UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
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Commission File Number: 00-09322
iEXALT, INC.
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(Exact Name of small business issuer as specified in its charter)
Nevada 75-1667097
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(State of Incorporation) (IRS Employer ID Number)
4301 Windfern Drive, Houston, Texas 77041
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(Address of principal executive offices)
(281) 600-4000
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(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by SECTION
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES [XX] NO[ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
March 31, 2000: 26,632,667 Shares.
Transitional Small Business Disclosure Format (check one): YES[ ] NO [XX]
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iEXALT, INC.
Table of Contents
Page
----
Part I - Financial Information
Item 1. Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis and
Plan of Operation 15
Part II - Other Information
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 25
2
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Part I - Item 1
FINANCIAL STATEMENTS
iEXALT, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
ASSETS
FEBRUARY 29,
2000
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CURRENT ASSETS
Cash and cash equivalents ............................ $ 294,267
Accounts receivable, trade, net ...................... 166,548
Inventory ............................................ 74,393
Prepaid expenses and other current assets ............ 143,410
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TOTAL CURRENT ASSETS ................................. 678,618
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PROPERTY AND EQUIPMENT, net .............................. 485,306
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OTHER ASSETS
Goodwill and other intangible assets, net ............ 3,917,038
Other assets ......................................... 88,644
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$ 5,169,606
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to shareholders ........................ $ 800,000
Short-term borrowings ................................ 327,197
Accounts payable, trade .............................. 469,585
Deferred revenue ..................................... 227,281
Accounts payable, affiliates ......................... 50,627
Royalties payable .................................... 59,169
Other accrued liabilities ............................ 73,648
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TOTAL CURRENT LIABILITIES ............................ 2,007,507
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SHAREHOLDERS' EQUITY
Common stock, $.001 par value, 100,000,000
shares authorized, 25,280,333 shares
issued and outstanding at February 29, 2000 ........ 25,280
Paid-in capital ...................................... 4,726,678
Retained deficit ..................................... (1,589,859)
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TOTAL SHAREHOLDERS' EQUITY ........................... 3,162,099
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$ 5,169,606
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See accompanying notes to unaudited financial statements.
3
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iEXALT, INC.
CONSOLIDATED CONSDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED ENDED
---------------------------------
FEBRUARY 29, FEBRUARY 29,
2000 2000
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REVENUES ............................. $ 841,788 $ 1,295,443
COSTS AND EXPENSES
Direct costs .................... 494,128 838,353
Selling, general and
administrative ................ 1,052,290 1,656,658
Depreciation and
amortization ................. 43,206 55,316
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TOTAL COSTS AND EXPENSES ............. 1,589,624 2,550,327
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LOSS FROM OPERATIONS ................. (747,836) (1,254,884)
OTHER INCOME/(EXPENSES)
Interest income ................. 363 5,252
Interest expense ................ (3,590) (4,364)
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LOSS BEFORE INCOME TAXES ............. (751,063) (1,253,996)
INCOME TAXES ......................... -- --
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NET LOSS ............................. $ (751,063) $ (1,253,996)
============ ============
BASIC LOSS PER SHARE ................. $ (0.03) $ (0.05)
============ ============
WEIGHTED NUMBER OF SHARES
OUTSTANDING ....................... 24,460,007 22,927,759
============ ============
See accompanying notes to unaudited financial statements.
4
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iEXALT, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
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FEBRUARY 29,
2000
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CASH FLOWS FROM OPERATING ACTIVITES:
Net loss ............................................ $(1,253,996)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization ..................... 55,316
Compensation expense for contributed services ..... 71,250
Changes in assets and liabilities, net
of effects of acquisitions:
Accounts receivable ............................. (8,546)
Inventory ....................................... (26,574)
Prepaid expenses ................................ (5,327)
Other assets .................................... (70,000)
Accounts payable ................................ 362,385
Royalties payable ............................... 15,467
Other accrued expenses .......................... (149,282)
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Net cash used by operating activities ........... (1,009,307)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net liabilities of acquisitions, net of cash
acquired .......................................... 64,087
Purchases of property and equipment ................. (312,109)
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Net cash used by investing activities ........... (248,022)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock .............. 782,497
Proceeds from issuance of debt ...................... 300,000
Borrowings under bank line of credit ................ 150,000
Net change in other notes payable ................... (32,213)
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Net cash provided by financing activities ....... 1,200,284
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NET DECREASE IN CASH AND CASH EQUIVALENTS ............... (57,045)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......... 351,312
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CASH AND CASH EQUIVALENTS, END OF PERIOD ................ $ 294,267
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See accompanying notes to unaudited financial statements.
5
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATIONS - iExalt, Inc.,
("iExalt" or "the Company"), was originally incorporated as Louisiana
Northern Gas, Inc. a Nevada corporation on April 23, 1979. The name of
the Company was changed to Sunbelt Exploration, Inc. on December 21,
1979. From 1989 until September 1, 1999, the Company had very limited
operations.
On September 1, 1999, the Company consummated a merger (hereinafter
referred to as the "Merger") with iExalt, Inc., a Texas corporation
incorporated on January 7, 1999, ("iExalt-Texas") whereby the
shareholders of iExalt-Texas acquired an 89% ownership interest in the
Company. The acquisition was effected through the issuance of
18,393,666 shares of the Company's common stock to the shareholders of
iExalt-Texas in exchange for all of the outstanding shares of
iExalt-Texas common stock. Upon the closing of the transaction, there
were 20,874,166 shares of common stock issued and outstanding. The
Merger has been accounted for as a reverse takeover with the Company
being the surviving legal entity and iExalt-Texas being the acquiror
for accounting purposes. Concurrent with the Merger, the Company
changed its name from Sunbelt Exploration, Inc. to iExalt, Inc.
iExalt-Texas had very limited operations in the six months ended
February 28, 1999, and therefore no comparative balances are
presented.
The Company is currently developing Internet resources created to
support a safe and efficient environment for families, businesses and
Christian organizations. The Company currently operates as a
nationwide filtered Internet Service Provider, publishes Christian
electronic books and reference materials as well as a Christian events
magazine, and operates one of the largest speakers bureaus dedicated
to Christian speakers. In addition, the Company sells tickets for
Christian events, owns and markets its own business-to-business
content management products, and utilizes independent sales
representatives to market and sell a variety of products and services
at discounted prices for the individual, home and family.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries.
All significant intercompany balances and transactions have been
eliminated.
INTERIM RESULTS - The accompanying consolidated condensed financial
statements of the Company for the three-month and six-month periods
ended February 29, 2000 reflect the results of operations of iExalt,
Inc. from the date of acquisition, September 1, 1999. The accompanying
consolidated condensed financial statements of the Company reflect the
historical results of iExalt-Texas prior to September 1, 1999.
6
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information. 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 three-month and six-month
periods are not necessarily indicative of the results that may be
expected for an entire year.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended August 31, 1999.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
debt instruments having maturities of three months or less at the date
of purchase to be cash equivalents.
INVENTORIES - Electronic publishing inventories are comprised of
compact discs and related supplies. Inventory is stated at the lower
of cost, determined by the average cost method, or market.
PROPERTY AND EQUIPMENT - Property and equipment is carried at original
cost or adjusted net realizable value, as applicable. Maintenance and
repair costs are charged to expense as incurred. When assets are sold
or retired, the remaining costs and related accumulated depreciation
are removed from the accounts and any resulting gain or loss is
included in income.
For financial reporting purposes depreciation of property and
equipment is provided using the straight-line method based upon the
expected useful lives of each class of assets. Estimated useful lives
of assets were as follows: Furniture and fixtures - five to seven
years; computers and other office equipment - three to five years.
FINANCIAL INSTRUMENTS - FAIR VALUE - The carrying values of the
Company's financial instruments, which include cash and cash
equivalents, accounts receivable, accounts payable and accrued
liabilities, royalties and debt, approximate their respective fair
values.
CREDIT RISK - The Company maintains its cash and cash equivalents with
high credit quality institutions and limits the credit exposure to any
one institution. The Company's accounts receivable arise from sales to
customers and the Company periodically evaluates its credit exposure
with its customers. To date credit related losses have been
immaterial.
