events and financial performance. Wherever used, the words "expect," "plan,"
"anticipate," "believe" and similar expressions identify forward-looking
statements.
Any such forward-looking statements are subject to risks and
uncertainties and the Company's future result of operations could differ
materially from historical results or current expectations. Some of these risks
include, without limitation, technical development of products, market for such
products and ongoing competitive pressures in the computer hardware industry.
The Company does not undertake to publicly update or reuse its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized.
The following information was derived from the Company's historical
financials statements incorporated herein:
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Nine Months Nine Months Year Ended Year Ended
Ended Ended December 31, 1998 December 31,
September 30, September 30, (audited) 1997
1999 1998 (audited)
(unaudited) (unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statement of Operations Data
Revenue $ 2,078,721 122,782 1,016,633 -0-
(Net Loss)/Net Profit (710,043) (984,323) (1,455,100) (1,651)
(Net Loss)/ Net Profit per share (0.10) (0.24) (0.40) (0.00)
9
<PAGE>
Balance Sheet Data
Current Assets 920,656 544,432 -0-
Total Property & Equipment, Net 315,391 400,839 -0-
Total Assets
Total Current Liabilities 1,125,928 631,203 2,451
Accumulated Deficit
(2,275,834) (1,565,791) (110,691)
Stockholder's
Equity(deficiency)
(7,904) 514,139 (2451)
======================================================================================================================
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AS COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1998 (UNAUDITED)
REVENUES. The Company generated $2,078,721 in revenues for the nine
months ended September 30, 1999, solely derived from training revenues at it
iNetversity subsidiary, as compared to $122,782 in revenues at September 30,
1998. The September 30, 1998 revenues only reflected one month of revenues of
the training subsidiary, as the Company had only acquired the assets of the
training division that were transferred to iNetversity on September 1, 1998.
GENERAL, ADMINISTRATIVE, AND SELLING EXPENSES.
The Company had $2,001,614 in general, administrative and/or selling
expenses for the nine months ended September 30, 1999, as compared to $1,050,380
such expenses for the same period in 1998. As substantially all expenses are
incurred by the Company's subsidiary, the 91% increase was significantly
attributable to the actual months of the subsidiary's expenses included in
respective nine month periods. The amounts at September 30, 1999 include nine
months of expenses, as compared to only one month of expenses at September 30,
1998. Included in the September 30, 1998 expenses is a $669,500 charge to
compensation for stock issued in exchange for services during the start-up
stages of the Company. A breakdown of the components of the general,
administrative and/or selling expenses for the year ended December 31, 1998
follows:
<TABLE>
<S> <C>
Advertising and marketing $ 60,276
Bad debt expense 37,855
Depreciation and amortization 182,000
Equipment rental 76,588
General operating expenses 149,070
Office expense 59,702
Payroll expense 1,005,416
Professional fees 64,938
Rent 198,627
Repairs and maintenance 95,714
10
<PAGE>
Telephone and utilities 56,427
Travel and entertainment 15,000
------
Total $ 2,001,613
===========
</TABLE>
INTEREST EXPENSE.
None
OTHER EXPENSE.
None.
TAXES ON INCOME.
The Company incurred $800 in income tax for the nine months ended
September 30, 1999, and September 30, 1998.
NET INCOME/LOSS.
The Company experienced a net loss of $710,043 as of the nine months
ended September 30, 1999 as compared to a $984,323 net loss for the same period
in 1998. The decrease is attributable in part to the substantially lower
revenues at September 30, 1998 to which the $669,500 stock compensation was
charged, as compared to a full nine months of revenue to which only normal,
recurring operations expenses were charged at September 30,1999.
FISCAL YEAR ENDED DECEMBER 31, 1998 (AUDITED) AS COMPARED TO FISCAL YEAR ENDED
DECEMBER 31, 1997 (AUDITED)
REVENUES. The Company had $1,016,633 in revenues for the year ended
December 31, 1998 from tuition revenue at it's subsidiary, compared to no
revenues for the year ended December 31, 1997. The increase is due to the fact
that the subsidiary, the only source of the Company's revenues, did not begin
generating revenues until September 1, 1999.
GENERAL, ADMINISTRATIVE, AND SELLING EXPENSES.
The Company had $2,013,718 in general, administrative and/or selling
expenses for the year ended December 31, 1998 as compared to $1,651 for the same
period in 1997. The increase was the result of the increased operations of the
Company following the commencement of the subsidiary on September 1, 1998, as
compared to the inactive Company for the year ended December 31, 1997. The
expenses in the year ended December 31, 1998 consisted mostly of payroll
expenses, including a charge for non-cash stock compensation of $737,000, and
overhead. December 31, 1998 also includes a $160,000 write off of a receivable
deemed noncollectable. A breakdown of the major components of the general,
administrative and/or selling expenses for the year ended December 31, 1998
follows:
<TABLE>
<S> <C>
Advertising and marketing $ 177,645
Bad debt expense 201,618
Depreciation and amortization 92,798
General operation expenses 69,274
Office expense 43,416
Payroll expense 1,267,267
Professional fees 47,418
Rent 77,205
Telephone and utilities 37,078
------------
11
<PAGE>
Total $ 2,013,719
============
</TABLE>
INTEREST EXPENSE.
None.
OTHER EXPENSE.
None.
TAXES ON INCOME.
The Company incurred $800 in income tax for the year ended December 31,
1998, compared to no income tax expense in December 31, 1997.
NET INCOME/LOSS.
The Company experienced a net loss of $1,455,100 for the year ended December 31,
1998 as compared to a net loss of $1,651 for the same period in 1998, the
increase in the loss attributable to the increase in operating expenses for the
year ended December 31, 1998, discussed previously, compared to the inactive
Company at December 31, 1998.
ITEM 3: PROPERTIES AND YEAR 2000 COMPLIANCE.
The Company currently operates out of two facilities: it leases
approximately 14,000 square feet of space at 19950 Mariner Avenue, Torrance, CA
90503 and approximately 6000 square feet at 19772 MacArthur Blvd., Irvine,
California 92615. The Company's primary administrative operations are conducted
at the Torrance facility. The Irvine facility is primarily composed of
additional classroom to provide Education Services.
The Company has developed and acquired its computer systems with an
objective to be Year 2000 compliant. The Company has engaged the services of
qualified technicians to determine the extent to which it may be vulnerable to
third party Year 2000 issues. All computer equipment purchased recently are Year
2000 compliant. The internal software written by the Company's programmers is
written with the long-date format included and consequently is Year 2000
compliant. The Company uses Microsoft software and has installed all the
available "patches" to up-date this software. Further, Microsoft "patches" have
been installed as they become available from Microsoft, but this affects the
Company's software and does not impact on the on-going operation of the Company.
The Company has assessed and continues to asses whether its information and
non-information technology systems will be effected by the Year 2000 issues. The
Company has investigated its third party communications suppliers such as the
telephone company and its Internet service provider and found that all are in
the process of becoming Year 2000 compliant in 1999. Based upon current
information, management believes that the necessary modifications have been made
internally to effectively continue the Company into the Year 2000, however,
management is continuing to monitor internal systems, and to assess the
readiness of its systems, to ensure Year 2000 compliance. As a contingency, the
Company has identified other communication suppliers who could provide the
necessary service at a minimal cost to the Company, and a minimal effect on the
operations of the Company. In the event no other communication suppliers can be
found, there could be a material adverse effect on the Company and its
operations. Based upon current information, the Company does not believe that
the costs associated with Year 2000 compliance is material for the Company.
