SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 1999
PRINTONTHENET.COM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
000-14614 65-0896930
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(Commission File Number) (IRS Employer Identification No.)
4491 South State Road 7, Suite 200, Fort Lauderdale, Florida 33314
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (800) 446-4753
--------------
NET LNNX, INC.
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 30, 1999, PrintOnTheNet.com, Inc. (the "Company" or "POTN")
completed its acquisition of PrintAmerica Interactive, Inc. ("PrintAmerica") in
a transaction (the "Acquisition") in which all of PrintAmerica's outstanding
common stock (1,000 shares) was acquired for one million shares of unregistered
common stock of the Company. The sellers executed a non compete agreement in
connection with the Acquisition, and also agreed to an 18 month lock up
agreement on the Company's common stock. The Acquisition will be recorded
similar to a pooling of interests for accounting purposes since 100% of the
common stock of PrintAmerica is owned by the parents of brothers Benjamin
Rogatinsky and Samuel Rogatinsky, who collectively own approximately 85% of the
common stock of the Company. Benjamin Rogatinsky is the Chief Executive Officer
and a Director of the Company, and Samuel Rogatinsky is the President and a
Director of the Company. Additionally, Ben Rogatinsky and Sam Rogatinsky had
served as President and Vice President, respectively, of PrintAmerica.
PrintAmerica will be merged into the Company shortly following the Acquisition.
In connection with the Acquisition, the Company obtained an independent
valuation of PrintAmerica.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
FINANCIAL STATEMENTS
(a) Financial Statements of Businesses Acquired
The following audited financial statements of PrintAmerica as of and
for the year and period ended December 31, 1998 and 1997, respectively, are
provided herein:
(1) Independent Auditor's Report for the year ended December 31,
1998
(2) Balance Sheet as of December 31, 1998
(3) Statement of Operations for the year ended December 31, 1998
(4) Statement of Shareholders' Equity for the year ended December
31, 1998
(5) Statement of Cash Flows for the year ended December 31, 1998
(6) Notes to Financial Statements for the year ended December 31,
1998
(7) Independent Auditor's Report for the period from July 30, 1997
(Inception) through December 31, 1997
(8) Balance Sheet as of December 31, 1997
(9) Statement of Operations for the period from July 30, 1997
(Inception) through December 31, 1997
(10) Statement of Shareholders' Equity for the period from July 30,
1997 (Inception) through December 31, 1997
(11) Statement of Cash Flows for the period from July 30, 1997
(Inception) through December 31, 1997
(12) Notes to Financial Statements for the period from July 30,
1997 (Inception) through December 31, 1997
2
<PAGE>
The following unaudited financial statements of PrintAmerica as of and
for the nine month interim periods ended September 30, 1999 and 1998 are
provided herein:
(1) Balance Sheets as of September 30, 1999 and 1998
(2) Statements of Operations for the nine month periods ended
September 30, 1999 and 1998
(3) Statement of Shareholders' Equity for the nine month period
ended September 30, 1999
(4) Statement of Shareholders' Equity for the nine month period
ended September 30, 1998
(5) Statements of Cash Flows for the nine month periods ended
September 30, 1999 and 1998
(6) Notes to Financial Statements (Unaudited)
(b) Unaudited Pro Forma Financial Information
(1) Pro Forma Combined Condensed Balance Sheet as of September 30,
1999 (Unaudited)
(2) Pro Forma Combined Condensed Statement of Operations for the
nine month period ended September 30, 1999 (Unaudited)
(3) Notes to Pro Forma Combined Condensed Financial Statements
(Unaudited)
(c) Exhibit No. Exhibit
2 Stock Purchase Agreement By and Among PrintOnTheNet.com, Inc.
and Reuben and Shulamit Rogatinsky as Tenants by the
Entireties.
3
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
PrintAmerica Interactive, Inc.
I have audited the accompanying balance sheet of PrintAmerica Interactive, Inc.
(a Florida corporation) as of December 31, 1998, and the related statements of
operations, shareholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of PrintAmerica Interactive, Inc. as
of December 31, 1998, and the results of operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
December 17, 1999
4
<PAGE>
PrintAmerica Interactive, Inc.
BALANCE SHEET
================================================================================
================================================================================
December 31, 1998
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash restricted (Note 2) $ 45,181
Accounts receivable (Note 2) 19,997
Inventory (Note 3) 124,325
Prepaid insurance 4,509
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 194,012
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET (NOTE 4) 394,739
- --------------------------------------------------------------------------------
OTHER ASSETS
Intangible assets, net (Note 5,9) 377,182
Deposits 5,898
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS 383,080
- --------------------------------------------------------------------------------
TOTAL ASSETS $971,831
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, current portion (Note 6,9) $ 95,711
Bank overdraft 14,586
Accounts payable (Note 8) 205,180
Accrued expenses 17,266
Income taxes payable (Note 7) 10,673
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TOTAL CURRENT LIABILITIES 343,416
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LONG-TERM LIABILITIES
Deferred taxes (Notes 7) 12,884
Notes payable long-term (Note 6,9) 384,177
- --------------------------------------------------------------------------------
TOTAL LONG-TERM LIABILITIES 397,061
- --------------------------------------------------------------------------------
COMMITMENTS (NOTE 2,10)
SHAREHOLDERS' EQUITY
Common stock, par value $1.00, 1,000 shares authorized
issued and oustanding (Note 11) 1,000
Paid-in capital (Note 8) 158,498
Retained earnings 71,856
- --------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 231,354
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $971,831
================================================================================
See Notes to Financial Statements
5
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF INCOME
================================================================================
================================================================================
For the year ended December 31, 1998
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REVENUES $ 1,512,807
COST OF SALES 905,580
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GROSS PROFIT 607,227
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OPERATING EXPENSES
General and administrative expenses 433,022
Depreciation and amortization 61,843
- --------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 484,865
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INCOME FROM OPERATIONS 122,362
INTEREST EXPENSE 28,054
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INCOME BEFORE INCOME TAXES 94,308
PROVISION FOR INCOME TAXES 23,557
- --------------------------------------------------------------------------------
NET INCOME $ 70,751
================================================================================
See Notes to Financial Statements
6
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF SHAREHOLDERS' EQUITY
================================================================================
================================================================================
For the year ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 1,000 $ 1,000 $ 35,776 $ 1,105 37,881
Capital contributions -- -- 56,267 -- 56,267
Value of services donated
by related parties -- -- 66,455 -- 66,455
Net Income -- -- -- 70,751 70,751
- -------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 1,000 $ 1,000 $158,498 $71,856 231,354
=======================================================================================================
=======================================================================================================
</TABLE>
See Notes to Financial Statements
7
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF CASH FLOWS
================================================================================
================================================================================
For the year ended December 31, 1998
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 70,751
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 61,843
Changes in operating assets and
liabilites, net of effects of
acquisitions:
Restricted cash (45,181)
Accounts receivable 59,170
Inventory (117,325)
Prepaid insurance (4,509)
Bank overdraft 14,586
Accounts payable 19,674
Accrued expenses 16,931
Income taxes payable 10,574
Deferred taxes 12,983
- --------------------------------------------------------------------------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 99,497
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (103,698)
Deposits (5,898)
Net cash payments for acquisitions (40,000)
- --------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (149,596)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 56,267
Value of services donated by related parties 66,455
Non interest bearing loans from affiliates 358,775
Repayment of non interest bearing loans from affiliates (358,775)
Principal repayments on notes payable (81,553)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 41,169
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NET DECREASE IN CASH (8,930)
CASH - BEGINNING OF YEAR 8,930
- --------------------------------------------------------------------------------
CASH - END OF YEAR $ --
================================================================================
See Notes to Financial Statements
8
<PAGE>
PrintAmerica Interactive, Inc.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
================================================================================
For the year ended December 31, 1998
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 28,054
Income taxes --
Non cash transactions:
Notes issued to acquire property $ 79,750
and equipment
================================================================================
See Notes to Financial Statements
9
<PAGE>
PrintAmerica Interactive, Inc.
NOTES TO FINANCIAL STATEMENTS
================================================================================
================================================================================
For the year ended December 31, 1998
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Note 1 - Nature of Operations and Significant Accounting Policies
Nature of Operations
PrintAmerica Interactive, Inc. (the "Company") specializes in quick
printing in the South Florida area. The Company is a Florida
corporation, and was established on July 30, 1997 as Budget Printing &
Graphics, Inc., (BDP). On March 19, 1998, BDP changed its name to
PrintAmerica Management Company, Inc., and again changed its name to
PrintAmerica Interactive, Inc. on September 15, 1999.
Revenue Recognition
Revenue from sales of printed business materials is recognized upon
shipment of product.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Provision for income taxes is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.
Inventory
Inventory, consisting of printing supplies and work in process, is
valued at the lower of cost or market value using the first-in
first-out method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method, half-year convention, over the
estimated useful lives of the assets.
10
<PAGE>
Valuation of Long-Lived Assets
The Company recognizes impairment losses on impaired long-lived assets
(property and equipment and intangible assets) based on the amount by
which the carrying value exceeds the fair value of the long-lived
asset. Fair value is determined by using a current market value
modeling approach or by evaluating the current market value of the
acquired business using fundamental analysis.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
Cash, accounts receivables, accounts payable, debt, accrued expenses
and other liabilities are carried at amounts which reasonably
approximate their fair value due to the short-term nature of these
amounts or due to variable rates of interest which are consistent with
current market rates.
Note 2 - Accounts Receivable
The Company is a party to an agreement (the "Agreement") with a bank
(the "Bank") whereby the Company sells eligible accounts receivable to
the Bank. The bank charges a service fee of 3.25% of the face amount of
each invoice, and holds back 10% (the "holdback"), pending collection
by the Bank of the invoice amount. When the invoice is collected by the
Bank, the holdback is remitted to the Company. At the Banks discretion,
accounts receivable remaining uncollected past ninety days are subject
to repurchase by the Company. The Bank is secured and has filed a UCC
financing statement covering all accounts receivable, inventory, and
all other intangible and tangible assets of the Company, including the
holdback, which amounted to $45,181 at December 31, 1998. Such holdback
has been classified as cash restricted in the accompanying balance
sheet. As of December 31, 1998, the Company sold $409,798 of accounts
receivable (net of the holdback and the service fees) which the Company
could be obligated to repurchase if the underlying accounts receivable
are not collected by the Bank.