7
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
GOODWILL AND OTHER INTANGIBLES - Goodwill represents the cost in
excess of fair value of the assets of businesses acquired and is being
amortized using the straight-line method over 40 years. Other
intangible assets represent costs allocated to covenants not to
compete and other intangibles acquired in business acquisitions. Other
intangible assets are being amortized using the straight-line method
over their estimated useful lives, which range from three to ten
years. Accumulated amortization at February 29, 2000 was $22,711.
REVENUE RECOGNITION - The Company generally recognizes revenue on
services as they are performed and on products when they are sold net
of sales returns. Speaker revenues are recognized when the speech or
event occurs. The Company grants refunds and returns on electronic
publishing products if the software and publications sold are returned
within thirty days. Revenue from ticket operations is recognized as
tickets are sold. Although iExalt collects ticket receipts
representing the full ticket price on behalf of its clients, the
Company only records as revenue the convenience charges and handling
fees included in the ticket price.
INCOME TAXES - The Company operates as a corporation. No tax provision
has been reflected because of the net operating loss for the Company.
The tax benefits related to the net operating losses are fully
reserved by a valuation allowance.
RECLASSIFICATIONS - Certain reclassifications have been made in the
accompanying balance sheet when compared to prior periods.
MANAGEMENT'S 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 disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
While it is believed that such estimates are reasonable, actual
results could differ from those estimates.
CONDITIONS AFFECTING ONGOING OPERATIONS - The Company hopes to obtain
additional debt and equity financing from various sources in order to
finance its operations and to continue to grow through merger and
acquisition opportunities. In the event the Company is unable to
obtain additional debt and equity financing, the Company will not be
able to continue its current level of operations. If the Company is
unable to continue its current level of operations, the value of the
Company's assets could experience a significant decline in value from
the net book values reflected in the accompanying consolidated balance
sheet.
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flow to meet its obligations on a
timely basis, to comply with the terms of its financing agreements, to
obtain additional financing or refinancing as may be required, and
ultimately to attain profitability.
8
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE B ACQUISITIONS
The Company acquired the proprietary assets of netFilter Technologies,
a proxy-filtering software company on October 1, 1999 for $60,000 and
60,000 shares of the Company's common stock.
On October 1, 1999, the Company acquired Wordcross Enterprises, Inc.
d/b/a Christian Happenings ("Wordcross"). In consideration for this
purchase, the selling shareholders received 850,000 shares of common
stock of iExalt, Inc. and 250,000 common stock options exercisable
at$1.80 per share. The options vest in the amount of 50,000 shares per
year on the anniversary date of the acquisition. Both former
shareholders of Wordcross have employment agreements with the Company
for a period of five years. The transaction was accounted for as a
purchase and the amount of goodwill recorded was $272,000.
On November 16, 1999, the Company acquired Solutions Global, Inc.
("Solutions Global"). In consideration for this purchase, the selling
shareholders received 40,000 shares of common stock of iExalt, Inc.
and 60,000 common stock options exercisable at $1.80 per share. The
options vest in the amount of 20,000 shares per year on the
anniversary date of the acquisition. Both former shareholders of
Solutions Global have employment agreements with the Company for a
period of three years. The transaction was accounted for as a purchase
and goodwill of $72,000 was recorded.
On December 1, 1999, the Company acquired, all of the issued and
outstanding stock of Premiere Speakers Bureau, Inc. d/b/a
Christianspeakers.com ("Christian Speakers"), a Tennessee corporation
in the business of scheduling well-known speakers to speak to groups
on Christian issues. The consideration issued to the sole stockholder
of Christian Speakers, was: (i) 500,000 shares of Company common
stock, (ii) aggregate cash consideration of $40,000, of which $10,000
was payable at closing, and $5,000 is payable monthly over a period of
six months beginning January 2000, and (iii) a stock option to
purchase an aggregate 250,000 shares of Company common stock at an
exercise price of $1.80 per share. The stock option vests in the
amount of 50,000 shares per year on the anniversary date of the
agreement, and is subject to the former owner of Christian Speakers
remaining an employee of the Company. The term of the stock option is
three years from the date of vesting. The former owner of Christian
Speakers has entered into a five-year employment agreement with the
Company. The transaction was accounted for as a purchase and goodwill
was recorded in the amount of $490,011.
Effective December 31, 1999, the Company acquired all of the issued
and outstanding stock of First Choice Marketing, Inc., ("First
Choice"), a Texas corporation in the business of directly marketing a
variety of goods and services through commission-based
representatives.
9
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE B ACQUISITIONS (continued)
The consideration payable to the shareholders of First Choice, was (i)
2,302,000 shares of Company common stock and (ii) cash consideration
of $30,000 paid to key employees in exchange for non-compete
agreements. For the years 2000 through 2002, the shareholders are also
entitled to receive 333,333 additional shares per year if certain
financial benchmarks and employment agreements are satisfied. The
Company also agreed to assume certain warrant obligations of First
Choice to a party related to the Company totaling 810,000 shares of
the Company's common stock at an exercise price of $1.00 per share.
One-third of these warrants become exercisable in each of the years
2000 through 2002 if First Choice achieves the financial benchmarks
established in each of those years in connection with the contingent
share issuance to First Choice shareholders discussed above.
Exercisable warrants expire in 2004 if not previously exercised. A key
management employee of First Choice has entered into a three-year
employment agreement with the Company. In addition, the key employee
will receive up to 150,000 stock options subject to the achievement of
the financial benchmarks referred to above. The transaction was
accounted for as a purchase and goodwill was recorded in the amount of
$2,926,434. Subsequent to the purchase, the Company negotiated an
agreement to issue 190,890 registered shares of common stock to a
related party for their consulting services in effecting the
acquisition.
The unaudited pro forma results of operations of the Company for the
six months ended February 29, 2000 and February 28, 1999 (assuming
Wordcross, Solutions Global, Christian Speakers and First Choice had
been acquired as of the beginning of the respective periods) are shown
below.
PRO FORMA FOR
SIX MONTHS ENDED
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FEBRUARY 29, FEBRUARY 28,
2000 1999
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REVENUES ................. $ 1,922,606 $ 1,550,055
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NET INCOME(LOSS) ......... $(1,387,780) $ (72,583)
=========== ============
EARNINGS/(LOSS) PER SHARE $ (0.05) $ 0.00
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Pro Forma Weighted Average
Shares Outstanding ..... 25,409,606 25,273,056
=========== ============
10
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE B ACQUISITIONS (continued)
In management's opinion, the pro forma combined results of operations
may not be indicative of the actual results that would have occurred
had the acquisitions been consummated at the beginning of the
respective periods or of the future operations of the combined
companies.
NOTE C PROPERTY AND EQUIPMENT
Property and equipment as of February 29, 2000 consisted primarily of
furniture and fixtures, computers, software and other office equipment
with an original cost of $517,911. The accumulated depreciation at
February 29, 2000 was $32,605.
NOTE D NOTES PAYABLE AND OTHER SHORT-TERM BORROWINGS
Notes payable and other short-term borrowings at February 29, 2000
consisted of the following:
Secured note payable to shareholder $350,000
Unsecured note payable to shareholder 150,000
Bank line of credit 150,000
Unsecured note payable to related party 156,000
Unsecured note payable to shareholder 300,000
Other unsecured notes payable 21,197
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$1,127,197
==========
The non-interest bearing shareholder promissory note in the amount of
$350,000 is secured by certain assets and is payable at such time that
the Company's net assets are equal to or exceed $5,000,000. This note
is classified as a current liability since it is expected that the
Company will meet such threshold within one year.
The unsecured $150,000 note payable to shareholder is payable on July
1, 2000.
On December 17, 1999, the Company increased its revolving line of
credit from $50,000 to $150,000. As of February 29, 2000, $150,000 in
borrowings was outstanding under this line of credit. The line of
credit is secured by the personal guarantee of a shareholder of the
Company. The line of credit was fully repaid on March 7, 2000.
In the December 31, 1999 acquisition of First Choice, the Company
assumed a $156,000 unsecured note payable to a related party.
Interest accrues at a rate of ten percent (10%) per annum and the note
and accrued interest is due on March 14, 2000, unless renewed for an
additional ninety (90) day period. This note was renewed and its new
maturity date is June 12, 2000.