12
<PAGE>
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of September 30, 1999: (i) each
stockholder known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock; (ii) each director of the Company; and
(iii) all directors and officers as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS(4) NAME AND ADDRESS(5) AMOUNT AND NATURE OF OWNERSHIP PERCENT
- ----------------- ------------------- ------------------------------ -------
<S> <C> <C> <C>
Common Stock Ramsey Hakim, Director 340,000(1) 4.1%
Common Stock Noreen Khan, President, 1,268,000(1) 16.2%
Director
Common Stock Lawrence W. Horwitz 500,000 (2) 6.5%
Secretary, Director
Common Stock Tariq Khan 570,000(3) 7.4%
Common Stock Mahin Samadani, Director 120,000(1) 1.5%
Total Shares held by officers, directors and 5% shareholders: 2,798,000 35.7%
</TABLE>
- ----------------
(1) This amount includes 90,000, 168,000 20,000 options exercisable at $1.00
per share, issued to Mr. Hakim, Ms. Khan and Mr. Samadani respectively..
(2) This amount includes up to 300,000 options exercisable at $1.75 and 200,000
shares acquired by Floyd Horwitz, the father of Lawrence W. Horwitz.
(3) This amount includes 70,000 options exercisable at $1.00 per share. Tariq
Khan is the son of Noreen Khan, the president of the Company.
(4) 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. Shares of Common Stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding
such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
(5) c/o Company's address: 19950 Mariner Avenue, Torrance, CA 90503.
ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Noreen Khan 52 President , Treasurer,
Director
Ramsey Hakim 36 Chairman of the Board
Lawrence W. Horwitz 40 Director, Secretary,
General Counsel
Mahin Samadani 25 Director
</TABLE>
13
<PAGE>
NOREEN KHAN, President and CEO of the Company since May of 1998 and a
member of the Board of Directors since October of 1998. Ms. Khan was employed by
Tansa Group as a business consultant from May, 1993 through August, 1996. From
September, 1996 through April, 1998 Ms. Khan was the financial officer of United
Golf Properties, Inc., a privately held real estate investment trust
specializing in the acquisition and operation of golf course properties. Ms.
Khan is responsible for the business development, financial management and
overall strategic planning and expansion of the Company.
RAMSEY HAKIM, Chairman of the Board since May of 1998. For the past 13
years, Mr. Hakim has held management positions in the Telecommunication and
Information Technology Industry. He is currently the General Manager for AT&T
Solutions Outsourcing where he is responsible for managing a $90 million annual
budget for client engagements and service delivery.
LAWRENCE W. HORWITZ, Director since November, 1999 has been a founding
shareholder and officer of the Irvine, California law firm of Horwitz & Beam,
Inc. since 1992. Horwitz & Beam is currently comprised of 14 attorneys. He
specializes in the securities law aspects of private and public offerings. He is
currently a member of the Board of Directors of Beta Oil and Gas, Inc. (NASDAQ
Small Cap: BETA) and was involved in that company's initial public offering in
the Summer of 1999. Mr. Horwitz is also the president of Strawberry Canyon
Capital, Inc., the general partner of two bridge loan funds: Westport Capital
Partners, Ltd. and Laguna Pacific Partners, Ltd. These bridge loan funds provide
early stage financing for primarily technology oriented companies positioning to
complete a private or public offering of securities. He is a graduate of the
University of California, Berkeley Haas School of Business (B.S.) and the Boalt
Hall School of Law (J.D.)
MAHIN SAMADANI, Director since May of 1998. Mr. Samadani currently works
for Scient, Corp.. an E-commerce consulting group based in San Francisco. Prior
to joining Scient, Mr. Samadani worked with the Enterprise Server Group at Intel
Corporation where he was responsible for identifying and promoting emerging
Internet Software. Prior to joining Intel, Mr. Samadani was employed by Apple
Computer.
ITEM 6: EXECUTIVE COMPENSATION
Set forth below is a summary of compensation for the Company's officers for
fiscal years 1999, 1998 and 1997. There are no annuity, pension or retirement
benefits proposed to be paid to officers, directors or employees of the Company
in the event of retirement at normal retirement date pursuant to any presently
existing plan provided or contributed to by the Company or its subsidiary.
14
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
========================================================================================================
Name and ANNUAL COMPENSATION
Principal Position -------------------
Year Salary Stock Options
<S> <C> <C> <C>
Noreen Khan 1999 $66,000 168,000
CEO, President, Secretary & CFO
Meenaz Hudani 1999 $60,000 30,000
CIO
Ralph Hutchison 1999 $60,000 -0-
VP, Marketing
Linda Ruby 1999 $54,000 -0-
VP, Professional
Placement
========================================================================================================
</TABLE>
All of the foregoing options are at an exercise price of $1.00.
The Company's By-laws state that Directors of the Company shall not
receive any stated salary for their services, but, by resolution of the Board
of Directors, a fixed sum and expense of attendance, if any, may be allowed
for attendance at each regular and special meeting of the Board of Directors.
The Company maintains directors and officers liability insurance.
ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Noreen Khan, the president of the Company, has entered into the
following transactions with the Company:
(1) In May, 1998 she entered into a Subscription Agreement pursuant
to which she provided $27,000 in debt financing which was
converted into equity during the fourth quarter of 1999 at the
rate of $.20 per share, in accordance with the original terms of
the Subscription Agreement;.
(2) In April, 1998 she acquired 50,000 shares of the Company under
Rule 504 of Regulation D at the price of $.15 per share;
(3) In July, 1998 she acquired 100,000 shares of the Company under
Rule 506 of Regulation D at the price of $.15 per share;
(4) During calendar year 1999 Ms. Khan received 800,000 shares as
additional compensation for services rendered to the Company.
Tariq Khan, the son of the President of the Company, has entered into the
following transactions with the Company:
(1) In May, 1998, he entered into a Subscription Agreement pursuant
to which he provided $640,000 in debt financing which was
converted into equity during the fourth quarter of 1999 at the
price of $.20 per share, in accordance with the original terms of
the Subscription Agreement;
15
<PAGE>
(2) In November, 1998, Manhattan West, Inc., a corporation controlled
by Mr. Khan entered into a Consulting Agreement with the Company
for marketing, general business and public relations services for
a one year period of time. Manhattan West was eventually paid
$30,000 in stock at the price of $.45 per share (66,667 shares in
the aggregate);
(3) On January 1, 1999 the Company issued Mr. Khan 70,000 options
exercisable at $1.00 per share in accordance with the Company's
annual issuance of options to key employees, consultants, officer
and directors of the company.;
(4) During 1999 Mr. Khan received 500,000 shares for consulting
services provided to the Company. These services included
strategic planning of the business plan which commenced
implementation in October, 1999, identification of key personel
to implement this business plan, budgeting and capitalization
planning and general business consulting and advice.
Ramsey Hakim, the Chairman of the Board of the Company entered into the
following transactions with the Company:
(1) In January, 1999 Mr. Hakim received 90,000 options to acquire
stock at $1.00 per Share.
