SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended September 30, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to . ------------ --------------
Commission file number: I-9418
CYBERAMERICA CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Salt Lake City, Utah 84101
(Address of principal executive office) (Zip Code)
(801) 575-8073
(Issuer's telephone number)
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 for 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
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of November 15, 1996 was
8,711,039.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS................................................. 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS................................. 5
PART II
ITEM 1. LEGAL PROCEEDINGS.................................................... 9
ITEM 5. OTHER INFORMATION ...................................................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ..................................10
SIGNATURES.......................................................... 11
INDEX TO EXHIBITS ...................................................12
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<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets................................................. F-1
Consolidated Statements of Operations....................................... F-3
Consolidated Statements of Stockholders' Equity .............................F-4
Consolidated Statements of Cash Flows....................................... F-5
Condensed Notes to Consolidated Financial Statements ........................F-6
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 (Unaudited) and December 31, 1995
ASSETS
- ------ September 30 December 31
1996 1995
------------ -----------
CURRENT ASSETS
<S> <C> <C>
Cash ........................................... $ 249,051 $ 18,605
Receivable - brokerage account ................. -- 3,337
Accounts receivable - trade .................... 1,141,710 248,129
Accounts receivable - related parties .......... 380,536 200,017
Accounts receivable - other .................... 148,903 --
Note receivable - current portion .............. 246,499 12,000
Inventories .................................... -- 36,371
Prepaid expenses ............................... 151,996 36,677
----------- -----------
TOTAL CURRENT ASSETS ............................. 2,318,695 555,136
----------- -----------
PROPERTY AND EQUIPMENT ........................... 6,342,480 4,860,260
----------- -----------
OTHER ASSETS
Investment - securities ....................... 1,343,227 968,396
Mortgages receivable .......................... 353,000 353,000
Notes receivable - net of current portion ..... 677,927 653,027
Investments - other ........................... 221,341 244,321
Deposits ...................................... 61,462 16,345
Media and other credits ....................... 279,315 223,885
-----------
TOTAL OTHER ASSETS ............................... 2,936,272 2,458,974
----------- -----------
$11,597,447 $ 7,874,370
=========== ===========
</TABLE>
See notes to consolidated unaudited financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
September 30, 1996 (Unaudited) and December 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 December 31
1996 1995
CURRENT LIABILITIES
<S> <C> <C>
Notes payable ............................... $ 300,000 $ 57,493
Current maturities of long-term debt ........ 363,703 149,059
Accounts payable ............................ 290,321 328,751
Accounts payable - related parties .......... 114,915 17,413
Accrued liabilities ......................... 640,719 160,000
Accrued Interest ............................ 18,538 19,330
Accrued Real estate taxes ................... 343,726 317,751
Accrued Payroll and related taxes payable ... 69,285 143,200
Deferred income and deposits ................ 66,754 25,979
Deposit - real estate sales ................. 171,900 171,900
------------ ------------
TOTAL CURRENT LIABILITIES ...................... 2,379,861 1,390,876
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, less current portion ........ 3,283,474 2,764,757
------------
MINORITY INTEREST .............................. 701,694 347,923
------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock par value $.001; 20,000,000
shares authorized; No shares issued
Common stock par value $.001; 200,000,000
shares authorized; 8,576,169 and 5,886,799
shares issued ............................. 8,576 5,887
Additional paid-in capital .................. 14,789,951 11,428,674
Stock subscriptions receivable .............. (871,582) --
Accumulated deficit ......................... (8,694,527) (8,063,747)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ..................... 5,232,418 3,370,814
------------
$ 11,597,447 $ 7,874,370
============ ============
</TABLE>
See notes to consolidated unaudited financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
--------------------------------- ----------------------------
1996 1995 1996 1995
--------------------------------- ----------------------------
REVENUE
<S> <C> <C> <C> <C>
Consulting ........................................ $ 501,855 $ 680,524 $ 2,059,295 $ 1,362,245
Rentals ........................................... 116,301 87,651 339,390 185,915
Other ............................................. -- 1,080 63,234 11,161
----------- ----------- ----------- -----------
TOTAL REVENUE ........................................ 618,156 769,255 2,461,919 1,559,321
----------- ----------- ----------- -----------
COST OF REVENUE
Consulting ........................................ 481,330 208,012 1,242,798 686,275
Rental ............................................ 118,513 115,044 304,632 269,525
Other ............................................. -- 927 44,168 5,964
----------- ---------- ----------- -----------
TOTAL COST OF REVENUE ................................ 599,843 323,983 1,591,598 961,764
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS) .................................. 18,313 445,272 870,321 597,557
----------- ----------- ---------- -----------
SELLING GENERAL AND
ADMINISTRATIVE EXPENSES .............................. 656,555 100,817 1,365,819 606,842
Environmental Cleanup ............................. -- 70,661 20,000 70,661
----------- ----------- ---------- ----------
TOTAL SELLING GENERAL
AND ADMINISTRATIVE ................................... 656,555 171,478 1,385,819 677,503
----------- ----------- ----------- ----------
OPERATING PROFIT (LOSS) .............................. (638,242) 273,794 (515,498) (79,946)
OTHER INCOME AND (EXPENSE):
----------- ----------- ----------- -----------
Interest income ................................... 2,341 -- 13,361 28,838
Interest expense .................................. (64,273) (120,015) (235,735) (195,216)
Gain (loss) from disposal of subsidiary ........... -- 70,544 -- 70,544
Gain (loss) from sale of assets ................... -- -- -- 71,660
Gain (loss) from investments ...................... (144,343) (93,361) (71,277) 49,201
Loss on foreclosure - related party ............... -- -- -- (519,342)
Other income (expense) ............................ (9,747) 27,743 57,089
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) ......................... (216,022) (157,233) (265,908) (437,226)
----------- ----------- ----------- ----------
INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS .............................. (854,264) 116,561 (781,406) (517,172)
GAIN (LOSS) FROM
DISCONTINUED OPERATIONS .............................. -- (4,614) -- 23,911
MINORITY INTEREST IN LOSS ............................ 100,263 -- 150,626 --
----------- ----------- ----------- ------------
NET INCOME (LOSS) .................................... $ (754,001) $ 111,947 $ (630,780) $ (493,261)
=========== =========== =========== ===========
INCOME (LOSS) PER SHARE:
Income (loss) before discontinued operations ...... $ (0.10) $ 0.03 $ (0.10) $ (0.15)
Gain (loss) from discontinued operations .......... -- -- .01
Minority interest in loss ......................... .01 -- .01 --
----------- ----------- ----------- -----------
Net income (loss) .................................... $ (0.09) $ 0.03 $ (0.09) $ (0.14)
=========== =========== =========== ===========
Weighted average number of common
shares outstanding ................................ 8,500,855 4,256,651 7,066,586 3,466,252
=========== =========== =========== ==========
See notes to consolidated unaudited financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
SHAREHOLDERS' EQUITY
For The Nine Months Ended September 30, 1996 (Unaudited)
Stock Total
Common Stock Paid Subscriptions Shareholders'
Shares Amount Capital Receivable Deficit Equity
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995 ................ 5,886,799 $ 5,887 $11,428,674 $ -- $ (8,063,747) $ 3,370,814
Common Stock Activity:
Issued for services ...................... 904,753 905 497,102 -- -- 498,007
Issued for assets ........................ 225,000 225 308,775 -- -- 309,000
Issued for cash .......................... 1,559,617 1,559 2,555,400 -- -- 2,556,959
Stock subscription receivable ............ -- -- -- (871,582) -- (871,582)
Net Profit (loss) for period ................. -- -- -- -- (630,780) ( 630,780)
----------- -----------
BALANCES AT SEPTEMBER 30, 1996 ............... 8,576,169 $ 8,576 $14,789,951 $ (871,582) $(8,694,527) $ 5,232,418
=========== =========== =========== =========== =========== ===========
See notes to consolidated unaudited financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
Unaudited
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) ............................... $ (630,780) $ (493,261)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and Amortization ................ 165,303 141,231
Stock issued for assets and debt ............. 309,000 122,186
Loss (gain) from foreclosure - related party . -- 519,342
Loss (gain) from investments ................. 71,277 (49,201)
Stock issued for services and expenses ....... 498,007 105,157
Minority interest in loss .................... 150,626 --
Loss (gain) from sale of assets .............. -- (71,660)
(Increase) decrease in:
Accounts receivable - trade .................. (893,581) 5,334
Receivable - related parties ................. (180,519) 8,746
Other current assets ......................... (459,013) 40,361
Increase (decrease) in:
Accounts payable ............................. (38,430) (11,870)
Payables - related parties ................... 97,502 35,236
Accrued liabilities .......................... 431,287 492, 029
Current portion of long-term debt ............ 214, 644 (28,802)
Deferred income .............................. 40,775 (129,426)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES ...................................... $( 223,902) $ 685,402
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of property sold ........................ 1,100,000 215,965
Minority interest in Subsidiaries sold ....... (825,000) --
Minority interest in Subsidiaries ............ 1,178,771 --
Purchase of assets ........................... (3,511,795) (1,339,738)
Debt on Subsidiaries sold .................... (275,000) --
---------- -----------
NET CASH FLOWS (USED) IN INVESTING ACTIVITIES .... $(2,333,024) $( 1,183,773)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash ......................... 2,556,959 397,941
Stock subscription receivable ................. (871,582) --
Proceeds from borrowing ....................... 1,300,008 --
Payment on debt ............................... (197,473) (148,313)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........ $ 2,787,912 $ 546,254
----------- -----------
INCREASE (DECREASE) IN CASH ...................... 230,986 47,883
CASH AT BEGINNING OF PERIOD ...................... 18,065 29,009
----------- -----------
CASH AT END OF PERIOD ............................ $ 249,051 $ 76,892
=========== ===========
</TABLE>
See notes to consolidated unaudited financial statements.
F-5
<PAGE>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 1996
NOTE 1: Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have
been prepared by management in accordance with the instructions for Form 10-QSB
and therefore, do not include all information and footnotes required by
generally accepted accounting principles and should therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
fiscal year ended December 31, 1995.
In management's opinion, the accompanying consolidated unaudited condensed
financial statements contain all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of the results for the
interim periods presented. The interim operation results are not necessarily
indicative of the results for the fiscal year ending December 31, 1996.
Certain prior year amounts have been reclassified to conform to the 1996
classification.
NOTE 2: Revenue Recognition
Revenue from the sales of Internet mall sites is generally tied to certain
contingencies relating to product development and sales of the clients'
securities. As such, recognition of any revenue is postponed until those
contingencies are met. The contracts for the Internet mall sites also provide
for the client's payment of costs associated with the development and service of
the mall site. Revenue from these sources is generally recognized as the related
costs are incurred.
NOTE 3: Stock Option Plans and Agreement
On January 18, 1996 the Company established a new stock option plan for its
employees and consultants ("The 1996 Stock Option Plan of The Canton Industrial
Corporation"). Each option issued under the plan has a term of one year and an
exercise price of ninety percent (90%) of the bid price on the day of exercise.,
unless otherwise established by the Board of Directors. Under the plan, up to
one million (1,000,000) shares can be issued.
At September 30, 1996, the Company granted options under the plan for
636,909 shares, of which 578,259 shares were exercised.
As of September 30, 1996 no options had been exercised pursuant to the Stock
Option Agreements with AZ Professional Consultants ("AZ") and Investment
Sanctuary Corporation ("ISC") which were entered into on December 22, 1995.
Under the agreements, the Company granted options giving AZ and ISC the right to
purchase a quantity of shares of the Company's common stock equivalent to
twenty-six percent (26%) and twenty-five percent (25%), respectively, of the
issued and outstanding shares of the Company's common stock on the exercise
date, with an established price of $0.59 per share.
NOTE 4: Contingencies
In March 1995, Xeta Corporation filed suit against the Company seeking
recovery of $116,500 which Xeta contends was fraudulently transferred to the
Company by ATC, a client of the Company's subsidiary Canton Financial Services
Corporation, in order to avoid payment of a judgment held by Xeta against ATC.
On April 16, 1996 the Court granted Summary Judgment against the Company. An
objection to the entry of such a judgment has been filed and the Company
continues to dispute the allegations. All actions needed for the perfection of
an appeal are being taken and the Company intends to carry out the appeal
process.
<PAGE>
CYBERAMERICA CORPORATION FORMERLY KNOWN AS
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 1996
NOTE 4: Contingencies (continued)
KMC Foods, Inc. ("KMC"), a subsidiary of the Company, received a claim from
the Division of Revenue of the Department of Finance for the State of Delaware
in excess of $300,000. The claim is for alleged taxes due based upon the gross
revenues of KMC for the tax period April 1, 1989, through March 31, 1992. This
tax period is prior to the purchase of KMC by the Company. Prior management has
assured the Company that the tax does not apply as all sales of products were
outside the State of Delaware, and thus the Delaware tax is not due. The Company
has retained an attorney in Delaware to resolve the liability issue.
In April 1996, the State of Illinois informed the Company of its intent to
seek recovery of its estimated cost of $325,000 incurred in the removal of tires
at the Company's Canton, Illinois warehouse site. The Company believes the
ultimate intent of the Interim Order, the complete removal of the tires, has
been met because the tires had been completely removed or reduced to the IEPA's
control but not within the Court's exact specifications. The State has filed a
complaint with the Illinois Pollution Control Board seeking recovery of these
funds. The Company and the State are currently attempting to resolve a dispute
about the number of tires actually removed from the site.