11
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE D NOTES PAYABLE AND OTHER SHORT-TERM BORROWINGS (continued)
In January and February 2000, the Company entered into note agreements
totaling $300,000 with a shareholder of the Company to fund working
capital requirements. These notes are non-interest bearing. On March
21, 2000 the Company repaid the $300,000 due to the shareholder
resulting from these transactions.
NOTE E SHAREHOLDERS' EQUITY
The Company currently has a Private Placement Memorandum ("PPM")
offering 2,000,000 shares of iExalt common stock to qualified
purchasers at a price of $1.80 per share. Funds resulting from the
sale of the Company's common stock will be used for funding the
day-to-day operations of the Company, development of new products and
services, marketing, and acquisitions of other businesses in similar
industries, among other things. There is no assurance that there will
be adequate cash resulting from this transaction to accomplish the
above stated objectives. The Company has committed to pay six percent
of the offering proceeds raised to registered brokers as finder's fees
related to the sale of common stock subject to this offering. As of
February 29, 2000, 450,278 shares had been issued pursuant to this
offering and no finder's fees have been incurred. (See Note H).
Prior to the reverse takeover, a shareholder of the Company purchased
2,250,000 shares of iExalt's common stock for cash of $500,000. As
part of this purchase, the shareholder also committed the services of
an executive to assist the Company in the initial start-up and
structuring of its business for up to one year at no cash cost to the
Company. The Company recorded compensation expense of $60,000 and
$30,000 for the six-month and three-month periods ending February 29,
2000 respectively, for such services.
Certain shareholders provided management services to the Company
during the three-month period ended February 29, 2000 for which the
Company recognized expenses of $11,250 and reduced receivables from
shareholders by the same amount.
NOTE F STOCK OPTIONS AND WARRANTS
The former owners of Wordcross were granted options to purchase
250,000 shares of common stock at an exercise price of $1.80 per share
and vesting 50,000 shares per year as of the end of each of the first
five years of their employment by iExalt.
On September 1, 1999 an agreement for consulting services with
Consulting & Strategy International, Inc., ("CSI") went into effect.
In partial consideration for the consulting services to be offered by
CSI, CSI was granted an option to purchase 600,000 shares of iExalt
stock at an exercise price of $1.00 per share on or before six months
12
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE F STOCK OPTIONS AND WARRANTS (continued)
after the first day upon which the Company's stock begins full
reporting, full compliance and publicly trading. In addition, CSI was
granted 250,000 warrants to purchase common stock at an exercise price
of $3.00 per share; 250,000 warrants to purchase common stock at an
exercise price of $4.00 per share; 250,000 warrants to purchase common
stock at an exercise price of $5.00 per share; and 250,000 warrants to
purchase common stock at an exercise price of $7.00 per share.
On August 30, 1999, the shareholders approved an Employees Stock
Option Plan ("Plan") reserving 1,000,000 shares of authorized but
unissued common stock to be distributed by the compensation committee
of the board of directors pursuant to the Plan. On November 12, 1999
the compensation committee elected to issue stock options to current
employees and contract consultants of the Company pursuant to the Plan
at a price of $1.80 per share for an aggregate of 561,000 shares of
Company common stock. These options vest equally over a three-year
period beginning September 1, 1999. In addition, the compensation
committee elected to issue stock options to a current director of the
Company pursuant to the Company's Director Stock Option Plan at a
price of $1.80 per share for 50,000 shares of Company common stock.
The former owners of Solutions Global were granted options to purchase
60,000 shares of common stock for $1.80 per share and vesting 20,000
shares per year as of the end of each of the first three years of
their employment by iExalt.
The former owner of Christian Speakers was granted options to purchase
250,000 shares of common stock for $1.80 per share and vesting 50,000
shares per year as of the end of each of the first five years of his
employment by iExalt.
In the acquisition of First Choice, the Company granted options for
the purchase of 150,000 shares to the chief executive officer of First
Choice. In addition, the Company issued warrants to purchase an
aggregate of 810,000 shares of common stock to the holders of First
Choice warrants at an exercise price of $1.00 per share over three
years. Both the options and the warrants can be exercised only if
First Choice meets certain income performance tests over three years.
On January 11, 2000, the board of directors elected to issue stock
options at an exercise price of $1.80 per share to any director or
officer of the Company for a number of shares equal to the number of
dollars loaned to the Company which is either personally guaranteed by
any such officer or director, or is made by such officer or director
on a non-interest bearing basis. At February 29, 2000, borrowings and
guarantees in the amount of $450,000 were outstanding pursuant to this
agreement. Accordingly, options to purchase an aggregate at 450,000
shares of common stock have been granted.
13
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iEXALT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(UNAUDITED)
NOTE F STOCK OPTIONS AND WARRANTS (continued)
As of February 29, 2000, 2,671,000 stock options and 1,810,000
warrants have been granted and none of these have been exercised as of
that date.
NOTE G LEASES
The Company's corporate offices are leased on a month-to-month basis
from a related party. The lease expense on the corporate offices
during the six months ended February 29, 2000 was $18,316. The
Company's other office and warehouse space are leased under long-term
operating leases from third parties. Rental expense attributable to
long-term leases for the six months ended February 29, 2000 was
$36,839.
NOTE H SUBSEQUENT EVENTS
During March 2000, an additional 1,352,334 shares were issued under
the private placement for cash proceeds of $2,434,201. (See Note E).
14
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PART I - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read together with the financial
statements of iExalt, Inc., which are included earlier in this Form 10-QSB. The
following discussion contains certain forward-looking statements regarding
iExalt's expectations for its business and its capital resources. These
expectations are subject to various uncertainties and risks that may cause
actual results to differ significantly from these forward-looking statements.
GENERAL
iExalt-Texas was incorporated on January 7, 1999. On September 1, 1999,
iExalt-Texas consummated a reverse takeover of Sunbelt Exploration, Inc., a
Nevada corporation, which had originally been incorporated on April 23, 1979, as
Louisiana Northern Gas, Inc. and had had no significant operation since 1989. As
a reverse takeover, the surviving legal entity was Sunbelt Exploration, Inc.,
but iExalt-Texas was the acquiror for accounting purposes. Concurrent with the
merger, Sunbelt Exploration, Inc., changed its name to iExalt, Inc. ("iExalt" or
"the Company").
On February 4, 1999, the Company acquired certain intangible assets valued
on the accompanying balance sheet at $750 from a shareholder of the Company in
exchange for shares of iExalt common stock.
On May 31, 1999, the Company acquired all of the assets and assumed
certain liabilities of Hunter Community Interests, LTD. and AgroSource, Inc.
(d/b/a NetXpress), a Houston, Texas based Internet Service Provider ("ISP") from
certain shareholders of the Company. In this purchase, the Company issued
3,000,000 shares of common stock and assumed a non-interest bearing note payable
to a shareholder for $350,000. The purchase price in excess of the net book
value of assets acquired of $314,000 was recognized as a reduction in paid-in
capital because the business purchased was under common control.
On June 21, 1999, the Company acquired certain tangible and intangible
assets of Interactive Communications Concepts of Texas, a Houston, Texas based
ISP company, for a combination of $15,000 in cash and 72,000 shares of the
Company's common stock. The purchase price in excess of the value of the assets
acquired of $6,572 was recorded as goodwill.
On July 1, 1999, the Company acquired certain tangible and intangible
assets and liabilities of NavPress Software, a Texas general partnership that
specializes in developing, manufacturing and marketing various types of software
and electronic books for the Christian community. As consideration for this
purchase, the Company executed a non-interest bearing note payable in the amount
of $150,000 due in one year and issued 900,000 shares of common stock to the
sellers. The president of NavPress Software also signed an employment agreement
with a one-year term. The purchase price in excess of the net value of assets
acquired of $174,623 was recorded as goodwill. NavPress Software is now
conducting business as iExalt Electronic Publishing, an iExalt division.
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On October 1, 1999, the Company acquired WordCross Enterprises, Inc. d/b/a
Christian Happenings ("Wordcross"). As consideration, the Company issued 850,000
shares of common stock and granted 250,000 common stock options exercisable at
$1.80 per share to the former Wordcross shareholders. The options vest in the
amount of 50,000 shares per year on each anniversary date of the acquisition
over the next five years. Both former shareholders of Wordcross have employment
agreements with the Company for a period of five years. The transaction was
accounted for as a purchase and the amount of goodwill recorded was $272,000.