(2) During 1999, Mr. Hakim received 250,000 shares for services
provided as the Chairman of the Board of the Company.
(3) In November, 1998 the Company entered into a one year Consulting
Agreement with Mr. Hakim pursuant to which he was to be paid
$3,750 per month. The aggregate amount due under this Consulting
Agreement ($45,000) was eventually converted into restricted
shares of stock during the fourth quarter of 1999 at the price of
.45 per share (100,000 shares in the aggregate).
Lawrence W. Horwitz, a member of the Board of the Directors of the
Company and its General Counsel and Secretary and his father Floyd Horwitz
entered into the following transactions with the Company:
(1) Mr. Horwitz received 300,000 options exercisable at $1.75 per
share; and
(2) Floyd Horwitz, the father of Lawrence Horwitz, acquired 200,000
shares of the Company at the price of $0.25 per share.
Mahin Samadani, a member of the Board of Directors, entered into the
following transactions with the Company:
(1) On January 1, 1999 Mr. Samadani received 20,000 options
exercisable at $1.00 per share; and
(2)During 1999 Mr. Samadani received 100,000 shares for services
provided as a member of the Board of Directors of the Company.
ITEM 8: LEGAL PROCEEDINGS.
The Company is not a plaintiff or a defendant in any legal proceedings.
16
<PAGE>
ITEM 91 MARKET PRICE OF COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. MARKET INFORMATION
The Company's Common Stock is currently quoted on the Over-the-Counter
Bulletin Board under the Symbol "INVZ". Set forth below is the trading
history of the Company's Common Stock without retail mark up, mark-down or
commissions:
<TABLE>
<CAPTION>
===================================== ===================== ===============
HIGH ASK LOW BID
1999 -------- -------
----
<S> <C> <C>
January 1 - January 31 2.06 1.25
February 1 - February 28 2.06 1.31
March 1 - March 31 2.25 1.37
April 1 - April 30 5.37 1.75
May 1 - May 31 5.00 1.50
June 1 - June 30 3.31 1.43
July 1 - July 31 1.87 1.03
August 1 - August 31 1.56 0.69
September 1 - September 30 1.25 0.69
October 1 - October 31 1.25 0.72
November 1 - November 30 1.06 0.69
December 1 - December 31 1.03 0.69
===================================== ========================== ==========
</TABLE>
On December 17, 1999, the closing bid price for the Company's common
stock was $0.72
The above quotations are inter-dealer quotations, and the actual
retail transactions may involve dealer retail mark ups, mark downs, or
commissions for market makers of the Company's stock.
Except for 2,932,917 free trading shares, all shares issued by the
Company are "restricted securities" within the meaning of Rule 144 under the
1933 Act. Ordinarily, under Rule 144, a person holding restricted securities
for a period of one year may, every three months, sell in ordinary brokerage
transactions or in transactions directly with a market maker an amount equal
to the greater of one percent of the Company's then-outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Future sales of such shares and sales of shares purchased by
holders of options or warrants could have an adverse effect on the market
price of the Common Stock.
B. HOLDERS
As of December 6, 1999, there were approximately 46 registered
holders of the Company's restricted Common Stock, as reported by the
Company's transfer agent. This figure does not include the free trading
shareholders.
C. DIVIDENDS
The Company has not paid any dividends on its Common Stock. The
Company currently intends to retain any earnings for use in its business, and
therefore does not anticipate paying cash dividends in the foreseeable future.
17
<PAGE>
OPTIONS
On January 1, 1999 the Company issued 500,000 options exercisable at
$1.00 per share. These options have a three year term, but may not be
exercised until January 1, 2000. The holders of these options are as follows:
<TABLE>
------------------------------------------------------------------
<S> <C>
Ramsey Hakim 90,000
------------------------------------------------------------------
Noreen Khan 168,000
------------------------------------------------------------------
Tariq Khan 70,000
------------------------------------------------------------------
Earl Shannon 30,000
------------------------------------------------------------------
Mahim Samadani 20,000
------------------------------------------------------------------
Zeb Bhatti 1,000
------------------------------------------------------------------
Jack Madha 5,000
------------------------------------------------------------------
Saima Khan 10,000
------------------------------------------------------------------
Meenaz Hudani 30,000
------------------------------------------------------------------
Linda Ruby 15,000
------------------------------------------------------------------
Kailash Samtani 2,000
------------------------------------------------------------------
Steve Moch 2,000
------------------------------------------------------------------
Regina Bolden 2,000
------------------------------------------------------------------
Don Vigil 2,000
------------------------------------------------------------------
Patricia Columbo 3,000
------------------------------------------------------------------
Taseer Badar 20,000
------------------------------------------------------------------
</TABLE>
Also, in November, 1999 the Company issued 300,000 options to
Lawrence W. Horwitz at an exercise price of $1.75. These options are entitled
to S-8 registration rights in the event the Company becomes a Reporting
Company within the meaning of the Securities Exchange Act of 1934.
ITEM 10: RECENT SALES OF UNREGISTERED SECURITIES.
On April 3, 1998 the Company (which was then known as Zebulon
Enterprises) had 1,142,857 shares. Issued and outstanding, all of which were
free-trading. These shares were issued for nominal consideration in a private
placement that was conducted in 1990.
Simultaneous with the closing of the Zebulon acquisition, the
Company sold 1,114,000 shares of common stock to six accredited investors at
$.085 per share under Rule 504 of Regulation D (aggregate proceeds of
$94,600).
In May, 1998 the Company entered into two Subscription Agreements
with accredited investors providing for up to $850,000 in debt convertible
into common stock at the price of $.20 during the 18 month period of time
following the date of the Subscription Agreement. One of these investors was
the President of the Company. As of the date of this filing, 100% of the
provided debt ($667,000 in the aggregate) was converted into 3,335,000
restricted shares of common stock pursuant to Rule 506 of Regulation D..
During May-July, 1998 the Company sold 1,400,000 shares of
restricted common stock under Rule 506 at the price of $.15 per share. There
were 13 accredited investors in this transaction and 100% of the proceeds,
$210,000, was provided directly to the Company. All offers and sales were
made only to accredited investors.
In September, 1998 the Company issued 520,000 shares of its common
stock in connection with the acquisition of certain assets of NovaQuest
InfoSystems, Inc. ("Novaquest"). 200,000 of these shares were issued directly
to NovaQuest and 320,000 of these shares were issued directly to certain
employees of NovaQuest.. All of these issuances were of restricted shares
under Rule 505 of Regulation D.
18
<PAGE>
During November, 1998 the Company entered into three Consulting
Agreements providing for marketing, general business and public relations
services. These agreements were with Ramsey Hakim, a member of the Company's
board of directors ($3500 per month), Manhattan West, Inc. ($2500 per month)
and Winthrop Partners, Ltd. ($2500 per month). These Consulting Agreements
provided that all amounts due could be converted into shares of common stock
at the rate of $.45 per share. On November 12, 1999 all such amounts due were
collectively converted into 226,667 shares.
During December, 1998-January, 1999 the Company sold 180,000 shares
of common stock at $1.00 per share under Rule 506 of Regulation D to five
accredited investors and 100% of the proceeds were provided directly to the
Company. All offers and sales were made only to accredited investors/
In December, 1998 the Company received $250,000 from a single
accredited investor at the price of $.625 per share (400,000 shares in the
aggregate). The Company relied upon Rule 506 for this transaction.