Two of the Company's majority owned subsidiaries, CyberConnect, Inc., a
Nevada corporation ("CC"), and CyberDimensions, Inc., a Nevada corporation
("CD"), conducted offerings of their common stock during the third quarter of
1996. The Company has become aware that problems may exist with the manner of
these offerings which may require the rescission of the entire offerings. CC and
CD have begun to rescind these offerings and hope to have the rescissions
completed within 90 days. If a determination is made that the offerings were
conducted outside the parameters of the appropriate offering exemptions, CC and
CD could face potential liability. The Company believes CC and CD have
sufficient reserves to cover such expenses. However, if CC and CD cannot cover
the expenses the Company could be obliged to cover such shortfalls.
The Company believes that the ultimate outcome of all pending litigation
matters should not have a material adverse effect on the financial position of
the Company; however it is possible that the results of operations or cash flows
of the Company in any particular quarterly or annual periods or the financial
condition of the Company could be materially affected by the ultimate outcome of
certain pending litigation matters. Management is unable to derive a meaningful
estimate of the amount or range of any possible loss in any particular quarterly
or annual period or in the aggregate.
NOTE 5: Stockholders' Equity
During the nine months ended September 30, 1996, the Company issued 904,753
shares of its common stock in exchange for services provided to the Company by
employees and consultants; 225,000 shares were exchanged for assets; 259,616
shares of its restricted common stock were issued for cash; and 1,300,001 were
issued under Regulation S for cash and pursuant to promissory notes. At
September 30, 1996, the Company is owed $871,582 under the promissory notes by
the various entities for the 1,300,001 shares of the Company's common stock that
they purchased.
On May 15, 1996, the Company paid a property dividend in the form of common
stock of Oasis Hotel, Resort & Casino I, Inc. ("OHRCI") and Oasis Hotel, Resort
& Casino II, Inc. ("OHRCII"). The dividend declared March 4, 1996 was one share
in each OHRCI and OHRCII for every 100 shares of the common stock of the Company
owned by each shareholder of record on March 27, 1996.
On June 1, 1996, the Company paid a property dividend in the form of common
stock of Zahav, Inc. ("Zahav") and Cyber Information, Inc. ("CI"). The dividend
declared March 21, 1996 was one share in each Zahav and CI for every 100 shares
of common stock of the Company owned by each shareholder of record on April 23,
1996. The Company has requested its shareholders who received the CI dividend to
return their stock so a restrictive legend can be affixed. If such shareholders
are not interested in receiving restricted CI stock, the Company has given the
right to instead receive the cash equivalent, $0.02 per CI share.
<PAGE>
CYBERAMERICA CORPORATION FORMERLY KNOWN AS
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 1996
NOTE 5: Stockholders' Equity (continued)
On June 14, 1996, the Company declared a property dividend in the form of
common stock of INFOTECH International, Inc. The dividend declared was one share
in INFOTECH for every 100 shares of common stock of the Company owned by each
shareholder of record on June 24, 1996. On October 25, 1996, the board of
directors restated the dividend's terms to be payable only in $0.02 per 100
shares of Common Stock held June 24, 1996. The Company has not yet declared the
payable date for this distribution.
NOTE 6: Sale of Cyber Real Estate
On July 2, 1996, Canton Financial Services Corporation, a wholly-owned
subsidiary of the Company ("CFSC"), sold 90% of the outstanding stock of Cyber
Real Estate, Inc., a Nevada corporation ("CRE"), pursuant to an agreement with
Premier Sales Corporation, Ltd., a foreign corporation ("Premier"). CRE's sole
asset is a dormitory located in DeKalb, Illinois. Premier executed a promissory
note for $1,000,000 in exchange for the stock. The note requires no payments
until maturity on July 2, 1998 and bears no interest. The Company has recognized
no income from this sale.
NOTE 7: Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other material
change in the information disclosed in the notes to the financial statements
included in the Company Annual Report on Form 10-KSB for the year ended December
31, 1995. Therefore those footnotes are included herein be reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As used herein, the term "Company" refers to CyberAmerica Corporation, a
Nevada corporation, its subsidiaries and predecessors, unless otherwise
indicated.
The Company provides a variety of Internet-related products and services,
financial consulting services, and invests in real estate. The Company employs
professionals with expertise in law, accounting, finance, the Internet, public
and investor relations, and real estate. Typically, the Company provides
services and support functions that include: advice relating to regulatory
compliance; document preparation; capital formation; financial analysis;
promotional campaigns; debt settlement; and general corporate problem solving.
The Company recorded a net loss of $630,780 for the nine months ended
September 30, 1996 and a net loss of $754,001 for the three months ended
September 30, 1996.
Subsequent to the quarter ended September 30, 1996, the Company effected a
substantial downsizing of personnel. On November 15, 1996, the Company concluded
downsizing its staff from 70 employees to 36 and thereby reduced payroll by
approximately 48%. In addition to paring down its personnel, the Company has
also restructured its operations to be more efficient and revenue producing. Its
current workforce will continue rendering consulting and Internet services,
although in slightly varied forms. CyberAmerica hopes this downsizing will allow
it to improve the quality of its services as well as its profitability.
INTERNET SERVICES
CyberMalls, Inc. is a wholly owned subsidiary of the Company that began
focusing on providing Internet services in the first part of 1996. Through
CyberMalls, the Company is involved in the preparation, development and sales of
Internet virtual malls within which organizations can advertise their products
and services on individual Internet locations or malls. An Internet virtual mall
is similar to a real-world shopping mall because they are both collections of
retail and informational shops, but virtual malls are accessible via a computer.
Each shop within a virtual mall has its own home page and catalog of sales and
promotional information on its goods and services. Companies involved in the
same business or industry often group their home pages together for synergistic
results.
The Company is attempting to assert its niche and gain market position
within this rapidly growing industry through its development of a revolutionary
new search engine called "Web SafariTM"surrounding a collective association of
retailers. This type of engine, as opposed to others currently on the market,
will allow people to enter a single query and have the engine search from shop
to shop and mall to mall to locate the specific item sought, and make all
purchases together. WebSafari(TM) was initially planned to be developed in three
phases. As of September 1996, WebSafari(TM) successfully completed phase one.
Development of phases two and three began in November 1996. However, both phases
are currently pending due to the Company's immediate focus on retaining
additional clientele and increasing revenues. The Company believes that the
current success of phase one has created an urgency to acquire additional
clientele. Upon completion, the Company hopes phases two and three will create a
significant advantage for the Company's clients because of the technological
sophistication associated with these phases. However, no assurances can be given
that the technological strategies will be implemented at all or as planned, or
if they are implemented, that they will perform as predicted, or that if it
performs as predicted that it will become successful or profitable.
To enhance its working capital, the Company is considering the possible
sale of a substantial interest in CyberMalls. For instance, on November 5, 1996,
the Company signed a non-binding Letter of Intent with Packaging Plus Services,
Inc., a New York corporation ("Packaging") by which the Company is required to
give Packaging first right of refusal to purchase a minimum of 51% stock
interest in CyberMalls at a purchase price in cash or stock in an amount to be
mutually determined. This right of refusal will expire December 5, 1996. The
Company will seriously consider this sale only if the purchase price meets the
Company's expectation of the value of a majority interest in CyberMalls. This
value is currently being determined.
<PAGE>
Internet Product and Service Development
The Company is currently developing a number of products and services for
the use on the Internet, including "virtual malls." These malls will allow
individual businesses to congregate and sell their products and services. These
businesses pay "rent" for space to advertise and sell their products on the
Internet and pay for the initiation and maintenance of their information. The
Company provides both the space for this information and the technical support,
maintenance and service for these individual businesses, thus generating
revenues upon the initial sale of the malls as well as related support
functions. Additionally, the Company is contemplating selling licensing
agreements for the Company's proprietary software, WebSafariTM and other related
support services.
As of November 14, 1996, there were 6 employees working in the Company's
Internet division. This number of Internet personnel represents a decrease from
August 12, 1996 of approximately 25 persons. The Company believes that the
current staff can meet anticipated demand due to a decrease in programming needs
since WebSafari(TM) has completed phase one and mall sites require less
programming and maintenance expenditures. Currently, the Company does not
anticipate hiring additional personnel. No assurances can be given that its
current staff can meet anticipated demand or that the Company will not need to
hire additional employees. In the event the Company is unsuccessful in keeping
its current Internet personnel, it may experience problems in meeting clients'
deadlines which could result in reduced revenues.
The Company's objective in downsizing its Internet division is to make
CyberMalls self-sufficient by reducing its administrative expenses and
increasing revenues by expanding its support services and marketing its
products. Toward that end, further development of WebSafari(TM) phases two and
three is pending until CyberMalls generates sufficient revenues to cover its
development expenses. The Company's current Internet staff will focus on
marketing its services and products and supporting other consulting services.
The Company has expended approximately $500,000 toward the research and
development of the Company's Internet products and services, as of September 30,
1996. Expenses for the research, development and sales of the Company's Internet
products and services are not expected to increase in the immediate future.
Estimations of such expenses are very difficult to make because the amount
incurred will relate directly to the amount of business generated by the
Company's Internet division, which the Company cannot guarantee. The Company's
best estimate is that the Internet expenses should approximately double before
the end of the fiscal year 1996.
Trends, Events or Uncertainties in the Internet Industry & the Regulation
of the Internet
The commercial use of the Internet is still very new. Technology relating to
the Internet is developing extremely rapidly and its structure is very complex.
Although not currently subject to governmental regulations, the possibility
exists that governmental intervention will occur and regulate the content,
quantity, type of access providers, and other aspects of the Internet. This
underlying uncertainty renders an analysis of future trends unreliable and
requires strong warnings to investors that no assurances can be given that the
Company's Internet goals will be achieved or if they are, that they will benefit
the Company in any manner.
CONSULTING SERVICES
The types of consulting services the Company performs for its clients
include: document preparation; capital formation; financial analysis; debt
settlement; and general corporate problem solving. The Company has also begun
assisting private organizations in need of capital by preparing stock offering
documentation, although the Company does not actively assist in the actual
placement (i.e., the selling of shares) of the offering. Acceptable payments and
the size of payments the Company charges for its services vary with the
volatility of the clients' securities, the amount and nature of work involved,
and the expenses related to the services being rendered. The Company accepts
consulting fees that range, in order of frequency, from the clients' equity, to
cash, to other assets. When payment is made in equity, the number of shares to
be paid is dependent on the price of the clients' equity, when available. The
Company accepts equity with the expectation that its services will assist in the
stock's appreciation, thus allowing the Company to be paid and make a return on
the payments for its services.
<PAGE>
The number of the Company's clients, the nature of services being rendered
and the type of compensation received from clients vary greatly. At a given
time, the Company may be actively providing consulting services to more than 35
clients. Therefore, projecting the revenues that could be produced by the
Company's performance of these services is very difficult. The difficulty of
such projections is further enhanced because the Company receives a majority of
its compensation in the form of equity payments which cannot be readily resold,
thereby limiting its cash flow and reducing its liquidity. The Company estimates
that it will be able to obtain at least two additional clients per quarter for a
term of no less than one year.
For most of its recent history, the Company has assisted organizations is
raising capital. During the third quarter of 1996 and immediately thereafter,
the Company has focused a portion of its resources toward Internet securities
offerings. The Company believes a synergy exists in this area between its
current Internet division and its current consulting services division. The
popularity of the Internet and the Securities and Exchange Commission's
favorable position with respect to the Internet has fostered this modification
in focus. The Company desires to provide the most advanced consulting services
in its field and hopes that the clarification and mastery of this modified focus
on the Internet will allow the realization of this goal. Pursuant to providing
services relating to Internet offerings, the Company plans to bill at least a
portion of its fees in cash, as opposed to equity as it has primarily done in
the past. However, the Company cannot give any assurances that the Company will
be able to provide services relating to Internet offerings of securities or that
the provision of such services will improve the Company's financial position. In
addition, because the number of clients, the financial strength of clients, the
types of payments and the range of services provided can vary greatly from
quarter to quarter, it is difficult for the Company to project the revenue that
can or is likely to be produced by performing these services.
Typical services rendered by the Company's consulting services branch
include assisting corporations in effecting stock offerings pursuant to certain
statutory exemptions. These offerings require strict adherence to the
appropriate restrictions and provisions contained in the statutory exemptions
upon which the offerings are premised. The Company notifies these clients of the
restrictions and provisions in the exemptions and relies upon the clients to
ensure compliance with the exemptions. Because the Company cannot control the
actions of its clients, it is possible that in the event an offering is
conducted outside the requirements of appropriate exemptions, the Company could
be included in claims by investors in improper offerings. CyberConnect, Inc., a
Nevada corporation ("CC"), and CyberDimensions, Inc., a Nevada corporation
("CD"), are majority owned subsidiaries of the Company that conducted offerings
of their common stock during the second and third quarters of 1996. The
executive officers of CC and CD responsible for the conduct of these offerings
are not directly affiliated with the Company. However, the Company has become
aware that problems may exist with the manner of these offerings which may
require the rescission of the entire offerings. CC and CD have begun to rescind
these offerings and hope to have the rescissions completed within 90 days. If a
determination is made that the offerings were conducted outside the parameters
of the appropriate offering exemptions, CC and CD could face potential
liability. The Company believes CC and CD have sufficient reserves to cover such
expenses. A possibility exists, however, that if CC and CD cannot cover the
expenses that the Company could be obliged to cover such shortfalls.
The Company generates a substantial portion of its cash flow by liquidating
the non-cash assets received as fees for consulting services. As most fees are
paid in the form of equity, the Company's ability to generate cash flows is
somewhat tied to the price of its clients' equity. Therefore, material
fluctuations in the price of clients' equity may significantly impact both the
short-term and long-term liquidity of the Company.
