<PAGE>
As filed with the Securities and Exchange Commission on April 27, 2000.
Registration No. __________
==============================================================================
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD INTERNETWORKS, INC.
--------------------------
(Name of small business issuer in its charter)
Nevada 4541 87-0443026
------ ---- ----------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
418 South Commerce Road, Suite 422
Orem, Utah 84058
(801)434-7517
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(Address and telephone number of principal executive offices)
Same as above
--------------
(Address of principal place of business
or intended principal place of business)
Steven K. Hansen
418 South Commerce Road, Suite 422
Orem, Utah 84058
(801) 434-7517
--------------
(Name, address and telephone number of agent for service)
Copies to:
Branden T. Burningham, Esq.
455 East 500 South, Suite 500
Salt Lake City, Utah 84111
(801) 363-7411
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_]
If this Form is a post effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
==============================================================================
CALCULATION OF REGISTRATION FEE
Title of
Each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price per Offering
Registration
Registered Registered Share (1) Price (1) Fee
- ---------- ---------- --------- --------- ---
Common Stock, 5,796,000 $1.78125 $10,324,125 $2,725.57
$0.001 par value . .shares
Common Stock
underlying 1,530,000 $1.78125 $ 2,725,312.50 $ 719.48
Warrants(2) . . . . shares
TOTAL. . . . . . . 7,326,000 $1.78125 $13,049,437.50 $3,445.05
shares
==============================================================================
(1) Estimated solely for the purpose of calculating the registration fee
under Rule 457(c) under the Securities Act on the basis of the average of the
bid and asked price of our common stock as quoted on the OTC Electronic
Bulletin Board on April 26, 2000.
(2) In accordance with Rule 416 under the Securities Act of 1933, as amended,
a presently indeterminable number of shares of common stock are registered
hereunder which may be issued in the event the anti-dilution provision of the
Warrants becomes operative.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
WORLD INTERNETWORKS, INC.
7,326,000 Shares of Common Stock
This prospectus covers an aggregate of 7,326,000 shares of our
common stock, which will be sold, from time to time, by some of our
stockholders. These stockholders previously received 5,796,000 of these
shares of common stock from us. The remaining 1,530,000 shares underlie
warrants that some of these stockholders own. We will not receive any money
from the stockholders when they sell their shares of common stock. We have
agreed to pay all costs and expenses relating to the registration of our
common stock, but any stockholders who sell their shares shall be responsible
for any related commissions, taxes, attorney's fees and related charges in
connection with the offer and sale of these securities. The stockholders may
sell all or a portion of the shares registered by this registration statement
in private transactions or in the over-the-counter market at prices related to
the prevailing prices of our common stock at the time of negotiation. The
stockholders may sell their common stock through one or more broker-dealers,
and such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the stockholders.
Our common stock is quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc. (the "NASD"), under the symbol "WINW."
On April 26, 2000, the price of our common stock as quoted on the OTC Bulletin
Board was $1.6875.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE THE CAPTION
"RISK FACTORS," BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
You may rely only on the information contained in this prospectus.
We have not authorized anyone to provide information different from that
contained in this prospectus. Neither the delivery of the prospectus nor the
sale of common stock means that information contained in this prospectus is
correct after the date of this prospectus. This prospectus is not an offer to
sell or a solicitation of an offer to buy these shares of common stock in any
circumstances under which the offer or solicitation is unlawful.
The date of this Prospectus is __________, 2000.
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TABLE OF CONTENTS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . .3
Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Determination of Offering Price and Dilution . . . . . . . . . . . . . 8
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . .10
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Directors, Executive Officers, Promoters and Control Persons . . . . .13
Security Ownership of Certain Beneficial Owners and Management . . . .15
Description of Securities . . . . . . . . . . . . . . . . . . . . . . 17
Interest of Named Experts and Counsel . . . . . . . . . . . . . . . . 19
Disclosure of Commission Position on Indemnification for Securities . 19
Act Liabilities
Description of Business . . . . . . . . . . . . . . . . . . . . . . . 20
Management's Discussion and Analysis or Plan of Operation . . . . . . 29
Description of Property . . . . . . . . . . . . . . . . . . . . . . . 32
Certain Relationships and Related Transactions . . . . . . . . . . . .32
Market for Common Equity and Related Stockholder Matters . . . . . . .32
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . .34
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .36
Changes in and Disagreements with Accountants on Accounting and . . . 64
Financial Disclosure
2
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AVAILABLE INFORMATION
We file periodic reports with the Securities and Exchange
Commission. These documents may be inspected and copied at the Public
Reference Room of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-
SEC-0330 for additional information. Our Commission filings are also
available from the Commission's web site: http://www.sec.gov.
We have filed a registration statement with the Commission on Form
SB-2, under the Securities Act of 1933, with respect to the securities
described in this prospectus. This prospectus is filed as part of the
registration statement. It does not contain all of the information set forth
in the registrations statement and the exhibits and schedules filed with it.
For further information about us and the common stock described by this
prospectus, reference is made to the registration statement and to the
exhibits and schedules filed with it. Copies of these documents may be
inspected at or obtained from the Public Reference Branch.
PROSPECTUS SUMMARY
WORLD INTERNETWORKS, INC.
------------------------
Since this is a summary of the terms of the common stock described
in this prospectus, it does not contain all of the information that may be
important to you. This prospectus contains "forward-looking" information
within the meaning of the Private Securities Litigation Reform Act of 1995.