In January, 1999 the Company issued 500,000 options exercisable at
$1.00 per share to certain key employees, directors, officers and consultants.
In March, 1999 the Company issued 300,000 shares at the price of
$.25 to a single accredited investor under Rule 504 of Regulation D and the
Company received 100% of the proceeds of this offering.
During 1999, the Company issued 800,000, 500,000 and 250,000 shares
to Noreen Khan (the president of the Company), Tariq Khan (Noreen Khan's son)
and Ramsey Hakim (Chairman of the Board of the Company), respectively. See
Item 7. "Certain Relationships and Related Party Transactions" for additional
information regarding these transactions.
On November 12, 1999 the Company entered into two Agreements: (a) it
entered into a stock option agreement with Lawrence W. Horwitz, a member of
the Company's legal firm, to acquire upto 300,000 shares of stock at $1.75
per share and (b) it entered into a Subscription Agreement with Floyd
Horwitz, the father of Lawrence W. Horwitz to sell 200,000 shares under Rule
506 at the price of $.25 per share. See Item 7. "Certain Relationships and
Related party Transactions" for additional information regarding these
transactions.
In December, 1999 the Company commenced an offering of upto $500,000
in Units. The price of each Unit was $25,000 and each Unit was comprised of
one promissory note with a six month term at 8% interest and a five year
warrant with an exercise price of $.80 per share. As of the date of this
filing, the Company has raised $250,000 from this offering of Units.
ITEM 11: DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's Articles of Incorporation authorize the issuance of
71,428,572 shares of Common Stock, $.001 par value per share, of which
7,671,857 shares were issued and outstanding as of September 30, 1999.
Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Holders of
Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities. Holders of Common Stock have no right to
convert their Common Stock into any other securities. The Common Stock has no
preemptive or other subscription rights. There are no redemption or sinking
fund provisions applicable to the Common Stock. All outstanding shares of
Common Stock are duly authorized, validly issued, fully paid and
nonassessable.
The following summary of certain terms of the common stock does not
purport to be complete and is subject to, and qualified in its entirety by,
the provisions of the company's Articles of Incorporation and By-laws which
are attached to this Statement.
19
<PAGE>
ITEM 12: INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has adopted provisions in its Articles of Incorporation
and bylaws that limit the liability of its directors and provide for
indemnification of its directors and officers to the full extent permitted
under the Delaware General Corporation Law. Under the Company's Articles of
Incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to the Company or its stockholders for monetary
damages arising from a breach of their fiduciary duty of care as directors.
Such provisions do not, however, relieve liability for breach of a director's
duty of loyalty to the Company or its stockholders, liability for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, liability for transactions in which the director derived
as improper personal benefit or liability for the payment of a dividend in
violation of Delaware law. Further, the provisions do not relieve a
director's liability for violation of, or otherwise relieve the Company or
its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding that may result in a claim for indemnification by
any director or officer.
ITEM 13: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Attached as Exhibits to this Form 10 are the financial statements
required by this Item.
ITEM 14: ACCOUNTANTS AND FINANCIAL DISCLOSURES
The Company has engaged Stonefield Josephson ("SJ") as its principal
accountants. SJ's business address is 1620 26th Street, Suite 400 South Santa
Monica, CA 90401-4041 SJ conducted both the 1999 and 1998 which are attached.
Neither the Company nor anyone on its behalf has consulted (former
accountants) during the two most recent past fiscal years regarding any
matter for which reporting is required under Regulation S-B, Item
304(a)(2)(i) or (ii) and the related instructions. The decision to engage SJ
was approved by the Board of Directors.
ITEM 15: FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
The following financial statements are included herein:
Audited Financial Statements for the Fiscal Years ended 1997 and 1998
Unaudited Financial Statements for the Nine Months Ended September 30, 1999
20
<PAGE>
PART II
ITEM 1 AND
ITEM 2. INDEX TO EXHIBITS AND DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
- ----------- --------------------
<S> <C>
3.1 Articles of Incorporation of Martinique Ventures Corporation, dated February 18, 1988
3.2 Certificate of Amendment to Articles of Incorporation of Martinique Ventures Corporation changing
name to Zebulon Enterprises, Inc., dated August 13, 1997
3.3 Certificate of Amendment to the Articles of Incorporation of Zebulon Enterprises, Inc. changing name
to Tao Partners Inc. dated April 21, 1998.
3.4 Certificate of Amendment to the Articles of Incorporation of Tao Partners Inc. changing name to
Inetvisionz.com, Inc. dated April 30, 1999.
3.5 Bylaws of Martinique Ventures Corporation
24.1 Power of Attorney (see signature page)
27.0 Financial Data Schedule
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: January 10, 2000 iNetVisionz.com, Inc.
/s/ Noreen Khan
----------------------
Noreen Khan
Chief Executive Officer, President
Chief Financial Officer
21
<PAGE>
INETVISIONZ, INC.
(FORMERLY KNOWN AS
TAO PARTNERS, INC.)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity (Deficit) 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-15
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Inetvisionz, Inc.
Torrance, California
We have audited the accompanying consolidated balance sheet of Inetvisionz,
Inc. as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1998 and 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Inetvisionz, Inc. as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
STONEFIELD JOSEPHSON, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
November 23, 1999
1
<PAGE>
INETVISIONZ, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
1999 1998
------------ -----------
(unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash $ 345,510 $ 4,066
Accounts receivable, net of allowance for
doubtful accounts of $41,539 519,992 474,480
Common stock receivable -- 23,692
Other receivables 33,242 33,242
Other current assets 21,912 8,952
----------- -----------
Total current assets 920,656 544,432
----------- -----------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 315,391 400,839
----------- -----------
INTANGIBLE ASSETS:
Customer lists, net 219,436 261,436
Product license, copyrights, net 195,925 233,425
Covenant not to compete, net 39,185 46,685
----------- -----------
Total intangible assets 454,546 541,546
----------- -----------
$ 1,690,593 $ 1,486,817
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 954,958 $ 547,865
Loan payable, bank 95,970 --
Deferred income 75,000 83,338
----------- -----------
Total current liabilities 1,125,928 631,203
----------- -----------
NOTES PAYABLE, OFFICER-STOCKHOLDERS 572,569 341,475
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock; $0.001 par value, 71,428,571 shares
authorized, 7,671,857 and 6,806,857, shares issued and
outstanding, respectively 7,672 6,807
Additional paid-in capital 2,260,258 2,073,123
Accumulated deficit (2,275,834) (1,565,791)
----------- -----------
Total stockholders' equity (deficit) (7,904) 514,139
----------- -----------
$ 1,690,593 $ 1,486,817
=========== ===========
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.