REAL ESTATE HOLDINGS
Part of the Company's business operations include the acquisition,
management, lease and sale of real estate. The Company has acquired a variety of
commercial properties. While most of the Company's real estate holdings are in
Utah, the Company also owns several properties in other parts of the United
States. The Company hopes to increase revenues generated from these properties
and obtain additional real estate holdings. A key to the Company's success is
the ability of management to locate and acquire real estate with little or no
cash down and turn such properties into profitable assets.
The Company manages its real estate holdings in-house and plans to fill
vacancies for the Company's property holdings in Salt Lake City, Utah. The
Company, as of September 30, 1996, had approximately 51.5% of its commercial
space vacant, generated approximately $39,000 in gross monthly rents, and
operated at a loss of approximately $700 per month as compared to a loss of
approximately $9,000 for the same period in 1995. The real estate operations are
continued despite the losses for two reasons. First, the Company hopes to
eliminate the losses by increasing the rental income from the property. Second,
these operations are pursued primarily for appreciation purposes. Thus, while
the Company seeks to minimize and reverse its real estate operating losses, its
long term goal is to generate a capital gain upon disposition that is sufficient
to offset any previous losses, although no such assurances can be given. Many of
these properties have MAI appraisals valuing them at twice the current book
value, although no assurances can be given that the values of such properties
will be maintained.
<PAGE>
There is a risk that the Company may lose control of the properties, (e.g.,
through foreclosure), if enough funds are not derived from the rental income for
both the financing obligations and ongoing operations. Currently, due to
expanded acquisition activity and deficiencies in rental income from the
properties acquired, the Company does not have sufficient rental revenues to
service the debt and cover operating costs of all properties. The Company
currently has to use capital from other sources to fund this deficit. Although
management's goal is to increase the occupancy and rental rates and thus
increase the rental income so that such income will cover both operating costs
and debt service, no such assurances can be made. The Company's primary reason
for acquiring most of its real estate is for potential appreciation.
On July 2, 1996, the Company, through its wholly owned subsidiary Canton
Financial Services Corporation, entered into a Stock Purchase Agreement with
Premier Sales Corporation, Ltd., a foreign corporation ("PSC"), by which the PSC
acquired 100% of the issued and outstanding common stock in Cyber Real Estate,
Inc., a Nevada corporation ("CRE"), for $1 million, payable in the form of a
promissory note also dated July 2, 1996. CRE's sole asset is a dormitory located
in DeKalb, Illinois.
During August 1996, one of the Company's wholly owned subsidiaries, KMC
Foods, Inc., a Delaware corporation, foreclosed on property located in Cheriton,
Virginia, with its bid of $400,000. The Company is exploring the sale, use,
lease or development of the property.
RESULTS OF OPERATIONS
Consulting
Revenue from consulting services for the quarter ended September 30, 1996,
decreased to $501,855 from $680524 for the third quarter of 1995. Revenue from
consulting services for the nine months ended September 30, 1996, increased by
$697,050 over the same period in 1995. The increase is attributable to an
increase in the number of clients for which the Company provides services. The
costs of providing consulting services for the third quarter of 1996 increased
over the costs of providing services for the third quarter of 1995 by $273,318.
Gross profit from consulting services during the third quarter of 1996 was
$20,525 compared with a gross profit of $472,512 for the third quarter of 1995.
This reduction is, in the Company's opinion, attributable to the increase in
costs of providing consulting services which increased by $556,523 for the nine
months ended September 30, 1996, over the same period in 1995. The increase in
the costs of providing consulting services is due to an increase in personnel
expenses resulting from the addition of new employees hired to meet the needs of
the Company's expanded client base and subsequent costs related to the Internet
department for which no significant revenues have been earned. Gross profit from
consulting services for the nine months ended September 30, 1996, increased by
$140,527 over the same period in 1995.
Rental Properties
Revenue from rental of the Company's properties in the third quarter of
1996 increased to $118,513 from $87,651 for the same period of 1995. Revenue
from rental of the Company's properties for the nine months ended September 30,
1996, increased by $153,475 over the same period in 1995. This increase is
primarily due to an increase in the number of properties under the Company's
control and an increase in occupancy rates. This is also the reason for the
increase in cost of rental revenue from $115,044 for the third quarter of 1995
to $118,513 for the third quarter of 1996.
Other Revenue
Other revenue was $0 for the quarter ended September 30, 1996, compared
with $1,080 for the same period of 1995. Other revenue for the nine months ended
September 30, 1996, was $63,234 compared with $4,161 for the same period of
1995. This increase is primarily due to the Company's operation of a retail
complex in Oasis, Nevada until March 9, 1996. The Company has leased this retail
operation on a month to month basis to an operator and therefore revenue from
this source will not continue, although the Company is receiving rental revenue
from this lease.
<PAGE>
Net loss for the first nine months ended September 30, 1996, was $630,780
compared with a net loss of $493,261 in the first nine months of 1995. This
increase in net loss is due to increased costs associated with the development
of WebSafariTM and an increase in personnel.
During the first two quarters of fiscal 1996, the Company expended
significant costs in developing its Internet division. For more information on
this division, please see "Part I, Item 2 - Management's Discussion and Analysis
or Plan of Operation - Internet Services." The Company expects this increase in
Internet expenses to continue, but at a slower pace than what has been
experienced due primarily to a reduction in personnel.
CAPITAL RESOURCES AND LIQUIDITY
The deficiency in working capital decreased from a deficit of $1,017,178 on
September 30, 1995, to a deficit of $61,166 on September 30, 1996. This decrease
is primarily due to an increase in receivables resulting from consulting
services. The Company had negative cash flows during the first nine months of
1996. Operating cash flows are closely aligned with consulting revenue and the
cost of consulting services and of the Internet division's research and
development. The most significant cost of providing consulting service is the
payroll for the Company's approximately 36 employees. The Company expects to
maintain its current personnel level which represents a significant reduction.
During the quarter ended September 30, 1996, the Company issued 259,935
shares of its common stock in exchange for services provided to the Company by
employees and consultants and 109,616 shares were issued cash
During the nine months ended September 30, 1996, the Company issued 904,753
shares of its common stock in exchange for services provided to the Company by
employees and consultants; 225,000 shares were exchanged for assets; 259,616
shares of its restricted common stock were issued for cash; and 1,300,001 were
issued pursuant to Regulation S under the Securities Act of 1933, as amended,
for cash and pursuant to promissory notes. At September 30, 1996, the Company is
owed $871,582 under the promissory notes by the various entities for the
1,300,001 shares of the Company's common stock that they purchased.
On September 16, 1996, the Company sold 6.0% Cumulative Convertible
Debentures for $300,000 to Legong Investments, N.V. of Curacao, Netherlands
Antilles through an Offshore Securities Subscription Agreement. Pursuant to the
terms of the Agreement the Company will either issue shares of its Common Stock
at an exercise price of 70% of the average bid and ask price for the five (5)
days preceding the date of conversion or pay $300,000 with all applicable
interest on the date of maturity. Such conversion is at the option of the
holder. The maturity date of the Debentures is September 17, 1997.
On June 1, 1996, the Company paid a property dividend in the form of common
stock of Zahav, Inc. ("Zahav") and Cyber Information, Inc. ("CI"). The dividend
declared March 21, 1996 was one share in each Zahav and CI for every 100 shares
of common stock of the Company owned by each shareholder of record on April 23,
1996. The Company has requested its shareholders who received the CI dividend to
return their stock so a restrictive legend can be affixed. If such shareholders
are not interested in receiving restricted CI stock, the Company has given the
right to instead receive the cash equivalent, $0.02 per CI share.
On June 14, 1996, the Company declared a non-cash dividend of INFOTECH
International, Inc. ("INFOTECH") or the cash equivalent of this stock. The
dividend rate was declared to be one share in INFOTECH common stock or $0.02 per
100 shares of the Company's Common Stock held of record, with the record date
being June 24, 1996. On October 25, 1996, the board of directors restated the
dividend's terms to be payable only in $0.02 per 100 shares of Common Stock held
June 24, 1996. The Company has not yet declared the payable date for this
distribution.
PART II
ITEM 1. LEGAL PROCEEDINGS
The following are legal proceedings that had material developments during
the third quarter of 1996. Other material legal proceedings are pending,
however, no developments occurred during the third quarter of 1996. (For further
information, see "Part I, Item 3 - Legal Proceedings" in the Company's Annual
Report on Form 10-KSB/A for the year ended December 31, 1995).
<PAGE>
Xeta Corporation vs. The Canton Industrial Corporation. A suit was
originally filed in the Northern District of Oklahoma but that matter was
dismissed based on a lack of jurisdiction. The same suit was refiled on March 8,
1995 in the United States District Court, in the Central District of Utah, Case
Number 95CV-218G. Richard Surber and Gerald Curtis both former officers of ATC
II are also named as individual defendants. Xeta contends that funds were
improperly transferred to the Company by ATC II, Inc., Xeta seeks the recovery
of those funds toward partial satisfaction of a judgment that it holds against
ATC II. Xeta has been granted a summary judgment in the amount of $116,000 as to
the Company only, the trial court has reserved a decision as to Surber and
Curtis until trial. Xeta applied for and the court granted a motion to sever the
judgment as to the Company. In response the Company has filed a notice of appeal
to take the summary judgment before the 10th Circuit Court of Appeals for
further review. The Company has indicated that it intends to appeal based upon
evidence that it provided bona fide services to ATC II and that the bulk of the
funds were used for operating expenditures of ATC II. All actions needed for the
perfection of an appeal are being taken and the Company intends to carry out the
appeal process.
Steven A. Christensen v. The Canton Industrial Corporation, Canton
Personnel, Inc. and Allen Z. Wolfson. Suit was filed on July 1, 1996 in the
Third Judicial District Court of Salt Lake County, State of Utah Civil Action
No. 96-0904584CV, by Christensen, former President of the Company. The suit
sought recovery of wages, benefits, bonuses, and other items. Christensen
dismissed this cause of action without prejudice on October 10, 1996.
ITEM 5. OTHER INFORMATION
On October 9, 1996, Allen Z. Wolfson, a control person of the Company because
of his indirect ownership of the Company's Common Stock, was charged with
securities law violations. This criminal matter was filed in the District Court
for the Southern District of New York. On October 10, 1996, the Securities and
Exchange Commission initiated administrative proceedings against Wolfson. This
administrative action is premised upon the same allegations contained in the
complaint pending in the Southern District of New York. Wolfson intends to
vigorously defend against both of these actions.
The Company had a consulting agreement with Wolfson's primary consulting
entity, A-Z Professional Consultants, that expired in August 1996 and was not
renewed. Wolfson's relationship with the Company, aside from his indirect
ownership of Common Stock, is therefore only informal and on an ad hoc basis.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits on page 14 of
this Form 10-QSB, and are incorporated herein by this reference.
(b) Reports on Form 8-K. The Company did not file any reports on Form
8-K during the quarter ended September 30, 1996.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
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, this 14th day of November 1996.
CYBERAMERICA CORPORATION
Date: November 14, 1996 By: /s/ Richard D. Surber
--------------------------
Name : Richard D. Surber
Title: President
Date: November 14, 1996 By: /s/ Susan S. Waldrop
-----------------------
Name: Susan S. Waldrop
Title: Chief Financial Officer,
Secretary/Treasurer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION OF EXHIBIT
3(i) * Articles of Incorporation are incorporated herein
by reference.
(3)(ii) * Bylaws are incorporated herein by reference.
10(i)a 14 Offshore Securities Subsrciption Agreement for
6.0% Convertible Debentures sold to Legong
Investments on September 16, 1996
10(i)b 52 May 22, 1996 Stock Purchase Agreement by which the
Company sold its wholly owned subsidiary, Cyber
Real Estate, Inc. to Premier Sales Corporation,
Ltd.
* Articles are incorporated herein by reference.
DEBENTURE
THIS DEBENTURE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, (THE
"1933 ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR
FOR THE ACCOUNT OF BENEFIT OF U.S. PERSONS (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE 1933 ACT), FOR A PERIOD OF FORTY (40) DAYS AFTER
COMPLETION OF THE OFFERING PURSUANT TO WHICH THIS DEBENTURE WAS ISSUED, AND
THEREAFTER MAY ONLY BE OFFERED OR SOLD PURSUANT TO REGISTRATION UNDER OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
6.0% CUMULATIVE CONVERTIBLE DEBENTURE DUE September 16, 1997
$300,000 September 17, 1996
Number A101
FOR VALUE RECEIVED, CYBERAMERICA CORPORATION, a Nevada corporation,
(the "Company"), hereby promises to pay to Legong Investments N.V. or registered
assigns (the "Holder"), on September 16, 1997 (the "Maturity Date"), the
principal amount pf Three Hundred Thousand Dollars ($300,000) USD, and to pay
interest on the principal amount hereof, in such amounts, at such times and on
such terms and conditions as are specified herein.
Article 1. Interest
The Company shall pay interest on the unpaid principal amount of the
Debenture (the "Debenture") at the rate of Six Percent (6.0%) per year, payable
at the time of each conversion until the principal amount hereof is paid in full
or has been converted. Interest on this Debenture shall accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from September 17, 1996. Interest shall be computed on the basis of a 360 day
year of 12, 30 day months. If the Holder shall convert this Debenture during any
quarter, the Company shall pay to the Holder, upon conversion, the pro-rata
portion of accrued interest payable through the conversion date.