11
<PAGE>
Note 3 - Inventory
As of December 31, 1998, inventory consisted of the following.
Print materials and supplies $ 112,209
Work in process 12,116
---------
Total $ 124,325
=========
Note 4 - Property and Equipment
As of December 31, 1998, property and equipment consisted of the
following.
<TABLE>
<CAPTION>
Estimated
Useful
Amount Lives
------ -----
<S> <C> <C>
Manufacturing equipment $327,246 10-20 years
Office equipment 19,019 3-10 years
Vehicle 10,230 5 years
Leasehold improvements 52,378 10 years
--------
Total 408,873
Less accumulated depreciation (14,134)
--------
$394,739
========
</TABLE>
Depreciation expense was $13,691 for the year ended December 31, 1998.
Note 5- Intangible assets
As of December 31, 1998, intangible assets consisted of the following.
Excess of cost over assets acquired $ 331,044
Non-compete agreements 100,000
---------
431,044
Less accumulated amortization (53,862)
---------
$ 377,182
=========
Excess of cost over assets acquired and covenants not to compete are
being amortized over ten years and periods from two to five years,
respectively. Amortization expense was $48,152 for the year ended
December 31, 1998.
12
<PAGE>
Note 6- Notes Payable
<TABLE>
<CAPTION>
The Company is a party to several promissory notes as follows:
Acquisitions:
<S> <C> <C> <C> <C>
Note payable dated August 28, 1997, issued to acquire Kram Printing,
Inc. Face value of $125,000, monthly principal and interest payment of
$2,475 (interest at 7%) payable through July 2002 $ 97,713
Note payable dated March 16, 1998, issued to acquire RJ Menu Company
Face value of $100,000, monthly principal and interest payment of
$1,477 (interest at 6.5%) payable through February 2005 91,398
Note payable dated March 16, 1998, issued to acquire
Cloverleaf Printing, Inc. Face value of $151,000, monthly
principal and interest payment of $1,715 (interest
at 6.5%) based on a 10 year amortization period. Additional principal
payments of $25,000 in April, 2000, $25,000 in April 2001, and final
payment of $45,700 in April 2002 142,753
Note payable dated April 13, 1998, issued to acquire Denny
Printing Corp. Face value of $70,000, monthly principal
and interest payment of $1,386 (interest at 6.5%) payable through
March 2003 62,017
Equipment purchases:
Note payable dated October 24, 1998 for purchase of equipment. Face
value of $51,750, monthly principal and interest payment $1,312
(interest at 10%) payable through August 2002, secured by
manufacturing equipment 49,084
Note payable dated April 24, 1998 for purchase of equipment
Face value of $28,000, monthly principal and interest payment
of $905 (interest at 10%) payable through March 2000, secured by
manufacturing equipment 21,746
Assumption of note payable to GE Capital resulting from
acquisition of Cloverleaf Printing Inc. Face value of $ 40,960,
monthly principal and interest payment of $3,112
(interest at 10%) payable through May 1999 15,177
---------
Total 479,888
Current portion ( 95,711)
---------
Long-term portion $ 384,177
=========
</TABLE>
13
<PAGE>
At December 31, 1998, aggregate maturities of notes payable were as
follows:
1999 $ 95,711
2000 112,996
2001 113,112
2002 114,861
2003 21,200
Thereafter 22,008
---------
$ 479,888
=========
Note 7 - Income Taxes
As of December 31, 1998, the provision for income taxes consisted of
the following:
Current Federal income taxes $ 7,968
Current State income taxes 2,705
--------
$ 10,673
========
Deferred Federal income taxes $ 10,676
Deferred State income taxes 2,208
--------
$ 12,884
========
Total income tax provision $ 23,557
========
Note 8 - Related Parties
The Company entered into a five year lease agreement with US Property
Management, Inc, (a related party through common ownership), for one of
its manufacturing facilities. The lease is at a fair market rate, and
total rent expense related to the lease was $11,702 for the year ended
December 31, 1998. US Property Management, Inc. did not require the
Company to pay the amount due, and such amount was credited to paid-in
capital.
During the year ended December 31, 1998, the Company purchased $82,511
of printing materials and printing services from National Lithographers
& Publishers, Inc., ("National Lithographers") and Royal Industries,
Inc., (both related parties through common ownership). Of this amount,
$54,753 was credited to paid-in capital since National Lithographers
did not require payment of such amount. The remaining balance of
$27,758 of such purchases was included in accounts payable as of
December 31, 1998.
The Company leased its employees from National Payroll Services, Inc.,
(a related party through common ownership). The amounts charged for
salaries, wages and the related employment taxes and other benefits
totaled $522,802 for the year ended December 31, 1998.
14
<PAGE>
During the year ended December 31, 1998, certain affiliates of the
Company loaned cash (interest free) aggregating $358,775 to the Company
and the Company repaid these loans to such affiliates.
During the year ended December 31, 1998, the Company paid consulting
fees of $41,000 to a party related to the owners of the Company.
Note 9 - Acquisitions
During the year ended December 31, 1998, the Company purchased certain
assets and liabilities and the operations of three South Florida quick
print shops. Payment terms were as follows:
o RJ Menu Company was acquired on March 16, 1998. The purchase
price was $125,000, consisting of a cash payment of $25,000
and issuance of a promissory note for $100,000 payable over
7 years including interest at 6.5% per annum.
o Denny Printing, Inc. was acquired on April 13, 1998. The
purchase price was $100,000, consisting of a cash payment of
$30,000 and issuance of a promissory note for $70,000
payable over 5 years including interest at 7% per annum.
o Cloverleaf Printing, Inc. was acquired on March 16, 1998.
The purchase price was $151,000, consisting of a promissory
note payable based on a 10 year amortization period
including interest at 6.5% per annum, principal reductions
of $25,000 at the end of the second and third year, and a
final balloon payment for the remaining outstanding
principal balance at the end of year four. Additionally,
certain assets and liabilities of Cloverleaf were assumed.
The acquisitions were accounted for under the purchase method resulting
in the following aggregate allocation of purchase price:
<TABLE>
<CAPTION>
<S> <C>
Cash acquired $ 15,000
Accounts receivable acquired 63,298
Inventory acquired 6,000
Property, plant and equipment acquired 235,700
Non compete agreements 75,000
Excess of cost over assets acquired 212,044
Assumption of debt and trade payables (231,042)
-------
Total purchase price $ 376,000
=========
</TABLE>
15
<PAGE>
Note 10 - Commitments
The Company is a party to several operating leases for facilities and
office equipment, as follows:
Facilities:
o Five-year lease dated September 1, 1998 with initial annual rent
of $32,970.
o Five-year lease dated August 28, 1997 with initial annual base
rent of $9,000, and scheduled four percent (4%) increases for the
next four years.
o Five-year lease dated March 1, 1998 with annual base rent of
$10,800 for the first two years, $11,556 for the third and fourth
years, and $12,360 for the last year. Subject to a five-year
renewal option.
Equipment:
o Three-year office equipment lease dated August 13, 1998 with
monthly rental payments of $1,025.
Minimum annual rents, including sales taxes, on these leases are as
follows.
1999 $ 69,300
2000 70,400
2001 64,100
2002 48,100
2003 25,600
--------
Total $277,500
========
Total rent expense was $47,028 for such operating leases for the year
ended December 31, 1998.
Note 11 - Subsequent event
On December 30, 1999, the Company was acquired by PrintOnTheNet.com,
Inc. ("POTN"), a publicly traded company. POTN issued one million
shares of unregistered common stock for the outstanding common stock of
the Company. The Company was owned by the parents of Ben Rogatinsky and
Sam Rogatinsky, the founders and majority shareholders of POTN. Ben
Rogatinsky and Sam Rogatinsky had served as president and vice
president, respectively, of the Company.
16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
PrintAmerica Interactive, Inc.
I have audited the accompanying balance sheet of PrintAmerica Interactive, Inc.
(a Florida corporation) as of December 31, 1997, and the related statements of
operations, shareholders' equity, and cash flows for the period from July 30,
1997 (Inception) through December 31, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted this audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of PrintAmerica Interactive, Inc. as
of December 31, 1997, and the results of operations and cash flows for the
period from July 30, 1997 (Inception) through December 31, 1997 in conformity
with generally accepted accounting principles.
Esteban Brown CPA, PA
Miami, Florida
December 17, 1999
17
<PAGE>
PrintAmerica Interactive, Inc.
BALANCE SHEET
================================================================================
================================================================================
December 31,1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 8,930
Accounts receivable 15,869
Inventory 1,000
- ----------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 25,799
- ----------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET (NOTE 2) 17,282
- ----------------------------------------------------------------------------------------------------
OTHER ASSETS
Intangible assets, net (Note 3) 138,290
- ----------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 138,290
- ----------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 181,371
====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable, current portion (Note 4, 7) $ 22,018
Accounts payable (Note 6) 20,277
Accrued expenses 3,287
Income taxes payable (Note 5) 99
- ----------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 45,681
- ----------------------------------------------------------------------------------------------------
LONG - TERM LIABILITIES
Deferred taxes (Note 5) 96
Note payable long-term portion (Note 4,7) 97,713
- ----------------------------------------------------------------------------------------------------
TOTAL LONG -TERM LIABILITIES 97,809
- ----------------------------------------------------------------------------------------------------
COMMITMENT (NOTE 8)
SHAREHOLDERS' EQUITY
Common stock, par value $1.00, 1,000 shares authorized,
issued and outstanding (Note 9) 1,000
Paid-in capital (Note 6) 35,776
Retained earnings 1,105
- ----------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 37,881
- ----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 181,371
====================================================================================================
See Notes to Financial Statements
</TABLE>
18
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF INCOME
================================================================================
================================================================================
For the Period from July 30, 1997 (Inception) through December 31, 1997
REVENUES $71,860
COST OF SALES 44,472
- --------------------------------------------------------------------------------
GROSS PROFIT 27,388
OPERATING EXPENSES
General and administrative expenses 17,784
Depreciation and amortization 6,153
- --------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 23,937
- --------------------------------------------------------------------------------
INCOME FROM OPERATIONS 3,451
INTEREST EXPENSE 2,151
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,300
PROVISION FOR INCOME TAXES 195
- --------------------------------------------------------------------------------
NET INCOME $ 1,105
================================================================================
See Notes to Financial Statements
19
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF SHAREHOLDERS' EQUITY
================================================================================
================================================================================
For the Period from July 30, 1997 (Inception) through December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance July 30, 1997 - $ -- $ -- $ -- $ --
Capital contributions - 1,000 33,376 -- 34,376
Value of services donated
by related parties - -- 2,400 -- 2,400
Net Income - -- -- 1,105 1,105
- --------------------------------------------------------------------------------------------------------
Balance December 31, 1997 - $ 1,000 $35,776 $ 1,105 $37,881
========================================================================================================
See Notes to Financial Statements
</TABLE>
20
<PAGE>
PrintAmerica Interactive, Inc.