2
<PAGE>
INETVISIONZ, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months ended Nine months ended Year ended Year ended
September 30, 1999 September 30, 1998 December 31, 1998 December 31, 1997
------------------------ ----------------------- ------------------------- ---------------------
(unaudited) (unaudited)
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET REVENUES $ 2,078,721 100.0% $ 122,782 100.0% $ 1,016,633 100.0% $ --
COST OF REVENUES 787,151 37.9 56,725 46.2 458,015 45.1 --
----------- ------ ----------- ----- ----------- ----- ----------- -------
GROSS PROFIT 1,291,570 62.1 66,057 53.8 558,618 54.9 --
OPERATING EXPENSES 2,001,613 96.3 1,050,380 855.5 2,013,718 198.1 1,651
----------- ------ ----------- ----- ----------- ----- ----------- -------
NET LOSS $ (710,043) (34.2)% $ (984,323) (801.7)% $(1,455,100) (143.2)% $ (1,651)
=========== ====== =========== ===== ============ ====== =========== =======
NET LOSS PER SHARE -
basic and diluted $ (.10) $ (0.24) $ (0.40) $ (0.00)
=========== =========== =========== ==========
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING -
basic and diluted 7,041,164 4,150,622 3,684,633 1,142,857
========== =========== =========== ==========
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.
3
<PAGE>
INETVISIONZ, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common stock Additional Total
------------- paid-in Accumulated stockholders'
Shares Amount capital deficit (deficit)/equity
------ ------ ------- ------- --------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 1,142,857 $ 1,143 $ 107,097 $ (109,040) $ (800)
Net loss for the year ended
December 31, 1997 -- -- -- (1,651) (1,651)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 1,142,857 1,143 107,097 (110,691) (2,451)
Shares issued during private placements 3,094,000 3,094 731,596 -- 734,690
Shares issued per asset acquisition
agreement 520,000 520 499,480 -- 500,000
Shares issued in exchange for services 2,050,000 2,050 734,950 -- 737,000
Net loss for the year ended December 31, 1998 -- -- -- (1,455,100) (1,455,100)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 6,806,857 6,807 2,073,123 (1,565,791) 514,139
Shares issued during private placement 300,000 300 74,700 -- 75,000
Shares issued upon conversion of debt 565,000 565 112,435 -- 113,000
Net loss for the nine months ended
September 30, 1999 (unaudited) -- -- -- (710,043) (710,043)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1999 (unaudited) 7,671,857 $ 7,672 $ 2,260,258 $(2,275,834) $ (7,904)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.
4
<PAGE>
INETVISIONZ, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine months ended Year ended
------------------------------- ------------------------
September 30, September 30, December December
1999 1998 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR)
OPERATING ACTIVITIES:
Net loss $ (710,043) $ (984,323) $ (1,455,100) $ (1,651)
-------------- ------------ ---------------- ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY (USED FOR) OPERATING
ACTIVITIES:
Allowance for doubtful accounts -- -- 41,539 --
Depreciation and amortization 191,000 16,889 92,798 --
Stock compensation -- 669,500 737,000 --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS:
Accounts receivable (45,512) (131,304) (516,019) --
Other current assets (12,960) (2,000) (8,952) --
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable and accrued expenses 407,093 130,478 545,414 1,651
Deferred income (8,338) 30,695 83,338 --
-------------- ------------ ---------------- ------------
Total adjustments 531,283 714,258 975,118 1,651
-------------- ------------ ---------------- ------------
Net cash used for operating activities (178,760) (270,065) (479,982) --
-------------- ------------ ---------------- ------------
CASH FLOWS PROVIDED BY (USED FOR)
INVESTING ACTIVITIES:
Advances on loan receivable -- -- (33,242) --
Payments to acquire property and equipment (18,552) (397,358) (435,183) --
Payments to acquire intangible assets -- (100,000) (100,000) --
-------------- ------------ ---------------- ------------
Net cash used for investing activities (18,552) (497,358) (568,425) --
-------------- ------------ ---------------- ------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from notes payable, related parties 344,094 170,425 341,475 --
Proceeds from loan payable, bank 95,970 -- -- --
Common stock receivable 23,692 -- -- --
Proceeds from private placements, net of
offering costs 75,000 597,998 710,998 --
-------------- ------------ ---------------- ------------
Net cash provided by financing activities 538,756 768,423 1,052,473 --
-------------- ------------ ---------------- ------------
NET INCREASE IN CASH 341,444 1,000 4,066 --
CASH, beginning of year/period 4,066 -- -- --
-------------- ------------ ---------------- ------------
CASH, end of year/period $ 345,510 $ 1,000 $ 4,066 $ --
============== ============ ================ ============
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.
5
<PAGE>
INETVISIONZ, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine months ended Year ended
-------------------------------- --------------------------
September 30, September 30, December December
1999 1998 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ -- $ -- $ -- $ --
============== ============ ============== ============
Cash paid for income taxes $ 800 $ 800 $ 800 $ --
============== ============ ============== ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES:
Shares issued in exchange for services $ -- $ 669,500 $ 737,000 $ --
============== ============ ============== ============
Shares issued per asset acquisition agreement $ -- $ 500,000 $ 500,000 $ --
============== ============ ============== ============
Shares issued upon conversion of debt $ 113,000 $ -- $ -- $ --
============== ============ ============== ============
</TABLE>
See accompanying independent auditors' report and notes to consolidated
financial statements.
6
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL:
Martinique Ventures, Inc. was incorporated in the State of
Delaware on July 13, 1988 as a C corporation. On July 9, 1997,
Martinique Ventures, Inc. changed its name to Zebulon
Enterprises, Inc.
Pursuant to a share acquisition agreement dated March 31,
1998, all the outstanding common stock (1,142,857 shares) of
Zebulon Enterprises, Inc. was purchased for $114,286 and
accordingly, there was a change in control of the Company.
Immediately following this transaction, the new stockholders
changed its name from Zebulon Enterprises, Inc. to TAO
Partners, Inc. and on April 30, 1999, changed its name to
Inetvisionz.com, Inc. (the "Company").
During September 1998, the Company acquired certain assets of
a computer training division from NovaQuest InfoSystems, Inc.
and transferred its assets to Inetversity, Inc., a wholly
owned subsidiary. Until this time, the Company had no
operations.
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the
accounts of Inetvisionz.com, Inc. (the "Parent"), and its
wholly owned subsidiary, Inetversity, Inc.
BUSINESS ACTIVITY:
The Company and its subsidiary provide education through the
distance learning environment and develop and deliver
technology training lessons using the Internet as a means of
delivery. The Company also plans to provide major corporations
e-commerce solutions to conduct business via the Internet. All
material intercompany transactions have been eliminated in
consolidation.
REVENUE RECOGNITION:
The Company recognizes tuition revenue as services are
performed over the life of the contract. The Company also
plans to recognize website design, development and e-commerce
solutions revenue as services are provided over the life of
the contracts.
Deferred revenue represents amounts received as non-refundable
deposits on contracts for which the revenue is not yet
recognizable as the services have not yet been performed.
USE OF ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
See accompanying independent auditors' report.
7
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
FAIR VALUE:
Unless otherwise indicated, the fair values of all reported
assets and liabilities which represent financial instruments,
none of which are held for trading purposes, approximate the
carrying values of such amounts.
CASH:
EQUIVALENTS
For purposes of the statement of cash flows, cash equivalents
include all highly liquid debt instruments with original
maturities of three months or less which are not securing any
corporate obligations.
CONCENTRATION
The Company maintains its cash in bank deposit accounts which,
at times, may exceed federally insured limits. The Company has
not experienced any losses in such accounts.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to earnings as incurred,
whereas, additions, renewals, and betterments are capitalized.