<PAGE>
Article 2. Method of Payment
This Debenture must be surrendered to the Company in order for the
Holder to receive payment of the principal amount hereof. The Company shall have
the option of paying the interest on this Debenture in United States dollars or
in Common Stock upon conversion pursuant to Article 3 hereof. The Company may
draw a check for the payment of interest to the order of the Holder of this
Debenture and mail it to the Holder's address as shown on the Register (as
defined in Section 7.2 below). Interest and principal payments shall be subject
to withholding under applicable United States Federal Internal Revenue Service
Regulation.
Article 3. Conversion
Section 3.1. Conversion Privilege
(a) The Holder of this Debenture shall have the right , at its option,
to convert it into shares of common stock, par value $0.001 per share, of the
Company ("Common Stock") at any time which is before the close of business on
the Maturity Date, except as set forth in Section 3.1(c) below. The number of
shares of Common Stock issuable upon conversion of this Debenture id determined
by dividing the principal amount hereof to be converted plus all accrued an
unpaid interest thereof minus any required withholding by the conversion price
in effect on the conversion date (as defined in paragraph (b) of this Section
3.1 below) and rounding the result to the nearest whole share. On conversion, no
payment of or adjustment (other than as provided in the previous sentence) for
accrued and unpaid interest shall be made whether or not such conversion occurs
before, on or after an interest payment date.
(b) The conversion price and procedures are set forth in Section 3.2.
(c) Less than all of the principal amount of this Debenture may be
converted into Common Stock if the portion converted is $5,000 or a whole
multiple pf $5,000 and the provisions of this Article 3 that apply to the
conversion of all of the Debenture shall also apply to the conversion of a
portion of it. All accrued and unpaid interest on this Debenture shall be added
to the amount converted if less than all of the principal amount of this
Debenture is converted and shall be deemed to be paid and discharged thereby.
This Debenture may not be converted, whether in whole or in part, except in
accordance with Section 3.2.
<PAGE>
(d) In the event all or any portion of this Debenture remains
outstanding on the first anniversary of the date hereof, the unconverted portion
of such Debenture will automatically be converted into shares of Common Stock on
such date in the manner set forth in this Section 3.2.
Section 3.2. Conversion Procedure
(a) Debentures. Upon the conversion of this Debenture, the holder
thereof shall submit such Debenture to Seller, and Seller shall, within three
(3) business days of receipt of such Debenture, instruct Seller's transfer agent
to issue on or more Certificates representing that number of shares of Common
Stock into which the Debenture is convertible in accordance with the provisions
regarding conversion set forth in Exhibit A hereto. The Seller's transfer agent
or attorney shall act as Debenture Registrar and shall maintain an appropriate
ledger containing the necessary information with respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of this Debenture and upon receipt by the company of a facsimile or
original of Purchaser's signed Notice of Conversion and Purchaser Representation
Letter (See Exhibits a and B attached hereto) Seller shall instruct Seller's
transfer agent to issued Stock Certificates without restrictive legend or stop
transfer instruction in the name of Purchaser (or its nomine (being a non-U.S.
Person) or such nun-U.S. Persons as may be designated by Purchaser prior to the
closing) and in such denominations to be specified at conversion representing
the number of shares of Common Stock issuable upon such conversion, as
applicable. Seller warrants that no instruction other that these instructions
have been given or will be given to the transfer agent and that the Common Stock
shall otherwise be freely transferable on the books and records of Seller.
Nothing in this Section 3.2, however, shall affect in any way Purchaser's or
such nominee's obligations and agreements to comply with all applicable
securities laws upon resale of the Securities.
<PAGE>
(c) The holder of the Debenture ("Holder") is entitled, at its option,
at any time commencing 45 days after issue hereof to convert the original
principal amount of the Debenture into shares of Common Stock, $0.001 par value
per share, of the Company (the "Common Stock"), at a conversion price for each
share of Common Stock equal to seventy percent (70%) of the average closing bid
price of The Company's Common Stock for the five (5) trading days immediately
preceding and ending on the day preceding the date of conversion. The closing
shall be deemed to have occurred on the dated the funds are received by the
Company. Such conversion shall be effectuated by surrendering to the Company, or
its attorney, the original Debenture to be converted together with a facsimile
or original of the signed Notice of Conversion and facsimile or original of the
signed Purchaser Representation Letter, see Exhibits A and B aattached hereto,
wich evidences such Holder's intention to convert the Debenture or a specified
portion thereof, and accompanied by proper assignment, if applicable. No
fractional shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded up or down, as
the case may be, to the nearest whole share. The date on which notice of
conversion is effective ("Conversion Date") shall be deemed to be the date on
which the Holder has delivered to the Company the original Debenture, a
facsimile or original of the signed Notice of Conversion and a facisimile or
original of the signed Purchaser Representation Letter. The Debentures are
subject to a mandatory, 12 month conversion feature at the end of the which all
Debentures outstanding will be automatically converted, upon the terms set forth
in this paragraph.
(d) Nothing contained in this Debentrue or pragraph 3.2(f) hereof,
shall be deemed to establish or reeqire the payment of interest to the Purchaser
at a rate in excess of the maximum rate permitted by governing l aw. In the
event that the rate on interest required to be paid inder the Debenture exceeds
the maximum rate permitted by governing law, the rate of interest required ot be
paid thereunder shall be automatically reduced to the maximum rate permitted
under the governing and any any mounts collected inexcess of the permissible
amount shall be deemed a payment of principal. To the extent that such excess
amount exceeds the aggregate principal amount of this Debenture, such excess
shall be returned with reasonable promptness by the Holder to the Company.
<PAGE>
(e) Within five (5) business days after receipt of the documentation
regerred to above in Setion 3.2(c), the Company shall deliver a certificate,
without stop transger instructions, for the number of shares of Common Stock
issiable upon the conversion. It shall be the Company's responsibility to take
all necessary actions and to bear all such costs to issue the Common Stock as
provided herein, including the responsibility and cost for delivery of an
opinion letter to the transfer agent, if so required. Ther pperson in whose name
the certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. No payment of adjustment
shall be made for accrued and unpaid interest until the earlier of the
COnversion Date or the madatory conversion date. Upon surrender of any
Debentures that are to be converted in part, the Company shall issue to the
Purchase a new Debenture qual to the unconverted amount, if so requested by
Purchaser.
(f) In the event the Company does not make delivery of the Common
Stock, as instructed by Purchaser, within 6 business days after the Conversion
Date, then in such event the Company shall pay to Purchaser an amount, in cash
in accordance with the following schedule, wherein "No. Business Days Late" is
defined as the number of business days beyond the 6 business days delivery
period
Late Payment for Each
$10,000 of Debenture
Principal Amount Being
No. of Business Days Late Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 $200 for each
Business Days Late Beyond 10 Days
In no event shall the damages for late delivery exceed $14,545.
<PAGE>
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 3.2(f) is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 3.2(f) shall not
apply but instead the provisions of Section 3.2(g) shall apply.
The Company shall pay any payments incurred under this Section 3.2(f)
in immediately available funds within three (3) business days from the date of
issuance of the applicable Common Stock to the Holder within 6 business days
after the Conversion Date.
The Company recognizes the right of Purchaser to assign any portion of
the Debentures to another non-U.S. Person during the 40 day restricted period
and to assign any portion of the Debentures to another non-U.S. Person or U.S.
person or entity after the 40 dat restricted period/
(g) If, at any time Purchaser submits a Notice of Conversion and the
Company does not have sufficient authorized but unissued shares of Common Stock
available to effect, in full, a conversion of the Debentures (a "Conversion
Default"), the date of such default being referred to herein as the "Conversion
Default Date"), the Company shall issue to the Purchase all of the shares of
Common Stock which are available, and the Notice of Conversion as to any
Debentures requested to be converted but not converted (the "Unconverted
Debentures") shall become null and void. The Company shall provide notice of
such Conversion Default ("Notice of conversion Default") to all existing
Purchasers of outstanding Debentures, by facsimile, within one (1) business day
of such default (with the original delivered by overnight or two day courier).
No Holder may submit a Notice on Conversion after receipt of a Notice of
Conversion Default until the date additional shares of Common Stock are
authorized by the Company. The Company agrees to pay to all Purchasers of
outstanding Debentures payments for a Conversion Default ("Conversion Default
Payments") in the amount of (N/365) x (.24) x the initial issuance price of the
outstanding Debentures held by each Purchaser where N = the number of days from
the Conversion Default Date to the date (the "Authorization Date") that the
Company authorizes a sufficient number of shares of Common Stock to effect
conversion of all remaining Debentures. The Company shall send notice Debentures
that additional shares of Common Stock have been accrued Conversion Default
Payments. The accrued Conversion Default shall be paid in cash or shall be
convertible into Common Stock at the Conversion Rate, at the Purchaser's option,
payable as follows: (I) in the event Purchaser elects to take such payment in
cash, cash payments shall be made to such Purchaser of outstanding Debentures by
the fifth day of the following calendar month, or (ii) in the event Purchaser
elects to take such payment in stock, the Purchaser may convert such payment
amount into common stock at the Conversion Rate at anytime after the 5th day of
the calendar month following the month in which the Authorization Notice was
received, until the expiration of the mandatory 12 month conversion period.
<PAGE>
Nothing herein shall limit the Purchaser's right to pursue actual
damages for the Company's failure to maintain a sufficient number of authorized
shares of common stock.
Section 3.3 Fractional Shares. The Company shall not issue a fractional
share of Common Stock upon the conversion of this Debenture. Instead, the
Company shall round up or down, as the case may be, to the nearest whole share.
Section 3.4 Taxes on Conversion. The Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion of this Debenture. However, the Holder shall pay any
such tax which is due because the shares are issued in a name other than its
name.
Section 3.5 Company to Reserve Stock. The Company shall reserve out of
its authorized but unissued Common Stock or Common Stock held in treasury a
sufficient number of shares of Common Stock to permit the conversion of this
Debenture. All shares of Common Stock which may be issued upon the conversion
hereof shall upon issuance be validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof.
Section 3.6. Restrictions on Transfer. This Debenture and the Common
Stock issuable upon the conversion hereof have not been registered under the
Securities Act of 1933, as amended, (the "Act") and have been been sold pursuant
to Regulation S under the Act ("Regulation S"). The Debenture may not be
transferred or resold in the United States, or to a U.S. Person, or to or for
the account or benefit of a U.S. Person (as defined in Regulation S) for a
period of forty (40) days from the date hereof and thereafter this Debentrue and
the Common Stock issuable upon the conversion thereof may only be offeredor sold
pursuant to registration under or an exemption from the Act.
Section 3.7. Mergers, Etc. If the Company merges or consoldiates with
another corporation or sells or transgers all or sobstantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transger, the Company
and any such successor, ppurchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation , sale or transfer by a
holder of the number of shares of Common Stock into which this Debentrue might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.
<PAGE>
Article 4. Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes the
obligations of the Company under his Debenture and immediately after such
transaction no Event of Default exits. Any reference herein to the Company shall
refer to such surviving or tranferee corporaiton and the obligations of the
Company shall terminate upon such assumption.
Article 5. Reports
The Company will mail to the Holder hereof at iits address as shhown on
the Register a copy of any annual, quarterly or current report that it files
withthe Securities and Exchange Commission promptly after the filing thereof and
a copy of any annual, quarterly or other report or proxy statement that it gives
to its shareholders generally at the time such report or statement is sent to
shareholders.
Article 6. Defaults and Remedies
Section 6.1 Events of Default. an "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture when the
same becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment, other that a payment of principal, for a period
of 5 days thereafter, (c) the Company fails to comply with any of its other
agreements in this Debenture and such failure continues for the period and after
the notice specified below, (d) the Company pursuant to or within the meanin g
of any Bankruptcy Law (as hereinafter defined): (i) commences a coluntary case;
(ii) consents to the entry of an order for relief against it in an involuntary
case; (iii) consents to the appointment of a Custodian (as hereinafter defined)
of it or for all or substantially all of its property of (iv) makes a general
assignment for the benefit of its creditors or (v) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that : (A) is
for relief against the Company in an involuntary case; (B) appoints a Custodian
of the Company or for all or substantially all of its property or (C) orders the
liquidation of the Company, and the order or decree remains unstayed and in
effect for 60 days, (e) the Company shall have its Common Stock delisted from an
exchange or over-the-counter market. As used in this Section 6.1, the term
"Bankruptcy Law" means Title 11 of the United States Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law. A
default under clause (C)above is not an Event of Default until the holders of at
least 25% of the aggregate principal amount of the Debentures outstanding notify
the Company of such default and the Company does not cure it within five (5)
days after the receipt of such notice, which must specify the default, demand
that it be remedies and state that it is a "Notice of Default."
<PAGE>
Section 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
principal of and accrued interest on this Debenture to be due and payable. Upon
such declaration, the principal and interest hereof shall be due and payable
immediately.
Article 7. Registered Debentures
Section 7.1. Series. This Debenture is one of a numbered series of
Debentures having an aggregate principal amount of $1,300,000 which are
identical except as to the principal amount and date of issuance thereof and as
to any restriction on the transfer thereof in order to comply with the
Securities Act of 1933 and the regulations of the Securities and Exchange
Commission promulgated thereunder. Such Debentures are referred to herein
collectively as the "Debentures." The Debentures shall be issued in whole
multiples of $10,000.
<PAGE>
Section 7.2. Record Ownership. The Company, or its attorney, shall
maintain a register of the holders of the Debentures (the "Register") showing
their names and addresses and the serial numbers and principal amounts of
Debentures issued to or transferred of record by them from time to time. The
Register may be maintained in electronic, magnetic or other computerized form.
The Company may treat the person named as the Holder of this Debenture in the
Register as the sole owner of this Debenture. The Holder of this Debenture is
the person exclusively entitled to receive payments of interest on this
Debenture, receive notifications wit respect to this Debenture, convert it into
Common Stock and otherwise exercise all rights and powers as the absolute owner
hereof.