We believe that the forward-looking statements contained in this prospectus
are within the meaning of the safe harbor provided by Section 27A of the
Securities Act of 1933. Forward-looking statements contained in this
prospectus involve known and unknown risks, uncertainties and other factors
that could cause actual results, financial or operating performance to differ
from the future results, financial or operating performance or achievements
expressed or implied by such forward-looking statements. You should read the
following summary and the "Risk Factors" section along with the more detailed
information , financial statements and the notes to the financial statements
appearing elsewhere in this prospectus before you decide whether to purchase
the common stock described in this prospectus.
The Company
-----------
World Internetworks is a full-service web services provider that
focuses on small and home-based businesses. For a monthly membership fee of
$39.95, we provide an internet package that includes web site design and
hosting, unlimited free e-mail and internet training. For no additional
charge, our members are able to list their web sites in our Main Street Plaza
online shopping mall.
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The Offering
------------
Securities offered by us . . . None
Securities that may be sold
by our stockholders . . . . . . 7,326,000 shares of our common stock.
Use of proceeds . . . . . . . . We will not receive any money from any
stockholders when they sell their shares of
common stock.
Offering Price . . . . . . . . .Market prices prevailing at the time of sale,
at prices related to the prevailing market
prices, at negotiated prices or at fixed
prices, all of which may change.
Transfer Agent . . . . . . . . .Standard Registrar & Transfer Company,
12528 South 1840 East, Draper, Utah 84020,
serves as the transfer agent and registrar for
our outstanding securities.
RISK FACTORS
------------
An investment in shares of World Internetworks' common stock is
very speculative and involves substantial risks. In addition to the general
investment risks and other information in this prospectus, you should
carefully consider the following factors before making an investment decision.
WE HAVE A HISTORY OF UNSUCCESSFUL OPERATIONS
World Internetworks has previously operated through its wholly-owned
subsidiaries, World Internet Marketplace, Inc., a Utah corporation; Global
Wholesale Exchange, Inc., a Utah corporation; and Global Media Group, Inc., a
Utah corporation. These operations were unsuccessful and World Internetworks
and its subsidiaries ceased operations in October, 1998. On October 26, 1999,
each of our subsidiaries filed a Chapter 7 bankruptcy case in the United
States Bankruptcy Court for the District of Utah. In 1999, the Utah
Department of Commerce also dissolved each of these subsidiaries. We can not
assure you that our future operations will have any more success than our
previous operations.
WE MAY HAVE DIFFICULTY OBTAINING FUNDING IN THE FUTURE
We currently have limited operating capital and cash resources. We
may need substantial funding in order to meet the expenses of our anticipated
expansion, although management believes that proceeds from the recent issuance
of shares of our common stock will fund our planned operations in the near
term. Our ability to raise funding may be severely limited due to our
historical lack of successful operations, our limited assets and the limited
public market for our common stock.
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ANY FUTURE GOVERNMENTAL REGULATION OF THE INTERNET MAY ADVERSELY AFFECT OUR
OPERATIONS
At present, management is not aware of any laws or regulations
specifically restricting the commercial use of the internet. However, related
laws and regulations, including those pertaining to trademark, copyright,
patent, licensing, obscenity, and security matters, can affect the use of the
internet for online commerce. Management believes that World Internetworks is
currently in compliance with all laws pertaining to use of the internet.
Nevertheless, we can not assure you that restrictive legislation will not be
enacted in the future. New regulation may require us to expend large amounts
of money to ensure compliance or may simply prohibit us from doing certain
things. In either case, our profitability may be adversely affected.
UNCERTAINTY ABOUT THE FUTURE OF THE INTERNET MAY LEAD TO UNCERTAINTY ABOUT OUR
OPERATIONS
Because the internet is such a new commercial medium, critical
issues as to its viability remain unresolved and may limit the growth of e-
commerce. These issues include security, reliability, cost, ease of use and
access, and quality of service. Although we believe that our internet-related
products and services are commercially viable and that the number of internet
users will continue to grow, we can not assure you that commerce and
communication over the internet will become widespread, or that our products
or services will become widely recognized or used.
OUR OPERATIONS WILL DEPEND ON ADEQUATE INTERNET INFRASTRUCTURE
Marketing and distribution of our products and services will
require adequate infrastructure for providing internet access and carrying
growing internet traffic. The internet may prove not to be a viable
commercial marketplace because of inadequate development of necessary
infrastructure such as a reliable network backbone, or timely development of
related products such as high-speed modems or other quickening devices.
Because global commerce and online networks are still relatively new and
evolving, we can not predict whether the internet will prove to be a viable
commercial market. If it does not, our business operations and financial
condition could be negatively affected.
CAPACITY CONSTRAINTS MAY LIMIT OUR ABILITY TO MAKE SALES
Our business operations depend, in large part, on a high volume of
traffic on our internet site. Accordingly, the performance, reliability and
availability of our site, computer network infrastructure and internet
commerce processing systems are critical to our ability to attract and retain
new customers. Any systems interruptions that make our site unavailable or
limit our ability to process orders could reduce the volume of goods that we
sell. We have experienced periodic computer system interruptions in the past,
and anticipates that such interruptions will occur from time to time in the
future. Continued growth of our network of independent direct
distributors or other customers will require us to expand and
upgrade our internet technology, including our computer network and
internet commerce processing systems. We can not assure you that we will
accurately predict the need for such expansion or upgrade, or that we will be
able to make any such expansion or upgrade in a timely manner.