The Company acquired the proprietary assets of netFilter Technologies, a
proxy-filtering software company on October 1, 1999 for $60,000 and 60,000
shares of the Company's common stock.
On November 16, 1999, the Company acquired Solutions Global, Inc.
("Solutions Global"). As consideration, the shareholders of Solutions Global
received 40,000 shares of iExalt common stock and 60,000 common stock options
exercisable at $1.80 per share. The options vest in the amount of 20,000 shares
per year on the anniversary date of the acquisition. Both former shareholders of
Solutions Global have employment agreements with the Company for a period of
three years. The transaction was accounted for as a purchase and goodwill was
recorded in the amount of $72,000.
Effective December 1, 1999, the Company acquired all of the stock of
Premiere Speakers Bureau, Inc. d/b/a ChristianSpeakers.com ("Christian
Speakers"), a Tennessee corporation in the business of scheduling well-known
speakers to speak to groups on Christian issues. The consideration issued to the
sole stockholder of Christian Speakers consisted of: (i) 500,000 shares of
Company common stock, (ii) an aggregate $40,000, of which $10,000 was payable at
closing, and $5,000 is payable monthly for a period of six months beginning
January 2000, and (iii) a stock option to purchase an aggregate 250,000 shares
of Company common stock at an exercise price of $1.80 per share. The stock
option vests in the amount of 50,000 shares per year on each anniversary date of
the agreement over the next five years. The former shareholder has entered into
a five-year employment agreement with the Company. The transaction was accounted
for as a purchase and goodwill in the amount of $490,011 was recorded.
Effective December 31, 1999, the Company acquired all of the stock of
First Choice Marketing, Inc. ("First Choice"), a Texas corporation, in exchange
for 2,302,000 shares of Company common stock, assumption of a $156,000
short-term note payable, and assumption of certain warrant obligations of First
Choice by issuance of warrants to purchase 810,000 common shares of the Company
at an exercise price of $1.00. The warrants can only be exercised if First
Choice meets certain earnings goals over a three-year period. The shareholders
of First Choice are entitled to additional consideration of up to 999,999 shares
of Company common stock over a three-year period provided these earnings goals
and certain employment agreements are satisfied. The President of First Choice
entered into a three-year employment agreement with the Company and was granted
150,000 stock options at an exercise price of $1.80 per share and vesting
ratably over three years and which are also subject to the same earnings goals.
Subsequent to the purchase, the Company negotiated an agreement to issue 190,890
registered shares to the principals of Consulting & Strategy International,
Inc., for their consulting services in effecting the acquisition. The
transaction was accounted for as a purchase and goodwill was recorded in the
amount of $2,926,434. First Choice is now conducting business as
iExaltFamily.com.
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iExalt is continuing to expand its Internet resources to support a safe
and efficient environment for families, businesses and Christian organizations.
iExalt's mission is to use the influence of the Internet as a positive force in
the lives of families, businesses and Christian organizations by providing
filtered Internet access, developing a Christian-based Internet portal and by
creating content-based Web sites that will provide information and resources for
its target markets.
RESULTS OF OPERATIONS
iExalt has material operations in five divisions: the ISP, Electronic
Publishing, Events, Christian Speakers, and iExaltFamily.com. iExalt-Texas, the
accounting acquiror, was incorporated on January 7, 1999, and had no material
operations for the three months and six months ended February 28, 1999.
Therefore, the discussion of results analyzes operations for the three months
and six months ended February 29, 2000, but does not compare results to the
prior year.
Revenues
Overall revenues were $841,788 in the three months ended February 29, 2000
and $1,295,443 in the six months then ended. Comparison to the prior year is not
meaningful; the growth in revenues from one quarter to the next was generated
both from acquisitions and internal growth.
The ISP division had revenues for the three months and six months ended
February 29, 2000, of $26,554 and $35,521 respectively. The Company's ISP became
available nationally in December, 1999.
iExalt Electronic Publishing had revenues of $276,922 and $594,786 for the
three months and six months ended February 29, 2000, representing 33% and 46% of
the Company's revenues respectively.
The Events division, which includes Wordcross from its acquisition on
October 1, 1999, had revenues of $318,385 and $445,209 for the three months and
six months ended February 29, 2000. These revenues constituted 38% and 34% of
Company revenue, respectively. When acquired, Christian Happenings magazine was
distributed in fourteen regions of the country east of the Mississippi and had a
circulation of approximately 250,000. As of the end of March, 2000, the magazine
was distributed in eighteen markets with a circulation of approximately 350,000.
The revenue for the Events division consists almost entirely of advertising and
ticket sales.
Christian Speakers had revenues from the date of its acquisition (December
1, 1999) to February 29, 2000, of $174,476, representing 21% and 13% of Company
revenue for the three months and six months then ended.
iExaltFamily.com was acquired on December 31, 1999, prior to commencement
of operations on a nationwide basis. Sales through February 29, 2000, totaled
$17,061.
Direct Costs
Direct costs were $494,128 in the three months ended February 29, 2000,
and $838,353 in the six months then ended. Gross profit (revenues less direct
costs) was $347,660 and $457,090 for the respective three-month and six-month
periods.
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The ISP division had direct costs of $110,494 and $202,719 for the three
months and six months ended February 29, 2000 constituting 22% and 24% of
Company direct costs respectively. These costs reflect the high start up costs
associated with acquiring management and technical skills required to operate
the equipment and provide services for a nationwide filtered ISP product. Costs
consist primarily of Internet connection costs, communication costs, and direct
labor.
iExalt Electronic Publishing had direct costs of $120,968 and $305,421 for
the three months and six months ended February 29, 2000, constituting 24% and
36% of Company direct costs respectively. These costs are primarily materials,
royalties and direct labor.
The Events division had direct costs of $83,581 and $151,128 for the three
months and six months ended February 29, 2000, constituting 17% and 18% of
Company direct costs respectively. Costs consist primarily of materials,
shipping, and credit card fees.
Christian Speakers had direct costs of $137,212 from the date of
acquisition to February 29, 2000, constituting 28% and 16% of Company direct
costs for the three months and six months then ended.
The direct costs for iExaltFamily.com from the date of acquisition to
February 29, 2000 was $19,426. This reflected costs relating to the start up of
operations.
Selling, General and Administrative
The selling, general and administrative costs for iExalt were $1,052,290
for the three months ended February 29, 2000, and $1,656,658 for the six months
then ended. The increase reflects the costs resulting from the five acquisitions
made during the six month period and the costs necessary to support an
aggressive plan of acquisitions and rapid internal growth.
The ISP division had selling, general and administrative costs of $42,585
and $78,058 for the three months and six months ended February 29, 2000. These
costs are primarily administrative salaries and related expenses.
iExalt Electronic Publishing had selling, general and administrative costs
of $120,468 and $259,143 for the three months and six months ended February 29,
2000. These costs are principally salaries, advertising and travel expenses.
The Events division had selling, general and administrative costs of
$228,422 and $296,626 for the three months and six months ended February 29,
2000. These costs are primarily salaries, communication expenses and outside
contracted services.
Christian Speakers had selling, general and administrative costs of
$57,461 from the date of acquisition to February 29, 2000. These cost are
primarily salaries and advertising expenses.
iExaltFamily.com had selling, general and administrative costs of $137,296
from the date of acquisition to February 29, 2000. These costs principally
consist of salaries, commissions, advertising, and travel expenses.
The selling, general and administrative costs of iExalt's corporate and
other activities totaled $466,058 and $828,074 for the three months and six
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months ended February 29, 2000. These costs consist primarily of salaries and
contract labor, advertising, and professional fees.
LIQUIDITY AND CAPITAL RESOURCES
As of February 29, 2000, iExalt had $678,618 in current assets, $2,007,507
in current liabilities and a retained deficit of $1,589,859. The Company had net
losses of $751,063 for the three months ended February 29, 2000 and $1,253,996
for the six months then ended. Negative cash flow from operations for the six
months ended February 29, 2000 was $1,009,307.