When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed
from the respective accounts, and any gain or loss is included
in operations. Depreciation is computed using the
straight-line method over the estimated useful lives of the
related assets
INTANGIBLES:
Intangibles are stated at cost and are being amortized
straight-line over the estimated useful lives of 60 months.
INVESTMENT:
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.
See accompanying independent auditors' report.
8
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
ACCOUNTING FOR STOCK-BASED COMPENSATION:
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related interpretations in accounting for its
employee stock options because the alternative fair value
accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of
option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the
exercise price of the Company's employee stock options equals
the fair market value of the underlying stock on the date of
grant, no compensation expense is recognized.
INCOME TAXES:
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which adopts the asset and liability approach to
measurement of temporary differences between financial
reporting and income tax return reporting. The principal
temporary difference is the net operating loss carryforward of
approximately $1,160,000 at December 31, 1998. A deferred
asset has been provided and completely offset by a valuation
allowance, because its utilization does not appear to be
reasonably assured. Federal net operating loss carryforward
starts to expire on December 31, 2018 and California state net
operating loss carryforward starts to expire on December 31,
2003.
NET LOSS PER SHARE:
Basic and diluted net loss per share have been calculated
based upon the weighted average number of common shares
outstanding during the period.
SEGMENT:
As substantially all the Company's operations occur at the
subsidiary, iNetVersity, level, and based on the Company's
integration and management strategies, the Company currently
believes it operates in a single business segment.
NEW ACCOUNTING PRONOUNCEMENTS:
The Company has adopted Statements of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" and No. 133
"Accounting for Derivative Instruments and Hedging
Activities." The Company also adopted Statement of Position
No. 98-5 "Reporting on the Costs of Start-up Activities."
Adoption of these activities did not materially affect the
financial statements.
See accompanying independent auditors' report.
9
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
INTERIM FINANCIAL STATEMENTS (UNAUDITED):
The accompanying unaudited condensed financial statements for the
interim periods ended September 30, 1999 and 1998 have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for
the nine months ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1999.
(2) MAJOR CUSTOMER:
During the year ended December 31, 1998, one customer accounted for
approximately 19% of total sales. This customer owed approximately
$74,000 as of December 31, 1998.
During the nine months ended September 30, 1999, one customer accounted
for approximately 30% of total sales. This customer owed approximately
$89,000 as of September 30, 1999.
(3) COMMON STOCK SUBSCRIPTIONS RECEIVABLE:
In September 1998, the Company commenced a private placement offering
(the "Offering") of the Company's common stock at a purchase price of
approximately $1.00 per share pursuant to Rule 504 of Regulation D of
the Securities and Exchange Act of 1933. As of December 31, 1998, share
subscription commitment agreements were executed, however, cash
proceeds were collected subsequently.
(4) PROPERTY AND EQUIPMENT:
Property and equipment is comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Computer and electronic equipment $ 309,728 $ 300,476
Office furniture and equipment 164,007 154,707
--------------- --------------
473,735 455,183
Less accumulated depreciation and amortization 158,344 54,344
--------------- --------------
$ 315,391 $ 400,839
=============== ==============
</TABLE>
Depreciation and amortization expense for the year ended December 31,
1998 amounted to $54,344.
See accompanying independent auditors' report.
10
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(5) CUSTOMER LIST:
A summary is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Customer list $ 280,000 $ 280,000
Less accumulated depreciation and amortization 60,564 18,564
--------------- --------------
$ 219,436 $ 261,436
=============== ==============
</TABLE>
Amortization expense related to the customer list for the period from
acquisition of this asset on September 1, 1998 to December 31, 1998
amounted to $18,564.
(6) PRODUCT LICENSE, COPYRIGHTS, TRADEMARK AND CONCEPT:
A summary is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Product license, copyrights, trademark and concept $ 250,000 $ 250,000
Less accumulated depreciation and amortization 54,075 16,575
--------------- --------------
$ 195,925 $ 233,425
=============== ==============
</TABLE>
Amortization expense related to Product license, copyrights, trademark
and concept for the period from acquisition of these assets on
September 1, 1998 to December 31, 1998 amounted to $16,575.
(7) NON-COMPETE AGREEMENT:
A summary is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Non-compete agreement $ 50,000 $ 50,000
Less accumulated depreciation and amortization 10,815 3,315
--------------- --------------
$ 39,185 $ 46,685
=============== ==============
</TABLE>
Amortization expense related to customer list for the period from
acquisition of this asset on September 1, 1998 to December 31, 1998
amounted to $3,315.
See accompanying independent auditors' report.
11
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(8) ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
A summary is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Accounts payable $ 645,002 $ 123,876
Accrued overhead expenses 194,261 267,414
Accrued consulting expenses 93,500 17,000
Delinquent payroll taxes payable, including
penalties and interest 15,717 123,926
Sales taxes payable 6,478 15,649
--------------- --------------
$ 954,958 $ 547,865
=============== ==============
</TABLE>
MAJOR VENDOR
Purchases from one vendor amounted to approximately $170,000 for the
nine months ended September 30, 1999 representing approximately 20% of
total purchases. Included in accounts payable and accrued expenses at
September 30, 1999 is approximately $30,000 due to this vendor.
Purchases from one vendor amounted to approximately $91,000 for the
year ended December 31, 1998 representing approximately 20% of total
purchases. Included in accounts payable and accrued expenses at
December 31, 1998 is approximately $60,000 due to this vendor.
(9) NOTES PAYABLE, OFFICER-STOCKHOLDERS:
Notes payable, officer-stockholders are non-interest bearing, unsecured
and due on January 1, 2001. Pursuant to the terms of these agreements,
the officer-stockholders will provide working capital on an as needed
basis up to a combined limit of $850,000, and all these notes are
convertible into common stock of the Company at the rate of $0.20 per
share at any time prior to its due date.
Subsequent to September 30, 1999, $43,000 of debt was converted on
November 12, 1999 and $527,000 was converted on December 5, 1999
(unaudited).
See accompanying independent auditors' report.
12
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(10) COMMITMENTS:
The Company leases its office space and training locations under
renewable operating leases, which expire on September 2001. Pursuant to
these lease agreements, the Company is also responsible for maintaining
certain minimum insurance requirements and general utilities.
The following is a schedule by years of future minimum rental payments
required under operating leases that have noncancellable lease terms in
excess of one year as of December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Year ending December 31,
1999 $ 262,000
2000 262,000
2001 196,500
--------------
$ 720,500
==============
</TABLE>
Total rent expense amounted to $77,205 for the year ended December 31,
1998 and $198,627 for the nine months ended September 30, 1999
(unaudited).
(11) COMMON STOCK:
PRIVATE PLACEMENT
During April 1998, the Company initiated a private placement offering
(the "April Private Placement") of 1,114,000 shares of the Company's
common stock at an offering price of $0.085 per share. The Private
Placement was exempt from the registration provisions of the Securities
and Exchange Commission Act of 1933 and Rule 504 of Regulation D. As of
December 31, 1998, proceeds amounted to $94,690.
During May 1998, the Company initiated a private placement offering
(the "May Private Placement") of 1,400,000 shares of the Company's
common stock at an offering price of $0.15 per share. The Private
Placement was exempt from the registration provisions of the Securities
and Exchange Commission Act of 1933 and Rule 504 of Regulation D. As of
December 31, 1998, proceeds amounted to $210,000.