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A COMPUTER SYSTEM FAILURE WOULD HURT OUR OPERATIONS
Our ability to receive and process orders for products and services
depends on efficient, uninterrupted operation of our computer and
communications equipment. Substantially all of our computer and
communications equipment is located at our headquarters in a leased facility
in Orem, Utah and at a facility in Palm Desert, California. Our computer and
communications equipment is vulnerable to flood, earthquake, power loss,
telecommunications failure, and other similar events. We do not have
redundant systems or a contingent disaster recovery plan and do not carry
adequate business interruption insurance to cover potential losses that may
occur from such an event. Our computer equipment is also vulnerable to
computer viruses, break-ins and similar events that could lead to
interruptions, loss of data or malfunction. Any such event would limit our
revenues during the "down time" and may require substantial expense to repair.
THE POTENTIAL SECURITY RISKS OF ONLINE COMMERCE MAY MAKE OUR PRODUCTS AND
SERVICES LESS DESIRABLE
One challenge to the success of online commerce is the secure
transmission of confidential information such as customer credit card numbers.
We rely on encryption devices supplied by third parties to provide this
security. However, we can not assure you that computer capabilities, new
discoveries in encryption technology or other circumstances will not result in
a breach of the security devices that we employ to protect confidential data.
If such a breach were to occur, our reputation, business operations and
financial condition could all be negatively affected. These concerns may
require us to spend additional resources to protect against the possibility of
such breaches. In addition, consumer concerns about internet security may
make our products and services less attractive.
AN AGREEMENT WITH A THIRD PARTY MAY RESULT IN A CHANGE IN CONTROL
Our Board of Directors has adopted an agreement with Fairway Capital
Partners, LLC. Among other things, the agreement gives Fairway Capital the
option to appoint its own representatives to fill three of five seats on our
Board of Directors and to appoint its representatives as executive officers.
If Fairway Capital exercises this option, its representatives will have a
majority of our Board of Directors and will be able to dictate our corporate
policy and business direction. We can not assure you that these decisions
will be consistent with our current direction or that they will be positive
for us and our stockholders. Fairway Capital has not yet exercised this
option. For a discussion of the Fairway Capital agreement, see the heading
"General" under the caption "Description of Business."
THE LIMITED MARKET FOR OUR SHARES WILL MAKE THEIR PRICE MORE VOLATILE
The market for our common stock is very limited and we can not
assure you that a larger market will ever be developed or maintained. The
market for our common stock is likely to be volatile and many factors may
affect the market. These include, for example:
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Our success, or lack of success, in marketing our products and
services;
Competition;
Governmental regulations; and
Fluctuations in operating results.
The stock markets generally have experienced, and will probably
continue to experience, extreme price and volume fluctuations which have
affected the market price of the shares of many small capital companies.
These fluctuations have often been unrelated to the operating results of such
companies. Such broad market fluctuations, as well as general economic and
political conditions, may decrease the market price of our common stock in any
market that develops.
THE SUCCESS OF OUR OPERATIONS WILL DEPEND LARGELY ON STEVEN K. HANSEN
Our success will depend largely on the efforts of our President,
Steven K. Hansen. We do not have a "key person" life insurance policy on Mr.
Hansen. The loss of Mr. Hansen could have devastating effect on our business,
operating results and financial condition. Our future growth and success also
depends on our ability to identify, hire, train and retain other qualified
management and technical personnel in the future. The inability to hire and
retain necessary personnel could severely limit our ability to grow.
THE HIGHLY COMPETITIVE NATURE OF THE INTERNET INDUSTRY MAY LIMIT OUR CHANCES
OF SUCCESS
The market for internet services is relatively new, intensely
competitive, rapidly evolving and subject to rapid technological change.
World Internetworks expects competition to persist, intensify and increase in
the future. Most of our current and potential competitors have longer
operating histories, larger installed customer bases, longer relationships
with clients and significantly greater financial, technical, marketing and
public relation resources than we do and could decide at any time to increase
their resource commitments to our target market. In order to remain
competitive, we may from time to time make certain pricing, service technology
or marketing decisions and we can not assure you that these decisions will
lead to success. Competition of the type described above could materially
adversely affect our business, results of operations, financial condition and
prospects.
In addition, our ability to generate clients will depend
to a significant degree on the quality of our services and our reputation
among our clients and potential clients. If we lose clients to our
competitors because of dissatisfaction with our services or our reputation is
adversely affected for any other reason, our revenues will likely decrease and
our prospects could be materially adversely affected.
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THE WEB SITE DESIGN AND HOSTING INDUSTRY HAS LOW BARRIERS TO ENTRY
There are relatively low barriers to entry into the web site design
and hosting business. Because firms such as World Internetworks rely on the
skill of their personnel and the quality of their client service, they have no
patented technology that would preclude or inhibit competitors from entering
their markets. We are likely to face additional competition from new
entrants into the market in the future. We can not assure you that existing
or future competitors will not develop or offer services that provide
significant performance, price, creative or other advantages over those
that we offer.
AUDITOR'S "GOING CONCERN" OPINION
The Independent Auditor's Report for our audited consolidated
financial statements as of February 28, 1999, expresses "substantial doubt
about [our] ability to continue as a going concern," due to our recurring
losses from operations and stockholders' equity (deficit).