STATEMENT OF CASH FLOWS
================================================================================
================================================================================
For the Period from July 30, 1997 (Inception) through December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C>
Net income $ 1,105
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,153
Changes in operating assets and liabilities,
net of effect of acquisition:
Accounts receivable (15,869)
Accounts payable 20,277
Accrued expenses 3,287
Income taxes payable 99
Deferred taxes 96
- --------------------------------------------------------------------------------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 15,148
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (7,725)
Net cash payment for acquisition (30,000)
- --------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (37,725)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions 34,376
Value of services donated by related parties 2,400
Non interest bearing loans from affiliates 42,057
Repayment of non interest bearing loans
from affiliates (42,057)
Principal repayments on notes payable (5,269)
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 31,507
- --------------------------------------------------------------------------------
NET INCREASE IN CASH 8,930
CASH - BEGINNING OF YEAR 0
- --------------------------------------------------------------------------------
CASH - END OF YEAR $ 8,930
================================================================================
See Notes to Financial Statements
</TABLE>
21
<PAGE>
PrintAmerica Interactive, Inc.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
================================================================================
================================================================================
For the Period from July 30, 1997 (Inception) through December 31, 1997
- --------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 2,151
Income taxes --
================================================================================
See Notes to Financial Statements
22
<PAGE>
PrintAmerica Interactive, Inc.
NOTES TO FINANCIAL STATMENTS
================================================================================
================================================================================
For the Period from July 30, 1997 (Inception) through December 31, 1997
- --------------------------------------------------------------------------------
Note 1 - Nature of Operations and Significant Accounting Policies
Nature of Operations
PrintAmerica Interactive, Inc., (the "Company") specializes in quick
printing in the South Florida area. The Company is a Florida
corporation, and was established on July 30, 1997 as Budget Printing &
Graphics, Inc., (BDP). On March 19, 1998, BDP changed its name to
PrintAmerica Management Company, Inc., and again changed its name to
PrintAmerica Interactive, Inc. on September 15, 1999.
Cash and Cash Equivalents
Cash and cash equivalents are comprised of cash and certain highly
liquid investments with a maturity of three months or less when
purchased. The carrying amount of cash equivalents approximates fair
value due to their short-term nature.
Revenue Recognition
Revenue from sales of printed business materials is recognized upon
shipment of product.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Provision for income taxes is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.
Inventory
Inventory consists of printing supplies and is valued at the lower of
cost or market value using the first-in first-out method.
23
<PAGE>
Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line method,
half-year convention, over the estimated useful lives of the assets.
Valuation of Long-Lived Assets
The Company recognizes impairment losses on impaired long-lived assets
(property and equipment and intangible assets) based on the amount by
which the carrying value exceeds the fair value of the long-lived
asset. Fair value is determined by using a current market value
modeling approach or by evaluating the current market value of the
acquired business using fundamental analysis.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
Cash, accounts receivables, accounts payable, debt, accrued expenses
and other liabilities are carried at amounts which reasonably
approximate their fair value due to the short-term nature of these
amounts or due to variable rates of interest which are consistent with
current market rates.
Note 2 - Property and Equipment
At December 31, 1997, property and equipment consisted of the
following.
Estimated
Useful
Amount Lives
------ -----
Manufacturing equipment $ 10,000 10-20 years
Leasehold improvements 7,725 10 years
---------
17,725
Less accumulated depreciation (443)
---------
$ 17,282
=========
Depreciation expense was $443 for the period ended December 31, 1997.
24
<PAGE>
Note 3 - Intangible Assets
At December 31, 1997, intangible assets consisted of the following.
Excess of cost over assets acquired $ 119,000
Non-compete agreement 25,000
--------
144,000
Less accumulated amortization (5,710)
--------
Total $ 138,290
========
Excess of cost over assets acquired and non-compete agreement are being
amortized over ten and five years, respectively. Amortization expense
was $5,710 for the period ended December 31, 1997.
Note 4 - Note Payable
<TABLE>
<CAPTION>
<S> <C>
Note dated August 28, 1997 issued for purchase of Kram Printing, Inc.
Face value of $125,000, with monthly principal and interest payment of
$2,475 (interest at 7%) payable through July 2002. $119,731
Less current portion (22,018)
--------
Long-term portion $ 97,713
========
</TABLE>
At December 31, 1997, aggregate maturity of the note payable is as
follows:
1998 $ 22,018
1999 23,610
2000 25,317
2001 27,146
2002 21,640
--------
$119,731
========
Note 5 - Income Taxes
The provision for income taxes consists of the following:
Current taxes $ 99
Deferred taxes 96
-----
$ 195
=====
25
<PAGE>
Note 6 - Related Parties
During the period ended December 31, 1997, the Company purchased
printing materials and printing services from National Lithographers &
Publishers, Inc. ("National Lithographers") and received certain
management services from National Holding Company ("National Holding").
Both National Lithographers and National Holding are related parties to
the Company through common ownership. National Holding did not require
the Company to pay the $2,400 balance due, and such amount was credited
to paid in capital. The remaining $5,263 was included in accounts
payable as of December 31, 1997.
The Company leased its employees from National Payroll Services, Inc.,
(a related party through common ownership). The amounts charged for
salaries, wages, employment taxes and other benefits were at cost, and
totaled $1,629 for the period ended December 31, 1997.
During the period ended December 31, 1997, certain affiliates of the
Company loaned cash (interest free) aggregating $42,057 to the Company
and the Company repaid these loans to such affiliates.
Note 7 - Acquisition
On August 29, 1997, the Company purchased certain assets and the
operations of Kram Printing, Inc. The purchase price was $155,000,
consisting of a cash payment of $30,000 and issuance of a promissory
note for $125,000 payable over 5 years including interest at 7% per
annum.
The acquisition was accounted for under the purchase method resulting
in the following allocation of purchase price:
Inventory acquired $ 1,000
Property and equipment acquired 10,000
Non compete agreement 25,000
Excess of cost over assets acquired 119,000
-------
Total purchase price $155,000
========
26
<PAGE>
Note 8 - Commitment
The Company is a party to a five-year lease dated August 28, 1997 with
initial annual base rent of $9,000, and scheduled four percent (4%)
increases for the next four years.
Minimum annual rent, including sales taxes, on this lease are as
follows.
1998 $ 9,250
1999 9,620
2000 10,005
2001 10,400
2002 12,816
------
Total $52,091
======
Note 9 - Subsequent event
On December 30, 1999, the Company was acquired by PrintOnTheNet.com,
("POTN"), a publicly traded company. POTN issued one million shares of
unregistered common stock for the outstanding common stock of the
Company. The Company was owned by the parents of Ben Rogatinsky and Sam
Rogatinsky, the founders and majority shareholders of POTN. Ben
Rogatinsky and Sam Rogatinsky had served as president and vice
president, respectively, of the Company.
27
<PAGE>
PrintAmerica Interactive, Inc.
Balance Sheets (Unaudited)
As of September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Assets
Current Assets
Cash $ -- $ 296
Cash restricted (Note 2) 69,014 --
Accounts receivable, net (Note 2) 133,906 26,219
Inventory 159,686 109,658
--------- ---------
Total Current Assets 362,606 136,173
--------- ---------
Property and equipment, net 599,621 398,162
Intangible assets, net (Note 3) 631,173 373,579
Other assets 21,898 5,898
--------- ---------
Total Assets $1,615,298 $913,812
---------- --------
Liabilities and Stockholders' Equity
Current Liabilities
Current portion of notes payable (Note 3) $ 132,486 $ 99,763
Current portion of capital lease obligations 2,756 --
Accounts payable and accrued expenses 365,376 200,243
Bank overdraft 62,013 --
--------- ---------
Total current liabilities 562,631 300,006
--------- ---------
Notes payable (Note 3) 534,062 419,053
Capital lease obligations 5,206 --
Deferred taxes 13,079 --
--------- ---------
Total Liabilities 1,114,978 719,059
--------- ---------
Commitment (Note 2)
Stockholders' Equity
Common stock (Note 4) 1,000 1,000
Paid in capital 331,093 158,498
Retained earnings 168,227 35,255
--------- ---------
Total Stockholders' Equity 500,320 194,753
--------- ---------
Total Liabilities & Stockholders' Equity $1,615,298 $913,812
---------- --------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements (Unaudited)
28
<PAGE>
PrintAmerica Interactive, Inc.
Statements of Operations (Unaudited)
For the Nine Month Periods Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net sales $ 1,947,168 $ 926,374
Cost of sales 1,204,094 555,824
----------- ----------
Gross profit 743,074 370,550
Operating Expenses
Selling, general and administrative
expenses 416,375 259,877
Depreciation and amortization 86,292 46,382
----------- ---------
Total operating costs 502,667 306,259
----------- ---------
Income from operations 240,407 64,291
Interest expense 111,913 18,758
----------- ---------
Income before taxes 128,494 45,533
Provision for income taxes 32,123 11,383
----------- ---------
Net income $ 96,371 $ 34,150
========== =========
=================================================================================================
</TABLE>
See Notes to Financial Statements (Unaudited)
29
<PAGE>
PrintAmerica Interactive, Inc.