During December 1998, the Company initiated two private placement
offerings (the "December Private Placements") of 400,000 and 180,000
shares of the Company's common stock at offering prices of $.625 and
$1.00, respectively, per share. The Private Placement was exempt from
the registration provisions of the Securities and Exchange Commission
Act of 1933 and Rule 506 of Regulation D. As of December 31, 1998,
proceeds amounted to $430,000.
During March 1999, the Company initiated a private placement offering
(the "March 1999 Private Placement") of 300,000 shares of the Company's
common stock at an offering price of $0.25 per share. The Private
Placement was exempt from the registration provisions of the Securities
and Exchange Commission Act of 1933 and Rule 504 of Regulation D. As of
December 31, 1998, proceeds amounted to $75,000 (unaudited).
See accompanying independent auditors' report.
13
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(11) COMMON STOCK, CONTINUED:
PURCHASE OF ASSETS OF TRAINING DIVISION
During September 1998, the Company acquired certain assets from the
training division of Novaquest InfoSystems, Inc. for a total cost of
$1,000,000. Pursuant to this agreement, the Company paid $500,000 in
cash and issued $500,000 worth of shares (520,000 shares) of its
restricted common stock.
STOCK OPTIONS (UNAUDITED)
On January 1, 1999, the Company granted 500,000 options to purchase
restricted shares of the Company's common stock to select employees,
consultants and non-employee directors. The options were not issued
under a formal plan, as the Company has not yet adopted an Option Plan.
The options have a three-year term, are exercisable at $1.00 per share,
and are exercisable on or after January 1, 2000.
The number and weighted average exercise price of outstanding options
at September 30, 1999 are as follows:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
------ --------------
<S> <C> <C>
Outstanding at beginning of period -- $ --
Outstanding at end of period 500,000 1.00
Exercisable at end of period -- 1.00
Granted during period 500,000 --
Exercised during period -- --
</TABLE>
The Company has elected, as permitted by SFAS No. 123, "Accounting for
Stock Based Compensation"' to account for its stock compensation
arrangements under the provisions of APB No. 25, "Accounting for Stock
Issued to Employees". Accordingly, because based on estimates of fair
market value, the exercise price of the Company's employee stock
options equals or exceeds the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
Pro forma information regarding the effect on operations is required by
SFAS 123, and has been determined as if the Company had accounted for
its employee stock options under the fair value method of that
statement. Pro forma information using the Black-Scholes method at the
date of grant based on the following assumptions:
<TABLE>
<CAPTION>
<S> <C>
Expected life (years) 3 years
Risk-free interest rate 6.00%
Dividend yield --
Volatility 70%
</TABLE>
This option valuation model requires input of highly subjective
assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options,
and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing
model does not necessarily provide a reliable single measure of fair
value of its employee stock options.
See accompanying independent auditors' report.
14
<PAGE>
INETVISIONZ, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1998 AND 1997
(11) COMMON STOCK, CONTINUED:
STOCK OPTIONS (UNAUDITED), CONTINUED
For purposes of proforma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The
Company's proforma information is as follows:
<TABLE>
<CAPTION>
September 30,
1999
----
<S> <C>
Net loss, as reported $ (710,043)
Proforma net loss $ (934,249)
Basic and diluted historical loss per share $ (.10)
Proforma basic and diluted loss per share $ (.11)
</TABLE>
See accompanying independent auditors' report.
15
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
MARTINIQUE VENTURES CORPORATION
DATED
FEBRUARY 18, 1988
<PAGE>
Book 0111 Page 238
CERTIFICATE OF INCORPORATION
OF
MARTINIQUE VENTURES CORP.
FIRST: The name of the Corporation is MARTINIQUE VENTURES CORP.
SECOND: Its registered office and place of business in the State of Delaware is
to be located at 410 South State Street in the City of Dover, County of Kent.
The Registered Agent in charge thereof is:
XL CORPORATE SERVICES, INC.
THIRD: The nature of the business and the objects and purpose proposed to be
transacted, promoted and carried on are to do any or all things herein
mentioned, as fully and to the same extent as natural persons might or could
do, and in any part of the world, via:
The purpose of the corporation is to engage in any lawful act of
activity for which corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The corporation shall be authorized to issue Five Hundred million
(500,000,000) shares at $.001 Par Value.
FIFTH: The name and address of the incorporate is a follows:
Rita J. Deakins
410 South State Street
Dover, Delaware 19901
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of this Corporation.
With the consent in writing, and pursuant to a vote of the holders of
a majority of the capital stock issued and outstanding, the Directors shall
have authority to dispose, in any manner, of the whole property of this
corporation.
1
<PAGE>
Book 0111 Page 239
The By-Laws shall determine whether and to what extent the account and
books of this corporation, or any of them, shall be open to the inspection of
the stockholders; no stockholder shall have any right except as conferred by
the law or the By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings
and keep the books, documents and papers of the corporation outside of the
State of Delaware, at such places as may be, from time to time, designated by
the By-Laws or by resolution of the stockholders or directors, except as
otherwise required by the laws of Delaware.
It is the intention that the objects, purposes and powers specified in
the THIRD paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from
the terms of any other clause or paragraph in this certificate of
incorporation, but that the objects, purposes and powers specified in the THIRD
paragraph and in each of the clauses or paragraphs of this charter shall be
regarded as independent objects, purposes and powers.
SEVENTH: No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (I) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law, of (iv) for any
transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 18th day of
February, A.D., 1988.
/s/ Rita J. Deakins
2
<PAGE>
STATE OF DELAWARE }
KENT COUNTY }
RECORDED in the Office for the Recording of Deeds, Etc, at Dover, In
and for the said County of Kent, In Corp. Record 0 Vol. 111 Page 237 Etc., the
19th day of February, A.D., 1988.
WITNESS my hand and the Seal of said office.
/s/ Michael T. Scuse, Recorder
3
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
MARTINIQUE VENTURES CORPORATION
CHANGING THE NAME TO ZEBULON ENTERPRISES, INC.
DATED
AUGUST 13, 1997
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
MARTINIQUE VENTURES, CORP., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
does hereby certify:
FIRST: That a meeting of the Board of Directors of said corporation,
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 special meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendments is as follows:
Resolved, that thee Certificate of Incorporation of this corporation
be amended by changing the Article thereof numbered "FIRST" so that, as
amended, said Article shall be and read as follows:
"THE NAME OF THIS CORPORATION SHALL BE ZEBULON
ENTERPRISES, INC."
Resolved that the Certificate of Incorporation of this corporation
be amended by changing the Article thereof numbered 'FOURTH" so that, as
amended, said Article shall be and read as follows:
"THE CORPORATION SHALL BE AUTHORIZED TO ISSUE 71,428,572
COMMON SHARES AT $.001 PAR VALUE."
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 amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 243 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 amendments.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed
on this date of July 9, 1997.
By: /s/ Adam Stull, President
-------------------------
1
<PAGE>
State of Delaware
Office of the Secretary of State
I Edward J. Freel, Secretary of the State of the State of Delaware,
do hereby certify "Zebulon Enterprises, Inc." is duly incorporated under the
laws of the State of Delaware and in good standing and has a legal corporate
existence so far as the records of this office show, as of the twentieth day
of August, A.D. 1997.