YOU SHOULD NOT EXPECT THE PAYMENT OF DIVIDENDS FROM YOUR INVESTMENT
World Internetworks does not expect to pay dividends on its common
stock in the foreseeable future. Future dividends, if any, will depend upon
our earnings, if any. Investors who will need cash dividends from their
investment should not purchase our common stock.
USE OF PROCEEDS
---------------
World Internetworks will not receive any part of the proceeds from
our stockholders' sale of our common stock.
DETERMINATION OF OFFERING PRICE AND DILUTION
--------------------------------------------
We will not receive any money from the stockholders when they sell
their shares of common stock. The stockholders may sell all or a portion of
their common stock in private transactions or in the over-the-counter market
at prices related to the prevailing prices of our common stock at the time of
negotiation. Because we can not accurately predict the prices of such sales,
we can not accurately estimate the amount of any dilution that may result from
the purchase of these shares. However, the net tangible book value of our
common stock on November 30, 1999, was $(0.4215) per share. Net tangible book
value per share is determined by subtracting our total liabilities from our
total tangible assets and dividing the remainder by the number of shares of
common stock outstanding.
You should not ascribe any value to our common stock in view of the
lack of any established public market for these securities and their negative
tangible book value, as well as our limited operating history and revenues,
lack of profits and dividends, and the other risk factors discussed in this
Prospectus. You are likely to suffer significant dilution relative to any
value you may ascribe to the shares you receive under this Prospectus.
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We can not assure you that any public market for our common stock
will equal or exceed the sales price of the shares of common stock sold by our
stockholders. Purchasers of the shares face the risk that their shares will
not be worth what they paid for them.
SELLING SECURITY HOLDERS
------------------------
The following table shows for our stockholders the following
information:
The number of shares of our common stock beneficially owned by them as
of March 24, 2000 and covered by this prospectus; and
The number of shares to be retained after this offering, if any.
Common Stock (1)
----------------
Number of Shares
Owned Prior to Number of Shares
and Registered Beneficially Owned
Name of Selling Stockholder in the Offering after the Offering(2)
- --------------------------- --------------- ------------------
Fairway Capital Partners LLC 1,625,000 -0-
Dwain Brannon Group LLC 125,000 -0-
Patrick Kephart 125,000 -0-
Bart Walters 125,000 -0-
Noziroh, Ltd. 375,000 -0-
Capital Investment Partners #1 SA 375,000 -0-
Christian Baddour 200,000 -0-
Jeff Parsons 50,000 -0-
GJM Trading Partners, Ltd. 800,000 -0-
Growth Ventures, Inc. 400,000 -0-
Douglas L. Rex 30,000 22,500
Leonard W. Burningham, Esq. 100,000 (3) 50,000
M. J. Camberlango 160,000 (3) -0-
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Madeleine Franco 36,000 11,250
First Security Bank, Trustee 50,000 (3) -0-
for Harold J. Steele
Sterling K. Jenson 50,000 (3) -0-
Amna S. Jamhour 50,000 (3) 33,400
Cherie S. Darrohn 50,000 (3) -0-
Triangle Bar Ranch 25,000 (3) -0-
Earlene S. Rex 25,000 (3) 13,500
Tri-Gold Investments Ltd. 500,000 (3) -0-
Jayvee & Co. 500,000 (3) -0-
Nottinghill Resources Ltd. 500,000 (3) -0-
Fairwinds Investments Ltd. 400,000 (3) -0-
Charles Walker 200,000 (3) -0-
K. Warren Mitchell 200,000 (3) -0-
Michael R. Viau 200,000 (3) -0-
O. Bryan Wilkinson 50,000 (3) -0-
(1) We assume no purchase in this offering by any stockholder listed
above of any shares of our common stock.
(2) Assumes the sale of all securities being registered.
(3) One-half of this figure constitutes shares of our common stock
underlying warrants that are exercisable at a price of $2 per share.
PLAN OF DISTRIBUTION
--------------------
We are registering the shares of our common stock covered by this
prospectus.
We will pay the costs, expenses and fees of registering the common
stock, but our stockholders will pay any underwriting or brokerage commissions
and similar selling expenses relating to the sale of shares of their common
stock.
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Our stockholders may sell our common stock at market prices
prevailing at the time of the sale, at prices related to the prevailing market
prices, at negotiated prices or at fixed prices, any of which may change. Our
stockholders may sell some or all of their common stock through:
Ordinary broker's transactions, which may include long or short
sales;
Purchases by brokers, dealers or underwriters as principal and
resale by those purchasers for their own accounts under this
prospectus;
Market makers or into an existing market for the common stock;
Transactions in options, swaps or other derivatives; or
Any combination of the selling options described in this
prospectus, or by any other legally available means.
In addition, our stockholders may enter into hedging transactions
with broker-dealers, who may engage in short sales of our common stock in the
course of hedging the positions they assume. Finally, our stockholders may
enter into options or other transactions with broker-dealers that require the
delivery of our common stock to those broker-dealers. Subsequently, the
shares may be resold under this prospectus.
In their selling activities, our stockholders will be subject to
applicable provisions of the Securities Exchange Act of 1934, and its rules
and regulations, including Regulation M, which may limit the timing of
purchases and sales of our common stock by our stockholders.