To fund the development of its Internet products and services, iExalt
offered through a Private Placement up to two million shares of common stock at
a price of $1.80 per share. Under this private placement iExalt has issued
450,278 shares of unregistered common stock for cash invested of $810,500 from
nineteen accredited investors as of February 29, 2000. During March an
additional 1,352,334 shares were issued under the private placement for cash
invested of $2,434,201 by forty-one additional accredited investors.
iExalt's post-merger working capital requirements and cash flow provided
by operating activities can vary from quarter to quarter, depending on revenues,
operating expenses, capital expenditures and other factors. iExalt's on-going
business will require substantial working capital. It is expected that iExalt
will need to raise additional capital in order to succeed and to continue in
business. Since inception, iExalt has experienced negative cash flow from
operations and will continue to experience negative cash flow for some time into
the future. As of March 31, 2000, iExalt's monthly cash operating expenditures
exceed its monthly cash receipts by approximately $250,000.
On December 17, 1999, the Company increased its revolving line of credit
with a bank from $50,000 to $150,000. The line of credit is secured by a
personal guarantee of a shareholder of the Company. As of February 29, 2000,
$150,000 in borrowings was outstanding under this line of credit. The line of
credit was fully repaid on March 7, 2000.
In addition, in January and February, 2000, the Company borrowed $300,000
from a shareholder of the Company. This short-term loan was repaid on March 21,
2000.
The Company will be required to obtain additional financing or capital to
attain profitable operations. The Company's internally generated cash flows from
operations have historically been and continue to be insufficient for its cash
needs. As of March 31, 2000 the Company's sources of external and internal
financing were limited. It is not expected that the internal source of liquidity
will improve until significant net cash is provided by operating activities, and
until such time, the Company intends to rely upon external sources for
liquidity.
iExalt has not entered into any arrangements with any financial
institutions or third parties to provide additional financing. If iExalt is
unable to obtain additional financing or raise adequate working capital in the
amounts desired and on acceptable terms, iExalt may be required to significantly
reduce the scope of its presently anticipated activities.
Management believes that net proceeds of future anticipated securities
offerings, and giving effect to revenues, which are projected to be realized
from operations, should be sufficient to fund ongoing operations and its
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business plan. However, there is no assurance that anticipated offerings will be
undertaken, and if undertaken, will be successful or the proceeds derived from
such offerings will, in fact, be sufficient to fund operations and meet the
needs of the Company's business plans. There is no assurance that the current
working capital will be sufficient to cover cash requirements for the balance of
the current fiscal year or to bring the Company to a positive cash flow
position.
PLAN OF OPERATIONS
iExalt is building a comprehensive, integrated product and service line
through internal development and strategic acquisitions. Many services are
already available and others are in various stages of development. The Company's
services can be divided into Business to Consumer ("B2C") and Business to
Business ("B2B) groups.
The B2C group consists of Internet-related products and services designed
to support the needs of families and organizations that share the principles of
the Christian community. Services already available in this group are a
nationwide filtered ISP, a comprehensive Christian portal website, free
web-based e-mail, electronic publication of Christian books and educational
material, Christian events websites and the Christian Happenings magazine, a
Christian speakers bureau, and direct marketing of discounted products and
services for the family. Websites included in this set of services are
iexalt.net, iexalt.com, iexaltmail.com, wordsearchbible.com, ievents.net,
christianhappenings.com, christianspeakers.com, and iexaltfamily.com.
The B2B service is licensing the Company's filtering technology to
businesses, schools, libraries, government agencies, and other organizations.
The Company's filter can run on a licensee's server and be configured to filter
out the types of content specified by the licensee. In addition to the filtering
function, in this capacity our technology provides a variety of user- level
monitoring capabilities. The Company offers this service under the name
netFilter Technologies and is located on the Internet at netfilter.com.
The Company's plan of operations is to aggressively continue the
development and acquisition of related products and services. Increased
resources will also be dedicated to branding and marketing both existing and
future products.
The Company's financial statements are prepared using principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. While the Company
has succeeded in raising significant cash as of March 31, 2000, such cash may
not be sufficient to assure its continuation as a going concern and the Company
may in the future experience significant fluctuations in its results of
operations. Such fluctuations may result in volatility in the price and/or value
of the Company's common stock. Shortfalls in revenues may adversely and
disproportionately affect the Company's results of operations because a high
percentage of the Company's operating expenses are relatively fixed.
Accordingly, the Company believes that period-to-period comparisons of results
of operations should not be relied upon as an indication of future results of
operations. There can be no assurance that the Company will be profitable.
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FORWARDING-LOOKING STATEMENTS
This quarterly report on Form 10-QSB includes "forward-looking statements"
within the meaning of SECTION 27A of the Securities Act of 1933 and SECTION 21E
of the Securities Exchange Act of 1934. These forward-looking statements may
relate to such matters as anticipated financial performance, future revenues or
earnings, business prospects, projected ventures, new products and services,
anticipated market performance and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. To comply with the terms of the safe harbor, we caution readers that
a variety of factors could cause our actual results to differ materially from
the anticipated results or other expressed in our forward-looking statements.
These risks and uncertainties, many of which are beyond our control, include (i)
the sufficiency of our existing capital resources and our ability to raise
additional capital to fund cash requirements for future operations, (ii)
uncertainties involved in the rate of growth and acceptance of the Internet,
(iii) adoption by the Christian community of electronic technology for gathering
information, facilitating e-commerce transactions, and providing new products,
websites, and services, (iv) volatility of the stock market, particularly within
the technology sector, and the ability to use our capital stock as a currency
for acquisitions, and (v) general economic conditions. Although we believe that
the expectations reflected in these forward-looking statements are reasonable,
we cannot give any assurance that such expectations reflected in these
forward-looking statements will prove to have been correct.
We cannot guarantee any future results, levels of activity, performance or
achievements. Except as required by law, we undertake no obligation to update
any of the forward-looking statements in this Form 10-QSB after the date of this
quarterly report.
Part II - Other Information
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities
The following sales of unregistered securities occurred during the six
months ended February 29, 2000, in private transactions in which the Company
relied on the exemption from registration available under SECTION 4(2) of the
Securities Act of 1933, as amended.
The Company offered to accredited investors through a Private Placement up
to two million shares of unregistered common stock at a price of $1.80 per
share. Pursuant to this Private Placement, the Company issued 133,000 shares of
unregistered common stock for cash invested of $239,400 by nine investors
between September 1, 1999 and November 30, 1999. From December 1, 1999, to
February 29, 2000, 287,278 additional shares of unregistered common stock were
issued for additional cash invested of $517,100 from eight investors.
Effective September 1, 1999, the Company entered into an agreement for
consulting services with Consulting & Strategy International, Inc., ("CSI"). As
partial consideration for the consulting services to be offered by CSI under the
agreement, CSI was granted an option to purchase 600,000 shares of the Company's
common stock at $1.00 per share on or before six months after the first day upon
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which the Company's stock begins full reporting, full compliance and public
trading. CSI was granted 250,000 warrants to purchase common stock at $3.00 per
share; 250,000 warrants to purchase common stock at $4.00 per share; 250,000
warrants to purchase common stock at $5.00 per share; and 250,000 warrants to
purchase common stock at $7.00 per share.
On October 1, 1999, the Company acquired WordCross Enterprises, Inc. d/b/a
Christian Happenings ("Wordcross"). As consideration, the Wordcross shareholders
received 850,000 unregistered shares of common stock of iExalt, Inc. and 250,000
common stock options exercisable at $1.80 per share. The options vest in the
amount of 50,000 shares per year on each anniversary date of the acquisition
over the next five years.
On October 1, 1999, the Company acquired the proprietary assets of
netFilter Technologies, a proxy-filtering software company for $60,000 and the
issuance of 60,000 unregistered shares of the Company's common stock paid to the
owners of netFilter.
On November 16, 1999, the Company acquired Solutions Global, Inc.
("Solutions Global"). As consideration, the shareholders of Solutions Global
received 40,000 unregistered shares of common stock of iExalt, Inc. and 60,000
common stock options exercisable at $1.80 per share. The options vest in the
amount of 20,000 shares per year on each anniversary date of the acquisition
over the next three years.
Effective December 1, 1999, the Company acquired all of the stock of
Premiere Speakers Bureau, Inc. d/b/a ChristianSpeakers.com ("Christian
Speakers"), a Tennessee corporation. The consideration issued to the sole
stockholder of Christian Speakers consisted of: (i) 500,000 unregistered shares
of Company common stock, (ii) an aggregate $40,000, of which $10,000 was payable
at closing, and $5,000 is payable monthly for a period of six months beginning
January 2000, and (iii) a stock option to purchase an aggregate 250,000 shares
of Company common stock at an exercise price of $1.80 per share. The stock
option vests in the amount of 50,000 shares per year on each anniversary date of
the agreement over the next five years.