Statement of Shareholders' Equity (Unaudited)
For the Nine Month Period Ended September 30, 1999
<TABLE>
<CAPTION>
Additional
Common Stock Paid In Retained Total Shareholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 1,000 $ 1,000 $158,498 $ 71,856 $231,354
Capital Contributions -- -- 75,000 -- 75,000
Value of services donated by
related parties -- -- 97,595 -- 97,595
Net Income -- -- -- 96,371 96,371
- -----------------------------------------------------------------------------------------------------------------
Balance September 30, 1999 1,000 $ 1,000 $331,093 $168,227 $500,320
=================================================================================================================
</TABLE>
See Notes to Financial Statements (Unaudited)
30
<PAGE>
PrintAmerica Interactive, Inc.
Statement of Shareholders' Equity (Unaudited)
For the Nine Month Period Ended September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid In Retained Shareholders'
Shares Amount Capital Earnings Equity
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1997 1,000 $ 1,000 $ 35,776 $ 1,105 $ 37,881
Capital Contributions - - 56,267 - 56,267
Value of services donated
by related parties - - 66,455 - 66,455
Net Income - - - 34,150 34,150
- -----------------------------------------------------------------------------------------------------------------
Balance September 30, 1998 1,000 $ 1,000 $158,498 $35,255 $194,753
=================================================================================================================
</TABLE>
See Notes to Financial Statements (Unaudited)
31
<PAGE>
PrintAmerica Interactive, Inc.
Statement of Cash Flows (Unaudited)
For the Nine Month Periods Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flow from operating activities
Net income $ 96,371 $ 34,150
-------- --------
Adjustments to reconcile net income to net
cash provided by operations
Depreciation and amortization 86,292 46,382
Changes in operating assets and liabilities,
net of acquisitions:
Cash restricted (23,833) (26,219)
Accounts receivable, net (113,909) 15,869
Inventory (35,361) (108,658)
Prepaid expenses 4,509 --
Accounts payable and accrued expenses 132,452 176,578
Bank overdraft 47,427 (96)
-------- --------
Net cash provided by operating activities 193,948 138,006
Cash flow from investing activities
Purchases of equipment (193,665) (155,448)
Net cash payments for acquisitions (75,000) (40,000)
Deposits (16,000) (5,898)
-------- --------
Net cash used by Investing activities (284,665) (201,346)
-------- --------
Cash flow from financing activities
Capital contributions 172,595 122,722
Non interest bearing loans from affiliates 1,051,076 326,560
Repayment of non interest bearing loans from
affiliates (1,051,076) (326,560)
Principal repayments of notes payable (78,340) (68,016)
Principal repayments of capital lease obligations (3,538) 0
-------- --------
Net cash provided by financing activities 90,717 54,706
-------- --------
Net increase in cash 0 (8,634)
Cash - beginning of period 0 8,930
-------- --------
Cash - ending of period $ 0 $ 296
======== =========
</TABLE>
See Notes to Financial Statements (Unaudited)
32
<PAGE>
PrintAmerica Interactive, Inc.
Supplemental Disclosure of Cash Flow Information (Unaudited)
For the Nine Month Periods Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 111,913 $ 18,758
Income taxes -- --
Non cash transactions:
Capital lease obligations $ 11,500 --
See Notes to Financial Statements (Unaudited)
</TABLE>
33
<PAGE>
PrintAmerica Interactive, Inc.
Notes to Financial Statements
For the Nine Month Periods Ended September 30, 1999 and 1998
(Unaudited)
Note 1 - Significant Accounting Policies
Nature of Operations
PrintAmerica Interactive, Inc. (the "Company") specializes in quick
printing in the South Florida area. The Company is a Florida
corporation, and was established on July 30, 1997 as Budget Printing &
Graphics, Inc., (BDP). On March 19, 1998, BDP changed its name to
PrintAmerica Management Company, Inc., and again changed its name to
PrintAmerica Interactive, Inc. on September 15, 1999.
Revenue Recognition
Revenue from sales of printed business materials is recognized upon
shipment of product.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Provision for income taxes is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax
assets and liabilities.
Inventory
Inventory, consisting of printing supplies and work in process, is
valued at the lower of cost or market value using the first-in
first-out method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed
using the straight-line method, half-year convention, over the
estimated useful lives of the assets.
34
<PAGE>
Valuation of Long-Lived Assets
The Company recognizes impairment losses on impaired long-lived assets
(property and equipment and intangible assets) based on the amount by
which the carrying value exceeds the fair value of the long-lived
asset. Fair value is determined by using a current market value
modeling approach or by evaluating the current market value of the
acquired business using fundamental analysis.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions may affect the
reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
Cash, accounts receivables, accounts payable, debt, accrued expenses
and other liabilities are carried at amounts which reasonably
approximate their fair value due to the short-term nature of these
amounts or due to variable rates of interest which are consistent with
current market rates.
Note 2 - Accounts Receivable
The Company is a party to an agreement (the "Agreement") with a bank
(the "Bank") whereby the Company sells eligible accounts receivable to
the Bank. The bank charges a service fee of 3.25% of the face amount of
each invoice, and holds back 10% (the "holdback"), pending collection
by the Bank of the invoice amount. When the invoice is collected by the
Bank, the holdback is remitted to the Company. At the Banks discretion,
accounts receivable remaining uncollected past ninety days are subject
to repurchase by the Company. The Bank is secured and has filed a UCC
financing statement covering all accounts receivable, inventory, and
all other intangible and tangible assets of the Company, including the
holdback, which amounted to $69,014 at September 30, 1999. Such
holdback has been classified as cash restricted in the accompanying
balance sheet. As of September 30, 1999, the Company sold $337,145 of
accounts receivable (net of the holdback and the service fees) which
the Company could be obligated to repurchase if the underlying accounts
receivable are not collected by the Bank.
35
<PAGE>
Note 3 - Acquisitions
During the nine month period September 30, 1998, the Company purchased
certain assets and liabilities and the operations of three South
Florida quick print shops. Payment terms were as follows:
o RJ Menu Company was acquired on March 16, 1998. The purchase
price was $125,000, consisting of a cash payment of $25,000
and issuance of a promissory note for $100,000 payable over
7 years including interest at 6.5% per annum.
o Denny Printing, Inc. was acquired on April 13, 1998. The
purchase price was $100,000, consisting of a cash payment of
$30,000 and issuance of a promissory note for $70,000
payable over 5 years including interest at 7% per annum.
o Cloverleaf Printing, Inc. was acquired on March 16, 1998.
The purchase price was $151,000, consisting of a promissory
note payable based on a 10 year amortization period
including interest at 6.5% per annum, principal reductions
of $25,000 at the end of the second and third year, and a
final balloon payment for the remaining outstanding
principal balance at the end of year four. Additionally,
certain assets and obligations of Cloverleaf were assumed.
The acquisitions were accounted for under the purchase method resulting
in the following aggregate allocation of purchase price:
Cash acquired $ 15,000
Accounts receivable acquired 63,298
Inventory acquired 6,000
Property, plant and equipment acquired 235,700
Non compete agreements 75,000
Excess of cost over assets acquired 212,044
Assumption of debt and trade payables (231,042)
---------
Total purchase price $ 376,000
=========
During the nine month period ended September 30, 1999, the Company
purchased certain assets and the operations of Sun Graphics. The
acquisition was consummated on May 5, 1999. The purchase price was
$340,000, consisting of a cash payment of $75,000 and issuance of a
promissory note for $265,000 (plus interest at 7%) payable monthly
based on a ten year amortization period, with a final balloon payment
for the remaining principal balance at the end of year seven.
36
<PAGE>
The acquisition was accounted for under the purchase method resulting
in the following allocation of purchase price:
Property and equipment $ 25,000
Non compete covenant 25,000
Excess of cost over assets acquired 290,000
---------
Total purchase price $ 340,000
=========
Note 4- Related Parties
- -----------------------
The Company has five year lease agreements with U.S. Property
Management, Inc., (a related party through common ownership) for two of
its facilities. The leases are at fair market rates, and total rent
expense related to these leases was $45,016 and $11,702 during the nine
month periods ended September 30, 1999 and 1998, respectively. U.S.
Property Management, Inc. did not require the Company to pay the 1998
amount, which was credited to paid-in capital.
During the nine month periods ended September 30, 1999 and 1998, the
Company purchased $110,745 and $82,511, respectively, of printing
materials and printing services from National Lithographers &
Publishers, Inc. ("National Lithographers") and Royal Industries, Inc.
(both related parties through common ownership). Of this amount,
$97,595 and $54,753 was credited to paid-in captial during the periods
ended September 30, 1999 and 1998, respectively, since National
Lithographers did not require payment of such amounts.
The Company leased its employees from National Payroll Services, Inc.,
(a related party through common onwership). The amounts charged for
salaries, wages and the related employment taxes and other benefits
totaled $607,055 and $320,140 for the nine periods ended September 30,
1999 and 1998, respectively.
Certain affiliates of the Company loaned the Company cash (interest
free) aggregating $1,015,076 and $326,560 during the nine month periods
ended September 30, 1999 and 1998, respectively, and the Company repaid
these loans to such affiliates.
The Company paid consulting fees of $30,750 to a party related to the
owners of the Company during the nine month periods ended September 30,
1999 and 1998, respectively.
Note 5 - Subsequent event
On December 30, 1999, the Company was acquired by PrintOnTheNet.com,
Inc. ("POTN"), a publicly traded company. POTN issued one million
shares of unregistered common stock for the outstanding common stock of
the Company. The Company was owned by the parents of Ben Rogatinsky and
Sam Rogatinsky, the founders and majority shareholders of POTN. Ben
Rogatinsky and Sam Rogatinsky had served as president and vice
president, respectively, of the Company.