Those of our stockholders and any broker-dealers involved in the
sale or resale of our common stock may qualify as "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. In addition, the
broker-dealers' commissions, discounts or concessions may qualify as
underwriters' compensation under the Securities Act of 1933. If any broker-
dealer or any of our stockholders qualifies as an "underwriter," they will be
subject to the prospectus delivery requirements of Section 154 of the
Securities Act of 1933.
In conjunction with sales to or through brokers, dealers or agents,
our stockholders may agree to indemnify such brokers, dealers or agents
against liabilities arising under the Securities Act of 1933. We do not know
of any existing arrangements between our stockholders and any other
stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of our common stock.
In addition to selling their common stock under this prospectus, our
stockholders may:
Transfer their common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution or other transfer; or
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Sell their common stock under Rule 144 of the Securities Act of
1933, if the transaction meets the requirements of Rule 144.
We have advised our stockholders that, during the time each is
engaged in distribution of their common stock, each must comply with Rule 10b-
5 and Regulation M under the Securities Exchange Act of 1934. They must do
all of the following under those rules:
Not engage in any stabilization activity in connection with our
common stock;
Furnish each broker who may be offering our common stock on
behalf
of our stockholders the number of copies of this prospectus
required by each broker; and
Not bid for or purchase any of our common stock or attempt to
induce any person to purchase any of our common stock, other
than
as permitted under the Securities Exchange Act of 1934.
Any of our stockholders who may be "affiliated purchasers," as
defined in Regulation M, have been further advised that they must coordinate
their sales under this prospectus with each other and us for the purposes of
Regulation M.
To the extent required by the Securities Act of 1933, a supplemental
prospectus will be filed, disclosing:
The name of any such broker-dealers;
The number of securities involved;
The price at which such securities are to be sold;
The commissions paid or discounts or concessions allowed to
such
broker-dealers, where applicable;
That such broker-dealers did not conduct any investigation to
verify the information set out in this prospectus, as
supplemented; and
Other facts material to the transaction.
There is no assurance that any of our stockholders will sell any of
our common stock.
LEGAL PROCEEDINGS
-----------------
In February 1998, our wholly-owned subsidiary, World Internet
Marketplace, Inc., filed a complaint in the Fourth District Court for the
State of Utah, alleging breach of fiduciary duty, conversion, tortious
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interference with economic relations and violation of the Utah Uniform Trade
Secrets Act against three former employees. The claims resulted from certain
former employees' commission practices and discussions with competitors. The
defendants filed an answer in March, 1998; no counterclaim was asserted.
In March 1998, Paulette Arnold filed a complaint against World
Internet Marketplace, Inc., in Knoxville County, Tennessee, alleging an
undetailed claim of breach of contract and seeking damages of $ 5,940.
On October 26, 1999, our wholly-owned subsidiaries, World Internet
Marketplace, Inc.; Global Media Group, Inc.; and Global Wholesale Exchange,
Inc., filed for Chapter 7 bankruptcy protection in the United States
Bankruptcy Court for the District of Utah (Salt Lake). The cases were
designated Case Nos. 99-31576; 99-31577; and 99-31578, respectively. The
pending litigation involving World Internet Marketplace, Inc., was stayed in
accordance with U. S. bankruptcy law, pending completion of its bankruptcy
case. The first meeting of creditors was held January 19, 2000. Ms. Arnold
did not file a creditor's claim at that meeting.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of World Internetworks. These persons will serve until
the next annual meeting of the stockholders or until their successors are
elected or appointed and qualified, or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Steven K. Hansen President 2/99 *
Director 2/99 *
Phillip M. Ray Secretary/ 2/99 3/00
Treasurer 2/99 3/00
Randal L.Roberts Director 2/99 *
Gary S. Winterton Director 2/99 *
</TABLE>
* These persons presently serve in the capacities
indicated.
13
<PAGE>
Business Experience.
- --------------------
Steven K. Hansen. Mr. Hansen, age 40, has extensive experience in
sales and marketing. He has served as Vice President of Allen & Associates, a
Texas based organization which provided membership development services for
Chamber of Commerce organizations nationwide; these non-profit business
organizations were reliant on Mr. Hansen's efforts to provide the necessary
funding for programs and services. During the past 10 years, he has served as
a Financial Advisor for Paine Webber, Smith Barney and Everen Securities. Mr.
Hansen and his partner managed over $120 Million of client assets. He also
has extensive experience in the areas of money management, sales, marketing,
administration and client services.
Randal L. Roberts. Mr. Roberts, age 47, is a Vice President and
Manager of the International Banking Department of First Security Bank, a $22
billion financial services company, with banking offices in seven states. He
brings over 20 years experience in commercial lending and international
operations to World Internetworks. Mr. Roberts has been responsible for a
328% increase in international business for his department over the past five
years, and is responsible for hundreds of millions of dollars in international
transactions. In his capacity as a commercial banker, Mr. Roberts has
provided financial analysis of well over 2,000 different banks and
corporations.
Gary S. Winterton. Mr. Winterton, age 30, was the Acting President
of Internet Marketing Concepts, an internet development company, until
December, 1999. He brings broad experience to World Internetworks, including
seven years with the Covey Leadership Center, where he was one of the top
revenue producers and business developers. He was a key figure in the
development of the highly acclaimed "First Things First" time management
training division. Following his tenure with Covey Leadership Center, Mr.
Winterton served as Vice President of a marketing/communications company which
provided recruiting, training and motivational materials for the direct sales
and network marketing industry.