Effective December 31, 1999, the Company acquired all of the stock of
First Choice Marketing, Inc. ("First Choice"), a Texas corporation, in exchange
for 2,302,000 shares of the Company's common stock, assumption of a $156,000
short-term note payable, and issuance of warrants to purchase an aggregate of
810,000 common shares in the Company with an exercise price of $1.00 per share
but which warrants can only be exercised if First Choice meets certain earnings
goals over the next three years. The former shareholders of First Choice are
entitled to additional consideration of up to 999,999 shares of the Company's
common stock over a three-year period provided these earnings goals and certain
employment agreements are satisfied. The president of First Choice entered into
a three-year employment agreement with the Company and was granted 150,000 stock
options vesting over three years but also subject to the same earnings tests.
On January 11, 2000, the board of directors elected to issue stock options
with an exercise price of $1.80 per share in an amount equal to the number of
dollars loaned to the Company by any officer or director of the Company who
makes a non-interest bearing loan to or personal guarantee on behalf of the
Company. As of February 29, 2000 borrowings and guarantees in the amount of
$450,000 were outstanding pursuant to this agreement. Accordingly, 450,000
options have been issued pursuant to this agreement.
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Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT DESCRIPTION OF EXHIBIT
*3.1 Restated Articles of Incorporation of the Company as filed with the
Nevada Secretary of State on September 13, 1999.
*3.2 Amended Bylaws of the Company as adopted on April 24, 1979.
10.1 Exchange Agreement among the Company, iExalt, Inc.-Texas, and the
Shareholders of iExalt, Inc.-Texas dated August 12, 1999 (Exhibit 1.1
to the Company's Current Report on Form 8-K, as filed with the
Commission on September 14, 1999, is incorporated herein by reference.
10.2 Contract for Sale and Purchase of Wordcross Enterprises, Inc. between
the Company and Wordcross Enterprises, Inc. d/b/a Christian Happenings
dated October 1, 1999 (Exhibit 1.1 to the Company's Current Report on
Form 8-K, as filed with the Commission on October 15, 1999, is
incorporated herein by reference.
10.4 Stock Purchase Agreement between the Company and Christian Speakers,
Inc. dated December 1, 1999 (Exhibit 1.1 to the Company's Current Report
on Form 8-K, as filed with the Commission on December 16, 1999, is
incorporated herein by reference).
10.5 Stock Purchase Agreement between the Company and First Choice Marketing,
Inc. dated December 31, 1999 (Exhibit 1.1 to the Company's Current
Report on Form 8-K, as filed with the Commission on January 28, 2000, is
incorporated herein by reference).
10.6 Company's Directors' Stock Option Plan (Exhibit 2.1 to the Company's
Current Report on Form 8-K, as filed with the Commission on September
14, 199, is incorporated herein by reference).
10.7 Company 1998 Stock Option Plan (Exhibit 2.2 to the Company's Current
Report on 8-K, as filed with the Commission on September 14, 1999, is
incorporated herein by reference).
*27.1 Financial Data Schedule
- --------------------
* Filed herewith
(b) Reports on Form 8-K and Form 8-K/A filed during the three months ended
February 29, 2000:
Form 8-K/A dated December 15, 1999 reporting (i) the acquisition by iExalt of
Wordcross Enterprises, Inc. d/b/a Christian Happenings, an Ohio Corporation in
the business of publishing and events advertising, and (ii) the financial
statements and pro forma financial information of the acquired company related
to the acquisition.
Form 8-K dated December 16, 1999 reporting the acquisition by iExalt of Premier
Speakers Bureau, Inc. d/b/a ChristianSpeakers.com, a Tennessee corporation in
the business of scheduling well known speakers to speak to groups on Christian
issues.
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Form 8-K dated January 28, 2000 reporting the acquisition by iExalt of First
Choice Marketing, Inc., a Texas corporation in the business of directly
marketing a variety of goods and services through commission-based
representatives.
Form 8-K/A dated February 14, 2000 reporting (i) the acquisition by iExalt of
Premier Speakers Bureau, Inc. d/b/a ChristianSpeakers.com, a Tennessee
corporation in the business of scheduling well known speakers to speak to groups
on Christian issues, and (ii) the financial statements and pro forma financial
information of the acquired company related to the acquisition.
Form 8-K/A dated March 16, 2000 reporting (i) the acquisition by iExalt of First
Choice Marketing, Inc., a Texas corporation in the business of directly
marketing a variety of goods and services through commission-based
representatives, and (ii) the financial statements and pro forma financial
information of the acquired company related to the acquisition.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
iEXALT, INC.
April 14, 2000 /s/ Kirwin Drouet
----------------------
Kirwin Drouet
Executive Vice President and
Chief Accounting Officer
25
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
SUNBELT EXPLORATION, INC.
Sunbelt Exploration, Inc., pursuant to SECTIONs 78.390 and 78.403 of the
Nevada Revised Statutes, adopts these Restated Articles of Incorporation. The
following Restated Articles of Incorporation were adopted by unanimous consent
of the Board of Directors pursuant to SECTION 78.315 of the Nevada Revised
Statutes and by Consent of Majority Stockholders pursuant to SECTION 78.320 of
the Nevada Revised Statutes.
The following Restated Articles of Incorporation amends the original
Articles of Incorporation in its entirety, as follows:
ARTICLE I
NAME
The name of the corporation shall be "iExalt, Inc." (hereinafter called
the "Corporation").
ARTICLE II
PERIOD OF DURATION
The Corporation shall have perpetual existence.
ARTICLE III
NATURE AND PURPOSE
The nature of the business of the Corporation and the objects or the
purposes to be transacted, promoted, or carried on by it are as follows:
To engage in any lawful activity for which Corporations may be
incorporated under the Nevada General Corporation Law.
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ARTICLE IV
AUTHORIZED SHARES
The total number of shares of stock that the Corporation shall have
authority to issue is 120,000,000 consisting of 100,000,000 shares of common
stock, par value $.001 per share ("Common Stock"), and 20,000,000 shares of
preferred stock, par value $.001 per share ("Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time to
time in one or more series, each of which shall have such distinctive
designation or title as shall be determined by the Board of Directors of the
Corporation ("Board of Directors") prior to the issuance of any shares thereof.
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating , optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution or resolutions providing for the issue of
such class or series of Preferred Stock as may be adopted from time to time by
the Board of Directors prior to the issuance of any shares thereof. The number
of authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the voting power of all the then outstanding shares
of the capital stock of the Corporation entitled to vote generally in the
election of the directors, voting together as a single class, without a separate
vote of the holders of the Preferred Stock, or any series thereof, unless a vote
of any such holders is required pursuant to any Preferred Stock Designation.
Shareholders of the Corporation shall not have cumulative voting rights
nor preemptive rights.
ARTICLE V
LIMITATION ON LIABILITY
The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the Nevada General Corporation
Law, as the same may be amended and supplemented.
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
The Corporation shall, to the fullest extent permitted by Nevada Revised
Statute ss.778.7502 and ss.778.751, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify under said
Law from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said Law, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.
ARTICLE VII
REGISTERED AGENT
The Corporation's registered office in the State of Nevada is One East
First Street, County of Washoe, Reno, Nevada, and the name of the initial
registered agent as such address is The Corporation Trust Company of Nevada.
Either the registered office or the registered agent may be changed as permitted
by law.
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ARTICLE VIII
CONTRACTS AND TRANSACTIONS WITH OFFICERS AND DIRECTORS
To the fullest extent permitted by Nevada Revised Statute ss.778.140, a
contract or other transaction will not be void or voidable solely because: (i)
the contract or transaction is between the Corporation and one or more of its
directors or officers or a corporation, firm, or association in which one or
more of its officers or directors are officers or directors, or have a financial
interest; or because (ii) a common or interested director or officer is present
at the meeting of the board of directors or a committee thereof which authorizes
or approves the contract or transaction, or joins in the execution of a written
consent which authorizes or approves the contract or transaction pursuant to
subsection 2 of the Nevada Revised Statute ss.778.315.