Section 7.3. Registration of Transfer. Transfers of this Debenture may
be registered on the books of the Company maintained for such purpose pursuant
to Section 7.2 above (i.e., the Register). Transfers shall be registered when
this Debenture is presented to the Company with a request to register the
transfer hereof and the Debenture is duly endorsed by the appropriate person,
reasonable assurances are ? that the endorsements are genuine and effective, and
the Company has received evidence satisfactory to it that such transfer is
rightful and in compliance with all applicable laws, including tax laws and
state and federal securities laws. When this Debenture is presented for transfer
and duly transferred hereunder, it shall be canceled and a new Debenture showing
the name of the transferee as the record holder thereof shall be issued in lieu
hereof. When this Debenture is presented to the Company with a reasonable
request to exchange it for an equal principal amount of Debentures of other
denominations, the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a total principal amount
equal to this Debenture in the denominations requested by the Holder. The
Company may charge a reasonable fee for any registration of transfer or exchange
other than one occasioned by a notice of redemption or the conversion hereof. No
transfer of this Debenture shall be made to any U.S. Person as that term is
defined in Regulation s.
Section 7.4. Worn or Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delivered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or verification
as the Company may request.
Article 8. Notices
Any notice which is required or convenient under the terms of this
Debenture shall be duly given if it is in writing and delivered in person or
mailed by first class mail, postage prepaid and directed to the Holder of the
Debenture at its address as it appears on the Register or if to the Company to
its principal executive offices. The time when such notice is sent shall be the
time of the giving of the notice.
<PAGE>
Article 9. Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes o requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. Where time is extended
by virtue of the provisions of this Article 9, such extended time shall not be
included in the computation of interest. A "business day" shall mean a day on
which the banks in Nevada are not required or allowed to be closed.
Article 10. Waivers
The holders of a majority in principal amount of the Debentures may
waive a default or rescind the declaration of an Event of Default and its
consequences except for a default in the payment of principal of or interest on
any Debenture.
Article 11. Rules of Construction
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in the Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.
Article 12. Governing Law
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of Nevada applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of Nevada.
<PAGE>
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.
CYBERAMERCA CORPORATION
By
/s/ Richard Surber
----------------------
Name: Richard Surber
Title: President
<PAGE>
Exhibit A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debentures.)
The undersigned hereby irrevocably elects, as of _______________, 199_ to
convert $______________ of the Debentures into Shares of Common Stock (the
"Shares") of CYBERAMERICA CORPORATION (the "Company") according to the
conditions set forth in the Subscription Agreement dated September 16, 1996.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Debentures on behalf of any U.S. Person.
Date of Conversion_____________________________________________________________
Applicable Conversion Price____________________________________________________
Number of Shares Issuable upon this conversion_________________________________
Signature______________________________________________________________________
[Name]
Address________________________________________________________________________
_______________________________________________________________________________
Phone______________________________Fax________________________
<PAGE>
EXHIBIT B
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned______________________, has purchased on September 17, 1996,
One (1) convertible Debenture(s) of CYBERAMERICA CORPORATION (the "Company") in
the amount of $ _________________, (the "Debenture(s)"). In connection with such
purchase, the undersigned has executed and delivered a subscription agreement
("Subscription Agreement") of your design. As the forty (40) day transaction
restriction period has expired, the undersigned hereby requests that the
Debentures be transferred into "Street Name" of
__________________________________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Debentures was made to it outside of the United
States and the undersigned was, at the time the Subscription Agreement was
executed and delivered, and is now, outside the United States;
(2) It is not a U.S. Person (as such term is defined in Section 902(a) of
Regulation S promulgated under the United States Securities of 1933 (the
"Securities Act"); and it has purchased the Debentures for its own account and
not for the account or benefit of any U.S. person;
(3) All offers and sales by the undersigned of the Debentures shall be made
pursuant to an effective registration statement under the Securities Act or
pursuant to and exemption from, or in a transaction not subject to the
registration requirements of, the Securities Act;
(4) It is familiar with and understands the terms, conditions and requirements
contained in Regulation S and definitions of U.S. persons contained in
Regulation S;
(5) The undersigned has not engaged in any "directed selling efforts" (as such
term is defined in Regulation S) with respect to the Debentures or the Common
Stock that is issuable upon conversion; and
(6) The undersigned purchased its Debentures with investment intent and at the
time of the purchase of said Debentures had no interest to sell, dispose of or
otherwise transfer the Debentures or the Common Stock that is issuable upon
conversion. The purpose for this request is to facilitate the management of the
undersigned's investment accounts.
(7) The undersigned agrees to the provisions of Paragraph 2(a)(xiv) of the
Offshore Securities Subscription Agreement which is incorporated herein and made
a part hereof as if written.
Dated this ______day of the month of ___________________, 1996.
By:
_____________________________ ______________________________
Official Signature of Purchase Title
<PAGE>
Assignment of Debenture
The undersigned hereby sell(s) and assign(s) and transfer(s)
unto
(Name, address, and SSN or EIN of assignee)
Dollars ($ )
(principal amount of Debenture, $10,000 or integral multiples of $10,000)
of principal amount of this Debenture together with all accrued and unpaid
interest hereon.
Date: Signed:
(Signature must conform in all respects to
shown name of Holder of face of Debenture)
Signature Guaranteed:
<PAGE>
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN
REGULATION S OF THE 1933 ACT) OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S
OF THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT.
THIS OFFHSORE SECURITIES SUBSCRIPTION AGREEMENT dated as of September,
1996 (the "Agreement"), is executed in reliance upon the exemption from
registration afforded by Regulation S ("Regulation S") as promulgated
by the Securities and Exchange Commission ("Securities"), under the
Securities Act of 1933, as amended. Capitalized terms used herein and
not defined shall have the meanings given to them in Regulation S.
This Agreement has been executed by the undersigned Legong
Investments as "Purchaser" in connection with the offshore offering of
6.0% Cumulative Convertible Debentures of CYBERAMERICA CORPORATION
("CYBERAMERICA"), a corporation organized under the laws of the State
of Nevada, with its principal executive offices located at 268 West
400 South, Suite 300, Salt Lake City, Utah 84101 (herein-after
referred to as "Seller" or "Company"). Purchaser hereby represents and
warrants to, and agrees with Seller:
1. Agreement to Subscribe: Purchase Price.
a) Subscription. The undersigned Purchaser
hereby subscribes for and agrees to
purchase the Sellers 6.0% Cumulative
Convertible Debentures in the principal
amount of U.S. $ (Singly, a "Debenture",
and collectively, the "Debentures").
b) Form of Payment. Purchaser shall pay the
total consideration by delivering good
funds by wire transfer in United States
Dollars to the Escrow Agent, Joseph B.
LaRocco, Esq. on or before September, 1996
into the escrow account as follows:
First Union Bank of Connecticut
Executive Office
300 Main Street, P.O. Box 700
Stamford, CT 06904-0700
ABA #: 021102208 First Union Bank
Swift #: UTCIUS33
Account #: 20000-2072298-4
Acct.Name: Joseph B. LaRocco,Esq.Trustee Acct
c) Closing. Subject to the satisfaction of the
conditions set forth in Section 8 and 9
hereof, the closing of the transactions
contemplated by this Agreement shall occur
from time to time on or before September,
1996.
<PAGE>
2. Purchaser Representations Access to Information.
a) Offshore Transaction. In connection with the purchase and
sale of the Debentures, Purchaser represents and warrants to, and
covenants and agree with Seller as follows:
(I). Purchaser is not a natural person and
is not organized under the laws of any jurisdiction
within the United States, was not formed by a U.S.
Person (as defined in Section 902(o) of Regulation
S) securities and is not otherwise a U.S. Person.
Purchaser is not, and on the closing date will not
be, an affiliate of Seller;
(ii.) At the time the buy order was
originated, Purchaser was outside the United States
and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(iii.) No offer to purchase the Debentures
or the common stock of Seller issuable upon
conversion of the Debentures (collectively, the
"Securities"), was made by Purchaser in the United
States;
(iv.) Purchaser is purchasing the
Securities for its own account and Purchaser is
qualified to purchase the Securities under the laws
of its jurisdiction of residence, and the offer and
sale of the Securities will not violate the
securities or other laws of such jurisdiction;
(v.) All offers and sales of any of the
Securities by Purchaser prior to the end of the
Restricted Period (as hereinafter defined) shall be
made in compliance with any applicable securities
laws of any applicable jurisdiction and in accordance
with Rule 903 and 904, as applicable, or Regulation S
or pursuant to registration of securities under the
1933 Act or pursuant to an exemption from
registration. In any case, none of the securities
have been or will be offered or sold by Purchaser to,
or for the account or benefit of, a U.S. Person or
within the United States until after the end of the
forty (40) day period commencing on the date of
closing of the offering of the Securities or (the
"Restricted Period"), which in no event shall be
later than , 1996, when this offering shall be closed
to all Purchasers;
(vi.) The transactions contemplated by this
Agreement (a) have not been and will not be
pre-arranged by Purchaser with a purchaser located
in the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a
plan or scheme by Purchaser, to evade the
registration provisions of the 1933 Act;
<PAGE>
(vii.) Purchaser understands that the
Securities are not registered under the 1933 Act and
are being offered and sold to it in reliance on
specific exclusions from the registration
requirements of Deferral and State securities laws,
and that Seller is relying upon the truth and
accuracy of the representations, warranties,
agreements, acknowledgments and understandings of
Purchaser set forth herein in order to determine the
applicability of such exclusions and the suitability
of Purchaser to acquire these Securities;
(viii.) Purchaser shall take all reasonable
steps to ensure its compliance with Regulation S and
shall promptly send to each purchaser who acts as a
distributor, dealer or a person receiving a selling
concession, fee or other remuneration in respect of
any of the Securities, who purchases prior to the
expiration of the Restricted Period referred to in
subparagraph (v) above, a confirmation or other
notice to the purchaser stating that the purchaser is
subject to the same restrictions on offers and sales
as Purchaser pursuant to Section 109(c)(2)(iv) of
Regulation S;
(ix.) Purchaser has not conducted and shall
not conduct any "directed selling efforts" as that
term is defined in Rule 902(b) of Regulation S; nor
has Purchaser conducted any genera solicitation
relating to the offer and sale of any of the
Securities in the United States or elsewhere;
(x.) This Agreement has been duly
authorized, validly executed and delivered on behalf
of Purchaser and is a valid and binding agreement in
accordance with this terms, subject to general
principals of equity and to bankruptcy or other laws
affecting the enforcement of creditors' right
generally;
(xi.) The execution and delivery of this
Agreement and the consummation of the purchase of the
Securities, and the transactions contemplated by the
Agreement do not and will not conflict with or result
in a breach by the Purchaser of any of the terms or
provisions of, or constitute a default under, the
articles of incorporation or by-laws (or similar
constitutive documents) of the Purchaser, or any
indenture, mortgage, deed of trust, or other material
agreement or instrument to which Purchaser is a party
or by which it or any of its properties or asses are
bound, or any existing applicable law, rule, or
regulation of the United States or any State thereof
or any applicable decrees, judgement, or order of any
Federal or State court, Federal or State regulatory
body, administrative agency or other governmental
body having jurisdiction over the Purchaser or any of
its properties or assets;
<PAGE>
(xii.) All invitations, offers and sales of
or in respect of any of the Securities, by Purchaser
and any distribution by Purchaser of any documents
relating to any offer by it of any of the Securities
will be in compliance with applicable laws and
regulations and will be made in such a manner that no
prospectus need be filed and no other filing need be
made by Seller with any regulatory authority or stock
exchange in any country or any political subdivision
of any country;
(xiii.) Purchaser will not make any offer or
sale of the Securities by any means which would not
comply with the laws and regulation of the territory
in which such offer of sale takes place or to which
such offer or sale is subject or which would on
connection with any such offer or sale impose upon
Seller any obligation to satisfy any public filing or
registration requirement or provide or publish any
information of any kind whatsoever or otherwise
undertake or become obligated to do any act; and
(xiv.) Neither the Purchaser nor any of this
affiliates agents or any other person or entities at
the direction of the Purchaser has entered, has the
intention of entering, or will during the Restricted
Period or 30 days prior ro the restricted period
enter into any put option, short position or other
similar instrument or position with respect to any of
the Securities or securities of the same class as the
Securities or common shares of the Company.
b) No Government Recommendation or Approval.
Purchaser understands that no Federal or State or foreign government
agency has passed on or made any recommendation or endorsement of the
Securities.
c) Current Public Information. Purchaser acknowledges
that it and its advisors, if any, have had access to or have been
furnished with all materials relating to the business, finances and
operations of Seller and all materials relating to the offer and sale
of the Securities which have been requested by Purchaser. Purchaser
further acknowledges that it and its advisors, if any, have received
complete and satisfactory answers to such inquiries.
<PAGE>
d) Purchaser's Sophistication. Purchaser acknowledges
that the purchase of the Securities involves a high degree of risk,
including the total loss of Purchaser's investment. Purchaser has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of purchasing the
Securities.
e) Tax Status. Purchaser is not a "10-percent
Shareholder" (as defined in Section 871(h)(3)(B) of the U.S. Internal
Revenue Code) of Seller.