Significant Employees.
- ----------------------
Steven K. Hansen is a significant full-time employee. We do not
presently employ any non-officers who are expected to make a significant
contribution to our business.
Family Relationships.
- ---------------------
There are no family relationships between any of our directors or
executive officers.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
Except as stated below, during the past five years, no present or
former director, executive officer or person nominated to become a director or
an executive officer of World Internetworks:
14
<PAGE>
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
On October 26, 1999, our wholly-owned subsidiaries, World Internet
Marketplace, Inc.; Global Media Group, Inc.; and Global Wholesale Exchange,
Inc., filed for Chapter 7 bankruptcy protection in the United States
Bankruptcy Court for the District of Utah (Salt Lake). The cases were
designated Case Nos. 99-31576; 99-31577; and 99-31578, respectively. In
addition, World Internet Marketplace was dissolved by the Utah Department of
Commerce on June 18, 1999; the other two corporations were dissolved on August
1, 1999. The Department's computer database shows that Richard T. Smith, who
is a former director of World Internetworks, was also a director of Global
Media Group, Inc., and of Global Wholesale Exchange, Inc.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of each of our
stockholders who is known to beneficially own more than five percent of our
outstanding common stock as of March 24, 2000. To the knowledge of
management, each of these stockholders has sole investment and sole voting
power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Gary J. McAdam 1,200,000 (1) 13.4%
14 Red Tail Dr.
Highlands Ranch, Colorado
80126
15
<PAGE>
Steven K. Hansen 1,000,000 (2) 11.2%
1379 East Indian Ridge Cir.
Sandy, Utah
84092
Fairway Capital Partners LLC 1,625,000 18.1%
56 East Pine St., Suite 200
Orlando, Florida
32802
-------- -----
TOTALS 3,825,000 42.7%
(1) A total of 800,000 of these shares are held of record by GJM Trading
Partners, Ltd., of which Mr. McAdam is a general partner, and 400,000 shares
are held of record by Growth Ventures, Inc., of which Mr. McAdam is President.
(2) A total of 700,000 of these shares are held of record by Mr. Hansen
and his wife as joint tenants.
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of our directors
and executive officers as of March 24, 2000. Each of these persons has sole
investment and sole voting power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Steven K. Hansen 1,000,000 (1) 11.2%
1379 East Indian Ridge Cir.
Sandy, Utah
84092
Randal L. Roberts -0- -0-
9878 South Lannae Dr.
Sandy, Utah
84094
16
<PAGE>
Gary S. Winterton 10,000 (2) 0.1%
517 South 1045 West
Orem, Utah 84058
-------- -----
All directors and executive 1,010,000 11.3%
officers as a group
(3 persons)
</TABLE>
(1) Mr. Hansen and his wife hold a total of 700,000 of these shares as
joint tenants.
(2) Mr. Winterton purchased these shares in an open-market transaction.
See the caption "Directors, Executive Officers, Promoters and
Control Persons," of this prospectus for information about the offices or
other capacities in which each of these persons serves with World
Internetworks.
Changes in Control.
- -------------------
Our Letter of Intent with Fairway Capital gives Fairway Capital the
option to appoint three of five members of our Board of Directors and to
appoint its representatives as executive officers of World Internetworks. If
Fairway Capital exercises this option, its appointees will constitute a
majority of our Board of Directors and will be able to determine our corporate
direction. Fairway Capital has not yet exercised this option. See the Risk
Factor "An Agreement with a Third Party May Result in a Change in Control."
DESCRIPTION OF SECURITIES
-------------------------
World Internetworks has the authority to issue 500,000,000 shares of
one mill ($0.001) par value common voting stock. The holders of our common
stock are entitled to one vote per share on each matter submitted to a vote at
a meeting of stockholders. The shares of common stock do not carry cumulative
voting rights in the election of directors.
Our stockholders have no pre-emptive rights to acquire additional
shares of common stock or other securities, but the Board of Directors does
have the right to resolve that our unissued securities be offered for
subscription only to our common stock holders or only to such stock holders in
proportions based on their stock ownership. The common stock is not subject
to redemption rights and carries no subscription or conversion rights. In the
event of liquidation of World Internetworks, the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. All shares of the common stock now outstanding are fully paid
and non-assessable.
17
<PAGE>
Our Bylaws authorize the Board of Directors to vote to declare
dividends whenever the Board believes it to be expedient.
The common stock holders are not personally liable for the payment
of our debts.
Our shares of common stock are "penny stock" as defined in Rule
3a51-1 of the Securities and Exchange Commission. This designation may
adversely affect the development of any public market for our common stock or,
if such a market develops, its continuation. Broker-dealers are required to
personally determine whether an investment in "penny stock" is suitable for
customers.
Penny stocks are securities (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national
exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv)
of an issuer with net tangible assets less than $2,000,000 (if the issuer has
been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average annual
revenues of less than $6,000,000 for the last three years.
Section 15(g) of the 1934 Act, and Rule 15g-2 of the Securities and
Exchange Commission require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and
to obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock."
Rule 15g-9 of the Securities and Exchange Commission requires
broker-dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for purchasers of our common stock to resell their shares to
third parties or to otherwise dispose of them.