37
<PAGE>
PRINTONTHENET.COM, INC. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
INFORMATION
OVERVIEW
- --------
On December 30, 1999, PrintOnTheNet.com, Inc. (the "Company" or "POTN")
completed its acquisition of PrintAmerica Interactive, Inc. ("PrintAmerica") in
a transaction (the "Acquisition") in which all of PrintAmerica's outstanding
common stock (1,000 shares) was acquired for one million shares of unregistered
common stock of the Company. The Acquisition will be recorded similar to a
pooling of interests for accounting purposes since 100% of the common stock of
PrintAmerica is owned by the parents of brothers Benjamin Rogatinsky and Samuel
Rogatinsky, who collectively own approximately 85% of the common stock of the
Company. Benjamin Rogatinsky is the Chief Executive Officer and a Director of
the Company, and Samuel Rogatinsky is the President and a Director of the
Company. Additionally, Ben Rogatinsky and Sam Rogatinsky had served as President
and Vice President, respectively, of PrintAmerica. PrintAmerica will be merged
into the Company shortly following the Acquisition. In connection with the
Acquisition, the Company obtained an independent valuation of PrintAmerica.
The following unaudited pro forma combined condensed financial
statements have been prepared to give effect to the Acquisition, using the
pooling of interests method of accounting. The unaudited pro forma combined
condensed balance sheet as of September 30, 1999 gives effect to the Acquisition
as if it had occurred on September 30, 1999, and combines the historical balance
sheets of the Company and PrintAmerica as of September 30, 1999. The unaudited
pro forma combined condensed statement of operations combine the historical
statement of operations of the Company for the period from January 27, 1999
(Inception) through September 30, 1999, and the historical statement of
operations of PrintAmerica for the nine month period ended September 30, 1999.
The unaudited pro forma combined condensed financial statements have been
prepared based upon the historical financial statements of the Company and
PrintAmerica for the periods stated above. Such pro forma statements may not be
indicative of the results that would have occurred if the Acquisition had been
consummated on the indicated dates, or of the operating results that may be
achieved by the combined companies in the future.
38
<PAGE>
PRINTONTHENET.COM, INC.
Pro Forma Combined Condensed Balance Sheet (Unaudited)
September 30, 1999
<TABLE>
<CAPTION>
Pro Forma Pro Forma
POTN PrintAmerica Combined Adjustments Combined
---- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Assets
Current Assets
Cash $ 68,590 $ -- 68,590 $ (62,013)(1) $ 6,577
-----------
Cash restricted -- 69,014 69,014 -- 69,014
Accounts receivable, net 25,412 133,906 159,318 (3,206)(2) 156,112
Inventory 2,000 159,686 161,686 -- 161,686
----------- ----------- ----------- ----------- -----------
Total Current Assets 96,002 362,606 458,608 (65,219) 393,389
Property and equipment, net 83,461 599,621 683,082 -- 683,082
Other assets 3,355 21,898 25,253 -- 25,253
Non compete agreements, net 48,610 79,340 127,950 -- 127,950
Excess of cost over assets acquired, net 276,624 551,833 828,457 -- 828,457
----------- ----------- ----------- ----------- -----------
Total Assets $ 508,052 $ 1,615,298 $ 2,123,350 $ (65,219) 2,058,131
=========== =========== =========== =========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable, current portion $ 11,593 $ 132,486 $ 144,079 $ -- $ 144,079
Capital lease obligations,
current portion 9,542 2,756 12,298 -- 12,298
Accounts payable and accrued expenses 66,992 365,571 432,563 (3,206)(2) 407,234
10,000(3)
(32,123)(5)
Bank overdraft -- 62,013 62,013 (62,013)(1) --
----------- ----------- ----------- ----------- -----------
Total current liabilities 88,127 562,826 650,953 (87,342) 563,611
Shareholder loans 420,229 -- 420,229 -- 420,229
Notes payable 15,576 534,062 549,638 -- 549,638
Capital lease obligations 9,542 5,206 14,748 -- 14,748
Deferred taxes -- 12,884 12,884 -- 12,884
----------- ----------- ----------- ----------- -----------
Total Liabilities 533,474 1,114,978 1,648,452 (87,342) 1,561,110
----------- ----------- ----------- ----------- -----------
Stockholders' Equity
Preferred stock -- -- -- -- --
Common stock 26,554 1,000 27,554 (1,000)(4) 27,554
1,000(4) --
Paid in capital 263,311 331,093 594,404 -- 594,404
Retained earnings (accumulated (315,287) 168,227 (147,060) (10,000)(3) (124,937)
deficit) 32,123(5)
----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity (25,422) 500,320 474,898 22,123 497,021
----------- ----------- ----------- ----------- -----------
Total Liabilities &
Stockholders' Equity $ 508,052 $ 1,615,298 $ 2,123,350 $ (65,219) $ 2,058,131
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Statements (Unaudited)
39
<PAGE>
PRINTONTHENET.COM, INC.
Pro Forma Combined Condensed Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
POTN
For the period
from January 27, PrintAmerica
1999 (Inception) For the Nine
through Months Ended Pro Forma Pro Forma
September 30, 1999 September 30, 1999 Combined Adjustments Combined
-------------------- ------------------ ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 75,433 $ 1,947,168 $ 2,022,601 $ (3,206)(2) $ 2,019,395
Cost of sales 31,046 1,204,094 1,235,140 (3,206)(2) 1,231,934
------------ ------------ ------------ ---------- ------------
Gross profit 44,387 743,074 787,461 -- 787,461
Selling, General and Administrative
Expenses 357,166 502,667 859,833 10,000 (3) 869,833
------------ ------------ ------------ ---------- ------------
Income (loss) from operations (312,779) 240,407 (72,372) (10,000) (82,372)
Interest expense 2,508 111,913 114,421 -- 114,421
------------ ------------ ------------ ---------- ------------
Income (loss) before taxes (315,287) 128,494 (186,793) (10,000) (196,793)
Provision for income taxes -- 32,123 32,123 (32,123)(5) --
------------ ------------ ------------ ---------- ------------
Net income (loss) $ (315,287) $ 96,371 $ (218,916) $ 22,123 $ (196,793)
============ ============ ============ ========== ============
Basic and Diluted Earnings per Common
Share (0.01) -- -- -- (0.01)
============ ============ ============ ========== ============
Average common shares outstanding 26,424,774 -- -- 1,000,000 27,424,774
============ ============ ============ ========== ============
</TABLE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (Unaudited)
(1) Represents a reclassification of PrintAmerica's bank overdraft to cash to
reflect the net cash balance of the combined entities.
(2) Represents the elimination of intercompany billings from PrintAmerica to
POTN as well as elimination of the related unpaid balances due by POTN to
Print America.
(3) Represents the estimated one time Acquisition related costs.
(4) Represents the elimination of the common stock of PrintAmerica pursuant to
the subsequent merger, offset by recording one million shares of
unregistered $.001 par value common stock issued by POTN to the sellers of
Print America.
(5) For tax purposes POTN has sufficient accumulated losses to offset the
income generated by PrintAmerica, and therefore no deferred taxes are being
presented relating to the net operating loss carryforward.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PRINTONTHENET.COM, INC.
Dated: January 13, 2000 By: /s/ Benjamin Rogatinsky
-------------------------
Benjamin Rogatinsky
Chief Executive Officer
and Director
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EXHIBITS
Exhibit No. Exhibit
- ----------- -------
2 Stock Purchase Agreement By and Among PrintOnTheNet.com, Inc.
and Reuben and Shulamit Rogatinsky as Tenants by the
Entireties.
EXHIBIT 2
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
between
REUBEN AND SHULAMIT ROGATINSKY,
as Tenants by the Entireties,
as Seller,
and
PRINTONTHENET.COM, INC.,
as Purchaser
- --------------------------------------------------------------------------------
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of December 30,
1999, between and among PrintOnTheNet.com, Inc., a Delaware corporation ("Buyer"
or "Purchaser") and Reuben and Shulamit Rogatinsky, as Tenants by the Entireties
("Seller").
RECITALS:
A. Seller owns 1000 shares of common stock, par value $1.00 per share
(the "Common Stock") of PRINTAMERICA INTERACTIVE, INC. (the "Corporation"),
representing 100% of the outstanding capital stock of the Corporation.
B. Seller wishes to sell to Purchaser, and Purchaser wishes to buy from
Seller, the Common Stock of the Corporation subject to the terms and conditions
set forth herein.
NOW THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
1.1 "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
1.2 "Assets" means all of the properties and assets, unless
specifically excluded by this Agreement, used or intended to be used or required
by the Corporation and each Subsidiary in the conduct of the Corporation's or a
Subsidiary's business and which are material and, with respect to contract
rights, is a party to and enjoys the benefits of all material contracts and
agreements used and/or intended to be used by the Corporation or Subsidiary or
required in or relating to the conduct of the Corporation's business, including
without limitation all:
(a) the furniture, fixtures and equipment;
(b) the Marks and other Intellectual Property;
(c) all of Seller's rights and interests in the Material
Contracts;
(d) copies of the Books and Records;
(e) all of Seller's telephone, and fax numbers, e-mail
addresses and website addresses, used exclusively in
connection with the Corporation; and
(f) all goodwill associated with the Corporation.
1.3 "Bankruptcy" means (a) an adjudication of bankruptcy under the U.S.
Bankruptcy Reform Act of 1978, as amended, or any successor statute, (b) the
specified Person stops payment of, is deemed unable or otherwise admits
inability to pay its debts or becomes or is deemed to be insolvent, (c) an
assignment for the benefit of creditors, (d) the filing of a voluntary petition
in bankruptcy or reorganization or the passing of a resolution for voluntary
liquidation, reconstruction or winding up (other than for the purpose of a
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solvent merger or reorganization), or (g) the failure to vacate the appointment
of a receiver, trustee, provisional liquidator or administrative receiver for
any part or all of the assets or property of a party within 60 days from the
date of such appointment.
1.4 "Books and Records" means all books, records, bank statements,
budgets, financial statements, correspondence, computer programs, software
developments, trade secrets, customer lists, supplier lists, site plans,
surveys, plans and specifications, marketing materials, floor plans, tax
assessment records, billing and collection records and all other intangible
personal property of Seller which primarily relates to the Corporation or the
Assets.
1.5 "Business" means the business and Assets of the Corporation.
1.6 "Business Day" means any day that is not a Saturday or a Sunday and
on which banks are open for the conduct of normal banking business in the city
of Miami, Florida.