3. Seller Representations.
a) Reporting Company Status. Seller is a "Reporting
Issuer" as defined by Rule 902 of Regulation S. Seller has registered
its Common Stock, $0.001 par value per share (the "Common Stock"),
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Common Stock is listed and trades
on the Nasdaq Electronic Bulletin Board ("NASDAQ"). Seller has filed
all material required to be filed pursuant to all reporting obligations
under either Section 13(a) or 15(d) of the Exchange Act for a period of
at least twelve (12) months immediately preceding the offer or sale of
the Securities (or for such other period that Seller has been required
to file such material).
b) Current Public Information. Seller has either
furnished Purchaser with copies of its most recent reports filed under
the Exchange Act referred to in Section 2(C) above, and other publicly
available documents or Purchaser has had access thereto.
c) Offshore Transaction. Seller has not offered any
of the Securities to any person in the United States, any identifiable
groups of U.S. Citizens abroad, or to any U.S. Person, as such terms
are used in Regulation S.
(I) At the time the buy order was
originated, Seller and/or its agents reasonable
believe the Purchase was outside of the United
States and was not a U.S. Person, based on the
representations of Purchaser.
(ii) Seller and/or its agent reasonable
believe that the transaction has not been
pre-arranged with a buyer in the United States, based
on the representation of Purchaser.
<PAGE>
(iii) No offer to buy or sell the
Securities was or will be made by Seller to any
person in the United States.
(iv) The sale of the Securities by Seller
pursuant to this Agreement will be made in
accordance with the provisions and requirements of
Regulation S provided that the representations and
warranties of Purchaser in Section 2(a) hereof are
true and correct.
(v) The transactions contemplated by this
Agreement (a) have not been and will not be
pre-arranged by Seller with a purchaser located in
the United States or a purchaser which is a U.S.
Person, and (b) are not and will not be part of a
plan or scheme by Seller to evade the registration
provisions of the 1933 Act.
d) No Directed Selling Efforts. In regard to this
transaction, Seller has not conducted any "directed selling efforts" as
that term is defined in Rule 902 of Regulation S nor has Seller
conducted any general solicitation relating to the offer and sale of
any of the Securities in the United States or elsewhere.
e) Concerning the Securities. The issuance, sale and delivery
of the Debentures have been duly authorized by all required corporate
action on the part of Seller, and when issued, sold and delivered in
accordance with the terms hereof and thereof for the consideration
expressed herein and therein, will be duly and validly issued and
enforceable in accordance with their terms, subject to the laws of
bankruptcy and creditors' rights generally. A sufficient number of
shares of Common Stock issuable upon conversion of the Debentures has
been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Debentures, shall be duly and validly
issued, fully paid, and non-assessable and will not subject the holders
thereof, if such persons are non-U.S. persons, to personal liability by
reason of being such holders. There are no pre-emptive rights of any
shareholder of Seller, other than has been disclosed in the Company's
annual report(s).
f) Authority to Enter Agreement. This Agreement has
been duly authorized, validly executed and delivered on behalf of
Seller and is a valid and binding agreement in accordance with this
terms, subject to general principals of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally.
<PAGE>
g) Non-contravention. The execution and delivery of
this Agreement and the consummation of the issuance of the Securities,
and the transactions contemplated by this Agreement do not and will
not conflict with or result in a breach by Seller of any of the terms
or provisions of, or constitute a default under, the articles of
incorporation or by-laws of Seller, or any indenture, mortgage, deed
of trust, or other material agreement or instrument to which Seller is
a party or by which it or any of its properties or assets are bound,
or any existing applicable law, rule or regulation of the United
States or any State thereof or any applicable decree, judgment, or
order of any Federal or State court, Federal or State regulatory body,
administrative agency or other United States governmental body having
jurisdiction over Seller or any of its properties or assets.
h) Approvals. Seller is not aware of any
authorization, approval or consent of any governmental body which is
legally required for the issuance and sale of the Debentures and the
Common Stock issuable upon conversion thereof to persons who are
non-U.S. Person, as contemplated by this Agreement.
I) Prior Shares Issued Under Regulation S. Seller
has not issued any shares of stock under Regulation S subsequent to
the filing of its most recent Securities report.
j) Use of Proceeds. Seller represents that the
intended use of the proceeds form this offering is expansion and
development of its internet division, real estate acquisitions and
working capital.
4. Exemption: Reliance on Representations. Purchaser
understands that the offer and sale of the Securities are not being
registered under the 1933 Act. Seller and Purchaser are relying on the
rules governing offers and sales made outside the United States
pursuant to Regulation S.
5. Transfer Agent Instructions.
a) Debentures. Upon the conversion of the Debentures,
the holder thereof shall submit such Debentures to seller, and Seller
shall, within three (3) business day of receipt of such Debentures,
instruct Seller's transfer agent to issue one or more Certificates
representing that number of shares of Common Stock into which the
Debenture or Debentures are convertible n accordance with the
provisions regarding conversion set forth in Exhibit A hereto. The
Seller's transfer agent or attorney shall act as Debenture Registrar
and shall maintain an appropriate ledger containing the necessary
information with respect to each Debenture.
<PAGE>
b) Common Stock to be Issued Without Restrictive
Legend. Upon the conversion of an Debentures and upon receipt by the
Company or its attorney of a facsimile or original of Purchaser's
signed Notice of Conversion and Purchaser Representation Letter (See
Exhibits A and B attached hereto) Seller shall instruct Seller's
transfer agent to issue Stock Certificates without restrictive agent or
stop transfer instructions in the name of Purchaser (or it nominee
(being a non-U.S. Person) or such non-U.S. Persons as may be designated
by Purchaser prior to the closing) and in such denominations to be
specified at conversion representing the number of shares of Common
Stock issuable upon such conversion, as applicable. Seller warrants
that no instructions other than these instructions have been given or
will be given to the transfer agent and that the common Stock shall
otherwise be freely transferable on the books and records of Seller.
Nothing in this Section 5, however, shall affect in any way Purchaser's
or such nominee's obligations and agreements to comply with all
applicable securities laws upon resale of the Securities.
c) The holder of the Debenture ("Holder") is
entitled, at its option, at any time commencing 45 days after issue
hereof to convert the original principal amount of the Debenture into
shares of Common Stock, $0.001 par value per share, of the Company (the
"Common Stock"), at a conversion price for each share of Common Stock
equal to seventy percent (70%) of the average closing bid price of
CYBERAMERICA's Common Stock for the five (5) trading days immediately
preceding and ending on the day preceding the date of conversion. The
closing shall be deemed to have occurred on the date the funds are
received by the Company. Such conversion shall be effectuated b
surrendering to the Company, or its attorney, the original Debenture to
be converted together with a facsimile or original of the signed Notice
of Conversion and a facsimile or original of the signed Purchaser
Representation Letter, see Exhibits A and B attached hereto, which
evidence such Holder's intention to convert the Debenture or a
specified portion thereof, and accompanied by proper assignment, if
applicable. No fractional shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable
shall be rounded up or down, as the case may be, to the nearest whole
share. The date on which notice of conversion is effective ("Conversion
Date") shall be deemed to be the date on which the Holder has delivered
to the Company the original Debenture, a facsimile or original of the
signed Notice of Conversion and a facsimile or original of the signed
Purchaser Representation Letter. The Debentures are subject to a
mandatory, 12 month conversion feature at the end of which all
Debentures outstanding will be automatically converted upon the terms
set forth in this paragraph.
<PAGE>
d) Nothing contained in the Debenture or paragraph
(f) hereof, shall be deemed to establish or require the payment of
interest to the Purchaser at a rate in excess of the maximum rate
permitted by governing law. In the event that the rate of interest
required to be paid under the Debenture exceeds the maximum rate
permitted by governing law, the rate of interest required to be paid
thereunder shall be automatically reduced to the maximum rate permitted
under the governing and any amounts collected in excess of the
permissible amount shall be deemed a payment of principal. To the
extent that such excess amount exceeds the aggregate principal amount
of the Debenture, such excess shall be returned with reasonable
promptness by the holder to the Company.
e) Within five (5) business days after receipt of the
documentation referred to above in Section 5(c), the Company shall
deliver a certificate, without stop transfer instructions, for the
number of shares of Common Stock issuable upon the conversion. It shall
be the Company's responsibility to take all necessary actions and to
bear all such costs to issue the Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter
to the transfer agent, if so required. The person with whose name the
certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. No payment or
adjustment shall be made for accrued and unpaid interest until the
earlier of the conversion date or the mandatory conversion date. Upon
surrender of any Debentures that are to be converted in part, the
Company shall issue to the Purchaser a new Debenture equal to the
unconverted amount, if so requested by Purchaser.
f) In the event the Company does not make delivery of
the Common Stock, as instructed by Purchaser, within 6 business days
after the Conversion Date, then in such event the Company shall pay to
Purchaser an amount, in cash in accordance with the following schedule
wherein "No. Business Days Late" is defined as the number of business
days beyond the 6 business days delivery period.
<PAGE>
Late Payment for Each
$10,000 of Debenture
Principal Amount Being
No. Business Days Late Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each
Business days Late Beyond 10 days
In no event shall the damages for late delivery exceed
$80,000.
To the extent that the failure of the company to issue the
Common Stock pursuant to this Section 5(f) is due to the unavailability
of authorized but unissued shares of Common Stock, the provisions of
this Sections 5(f) shall not apply but instead the provisions of
Section 5(g) shall apply.
The Company shall pay any payments incurred under this Section
5(f) in immediately available funds within three 93) business days from
the date of issuance of the applicable Common Stock. Nothing herein
shall limit a Purchaser's right to pursue actual damages for the
Company's failure to issue and deliver Common Stock to the Holder
within 6 business days after the Conversion date.
The Company recognized the right of Purchaser to assign any
portion of the Debentures to another non-U.S. Person during the 40 day
restricted period and to assign any portion of the Debentures to
another non-U.S. Person or U.S. Person or entity after the 40 day
restricted period.
g) If, at any time Purchaser submits a Notice of Conversion
and the Company does not have sufficient authorized but unissued shares
of Common Stock available to effect, in full, a conversion of the
Debentures (a "Conversion Default", the date of such default being
referred to herein as the "conversion Default Date"), the Company shall
issue to the Purchaser all of the shares of Common Stock which are
available, and the Notice of Conversion as to any Debentures requested
to be converted but not converted (the "Unconverted Debentures") shall
become null and void. The Company shall provide notice of such
Conversion Default ("Notice of Conversion Default") to all existing
Purchasers of outstanding Debentures, by facsimile, within one (1)
business day of such default (with the original delivered by overnight
or two day courier). No Holder may submit a Notice of Conversion after
recept of a Notice of Conversion Default until the date additional
shares of Common Stock are authorized by the Company. The Company
agrees to pay to all Puurchasers of outstanding Debentures payments for
a Conversion Default ("Conversion Default Payments") in the amount of
(N/365) x (.24) x the initial issuance price of the outstanding
Debentures held by each Purchaser where N = the number of days from the
Conversion Default Date to the date (the "Authorization Notice")to each
Purchaser of outstanding Debentures that additional shares of Common
Stock have been authorized, the Authorization Date and the amount of
Holder's accrued Conversion Default Payments. The accrued Conversion
Default ahll be paid in cash or shall be convertible into Common Stock
at the Conversion Rate, at the Purch's ooption, payable as follow: (i)
in the event Purchaser elects to take such payment in cash, cash
payments shall be made to such Pruch of outstanding Debentures by the
fifth day of the following calendar month, or (ii) in the event
Purchaser elects to take such payment in stock, the Purchaser may
convert such payment amount into common stock at the Conversion Rate at
anytime after the 5th day of the calendar month follwoing the month in
which the Authorization Notice was received, until the expiration of
the mandatory 36 month conversion period.
<PAGE>
Nothing herein shall limit the Purch's right to
pursue actual damages for the Company's failure to mainatin a
sufficient number of Authorization shares of common stock.
6. Closing Date and Escrow Agent. Closing shall be effected
through delivery of funds and Debentures to the Escrow Agent. Purchaser
shal forthwith deliver the necessary funds as indicated in Paragraph 1
to the Escrow Agent. A Debentures(s) will be delivered at the
instructions of the Company too the Escrow Agent: Joseph B. LaRocco,
Esquire, 1055 Washington Boulevard, Stamford, Connecticut 06901.
Purchaser and the Company agree that the Escrow Agent, in his capacity
as Escrow Agent, has no liabililty as a result of any fraudulent or
unlawful conduct of an party other than the Escrow Agent and agree to
thold the Escrow Agent harmless in such event. In the event the
Debentures are not received by the Escrow Agent from the Company within
Five (5) Business Days of the date of receipt of the Escrowed Funds,
the Escrow Agent shall return the Escrowed funds without interest to
the Purchaser by wire transfer pursuant to written instructions.
7. Delivery Instructions. The Debentures being purchased
hereunder shall be delivered to Joseph B. LaRocco, Esq. as Escrow
Agent, who will hold the Debentures in escrow until funds have been
wired to the Company less, placement fees, at which time the Ecrow
attorney shall thenhave the Debentures dleivered to the Purchaser
outside the United States.
8. Conditions To Seller's Obligation to Sell. Seller's
obligation to sell the Debentures is conditioned upon:
a) The receipt and acceptance by Purchaser of this
Agreement as evidenced by exeuction of this Agreement by Purchaser.
b) Delivery into the closing depository of good
funds by Puch as payment in full of the purchase price of the
Debentures.
9. Conditions To Purch's Obligation to Purchase. Purch's
obligation to purchase the Debentures is conditioned upon:
a) The receipt and acceptance by Seller of this
Agreement as evidenced by exeuction of this Agreement by the duly
authorized officer of Seller.
b) Delivery of the Debentures as described herein.