Of the 8,956,607 shares of our common stock that were issued and
outstanding on March 24, 2000, 5,042,075 shares are "restricted," and
approximately 1,049,984 of these "restricted" shares are currently eligible
for resale under Rule 144 of the Securities and Exchange Commission. An
additional 176,639 shares will become available for resale under Rule 144 on
or before August 1, 2000. The future sale of these "restricted" shares may
have an adverse effect on any market that may develop for our common stock.
18
<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL
-------------------------------------
Our financial statements as of February 28, 1999, have been included
herein in reliance on the report of Jones, Jensen & Company, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
We have not hired any expert or counsel on a contingent basis. No
expert or counsel will receive a direct or indirect interest in World
Internetworks, and no such person was a promoter, underwriter, voting trustee,
director, officer or employee of World Internetworks.
Branden T. Burningham, Esq., who assisted us with the preparation of
this prospectus and the registration statement of which it is a part, is the
son of Leonard W. Burningham, Esq. The elder Mr. Burningham beneficially owns
100,000 shares of the shares that we are currently registering. The younger
Mr. Burningham beneficially owns approximately 7,625 shares of our common
stock; we are not currently registering these shares.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
-----------
Section 78.7502(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer, employee,
or corporate agent "who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.7502(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he
acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful."
Section 78.7502(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or in
the right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his or her actions were in or not opposed
to the corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.7502(1) or 78.7502(2), Section 78.7502(3)
of the NRS requires that he be indemnified "against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
with the defense."
19
<PAGE>
Unless ordered by a court or advanced pursuant to Section 78.751(2),
Section 78.751(1) of the NRS limits indemnification under Section 78.7502 to
situations in which either (1) the stockholders, (2)the majority of a
disinterested quorum of directors, or (3) independent legal counsel determine
that indemnification is proper under the circumstances.
Section 78.751(2) authorizes a corporation's articles of
incorporation, bylaws or agreement to provide that directors' and officers'
expenses incurred in defending a civil or criminal action must be paid by the
corporation as incurred, rather than upon final disposition of the action,
upon receipt by the director or officer to repay the amount if a court
ultimately determines that he is not entitled to indemnification.
Section 78.751(3)(a) provides that the rights to indemnification and
advancement of expenses shall not be deemed exclusive of any other rights
under any bylaw, agreement, stockholder vote or vote of disinterested
directors. Section 78.751(3)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees and agents,
as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
Article VIII of our Bylaws contains indemnification provisions that
virtually identical to the indemnification provisions of the NRS. In addition,
Paragraph 6 of our Employment Agreement with Mr. Hansen requires us to
indemnify Mr. Hansen "in any action arising out of the discharge of his
duties," including actions and claims relating to matters that occurred before
February 19, 1999, the date of the Employment Agreement.
This is only a summary of the indemnification provisions of the NRS
and our Articles of Incorporation, Bylaws and contracts. You are urged to
review our Bylaws for the actual text of their indemnification provisions.
See the Exhibit Index.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of World Internetworks pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
-----------------------
General.
- --------
World Internetworks is a Nevada corporation. It was incorporated on
March 17, 1986, under the name "Impressive Ventures, Ltd." for the purpose of
engaging in any lawful activity or business. We did not conduct any business
operations until August 27, 1996, when our stockholders approved an agreement
20
<PAGE>
under which the stockholders of Wealth International, Inc., a Utah corporation
("Wealth Utah"), obtained a controlling interest in Impressive Ventures. This
transaction was treated as an acquisition of Impressive Ventures by Wealth
Utah, and as a recapitalization of Wealth Utah. Under the agreement, the
stockholders of Wealth Utah exchanged all of their shares in that company for
2,752,245 common shares of Impressive Ventures, after the effects of a
1-for-250 reverse stock split, a 4-for-1 forward stock split and a 1-for-4
reverse stock split.
After the transaction was completed, Impressive Ventures changed its
name to "Wealth International, Inc." and the operating subsidiary (Wealth
Utah) subsequently changed its name to "World Internet Marketplace, Inc." In
January, 1998, we changed our name to "World InterNetWorks, Inc." in order to
more accurately reflect the nature of our business.
Until 1999, we had three wholly-owned subsidiaries: (i) World
Internet Marketplace, Inc., a Utah corporation, which was engaged in marketing
and distributing products and services relating to internet commerce; (ii)
Global Wholesale Exchange, Inc., a Utah corporation, which commenced
operations in June, 1998, providing wholesale goods to consumers via internet
and fax notification; and (iii) Global Media Group, Inc., a Utah corporation
doing business as the "Institute for Financial Independence", which commenced
operations in June, 1998, and performed seminars that sold the other
subsidiaries' products. Our subsidiaries have ceased operations. In 1999,
each filed a Chapter 7 bankruptcy petition. In the same year, the Utah
Department of Commerce dissolved each subsidiary. See the Risk Factor "We
Have a History of Unsuccessful Operations."
Our business operations were unsuccessful and on October 22, 1998,
we discontinued operations and re-entered the development stage. Our revenues
prior to the discontinuation of operations were substantially derived from two
categories of products and services: (i) personal and commercial web site
development and maintenance, and related internet training; and (ii)
merchandise sales from our internet-based virtual "mall" or "department
store." Orders for merchandise on the virtual "mall" are generally fulfilled
by shipment direct from the manufacturer or wholesaler to the customer. As
discussed under the caption "Legal Proceedings," each of our subsidiaries
filed a Chapter 7 bankruptcy case in the United States Bankruptcy Court for
the District of Utah on October 26, 1999.