ARTICLE IX
DIRECTORS
The number of directors constituting the board of directors shall not be
more than ten (10) nor less than one (1).
The number of directors of the Corporation may be increased or decreased
in the manner provided in the Bylaws of the Corporation; provided, that the
number of directors shall never be less than one. In the interim between
elections of directors by stockholders entitled to vote, all vacancies caused by
an increase in the number of directors and including vacancies resulting from
the removal of directors by the stockholders entitled to vote which are not
filled by said stockholders, may be filled by the remaining directors, though
less than a quorum.
28
<PAGE>
Signed this 2nd day of September, 1999
SUNBELT EXPLORATION, INC.
//s// Donald Sapaugh
Name: Donald Sapaugh
Title:President
State of Texas
County of Harris
On this 13th day of September, 1999 personally appeared before me, a
Notary Public, Donald Sapaugh who acknowledged that he/she executed the above
document.
//s// Kara A. Kirker
Notary Public, in and for
The State of Texas
(Notary Seal)
SUNBELT EXPLORATION, INC.
//s// Jonathan C. Gilchrist
Name: Jonathan C. Gilchrist
Title:Secretary
State of Texas
County of Harris
On this 2nd day of September, 1999 personally appeared before me, a Notary
Public, Jonathan C. Gilchrist who acknowledged that he/she executed the above
document.
//s// Kara A. Kirker
Notary Public, in and for
The State of Texas
(Notary Seal)
29
EXHIBIT 3.2
AMENDED BYLAWS
OF
SUNBELT EXPLORATION, INC.
(FORMERLY SOUTHWEST ENERGY CORPORATION)
ARTICLE I
PRINCIPAL OFFICE AND CORPORATE SEAL
SECTION 1. The principal office and place of business of the Corporation
in the State of Texas shall be at 601 Fort Worth Club Building, Fort Worth,
Texas 76102. Other offices and places of business may be established from time
to time by resolution of the board of directors or as the business of the
Corporation may require.
SECTION 2. The seal of the Corporation shall have inscribed thereon the
name of the Corporation and shall be in such form as may be approved by the
board of directors, which shall have power to alter the same at pleasure. The
Corporation may use the seal by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
ARTICLE II
SHARES AND TRANSFER THEREOF
SECTION 1. The shares of this Corporation shall be represented by
certificates signed by the president or a vice president and the secretary or an
assistant secretary of the Corporation, and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the president or vice
president and the secretary or an assistant secretary upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself or an employee of
the Corporation. In case any officer who has signed a
30
<PAGE>
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.
SECTION 2. No new certificates evidencing shares shall be issued unless
and until the old certificate or certificates, in lieu of which the new
certificate is issued, shall be surrendered for cancellation, except as provided
in SECTION 3 of this Article II.
SECTION 3. In case of loss or destruction of any certificate of shares,
another certificate may be issued in its place upon satisfactory proof of such
loss or destruction and, at the discretion of the Corporation, upon giving to
the Corporation a satisfactory bond of indemnity issued by a corporate surety in
an amount and for a period satisfactory to the board of directors.
SECTION 4. For the purpose of determining shareholders entitled to notice
of or to vote at any meeting of shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for a stated period, but not to
exceed in any case fifty days. If the stock transfer books shall be closed for
the purpose of determining shareholders entitled to notice of, or to vote at
meeting of shareholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the board of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the board of directors does not order the stock
transfer books closed, or fix in advance a record date, as above provided, then
the record date for the determination of shareholders entitled to notice of, or
to vote at any meeting of shareholders, or any adjournment thereof, or entitled
to receive payment of any dividend, or for the determination of shareholders for
any proper purpose shall be thirty days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
SECTION 1. Only shareholders of record on the books of the Corporation
shall be entitled to be treated by the Corporation as holders in fact of the
shares standing in their respective names, and the Corporation shall not be
bound to recognize any equitable or other claim to, or interest in, any shares
on the part of any other person, firm or corporation, whether or not it shall
have express or other notice thereof, except as expressly provided by the laws
of Nevada.
SECTION 2. Meetings of shareholders shall be held at the principal office
of the Corporation in Colorado.
31
<PAGE>
SECTION 3. In the absence of a resolution of the board of directors
providing otherwise, the annual meeting of the shareholders of the Corporation
for the election of directors, and for the transaction of such other business as
may properly come before the meeting, shall be held on the second Tuesday of
June in each year, if the same be not a legal holiday, and if a legal holiday,
then on the next succeeding business day, at 9:00 o'clock a.m.
SECTION 4. Special meetings of shareholders may be called by the president
(or in his absence by a vice president).
SECTION 5. Written or printed notice stating the place, day and hour of
the shareholders meeting, and in case of a special meeting of shareholders, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten days nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the president, the secretary,
the board of directors, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting, except that if the
authorized shares are to be increased, at least thirty days notice shall be
given. If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the shareholder at his address as it appears
on the stock transfer books of the Corporation, with postage thereon prepaid.
Failure to deliver such notice or obtain a waiver thereof shall not cause the
meeting to be lost, but it shall be adjourned by the shareholders present for a
period not to exceed sixty days until any deficiency in notice or waiver shall
be supplied.
SECTION 6. The officer or agent having charge of the stock transfer books
for shares of this Corporation shall make, at least ten days before each meeting
of the shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each, which list, for a period
of ten days prior to such meeting, shall be kept on file at the principal office
of the Corporation, whether within or outside of Nevada, and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting. The original stock transfer books shall be prima facie evidence as
to who are the shareholders entitled to examine such list or transfer books or
to vote at any meeting of shareholders.
SECTION 7. A quorum at any meeting of shareholders shall consist of a
majority of the shares of the Corporation entitled to vote thereat, represented
in person or by proxy. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote of a
greater number or voting by classes is required by law, the articles of
incorporation or these bylaws.
SECTION 8. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney in fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
32
<PAGE>
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
SECTION 1. The business and affairs of the Corporation shall be managed by
a board of not less than three nor more than nine directors who need not be
shareholders of the Corporation or residents of the State of Nevada and who
shall be elected at the annual meeting of shareholders or some adjournment
thereof. Directors shall hold office until the next succeeding annual meeting of
shareholders or until their successors shall have been elected and shall
qualify.
SECTION 2. The annual meeting of the board of directors shall be held at
the same place as, and immediately after, the annual meeting of shareholders,
and no notice shall be required in connection therewith. The annual meeting of
the board of directors shall be for the purpose of electing officers and the
transaction of such other business as may come before the meeting.
SECTION 3. Special meetings of the board of directors may be called at any
time by the president (or in his absence by a vice president), or by any
director, and may be held within or outside the State of Nevada at such time and
place as the notice or waiver thereof may specify. Notice of such meetings shall
be mailed or telegraphed to the last known address of each director at least
five days, or shall be given to a director in person or by telephone at least
forty-eight hours, prior to the date or time fixed for the meeting. Special
meetings of the board of directors may be held at any time that all directors
are present in person, and presence of any director at a meeting shall
constitute a waiver of notice of such meeting except as otherwise provided by
law. Unless specifically required by law, the articles of incorporation or these
bylaws, neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
SECTION 4. A quorum at all meetings of the board of directors shall
consist of a majority of the number of directors then holding office, but a
smaller number may adjourn from time to time without further notice, until a
quorum be secured. The act of the majority of the directors present at a meeting
at which a quorum is present shall be the act of the board of directors, unless
the act of a greater number is required by the articles of incorporation or
these bylaws.
SECTION 5. Any vacancy occurring in the board of directors may be filled
by the affirmative vote of a majority of the remaining directors though less
than a quorum of the board of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office, and shall
hold such office until his successor is duly elected and shall qualify. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by the affirmative vote of a majority of the directors then in
office or by an election at an annual meeting, or at a special meeting of
shareholders called for that purpose. A director chosen to fill a position
resulting
33
<PAGE>
from an increase in the number of directors shall hold office until the next
annual meeting of shareholders and until his successor shall have been elected
and shall qualify.
SECTION 6. Directors may receive such fees as may be established by
appropriate resolution of the board of directors for attendance at meetings of
the board, and in addition thereto, shall receive reasonable traveling expense,
if any is required, for attendance at such meetings.