1.7 RESERVED.
1.8 "Control" "Controlling" "Controlled By" or "Under Common Control
With" all mean that with respect to the relationship among two or more Persons,
the possession, directly or indirectly or as a trustee or executor, of the power
to direct or cause the direction of the affairs or management of a Person,
whether through ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
1.9 "Employee Benefit Plan" means any: (a) non-qualified deferred
compensation or retirement plan which is an Employee Pension Benefit Plan; (b)
qualified deferred contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan; or (d) Employee Welfare
Benefit Plan.
1.10 "Employee Pension Benefit Plan" shall have the meaning set forth
in Section 3(2) of ERISA.
1.11 "Employee Welfare Benefit Plan" shall have the meaning set forth
in Section 3(1) of ERISA.
1.12 "Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and Tax liens), charge,
encumbrance, adverse claim, option, preferential arrangement or restriction of
any kinds, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
1.13 "Environmental Laws" means any foreign, federal, state or local
statute, code, ordinance, rule, regulation, permit, consent, approval, license,
judgment, order, writ, judicial decision, common law rule, decree, agency
interpretation, injunction or other authorization or requirement whenever
promulgated, issued, or modified, including the requirement to register
underground storage tanks, relating to:
(a) emissions, discharges, spills, releases or threatened
releases of pollutants, contaminants, Hazardous Substances (as hereinafter
defined), materials containing Hazardous Substances, or hazardous or toxic
materials or wastes into ambient air, surface
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water, groundwater, watercourses, publicly or privately owned treatment works,
drains, sewer systems, wetlands, septic systems or onto land;
(b) the use, treatment, storage, disposal, handling,
manufacturing, transportation, or shipment of Hazardous Substances, materials
containing Hazardous Substances or Hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus containing Hazardous
Substances) as defined in or regulated under the following statutes and their
implementing regulations: the Hazardous Materials Transportation Act, 49 U.S.C.
ss. 1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C.
ss. 9601 et seq., and/or the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., each as amended from time to time; or
(c) otherwise relating to pollution or the protection of human
health or the environment.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.15 "Governmental Authority" means any federal, state or local, or
foreign government, governmental, regulatory or administrative authority (or
subdivision thereof) and any agency or commission or any court, tribunal or
judicial or arbitral body that has jurisdiction over the Business, the Seller or
the Assets.
1.16 "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
1.17 "Intellectual Property" means (a) inventions, whether or not
patentable, whether or not reduced to practice, and whether or not yet made the
subject of a pending patent application or applications; (b) ideas and
conceptions of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and
whether or not yet made the subject of a pending patent application or
applications; (c) national and multinational statutory invention registrations,
patents, patent registrations and patent applications (including reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations)
and all rights therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each registrations, patent or
application; (d) trademarks, service marks, trade dress, logos, trade names and
corporate and partnership names, whether or not registered, including all common
law rights and registrations and application for registration thereof; (e) trade
secrets and confidential, technical and business information, (f) copies and all
tangible embodiments of all of the foregoing, in whatever form or medium; (g)
all rights to sue or recover and retain damages and costs and attorneys' fees
for present and past in infringement of any of the foregoing; and (h) all
goodwill associated with the foregoing.
1.18 "Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law
issued by any Governmental Authority.
1.19 "Marks" means all trademarks, service marks and trade names of the
Corporation, including without limitation, Denny's Printing Company.
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1.20 "Material Contract" means any contracts entered into by the
Corporation relating to the business or the Assets and listed on Schedule 1.19
attached hereto.
1.21 "Person" means any individual, partnership, firm, corporation,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended,
1.22 "Tax" or "Taxes" means any and all taxes, stamp duties, fees,
levies, duties, tariffs, imposts, and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs, and
similar charges.
1.23 "Seller's Stock" means 1000 shares of common stock, par value
$1.00 per share of PRINTAMERICA INTERACTIVE, INC., representing 100% of the
outstanding capital stock of the Corporation.
1.24 "Buyer's Stock" means Buyer's Rule 144 common stock, par value
$.001 per share, currently trading as POTN - OTC:BB, subject to the
restrictions, representations and confirmations contained herein. With respect
to the Stock, the Seller(s) shall be referred to as "Shareholder."
ARTICLE II
PURCHASE AND SALE
2.1 Closing. The closing of the purchase and sale of the Seller's Stock
(the "Closing") shall take place at the offices of Reimer & Rosenthal, LLP, 3801
Hollywood Blvd., Suite 350, Hollywood, Florida 33021, on the date set forth
above
2.2 Purchase and Sale of Seller's Stock. Based upon the representations
and warranties, set forth herein, Buyer shall, at Closing, purchase from Seller,
and Seller shall sell to Buyer, the Seller's Stock. In consideration of and in
full payment for the Seller's Stock, Buyer shall, at Closing, deliver to Seller
a total of 1,000,000 shares of the Buyer's Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
As of the date hereof, Seller hereby represents and warrants to
Purchaser as follows:
3.1 Organization, Qualification, Etc. of the Corporation. The
Corporation is a duly organized and validly existing corporation under the Laws
of the State of Florida and has all necessary corporate power and authority to
own, operate or lease the properties and assets now owned, operated or leased by
it and to carry on its business as it has been, and is currently and is
anticipated to be conducted. The Corporation is duly licensed or qualified to do
business
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and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing does not have, or could not reasonably be expected to have,
a material adverse effect. All material corporate actions taken by the
Corporation have been duly authorized and the Corporation has not taken any
action that in any respect conflicts with, constitutes a default under or
results in a violation of any provision of its Articles of Incorporation or
Bylaws (collectively, the "Articles of Incorporation"). True and correct copies
of the Corporation' (a) Articles of Incorporation, as amended and restated
through the date hereof and (b) resolutions of the members and the Board of
Directors adopted prior to the date hereof heretofore have been delivered to
Purchaser and all of such resolutions remain in full force and effect in the
form delivered to Purchaser.
3.2 Capitalization of the Business. The entire authorized capital stock
of the Corporation consists solely of 1000 shares of Common Stock, of which 1000
shares are issued and outstanding. Except for this Agreement, there exists no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require the Corporation to issue, sell, or otherwise cause to become
outstanding any of its capital stock or any other securities of the Corporation.
The Corporation is not a partner or joint venturer in any enterprise, and has no
subsidiaries.
3.3 The Common Stock. Seller represents that they hold of record and
own beneficial interest in the Common Stock identified herein as tenants by the
entireties. The Common Stock is duly authorized and validly issued, fully paid,
non-assessable, with all documentary stamps and taxes of any kind paid, and free
and clear of all Encumbrances. There are no voting trusts, proxies, shareholder
agreements or similar contracts or understandings in effect relating to the
Common Stock.
3.4 Title to the Assets.
Except as otherwise indicated herein, the Corporation has good tittle
to or, in the case of leased or subleased Assets, valid and subsisting leasehold
interests in, all the Assets, free and clear of all Encumbrances or defaults.
All the Assets are in good operating condition and repair, ordinary wear and
tear excepted, and are suitable for the purposes for which they are used and
intended.
3.5 Authority of Seller. Seller has all necessary power and authority
to enter into this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Seller and (assuming due authorization, execution and
delivery by Purchaser) constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as such
enforcement may be subject to: (a) Bankruptcy or other similar laws now or
hereafter in effect relating to creditors' rights generally; and (b) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
3.6 No Conflict. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated hereby
do not and will not: (a) conflict with or violate any Law or Governmental Order
applicable to Seller or the Corporation, which violation or conflict would,
individually or in the aggregate, have a material adverse effect on Seller, the
Corporation, the Business, or on the transactions contemplated hereby; or (b)
conflict with, result in any breach of, constitute a default (or an event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or
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cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Seller or the Corporation or the Business pursuant to,
any note, bond, mortgage or indenture, contract, agreement, lease, sublease,
license, permit, franchise or other instrument, agreement or arrangement to
which the Corporation or the Seller is a party or by which any of such assets or
properties is bound or affected which conflict or violation would, individually
or in the aggregate, have a material adverse effect on the Business, the ability
of Seller to consummate the transactions contemplated hereby or the Corporation.
3.6 Consents and Approvals. Except as set forth on Schedule 3.6, the
execution, delivery and performance of this Agreement by Seller do not and will
not require any consent, approval, authorization or other order of, action by,
filing with or notification to any Governmental Authority or any third party.
3.7 Financial Information. Seller has delivered to Purchaser (a)
audited balance sheets of the Corporation as at December 31, 1997 and December
31, 1998 (collectively, the "Balance Sheet"), and the related statements of
income, changes in stockholders' equity, and cash flow for each of the fiscal
years then ended, including in each case the notes thereto, together with a
report thereon of Esteban Brown CPA, PA, independent certified public
accountants, (b) an unaudited balance sheet of the Corporation as at September
30, 1999 (the "Interim Balance Sheet") and the related unaudited statements of
income, changes in stockholders' equity, and cash flow for the nine months then
ended, including in each case the notes thereto, which have been reviewed by an
independent certified public accountant. Such financial statements and notes
accurately represent the transactions appearing on the books and records of the
Corporation and fairly present in all material respects the financial condition
and the results of operations, changes in stockholders' equity, and cash flow of
the Corporation as at the respective dates of and for the periods referred to in
such financial statements, all in accordance with GAAP, subject in the case of
interim financial statements, to (i) normal recurring year-end adjustments the
effect of which will not, individually or in the aggregate be materially
adverse, and (ii) the absence of notes. These financial statements reflect the
consistent application of such accounting principles throughout the periods
involved. No financial statements of any other Person are required by GAAP to be
included in the financial statements of the Corporation.
3.8 Litigation. There are no actions, disputes or claims being brought,
pending or threatened by or against Seller, the Business or the Corporation, or
any of Corporation's directors, officers, employees or agents, or affecting any
of the Business or the Assets which, if adversely determined, could reasonably
be expected to have a material adverse effect on the Business or Assets of the
Corporation or could reasonably be expected to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby. Neither the Corporation nor the Assets are subject to any
Law or Governmental Order which has or could reasonably be expected to have a
material adverse effect on the Business.