/s/ Edward J. Freel, Secretary of State
----------------------------------------
[SEAL]
2
<PAGE>
State of Delaware
[SEAL]
Office of the Secretary of State
I, Michael Harkins, Secretary of the State of Delaware do hereby
certify the attached is a true and correct copy of the certificate of
incorporation of Martinique Ventures Corp. filed in this office on the
eighteenth day of February A.D. 1988, at 9 o'clock A.M.
RECEIVED FOR RECORD
Feb. 19 A.D. 1988
/s/ Michael T. Scase, Recorder
$3.00 State Document Fee Paid
Michael Harkins, Secretary of State
AUTHENTICATION: 1589997
DATE: 02-18-1988
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
ZEBULON ENTERPRISES, INC.
CHANGING THE NAME TO TAO PARTNERS, INC.
DATED
APRIL 21, 1998
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/30/1999
991172509 - 2152245
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
ZEBULON ENTERPRISES, INC., a corporation organized and existing by virtue of the
General Corporation Law of the State of Delaware, does hereby certify:
FIRST: That at a meeting of the Board of Directors of said corporation,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
available and calling a special meeting of the stockholders of the corporation
for consideration thereof. the resolutions setting forth the amendment is as
follows:
Resolved that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST?" TO THAT, AS AMENDED,
SAID Article shall be and read as follows:
"THE NAME OF THIS CORPORATION SHALL BE TAO PARTNERS, INC."
SECOND: That thereafter, pursuant to a resolution of the Board of
Directors, a special meeting of the stock holders of said corporation was duly
called an 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 Section 242 of the General Corporation Law of the state of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed on
this 20th day of April 1998.
By: /s/ Adam R. Stull, President
-----------------------------
1
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
TAO PARTNERS, INC.
CHANGING THE NAME TO INETVISIONZ.COM, INC.
DATED
APRIL 30, 1999
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/30/1999
991172509 - 2152245
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
TOA PARTNERS, INC.
A DELAWARE CORPORATION
TOA PARTNERS, INC., a corporation organized and existing under
and by virtue of the General corporation Law of the State of Delaware, does
hereby certify
FIRST: That A MEETING OF THE Board of Directors of said corporation, 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 special meeting of the stockholders of said corporation for
consideration thereof. the resolution setting forth the proposed amendments 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 Articles shall be and read as follows:
"THE NAME OF THIS CORPORATION SHALL BE INETVISIONZ.COM, INC."
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 and which meeting the necessary number of shares as
required by statute were voted in favor of the amendments.
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 amendments.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed on
this date of April 26, 1999
By: /s/ Noreen Kahn, President
--------------------------
1
<PAGE>
EXHIBIT 3.5
BYLAWS
OF
MARTINIQUE VENTURES CORPORATION
<PAGE>
BY-LAWS
OF
MARTINIQUE VENTURES CORP.
ARTICLE 1 - OFFICES
The principal office of the corporation in the State of Delaware shall
be located in the City of Dover, County of Kent. The corporation may have such
other offices, either within or without the State of incorporation as the board
of directors may designate or as the business of the corporation may from time
to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 18th day of
February in each year, beginning with the year 1989 at the hour of 10:00 A.M.,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday such meeting shall be held on the next succeeding
business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of holders of not
less than fifty (50%) per cent of all the outstanding share of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the directors. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting and, in
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than seven nor more than ten days before the
date of the meeting, either personally or by mail, by or at the direction of the
president, or the secretary, of the officer or persons calling the meeting, to
1
<PAGE>
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make
a determination of stockholders for any other proper purpose, the directors
of the corporation may provide that the stock transfer books shall be closed
for a stated period but not to exceed, in any case, seven days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least seven days immediately preceding such meeting.
In lieu of closing the stock transfer books, the directors may fix in advance
a date as the record date for any such determination of stockholders, such
date in any case to be not more than ten days and, in case of a meeting of
stockholders, not less than days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. If the
stock transfer books shall be closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of stockholders,
such books shall be closed for at lease seven days immediately preceding such
meeting. In lieu of closing the stock transfer books, the directors may fix
in advance a date as the record date for any such determination of
stockholders, such date in any case to be not more than ten days and, in case
of a meeting of stockholders, not less than ____ days prior to the date on
which the particular action requiring such determination of stockholder is to
be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of stockholders entitled to notice of or to vote
at a meeting of stockholders, or stockholders entitled to receive payment of
a dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the directors declaring such a dividend is adopted,
as the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders.
page 3
page 4
page 5
page 6
6. QUORUM.
At any meeting of the directors ______a majority ____shall constitute a
quorum of the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
2
<PAGE>
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without causes shall be billed
by vote of the stockholders. A director elected to fill a vacancy cased by a
resignation, death or removal shall be elected t hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the
board, the president or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt thereof
by the board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their
services, but by resolution of the board a fixed sum and expenses for actual
attendance at each regular or special meeting of the board may be authorized.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
thereof.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
3
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president,
a secretary and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers may be deemed necessary may be
elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in the office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or any other proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of president and such other duties as may be
prescribed by the directors from time to time.
6. VICE PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president, shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President of by the
directors.
4
<PAGE>
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and the
directors' meetings in one or more books provided for that purpose, see that all
notices are given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register f the post office address of each stockholder
which shall be furnished to the secretary by each stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of an be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due ad payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the corporation.
5
<PAGE>
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form as
shall be determined by the directors. Such certificates shall be signed by the
president and by the secretary or by such other officers authorized by law and
by the directors. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the stockholders, the number of
shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer shall
be canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of the lost, destroyed or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the corporation as the
directors may prescribe.
2. TRANSFERS OF SHARES.
6
<PAGE>
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 31st day of
December in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in form and
shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated Teheran, shall be deemed equivalent to
the giving of such notice.
7
<PAGE>
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be adopted
by a vote of the stockholders representing a majority of all the shares issued
and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1999 SEP-30-1998 DEC-31-1998 DEC-31-1997
<CASH> 345,510 0 4,066 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 519,992 0 474,480 0
<ALLOWANCES> 41,539 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 920,656 0 544,432 0
<PP&E> 473,735 0 455,183 0
<DEPRECIATION> 158,344 0 54,344 0
<TOTAL-ASSETS> 1,690,593 0 1,486,817 0
<CURRENT-LIABILITIES> 1,125,928 0 631,203 0
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 7,672 0 6,807 0
<OTHER-SE> (15,576) 0 507,332 0
<TOTAL-LIABILITY-AND-EQUITY> 1,690,593 0 1,486,817 0
<SALES> 2,078,721 122,782 1,016,633 0
<TOTAL-REVENUES> 2,078,721 122,782 1,016,633 0
<CGS> 787,151 56,725 458,015 0
<TOTAL-COSTS> 787,151 56,725 458,015 0
<OTHER-EXPENSES> 2,001,613 1,050,380 2,013,718 1,651
<LOSS-PROVISION> 0 0 41,539 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> (709,243) (983,523) (1,454,300) (1,651)
<INCOME-TAX> 800 800 800 0
<INCOME-CONTINUING> (710,043) (984,323) (1,455,100) (1,651)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (710,043) (984,323) (1,455,100) (1,651)
<EPS-BASIC> (0.10) (0.24) (0.40) (0.00)
<EPS-DILUTED> (0.10) (0.24) (0.40) (0.00)
</TABLE>