SECTION 7. The board of directors may by resolution designate two or more
directors to constitute an executive committee which shall have and may exercise
such authority in the management of the corporation as shall be provided in such
resolution.
SECTION 8. The shareholders may, at a meeting called for the express
purpose of removing directors, by a majority vote of the shares entitled to vote
in an election of directors, remove the entire board of directors or any lesser
number, with or without cause.
ARTICLE V
OFFICERS
SECTION 1. The elective officers of the Corporation shall consist of at
least a president, a secretary and a treasurer each of whom shall be at least
eighteen years or older and whom shall be elected by the board of directors at
its first meeting after the annual meeting of shareholders. Unless removed in
accordance with the procedures established by law and these bylaws, the said
officers shall serve until the next succeeding annual meeting of the board of
directors and until their respective successors are elected and shall qualify.
Any two offices, but not more than two, may be held by the same person at the
same time, except that one person may not simultaneously hold the offices of
president and secretary.
SECTION 2. The board may elect or appoint such other officers and agents
as it may deem advisable, who shall hold office during the pleasure of the
board, and shall be paid such compensation as may be directed by the board.
SECTION 3. The officers of the Corporation shall exercise and perform the
respective powers, duties and functions as are stated below, and as may be
assigned to them by the board of directors.
(a) The president shall be the chief executive officer of the
Corporation and shall, subject to the control of the board of
directors, have general supervision, direction and control of
the business and officers of the Corporation. He shall preside
at all meetings of the shareholders and of the board of
directors. The president or a vice president, unless some other
person is specifically authorized by the board of directors,
shall sign all stock certificates, bonds, deeds, mortgages,
34
<PAGE>
leases and contracts of the Corporation. The president shall
perform all the duties commonly incident to his office and such
other duties as the board of directors shall designate.
(b) In the absence or disability of the president, the vice
president or vice presidents, if any, in order of their rank as
fixed by the board of directors, and if not ranked, the vice
presidents in the order designated by the board of directors,
shall perform all the duties of the president, and when so
acting shall have all the powers of, and be subject to all the
restrictions on the president. Each vice president shall have
such other powers and perform such other duties as may from
time to time be assigned to him by the president.
(c) The secretary shall keep accurate minutes of all meetings of
the shareholders and the board of directors. He shall keep, or
cause to be kept a record of the shareholders of the
Corporation and shall be responsible for the giving of notice
of meetings of the shareholder of the board of directors. The
secretary shall be custodian of the records and of the seal of
the Corporation and shall attest the affixing of the seal of
the Corporation when so authorized. The secretary shall perform
all duties commonly incident to his office and such other
duties as may from time to time be assigned to him by the
president.
(d) An assistant secretary may, at the request of the secretary, or
in the absence or disability of the secretary, perform all the
duties of the secretary. He shall perform such other duties as
may from time to time be assigned to him by the president or by
the secretary.
(e) The treasurer, subject to the order of the board of directors,
shall have the care and custody of the money, funds, valuable
papers and documents of the Corporation. He shall keep accurate
books of accounts of the Corporation's transactions, which
shall be the property of the Corporation, and shall render
financial reports and statements of condition of the
Corporation when so requested by the board of directors or
president. The treasurer shall perform all duties commonly
incident to his office and such other duties as may from time
to time be assigned to him by the president. In the absence or
disability of the president and vice president or vice
presidents, the treasurer shall perform the duties of the
president.
(f) An assistant treasurer may, at the request of the treasurer, or
in the absence or disability of the treasurer, perform all the
duties of the treasurer. He shall perform such other duties as
may from time to time be assigned to him by the president or by
the treasurer.
SECTION 4. All officers of the Corporation may receive salaries or
other compensation if so ordered and fixed by the board of directors. The
board shall have authority to fix salaries in advance for stated periods
or render the same retroactive as the board may deem advisable.
35
<PAGE>
SECTION 5. In the event of absence or inability of any officer to
act, the board of directors may delegate the powers or duties of such
officer to any other officer, director or person whom it may select.
SECTION 6. Any officer or agent may be removed by the board of
directors or by the executive committee, if any, whenever in its judgment
the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall
not, of itself, create contract rights.
ARTICLE VI
FINANCE
SECTION 1. The board of directors, in its uncontrolled discretion,
may set aside from time to time, out of the net profits or earned surplus
of the Corporation, such sum or sums as it deems expedient as a reserve
fund to meet contingencies, for equalizing dividends, for maintaining any
property of the Corporation, and for any other purpose.
SECTION 2. The moneys of the Corporation shall be deposited in the
name of the Corporation in such bank or banks or trust company or trust
companies, as the board of directors shall designate, and may be drawn out
only on checks signed in the name of the Corporation by such person or
persons as the board of directors by appropriate resolution may direct.
Notes and commercial paper, when authorized by the board, shall be signed
in the name of the Corporation by such officer or officers or agent or
agents as shall thereunto be authorized from time to time.
SECTION 3. The fiscal year of the Corporation shall be determined by
resolution of the board of directors.
ARTICLE VII
WAIVER OF NOTICE
With any notices required by law or under these bylaws to be given
to any shareholder or director of the Corporation, a waiver thereof in
writing signed by the person entitled to such notice, whether before, at,
or after the time stated therein shall be the equivalent to the giving of
such notice.
36
<PAGE>
ARTICLE VIII
ACTION WITHOUT A MEETING
Any action required to be taken at a meeting of the directors,
executive committee members or shareholders of this Corporation, or any
action which may be taken at a meeting of directors, executive committee
members, or shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken is signed by all directors or
executive committee members, or the minimum number of shareholders as is
required by the laws of the State of Nevada, depending on the subject
matter thereof. Notice of such action shall be provided according to
statute.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interest of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
SECTION 2. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent
37
<PAGE>
of the corporation, or is or was serving at the request of the Corporation
as director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interest of the Corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his duty to the Corporation unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such
court shall deem proper.
SECTION 3. To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in SECTIONs 1 and 2
of this Article IX, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorney's fees)
actually and reasonably incurred by him therewith.
SECTION 4. Any indemnification under SECTIONs 1 and 2 of this
Article IX (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the officer, director and employee or agent is proper
in the circumstances because he has met the applicable standard of conduct
set forth in SECTION 1 and 2 of this Article IX. Such determination shall
be made (a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (b) if such quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the affirmative
vote of the holders of the majority of the shares of stock entitled to
vote and represented at a meeting called for such purpose.
SECTION 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceedings authorized by
the board of directors as provided in SECTION 4 in this Article IX upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article IX.
SECTION 6. The board of directors may exercise the Corporation's
power to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability hereunder or otherwise.
38
<PAGE>
SECTION 7. The indemnification provided by this Article IX shall not
be deemed exclusive of any other rights or limitations to which those
seeking indemnification may be entitled or limited under the Articles of
Incorporation, these Bylaws, agreement, vote of shareholders or
disinterested directors, the Nevada Corporation Code, or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs and personal representatives of such a person.
ARTICLE X
AMENDMENTS
These bylaws may be altered, amended or repealed at the annual
meeting of the board of directors or at any special meeting of the board
called for that purpose.
ARTICLE XI
GENDER
Whenever in these Bylaws the masculine gender is used, it shall be
deemed to include the female gender.
The above bylaws approved and adopted by the Board of Directors on
April 24, 1979.
__________//s//___________
As secretary of Sunbelt Exploration, Inc. (the "Company"), I do hereby
certify that the document attached hereto is a true and complete copy of
the Company's Bylaws as amended on April 24, 1979.
By: //s// H Grady Payne, III
H. Grady Payne III
39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM iEXALT, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 294,297
<SECURITIES> 0
<RECEIVABLES> 166,548
<ALLOWANCES> 0
<INVENTORY> 73,393
<CURRENT-ASSETS> 678,618
<PP&E> 517,911
<DEPRECIATION> (32,605)
<TOTAL-ASSETS> 5,169,606
<CURRENT-LIABILITIES> 2,007,507
<BONDS> 0
0
0
<COMMON> 25,280
<OTHER-SE> 3,136,819
<TOTAL-LIABILITY-AND-EQUITY> 5,169,606
<SALES> 1,295,443
<TOTAL-REVENUES> 1,295,443
<CGS> 838,353
<TOTAL-COSTS> 2,550,327
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,364
<INCOME-PRETAX> (1,253,996)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,253,996)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