3.9 Conduct of Business in the Ordinary Course. Seller has conducted
the Corporation's business only in the ordinary course and consistent with past
practice. Since initiation of discussions between Seller and Purchaser, the
Corporation has not sold, transferred, or otherwise disposed of or encumbered
any Asset, Real Property, or Intellectual Property, except in the ordinary
course of conducting and consistent with past practice of the Corporation.
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3.10 Compliance with Laws. Seller has conducted and continues to
conduct the Business in all material respects in accordance with all Laws and
all Governmental Orders entered by or with any Governmental Authorities, and the
Business is in compliance with all such Laws or Governmental Orders.
3.11 Environmental Compliance. The Corporation is, and at all times has
been, in compliance with all applicable Environmental Laws.
3.12 Contracts. All Material Contracts are listed on Schedule 3.12
hereto and a copy of each has heretofore been delivered to Buyer. Each Material
Contract: (i) is valid and binding on the respective parties thereto and is in
full force and effect and (ii) upon consummation of the transactions
contemplated hereby shall continue in full force and effect without penalty or
other adverse consequence. The Corporation is not, and to Seller's knowledge, no
other party to any Material Contract is, in breach of or default under any
Material Contract, which breach of default would have a material adverse effect
on the Corporation.
3.13 Intellectual Property. The Corporation has full ownership of, and
the right to use, the Intellectual Property. Schedule 3.13 lists all
Intellectual Property owned or used by the Corporation in its business, and to
Seller's knowledge, no third party is infringing the Intellectual Property. The
Corporation is not infringing and has not infringed Intellectual Property
belonging to any other Person.
3.14 Employment Matters.
(a) Payroll. Schedule 3.14 attached hereto correctly sets
forth: (a) the name of each person employed by the Corporation (each, an
"Employee"); (b) each Employee's salary rate and contractual bonus, as well as
the amount of any pension or profit sharing plan contributions; and (c) the
terms of any health insurance plan provided to Employees. The Corporation has
paid all Employee's wages owed to the such Employees up to and including the
Closing Date.
(b) Employee Benefits. The Corporation does not maintain
Employee Benefit Plans for Employees.
(c) Collective Bargaining Agreements. None of the
Corporation's employees are subject to any collective bargaining or union
agreement.
(d) The consummation of the transactions contemplated by this
Agreement will not result in the acceleration, vesting or payment of any
compensation, bonus or benefit.
3.15 Real Property.
(a) Property. The Corporation is a tenant at the real
property identified in Schedule 3.15(a) pursuant to written lease
agreement(s).located at
(b) Compliance. The real property comprises all the real
property used or occupied by the business. There is no violation of any Law
(including, without limitation, any building, planning, zoning law or
environmental law) or any covenants, stipulations or conditions relating to any
of the real property and the Corporation is in peaceful and undisturbed
possession of the Real Property. There are no contractual or legal restrictions
that preclude or restrict in any material manner the ability to use any of the
real property in the manner in which
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it is currently being used and the real property has all rights and casements
reasonably necessary for their use and enjoyment for the purposes of the
business. The Corporation is not leasing or subleasing and has not leased or
sublet any parcel or any portion of any parcel real property to any other
Person, nor has the Corporation assigned its interest under any lease or
sublease for any leased real property to any third party. There are no
outstanding material disputes with any Person relating to the real property or
its use and no notices have been given or received by the Corporation which
would adversely affect the use and enjoyment of the real property.
3.16 Taxes.
(a) Except as disclosed on Schedule 3.16: (i) all returns and
reports in respect of all Taxes required to be filed with respect to Seller or
the Corporation have been timely filed; (ii) all Taxes required to be shown on
such returns and reports or otherwise due have been timely paid; (iii) all such
returns and reports are true, correct and complete; (iv) no adjustment relating
to such returns has been proposed by any tax authority and no basis exists for
any such adjustment; (v) there are no pending or threatened actions or
proceedings for the assessment or collection of Taxes against Seller or the
Corporation; (vi) there are no Encumbrances on any Assets; (vii) neither the
Seller nor the Corporation has been at any time a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for any period
for which the statute of limitations for any Tax has not expired; and (viii) all
Taxes required to be withheld, collected or deposited, as the case may be, and,
to the extent required, have been paid to the relevant taxing authority.
(b) There are (i) no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Corporation may be subject; (ii) no proposed reassessments of any
property owned by the Corporation or other proposals that could increase the
amount of any Tax to which the Corporation would be subject; and (iii) no power
of attorney that is currently in force has been granted with respect to any
matter relating to Taxes that could affect the Corporation.
(c) Seller has delivered to Purchaser correct and complete
copies of all federal, state and foreign income, franchise and similar tax
returns, and correct and complete summaries of all examination reports, and
statements of deficiencies assessed against or agreed to by the Corporation.
3.17 Brokers. Except as disclosed in Schedule 3.17, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon an arrangement made by or on behalf of the Seller.
3.18 Full Disclosure. No representation or warranty with respect to
Seller or the Business contained in this Agreement and no statement regarding
any financial or operating data or certificate furnished to Purchaser pursuant
to this Agreement, or in connection with the transactions contemplated by this
Agreement, contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
3.19 Investment Intent. Seller is acquiring the Buyer's Stock for its
own account and not with a view to its distribution within the meaning of
Section 2.11 of the Securities Act of 1933, as amended. Seller confirms that
Buyer has made available to Seller and its representatives and agents the
opportunity to ask questions of the officers and management employees of Buyer
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and to acquire such additional information about the business and financial
condition of Buyer as Seller as requested, and all such information has been
received.
3.20 Accounts Receivable. Each of the accounts receivable of the
Corporation that are reflected on the Balance Sheet or the Interim Balance Sheet
or on the accounting records of the Corporation as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or Interim
Balance Sheet or on the accounting records of the Corporation as of the Closing
Date (which reserves are adequate and calculated consistent with past practice.)
Schedule 3.20 contains a complete and accurate list of all Accounts Receivable
as of the date of the Interim Balance Sheet, which list sets forth the aging of
such Accounts Receivable. No account debtor has asserted any right to the
setoff, deduction or defense with respect thereto.
3.21 Inventory. All inventory of the Corporation, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the ordinary course of business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance Sheet or
Interim Balance Sheet or on the accounting records of the Corporation as of the
Closing Date, as the case may be.
3.22 No Undisclosed Liabilities. Except as set forth on Schedule 3.22,
the Corporation has no liabilities or obligations of any nature (whether known
or unknown and whether absolute, accrued, contingent or otherwise) except for
liabilities and obligations reflected or reserved against in the Balance Sheet
or Interim Balance Sheet and current liabilities incurred in the ordinary course
of business since the respective dates thereof.
3.23 Insurance. Seller has delivered to Buyer true and complete copies
of all insurance policies relating to the Assets or Business of the Corporation
which policies are listed on Schedule 3.23 hereto. All policies are (i) valid,
outstanding and enforceable, (ii) issued by an insurer that is financially sound
and reputable, (iii) taken together, provide adequate insurance coverage for the
Assets and operations of the Corporation, and (iv) will continue in full force
and effect following the consummation of the transactions provided for herein.
3.24 No Material Adverse Change. Since the date of the Interim Balance
Sheet, there has not been any material adverse change in the Business,
operations, properties, prospects, assets, or financial condition of the
Corporation, and no event has occurred or circumstance exists that may result in
such a material adverse change.
3.25 Bank Accounts and Deposit Boxes. Listed in Schedule 3.25 are the
names and addresses of all banks or financial institutions in which the
Corporation has an account, deposit or safety deposit box with the names of all
persons authorized to draw on these accounts or deposits or to have access to
the boxes.
3.26 Records. The books of account, minute books, stock record books
and other records of the Corporation are complete and correct in all material
respects and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls, and there
have been no transactions involving the Business which properly should have been
set forth therein and which have not been accurately so set forth. The minute
books of the Corporation contain accurate and complete records of all
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meetings held of, and corporate action taken by, the stockholders, the Board of
Directors and committees thereof, and no meeting of any such stockholders,
directors or committees has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Corporation.
3.27 Transactions With Certain Persons. The Corporation, on the one
hand, and the Seller, on the other, do not owe any amount to the other or have
any contract with or commitment to the other except as reflected on the
Corporation's financial statements. The Corporation has not made distributions
or other intra company transfers to the Seller or any Affiliate of the Seller
subsequent to the date of the Corporation's Interim Balance Sheet.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As of the date hereof, Purchaser hereby represents and warrants to
Seller as follows:
4.1 Organization, Qualification, Etc. of Purchaser. Purchaser is a duly
registered, incorporated and validly existing corporation under the Laws of
Delaware.
4.2 Authority of Purchaser. Purchaser has all necessary corporate power
and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Purchaser, the performance by Purchaser of its
obligations hereunder and the consummation by Purchaser of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
on the part of the Purchaser. This Agreement has been duly executed and
delivered by Purchaser and (assuming due authorization, execution and delivery
by Seller) constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as such
enforcement may be subject to (a) Bankruptcy or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
4.3 No Conflict. Assuming the obtaining of all the consents and
approvals referred to in Section 4.4, the execution, delivery and performance of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby do not and will not (a) violate, conflict with or result in
the breach of any provision of Purchaser's Articles of Incorporation or Bylaws
(collectively, the "Articles of Incorporation"), (b) conflict with or violate
any Law or Governmental Order applicable to Purchaser, which violation or
conflict could, individually or in the aggregate, have a material adverse effect
on Purchaser, or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse or time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation, or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Purchaser pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument, agreement or arrangement to which Purchaser is a party or by
which any of such assets or properties are bound or affected which could
reasonably be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated hereby.
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4.4 Consents and Approvals. Except as disclosed on Schedule 4.4, the
execution, delivery and performance of this Agreement by Purchaser do not and
will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to, any Governmental Authority or any third
party.