10. Offering Materials. All offering materials and documents
used in connection with offers and sales of the Securities prior to the
expiration of the Restricted Period referred to in Section 2(a)(v)
hhereof shall include statements ot the effect that the Securities have
not been registered under the 1933 Act or appliable state Securities
laws, and that neither Purchaser, nor any direct or indirect Purchaser
of the Securities from Purchaser, may directly or indirectly offer or
sell the Securities in the United States or to U.S. Persons (other than
distributors) unless the Securities are registereed under the 1933 Act
any appliable state Securities laws, or any exemption from the
registration requirements of the 1933 Act or such state Securities laws
is available. Such statements shall appear (1) on the cover of any
prospectus or offering used in connection with the offer of sale of the
Securities, (2) in the underwriting sectin of any prospectus or
offering circular used in connection with the offer or sale of the
Securities, and (3) in any advertisement made orissued by Seller,
Purchaser, any other distributor, any of their respective affiliates,
or any person acting on behalf of any of the foregoing.
<PAGE>
11. No Shareholder Approval. Seller hereby agrees that after
the Closing ate it wil take all appropriate action to authorize the
issuance of Common Stock upon conversion of the Debentures and that no
shareholder approval is required for such action. If an opinion of
counsel Company shall arrange for such an opinion to be provided at
Company's sole cost and expense.
12. Right of First Refusal. During the six (6) month period
following the Closing Date, eacj Purchaser shall have a pro rata right
of firtst refusal to purchase formt he Company any securities of the
COmpany which may be offered pursuant to exemption from registration
under Regulation S of the Securities Act on the same terms and
coditions as my be offered to any third party. In connection
therewith, the Company shall be required to give written notice to the
Purchaser(s) of any such offer prior to the completion of any
transaction contemplated by such offer.
The notice shall specify the terms and conditions of
such offer. Pruch shall have five (5) business days following receipt
of such notice to provide written notice to the Company of its exercise
of riht of first refusal to purchase all of the Securities described in
the notice on the terms and conditions set forth in the ntocie. If
Purchaser shall give notice of its election to exercise such right of
first refusal, Purchaser shall deliver all documents required to
complete such transaction within the later of five (5) business days
after the date of notice to the Company of Purchaser exercise of such
right of first refusal or delivery to Purchaser of all documents
required to complete such transaction. If Purchaser shall fail fail to
give such notice of its election to exercise right of first refusal in
full with the respect to the offer of the Securities set forth in the
notice or shall fail to deliver all such consideration and execute and
deliver all such documents within the required periods, such right of
first refusal with respect to the Securities offered in the notice
shall lapse.
13. Change in Regulation S. During the twelve month Period
following issuance of the Debentures, if there is any change in
Reguation S that would restrict the conversion of the Debentures into
Common Stock according to the terms and conditions set forth in this
Agreement, then in such event the Company shall immediately seek
registration by way of a Form S-3 filing. All such action required by
the Company to complete the registration shall be done as soon as
possible at the Company's sole cost and expense.
14. Independent Counsel. The undersigned ackowledge that they
have been advised to consult with thier own attorneys and finanical
advisors regarding this Agreement.
15. Arbitration. The parties shall resolve any dispute arising
hereunder before a panel of three arbitrators selected pursuant to and
run in accordance with the rules of the American Arbitration
Association. The arbitration shall be held in New York, New York. The
winning party shall be entitled to an award of reasonable attorney's
fees and costs. Disputes under this Agreement as well as all of the
terms and conditions of this Agreement shall be goverened in accordance
with and by the laws of the State of Nevada.
<PAGE>
16. Miscellaneous.
a) Except as specifically referenced herein, this
Agreement consititutes the entire contract between the parties, and
neither party shall be liable or bound to the other in any manner by
any warranties, representations or covenants exept as specifically set
forth herein. Any previous agreement among the parties related to the
transactions described herein is superseded hereby. The terms and
conditins of this Agreement shal insure to the benefit of and be
binding upon the respective successors and assigns fo the parteis
hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly
provided herein.
b) Purchaser is an independent contractor, and is not the
agent of Seller. Purchaser is not authorized to bind Seller, or to
make any representations or warranties on behalf of Seller.
c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Seller
will advise each purchaser, if any, and potential purchaser of the
Securities, of the foregoing senntence, and that such pruchaser is
relying on its own investigation with respect to all such mattes, and
that such purchaser wil be given access to any and all docments and
Seller personnel as it may reasonably request for such investigation.
d) All representations and warranties contained in the
Agreement by Seller and Purchaser shall survive the closing
transactions contemplated by this Agreement.
e) This Agreement shall be construed in accordance with the
internal laws of the State of Nevada, and shall be binding upon the
successors and assigns of each party hereto. This Agreement may be
executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shal be effective as an original.
Whereever used, the singular number shall include the plural, and the
plural the singular, and the use of any gender shall be applicable to
all genders.
[Balance of this page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first set forth above.
Official Signatory of Seller:
State of Utah )
) ss. CYBERAMERICA CORPORATION
County of Salt Lake )
On this 11th day of September, 1996, before me, Randall
Heiner, a notary public, personally appeared Richard By:/s/ Richard Surber
Surber, personally known to me to be the person whose Richard Surber
name is subscribed to this instrument, and acknowledged
that he executed the same. Title: President
/s/Randall Heiner
Notary Public
June 7, 2000
My Commission Expires
RANDALL HEINER
Notary Public
State of Utah
My Commission Expires June 7, 2000
8312 S. 1275 E. Sandy, UT 84094
Official Signatory of Purchaser:
By:/s/ M.I. Sankatung
Title: Director
Curacao Neth Antilles
Country of Execution
Address of Purchaser:
Int Trade Center TMT 26
Piscadero Bay
Curacao Neth Antilles
Phone 011 599(9)636198
Fax 011 599(9)636533
<PAGE>
Exhibit A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert
the Debentures.)
The undersigned hereby irrevocably elects, as of___________________ ,
199__ to convert $__________________ of the Debentures into Shares of Common
Stock (the "Shares") of CYBERAMERICA CORPORATION (the "Company") according to
the conditions set forth in the Subscription Agreement dated
______________________, 1996.
The undersigned represents that it is not a U.S. Person as defined in
Regulation S promulgated under the Securities Act of 1933, as amended, and is
not converting the Debentures on behalf of any U.S. Person.
Date of Conversion________________________________________________
Applicable Conversin Price_________________________________________
Number of Shares Issuable upon this conversion_____________________
Signature__________________________________________________________
[Name]
Address____________________________________________________________
___________________________________________________________________
Phone_______________________ Fax____________________
<PAGE>
EXHIBIT B
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned ____________________, has purchased on
_______________________, 1996, Convertible Debentures of CYBERAMERICA
CORPORATION (the "Company") in the amount of $300,000, (the "Debentures"). In
connection with such purchase, the undersigned, has executed and delivered a
subscription agreement ("Subscription Agreement") of your design. As the forty
(40) day transaction restriction period has expired, the undersigned hereby
requests that the Debentures be transferred into "Street Name" of
_________________________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Debentures was made to it outside of the United
States and theundersigned was, at the time the Subscription Agreement was
executed and delivered, and is now, outside the United States;
(2) It is not a U.S. Persion (as such term is defined in Section 902(a) of
Regulation S promulgated under the United States Securiteies Act of 1933 (the
"Securities Act"); and it has purchased the Debentures for its own account and
not for the account or benefit of any U.S. Person;
(3) All offers and sales by the undersigned of the Debentures shall be
made purusant to an effective registration statment under the Securities Act or
pursuant to and exemption from, or in a transaction not subject to the
registration requirments of, the Securities Act;
(4) It is familiar with and understands the terms, conditions and
requirements contained in Regulation S and definitins of U.S. Persons contained
in Regulation S;
(5) The undersigned has not engaged in any "directed selling efforts" (as
such term is defined in Regultion S) with respect to the Debentures or the
Common Stock that is issuable upon conversion; and
<PAGE>
(6) The undersigned purchased its Debentures with investment intent and at
the time of the purchase of said Debentures had no interest to sell, dispose of
or otherwise transfer the Debentures or the Common Sotck that is issuable upon
conversion. The purpose for this request is to facilitate the management of the
undersigned's investment accounts.
(7) The undersigned agrees to the provisions of Paragraph 2(a)(xiv) of the
Offshore Securities Subscription Agreement which is incorporated herein and made
a part hereof as if fully written.
Dated this _____ Day of the month of___________________, 1996.
By:
_______________________________ _________________________
Official Signature of Purchaser Title
<PAGE>
DEBENTURE ESCROW AGREEMENT
THIS AGREEMENT is made as of the 16th day of September, 1996 by and
between CYBERAMERICA CORPORATION with its principal office at 268 West 400
South, Suite 300, Salt Lake City, Utah 84101 (hereinafter "Company"), and Joseph
B. LaRocco, Esq., 1055 Washington Boulevard, Stamford, CT 06901 (hereinafter
"Escrow Agent")
W I T N E S S E T H:
WHEREAS, certain Purchasers will be purchasing the Company's Debentures
in an amount as set forth in an Offshore Securities Subscription Agreement
signed by the Company and eash Purchaser; and
WHEREAS, it is intended that each purchase of a Debentures be
consummated in accordance with the requirments set forth by Regualtion "S"
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company has requested that the Escrow Agent hold the funds
of each Purchaser in escrow until the Escrow Agent has received the Debentures
representing the amount being purchased by that particular Purchaser. The Excrow
Agent will tehn immediately wire transfer or otherwise deliver at the Company's
direction immediately available funds in the face amount of the Debentures, less
fourteen percent (14%) to the Company or the Company's account and arrange for
delivery of the certificates to the Purchaser per the Purch's written
instructions.
NOW, THEREFORE, in consideration of the covenants and mutual promises
containted herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledges and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1 The parties hereby agree to establish escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
the Debentures.
<PAGE>
1.2 Upon Escrow Agent's receipt of funds into his attorney's trustee
account he shall notify the Company, or the Company's sedignated attorney or
agent, of the following:
a) the amount of funds he has received into his account;
b) the name of Purchaser that sent in the funds;
c) the amount of the Debentures sought to be purchased.
1.3 The Company upon receipt of said notice and acceptance of such
Purchaser's Subscription Agreement, as evidenced by the Comopany's execution
thereof, from Escrow Agent shall deliver to Escrow Agent the Debentures
representing that amount of the Company's Debentures being purchased.
1.4 Upon Delivery of the Debentures, Escrow Agent shal immediately
wire that amount of funds necessary to purchase the Debentures, per the written
instructions of the Company. Once the funds have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Debentures
delivered by overnight delivery, if possible, per the written instructions of
the Purchaser.
1.5 This Agreement may be altered or amended only with the consent of
all the parties hereto. Should the Company attempt to change this Agreement in a
manner which, in the Escrow Agent's discretion, shall be undesirable, the Escrow
Agent may resign as Escrow Agent by notifying the Company and the Purchaser in
writing. In the case of the Excrow Agent's resignation or removal pursuant ot
the foregoing, his only duty, until receipt of notice from the Company and the
Purch's Agent that a successor escrow agent shall have been appointed, shall be
to hold and preserve the Debentures and/or funds. Upon receipt by the Escrow
Agent of said notice from the Company and the Purchaser of the appointment of a
successor escrow agent, the name of a successor escrow account and a direction
to transfer the Debentures and/or funds, the Escrow Agent shall promptly
therheafter thansfer all of the Debentures and/or funds held in escrow to said
successor escrow agent. Immediately after said transfer of Debentures, the
Escrow Agent shall furnish thhe Company and the Purchaser with proof of such
transfer. The Escrow Agent is authorized to desregard any notices, requests,
instructions or demands received by it form the Company or the Purchaser after
notice of resignation or removal shall have been given, unless the same shall be
the aforementioned notice form the Company and the Purchaser to transfer the
Debentures and funds to a successor escrow agent or to return to the same
perspective parties.
<PAGE>
1.6 The Escrow Agent shall be reimbursed by the Company and the
Purchaser for any reasonable expenses incurred in the event there is a conflict
between the parties and the Escrow Agent shall deem it necessary to retain
counsel.
1.7 The Escrow Agent shall not be liable or repsonsible except for the
Escrow Agent's own negligence or willful misconduct.
1.8 The Company and the Purchaser warrant to and agree with the Escrow
Agent that, unless otherwise expressly set forth in this Ag:
(I) there is no security interest in the
Debentures or any part thereof;
(ii) no financing statement under the Uniform
Commercial Code is on file in any
jurisdiction claiming a security interest
or in describing (whether specifcially or
generally) the Debentures or any part
thereof; and
(iii) the Escrow Agent shall have no
responsibility at any time to ascertain
whether or not any security interest exists
in the Debentures or any part thereof or to
file any financing statement under the
Uniform Commerical Code with respect to the
Debentures or any part thereof.
1.9 The Escrow Agent has made no representations or warranties in
connection with this transaction. The Escrow Agent has no liability hereunder to
either party other than to hold the Debentures and funds and to deliver them
under the terms hereof (except as provided in paragraph 1.7). Each party hereto
agrees to indemnify and hold harmless the Escrow Agent from and with respect to
any suits, claims, actions or liabilities arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Escrow.
<PAGE>
ARTICLE 2
MISCELLANEOUS
2.1 No waiver of any breach of any covenant or provision herein
contained shall be deemed a vaiver of any preceding or succeeding breach
thereof, or of any other covoenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligatio or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by hand delivery, fax,
overnight courier, registered or certified mail, postage prepaid, return receipt
requested, and shall be deemed received upon receipt thereof, as follows:
(I) CyberAmerica Corporation
Richard Surber, President
268 West 400 South, Suite 301
Salt Lake City, Utah 84101
(P) 801-575-8073
(F) 801-575-8092
(ii) Joseph B. LaRocco, Esq.