4.5 Litigation. No claims or proceedings are pending or, to the
knowledge of Purchaser, threatened by or against Purchaser (or, to Purchaser's
knowledge, any of its directors, officers, employees or agents) which, if
adversely determined, could reasonably be expected to have a material adverse
effect or could reasonably be expected to affect the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
4.6 Full Disclosure. No representation or warranty of Purchaser
contained in this Agreement and no written statement contained in any financial
or operating data or certificate furnished or to be furnished to Seller pursuant
to this Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
4.7 Investment Intent. Buyer is acquiring the Common Stock for its own
account and not with a view to its distribution within the meaning of Section
2.11 of the Securities Act of 1933, as amended. Buyer confirms that Seller has
made available to Buyer and its representatives and agents the opportunity to
ask questions of the officers and management employees of the Corporation and to
acquire such additional information about the business and financial condition
of the Corporation as Buyer as requested, and all such information has been
received.
ARTICLE V
DELIVERIES
5.1 Deliveries by Seller. On or prior to the Closing, Seller shall
execute or cause to be executed and deliver or cause to be delivered to Buyer
the following documents, certificates and agreements:
(a) Certificates. Certificates representing the Common Stock,
together with stock transfer forms (if any) duly executed to effect the transfer
of the Seller's Stock to Purchaser on the Books and Records of the Corporation.
(b) Required Consents. Each of the consents enumerated on
Schedule 5.1(b).
5.2 Deliveries by Buyer. On or prior to the Closing, Buyer shall
execute or cause to be executed and deliver or cause to be delivered to Seller
the following documents, certificates and agreements:
(a) Certificates. Certificates representing the Buyer's Stock,
together with stock transfer forms (if any) duly executed to effect the transfer
of 1,000,000 shares of the Buyer's Stock on the Books and Records of the Buyer.
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ARTICLE VI
INDEMNIFICATION
6.1 Survival. All representations and warranties contained herein and
made in writing by or on behalf of the parties hereto in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement and the Closing, without limitation as to time.
6.2 Purchaser's Right to Indemnification. Subject to the provisions of
this Article VI and in addition to any other rights and remedies available to
Purchaser under applicable law, Seller shall indemnify and hold harmless
Purchaser and any of its officers, directors, shareholders, employees, agents,
representatives, attorneys, successors, predecessors and assigns from and
against any and all losses, obligations, liabilities, damages, claims,
deficiencies, costs and expenses (including, but not limited to, the amount of
any settlement entered into pursuant hereto and all reasonable legal and other
expenses incurred in connection with the investigation, prosecution or defense
of any matter)(collectively "Claims"), which may be asserted against or
sustained or incurred by Purchaser in connection with, arising out of, or
relating to (i)any breach of any, or any false, incorrect or misleading,
representation or warranty that is made by Seller herein or in any Exhibit,
Schedule, certificate or other document delivered to Purchaser by Seller with
respect to Seller in connection with this Agreement or (ii) any breach of any
agreements and covenants made by Purchaser herein or in any Exhibit, Schedule,
certificate or other document delivered to Seller by or on behalf of Purchaser
in connection with this Agreement.
6.3 Seller's Right to Indemnification. Subject to the provisions of
this Article VI and in addition to any other rights and remedies that may be
available to Seller under applicable law, Purchaser shall indemnify and hold
harmless Seller and its successors, predecessors and assigns from and against
Claims which may be asserted against or sustained or incurred by Seller in
connection with, arising out of, or relating to: (i) any breach of any, or any
false, incorrect or misleading, representation or warranty that is made by
Purchaser herein or in any Exhibit, Schedule, certificate or other document
delivered to Seller by or on behalf of Purchaser in connection with this
Agreement or (ii) any breach of any agreements and covenants made by Purchaser
herein or in any Exhibit, Schedule, certificate or other document delivered to
Seller by or on behalf of Purchaser in connection with this Agreement.
6.4 Procedure for Claims.
(a) Notice of Claim. Promptly, but in any event within 30 days
after obtaining knowledge of any claim or demand which may give rise to, or
could reasonably give rise to, a claim for indemnification hereunder (any such
claim an "Indemnification Claim"), the party or parties entitled to
indemnification hereunder (the "Indemnified Party") shall give written notice to
the party or parties subject to indemnification obligations therefor (the
"Indemnifying Party") of such Indemnification Claim (a "Notice of Claim"). A
Notice of Claim shall be given with respect to all Indemnification Claims.
However, the failure to timely give a Notice of Claim to the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it may have to
the Indemnified Party hereunder to the extent that the Indemnifying Party is not
prejudiced by such failure. The Notice of Claim shall set forth the amount (or a
reasonable estimate) of the loss, damage or expense suffered, or which may be
suffered, by the Indemnified Party as a result of such Indemnification Claim and
a brief description of the facts giving rise to such Indemnification Claim. The
Indemnified Party shall furnish to the Indemnifying Party such information (in
reasonable detail) as the Indemnified Party may have with respect to such
Indemnification Claim (including copies of any summons, complaint or
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other pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same).
(b) Third Party Claims.
(i) If the claim or demand set forth in the Notice of
Claim is a claim or demand asserted by a third party (a "Third Party Claim"),
the Indemnifying Party shall have 15 days (or such shorter period if an answer
or other response or filing with respect to the pleadings served by the third
party is required prior to the 15th day) after the date of receipt by the
Indemnifying Party of the Notice of Claim (the "Notice Date") to notify the
Indemnified Party in writing of the election by the Indemnifying Party to defend
the Third Party Claim on behalf of the Indemnified Party.
(ii) If the Indemnifying Party elects to defend a
Third Party Claim on behalf of the Indemnified Party, the Indemnified party
shall make available to the Indemnifying Party and its agents and
representatives all records and other materials in its possession which are
reasonably required in the defense of the Third Party Claim and the Indemnifying
Party shall pay any expenses payable in connection with the defense of the Third
Party Claim as they are incurred (whether incurred by the Indemnified Party or
Indemnifying Party).
(iii) In no event may the Indemnifying Party settle
or compromise any Third Party Claim without the Indemnified Party's consent,
which shall not be unreasonably withheld.
(iv) If the Indemnifying Party elects to defend a
Third Party Claim, the Indemnified Party shall have the right to participate in
the defense of the Third Party Claim, at the Indemnified Party's expense (and
without the right to indemnification for such expense under this Agreement).
However, the reasonable fees and expenses of counsel retained by the Indemnified
Party shall be at the expense of the Indemnifying Party if (a) the use of the
counsel chosen by the Indemnifying Party to represent the Indemnified Party
would present such counsel with a conflict of interest; (b) the parties to such
proceeding include both the Indemnified Party and the Indemnifying Party and
there may be legal defenses available to the Indemnified Party which are
different from or additional to those available to the Indemnifying Party; (c)
within 10 days after being advised by the Indemnifying Party of the identity of
counsel to be retained to represent the Indemnified Party, the Indemnified Party
shall have objected to the retention of such counsel for valid reasons (which
shall be stated in a written notice to Indemnifying Party), and the Indemnifying
Party shall not have retained different counsel reasonably satisfactory to the
Indemnified Party; or (d) the Indemnifying Party shall authorize the Indemnified
Party to retain separate counsel at the expense of the Indemnifying Party.
(v) If the Indemnifying Party does not elect to
defend a Third Party Claim, or does not defend a Third Party Claim in good
faith, the Indemnified Party shall have the right, in addition to any other
right or remedy it may have hereunder, at the sole and exclusive expense of the
Indemnifying Party, to defend such Third Party Claim.
(vi) To the extent that an Indemnified Party recovers
on a Third Party Claim, the amount of such recovery (after deduction of all
costs and expenses incurred in connection with such Third Party Claim) shall
reduce, dollar-for-dollar, the indemnification obligation otherwise owing by the
Indemnifying Party.
(c) Cooperation in Defense. The Indemnified Party shall
cooperate with the Indemnifying Party in the defense of a Third Party Claim.
Subject to the foregoing, (i) the
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Indemnified Party shall not have any obligation to participate in the defense of
or to defend any Third Party Claim and (ii) the Indemnified Party's defense of
or its participation in the defense of any Third Party Claim shall not in any
way diminish or lessen its right to indemnification as provided in this
Agreement.
ARTICLE VII
GENERAL PROVISIONS
7.1 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
7.2 Notices All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made) upon the earliest to occur of
(a) receipt, if made by personal service, (b)three days after dispatch, if made
by reputable overnight courier service, (c) upon the delivering party's receipt
of a written confirmation of a transmission made by cable, by telecopy, by
telegram, or telex or (d) seven days after being mailed by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7.2):
(a) if to Purchaser: PrintOnTheNet.com, Inc.
7700 NW 37th Avenue
Miami, FL 33147
Telephone: (305) 691-2800
Facsimile: (305) 836-9231
Attention: Benjamin Rogatinsky
(b) if to Seller: Reuben and Shulamit Rogatinsky
------------------------------
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7.3 Interpretation. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. Each party has had the
opportunity to review and participate in the drafting of this Agreement and no
term or provision of this Agreement shall be construed narrowly or strictly
against the party that was responsible for the drafting of this Agreement or
such term or provision.
7.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
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7.5 Entire Agreement. Except as otherwise identified herein, this
Agreement, including all of the Exhibits and Schedules attached hereto which are
incorporated herein by this reference constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, between
Seller and Purchaser with respect to the subject matter hereof and thereof.
7.6 Assignment. This Agreement and the rights and duties hereunder may
not be assigned or assumed by operation of law or otherwise (other than an
assignment by Purchaser to an Affiliate of Purchaser) without the express prior
written consent of the other parties, as applicable).
7.7 Amendment; Waiver. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, each party
hereto. Each party to this Agreement may (a) extend the time for the performance
of any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered by the other party pursuant hereto
or (c) waive compliance with any of the agreements or conditions of the other
parties contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by all of the other parties to be
bound thereby. Any waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
7.8 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida (without regard to its
principals regarding conflicts of law).
7.9 Choice of Forum. All actions or proceedings initiated by any party
hereto and arising directly or indirectly out of this Agreement which are
brought to judicial proceedings shall be litigated in Dade County Circuit Court.
7.10 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
7.11 Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief which it may be entitled.
7.12 Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable Law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and
make effective the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed as of the date first written above.
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PrintOnTheNet.com, Inc. Reuben Rogatinsky and Shulamit
By:__________________________ --------------------------
Reuben Rogatinsky
Name:________________________
--------------------------
Shulamit Rogatinsky
Title:_______________________