1055 Washington Boulevard
Stamford, CT 06901
(P) 203-353-1922
(F) 203-353-0323
2.3 This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
2.4 The Agreement is the final expression of, and contains the entire
Ag between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto. This Ag many not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, excpet by writen insturment signed by the parties to be charged or by
its agent duly authorized in writing or as otherwise expressly permitted herein.
<PAGE>
2.5 Whenever required by the context of this Ag, the singular shall
include the plural and masculine shall include the feminine. This Ag shall not
be construed as if it had been prepared by one of the parties, but rather as if
both parties had prepared the same. Unless otherwise indicated, all references
to Articles are to this Ag.
2.6 The Company acknowledges and confirms that it is not being
represented in a legal capacity by Joseph B. LaRocco, and it has had the
opportunity to consult with its own legal advisors prior to the signing of the
agreement.
2.7 The parties hereto expressly agree that this Ag thall be
govenrened by, interpreted under, and constured and enforced in accordance of
the laws of the State of Connecticut. An action to enforce, arising out of, or
relating in any way to, any provisions of this Ag shall be brought through the
American Arbitration Association at the desingated locale of Stamford,
Connecticut.
IN WITNESS WHEREOF, the parties hereto have executed this Ag as of the
day of September, 1996.
CYBERAMERICA CORPORATION
By: /s/ Richard Surber
Richard Surber, President
JOSEPH B. LaROCCO, ESCROW AGENT
By: /s/ Joseph B. LaRocco
Joseph B. LaRocco, Esq.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, (this "Agreement") is made this 22nd day
of May, 1996, by and between Premier Sales Corporation, Ltd. ("Buyer"), whose
address is The Ave Sark, Channel Islands, GY9 OSB and, Canton Financial Services
Corporation ("Seller"), with offices at 268 West 400 South, Ste. 301, Salt Lake
City, UT 84101.
WITNESSETH
WHEREAS, Seller desires to sell to Buyer and Buyer desires to acquire
from Seller, 8,400,000 shares of Seller's Restricted Common Stock of Cyber Real
Estate, Inc. (the "Stock") on the terms and conditions contained herein, subject
to satisfaction of those certain conditions to closing hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto do agree as follows:
l. Acquisition of Stock. Seller hereby agrees to issue to Buyer and to
assign, transfer and convey to Buyer free and clear of all liabilities, liens,
claims, security interests and encumbrances and restrictions of any kind, and
Buyer hereby agrees to acquire from Seller, all of the Stock upon the terms and
subject to the conditions hereinafter set forth. Seller shall deliver to Buyer
at closing certificates for the Stock duly executed for transfer to Buyer on the
stock books and records of Seller. The Stock of Seller will be issued in a
non-public offering pursuant to any and all available and applicable exemptions
from registration in accordance with state and federal law. That said Stock of
Cyber Real Estate, Inc. being sold by Seller and purchased by Buyer herein,
represents a majority and controlling interest in Cyber Real Estate, Inc., as
well as, controlling interest in Cyber Real Estate Inc.'s subsidiary, Cyber Real
Estate of Illinois, Inc., whose sole asset is property located in DeKalb,
Illinois.
2. Purchase Price/Payment. In exchange for said Stock, Buyer shall
execute a Promissory Note in favor of Seller in the amount of $1 million due and
payable two (2) years from the date of the execution of this Agreement. Said
Note shall bear no accruable interest. However, should Maker fail to pay on said
Note when due, interest, at a rate of 9% per annum will be assessed from that
date forward until said Note is paid in full.
Further, said Note shall be secured by 166,667 shares of Alpha Solarco, Inc.'s
free-trading stock.
3. Representations, Warranties and Covenants.
3.l Seller s Representations and Warranties. In connection with the
transaction contemplated by this Agreement, Seller makes the following
representations, warranties and covenants as follows:
(a) Seller has not entered into any contract or agreement
to sell, mortgage or otherwise encumber its Stock.
(b) Seller, to the best of its knowledge and information,
knows of no patent or latent defects in the
transferability of the Stock.
(c) There are no creditors of Seller or other entities
and persons of all kinds and nature whatsoever who
have any liens, claims, security interests or
encumbrances which would affect Seller s ability to
pass clear title to the Stock to Buyer on the Closing
Date or who claim any lien, claim, security interest,
encumbrance, ownership right, beneficial interest or
claim of right in and to the Stock.
<PAGE>
(d) All of such shares will be validly issued at closing
and will be fully paid and nonassessable.
(e) Seller is the sole owner of all legal and beneficial
interests (including, without limitation good and
marketable title) in, and has good and marketable
title to, all of the Stock, with the absolute right
to own, sell, transfer, encumber, use, assign and
transfer the same to any person or entity whatsoever
free and clear of all liens, pledges, security
interests or encumbrances of any kind or nature
whatsoever and without any breach of any agreement to
which it is a party or by which it is bound. There
are no existing impediments to the sale and transfer
of the Stock.
(f) Seller has full right, power, legal capacity and
authority to enter into this Agreement and to issue
and deliver to Buyer the shares to be so exchanged
and delivered to Buyer hereunder.
(g) Seller is not in violation of any provision of its
Articles of Incorporation or Bylaws, nor has it
defaulted under any agreement or other instrument to
which it is a party or by which it is bound.
(h) No material fact regarding Seller and/or its business
and Assets has been omitted which would reasonably
affect a prudent investor's decision to acquire the
Stock being acquired by Buyer herein to the best of
Seller s knowledge, information and belief.
(i) No warranty or representation made herein by Seller,
nor any statement given to Buyer by Seller pursuant
hereto, or with respect to the transaction
contemplated hereby, contains any untrue statement of
material fact or admits to state a material fact
necessary to make the statement contained herein not
misleading as of the date of this Agreement to the
best of its knowledge.
3.2 Buyer's Representations and Warranties. In connection with the
transaction contemplated by the agreement, Buyer makes the following
representations, warranties and covenants as follows:
(a) Buyer is a duly authorized Corporation and existing
in good standing under the laws of a foreign
jurisdiction.
3.3 Brokers. Buyer and Seller mutually represent, warrant and agree
that any obligation on the part of Buyer or Seller with respect to commissions
owing to brokers or salesmen for services performed in connection with the
purchase or sale of the business contemplated by this transaction are not
considered as part of this Agreement. Any such amount owed by Buyer or Seller to
said vendors for such services, if any, shall be handled through mutual
indemnity by Buyer and/or Seller apart from this Agreement.
4. Indemnification.
4.l Seller s Indemnity. Seller indemnifies and holds harmless Buyer,
its successors and assigns, against any and all losses, costs, expenses and
damages resulting from any breach or any representation, warranty or agreement
set forth in this Agreement, or the untruth or inaccuracy thereof. Seller
indemnifies and holds harmless Buyer against any and all debts, liabilities,
choses in action, or claims of any nature, absolute or contingent, together with
all expenses and legal fees resulting from any such breach, untruth or
inaccuracy, or which may be incurred to compromise or defend such liabilities,
choses in action or claims of any nature, absolute or contingent, including, but
not limited to, any and all liabilities for federal income or withholding or
excise taxes, or state or municipal taxes of any nature. Buyer, its successors
and assigns, shall notify Seller of any such liability, asserted liability,
breach of warranty, untruth or inaccuracy of representation, or any claim
thereof, with reasonable promptness, and Seller or its legal representatives
shall have, at their election, the right to compromise or defend any such matter
involving asserted liability of Seller or Buyer through counsel of their own
choosing at the expense of Seller. Seller shall notify Buyer, or its successor
or assigns, in writing promptly of its intention to compromise or defend any
claim and Buyer, its successors or assigns, shall cooperate with Seller and its
counsel in compromising or defending against any such claim.
<PAGE>
4.2 Buyer's Indemnity. Buyer indemnifies and holds harmless Seller
against all expense or loss incurred resulting from any breach by Buyer of any
representation, warranty or covenant of Buyer set forth in this Agreement, or
the untruth or inaccuracy thereof.
5. Survival. All of the covenants, warranties, representations and
agreements contained in this Agreement and in all other documents executed and
delivered by or on behalf of Seller to Buyer in order to consummate the
transactions contemplated hereby are true as of the date of this Agreement and
will survive the closing. Seller acknowledges that each of the covenants,
warranties, representations and agreements of Seller contained herein
constitutes a material inducement to Buyer's execution of this Agreement and the
performance of its obligations hereunder and, in the event that any of such
covenant, warranty, representation or agreement is untrue or is breached, Buyer
shall be entitled to pursue any and all remedies therefore available at law or
in equity.
6. Arbitration.
6.l In the event any dispute or controversy arising out of this
Agreement cannot be settled by the parties hereto, such controversy or dispute,
at the election of any party to the dispute, shall be submitted to arbitration
in the state of Utah (and for this purpose each party hereby expressly consents
to such arbitration in such place). The decision of said arbitrator shall be
binding upon the parties hereto for all purposes, and judgment to enforce any
such binding decision may be entered in the Utah Supreme Court (and for this
purpose each party hereby irrevocably consents to the jurisdiction of said
court).
6.2 In the event the parties cannot mutually agree upon an arbitrator
to settle their dispute or controversy, each party shall then select one
arbitrator and the two arbitrators shall select a third arbitrator. At the
election of either of the parties hereto, all arbitrators shall be selected
pursuant to the then existing rules and regulations of the American Arbitration
Association governing commercial transactions.
6.3 The defaulting party shall be responsible for all out-of-pocket
expenses the non-defaulting party shall have incurred in this transaction as a
result of such default. Upon written notice of such default and expenses, the
defaulting party shall pay within ten (10) days of the receipt of notice of such
default the amount of the expenses incurred by the non-defaulting party to such
date.
6.4 In the event a party hereto finds it necessary to employ legal
counsel or to bring an action at law or other proceedings against another party
to enforce any of the terms, covenants or conditions hereof, the party
prevailing in any such action or other proceedings shall be paid all reasonable
attorneys fees by the other party, and in the event any judgment is secured by
such prevailing party, all such attorneys fees, as determined by the arbitration
and/or court, shall be included in any such judgment.
<PAGE>
7. Miscellaneous.
7.1 Any notice to be given by Buyer or Seller shall be given in writing
and delivered in person or forwarded by certified mail to the address above
noted, postage prepaid, at the address indicated below, unless the party giving
any such notice has been notified, in writing, of a change of such address:
Any such notice shall be deemed effective five (5) days after posting,
if mailed, or upon date of receipt, if delivered.
7.2 This Agreement contains the complete understandings and agreements
of the parties hereto with respect to all matters referred to herein, and all
prior representations, negotiations and understandings are superseded hereby and
merged into this Agreement. No party shall be liable or bound to any other
person hereto in any manner by any agreement, warranty, representation or
guarantee, except as specifically set forth herein.
7.3 Time is of the essence of this Agreement. Except as herein
otherwise provided, this Agreement and all of the terms and provisions hereof
shall inure to the benefit of and be binding upon the heirs, executors, personal
representatives, successors and assigns of the parties hereto.
7.4 If any of the terms or provisions of this Agreement is determined
to be invalid, such invalid term or provision shall not affect or impair the
remainder of this Agreement, but such remainder shall continue in full force and
effect to the same extent as though the invalid term or provision were not
contained herein.
7.5 This Agreement and the rights of the parties hereto shall be
governed and construed in accordance with the laws of the State of Utah.
7.6 This Agreement may be executed in two or more counterparts, each of
which may be executed by one of the parties hereto, with the same force and
effect as though all of the parties executing such counterparts have executed
but one instrument.
7.7 No consent or waiver, expressed or implied, by either party to or
of any breach or default of the other party in the performance by such other
party of its obligations hereunder or of such party's representations and
warranties contained herein shall be deemed or construed to be a consent to or
waiver of any other breach or default in the performance by such other party of
the same or any other obligations of such party hereunder. Failure on the part
of any party to complain of any act or failure to act on the part of any other
party or to declare such other party in default, irrespective of how long such
failure continues, shall not constitute a waiver by such other party of its
rights hereunder.
7.8 Neither this Agreement nor any term or provision hereof may be
changed, waived, discharged, or terminated orally, or in any manner other than
by an instrument in writing signed by the party against which the enforcement of
the change, waiver, discharge or termination is sought.
7.9 The parties hereto agree to execute, acknowledge and deliver such
further documents as may be necessary or proper to carry the purpose and intent
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first herein above written.
Canton Financial Services Corporation ("Seller")
/s/ Richard Surber
- ------------------------
Richard Surber, President
Premier Sales Corporation, Ltd. ("Buyer")
/s/ Simon Peter-Elmont
- ---------------------------
Simon Peter-Elmont, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S SEPTEMBER 30,
1996 QUARTERLY REPORT ON FORM 10 QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000788738
<NAME> CyberAmerica Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<EXCHANGE-RATE> 1
<CASH> 249,051
<SECURITIES> 0
<RECEIVABLES> 1,671,149
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,318,695
<PP&E> 7,160,772
<DEPRECIATION> 818,292
<TOTAL-ASSETS> 11,597,447
<CURRENT-LIABILITIES> 2,379,861
<BONDS> 0
0
0
<COMMON> 8,576
<OTHER-SE> 5,223,842
<TOTAL-LIABILITY-AND-EQUITY> 11,597,447
<SALES> 0
<TOTAL-REVENUES> 2,461,919
<CGS> 0
<TOTAL-COSTS> 1,591,598
<OTHER-EXPENSES> 1,385,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 235,735
<INCOME-PRETAX> (781,406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (781,406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (630,780)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