As part of World Internetworks' efforts to create a profitable
business plan, on November 30, 1998, former management entered into agreements
with Steven K. Hansen and Dwain Brannon. Under these agreements, Messrs.
Hansen and Brannon were retained to use their best efforts to assist in:
identifying and retaining a new management team; and
developing a corporate restructuring plan.
For their efforts, World Internetworks agreed to issue 75,000 shares
each to Messrs. Hansen and Brannon, with Mr. Hansen to receive an additional
150,000 "unregistered" and "restricted" shares and Mr. Brannon to receive an
additional 75,000 such shares. The Company recorded a management fee expense
21
<PAGE>
of $45,000 in connection with the issuance of the 75,000 shares to Mr. Hansen
and the 75,000 shares to Mr. Brannon.
In February, 1999, our new directors and executive officers were
appointed and we began to proceed with our present business plan.
Our business plan calls for us to do the following:
provide web site design and build software that will allow
small
business and home-based entrepreneurs to establish an internet
presence at a lower price than our competitors can provide;
establish an internet training and technical support program
that
will help our members understand the internet and learn how to
profit from it;
use the "affiliate method" to encourage members to recruit
other
members. Under this method, each member will be paid for each
new
member registered, down two membership levels;
create strategic alliances with companies such as Dell
Computer,
Office Max, Digital River and Walt Disney, by which our members
will be able to offer these companies' products on member web
sites and receive a commission ranging from approximately 4% to
10% on each sale, depending on the terms and conditions for
each
company;
provide our members with access to our "Main Street Plaza"
online
shopping mall, which will allow them to sell their own products
over the internet;
through our relationship with Alta Vista, one of the top search
engines in the country, provide our members with unlimited
internet access;
increase market awareness of our service through search engine
placement. We are already rated in the top 10 on Alta Vista
and
Google and expect to rate highly on America Online and Yahoo!
in
the near future.
On April 13, 1999, we executed an agreement with Internet Marketing
Concepts, of Orem, Utah, to help us proceed with our business plan. Under the
agreement, IMC agreed to make available to us, free of charge, a team of
designers to help us design and build our web site, and to allow us to use
IMC's Quicksite 3.0 technology for that purpose. We charge our members a
monthly hosting fee of $29.95. Of this amount, we paid $5.00 to the
sponsoring distributor; $12.45 to IMC; and we kept $12.55. All of our web
sites are sold on a reseller basis at $495. Of this amount, $200 is paid as
commission and we would split the remaining $295 with IMC ($147.50 to each
entity). In addition, IMC provided us with a merchant account for online
purchases and was responsible for all billing of our sites. IMC also
22
<PAGE>
performed all technical services for us, including maintenance, customer
service and technical updates. Gary Winterton, the former Acting President of
IMC, is a member of our Board of Directors. Until December, 1999, we also
leased our office space from IMC, although we paid our own expenses for
telephones, printing and related matters. As of December, 1999, we terminated
our relationship with IMC.
On September 14, 1999, our Board of Directors voted to adopt and
ratify a Letter of Intent with Fairway Capital, under which Fairway Capital
agreed to provide certain services to us. These services include:
Visiting our offices and performing "due diligence" on our
corporate structure, activities, finances and business model;
Assisting us in the development of strategies for corporate
finance, business model, internet presence and public
relations;
Introducing us to representatives of National Securities in
Chicago, Illinois, with the goal of retaining National
Securities
to expose us to its clients;
Introducing us to the Regional Investment Bankers Association
with
the goal of increasing our exposure to the brokerage community;
Assisting in the design of business plan documents to be
presented
to potential strategic partners, brokerage firms and investors;
and
Completing the business plan documents and obtaining our
acceptance of the documents.
Under the Letter of Intent, we agreed to grant to Fairway Capital
options to purchase 500,000 shares of our common stock for the services
itemized above. Fairway Capital has completed each of the items listed above.
Fairway Capital and its associates have exercised all of the 3 million options
granted to them as follows:
On September 14, 1999, we issued a total of 500,000 shares of
common stock to Fairway Capital and the following entities, in
exchange for $25,000:
Name of Recipient No. of Shares
----------------- -------------
Fairway Capital Partners LLC 125,000
Dwain Brannon Group LLC 125,000
Bart Walters 125,000
Patrick Kephart 125,000
23
<PAGE>
On November 5, 1999, we issued a total of 2,000,000 shares of
common stock to Fairway Capital and the following entities, in
exchange for $100,000:
Name of Recipient No. of Shares
----------------- -------------
GJM Trading Partners, Ltd. 800,000
Growth Ventures, Inc. 400,000
Fairway Capital Partners LLC 300,000
Capital Investment Partners #1 SA 250,000
Noziroh, Ltd. 250,000
On February 17, 2000, we issued 500,000 shares of common stock
to
Fairway Capital and the following entities, in exchange for
$25,000:
Name of Recipient No. of Shares
----------------- -------------
Christian Baddour 200,000
Jeff Parsons 50,000
Noziroh, Ltd. 125,000
Capital Investment Partners 125,000
Upon granting the 3,000,000 options on September 14, 1999, we
recorded a prepaid cost of capital of $1,725,000, based on the market price
per share of $0.625 on that date, less the option price of $0.05 per share.
We are charging this prepaid cost of capital to paid in capital ratably as we
receive the capital raised from sources that Fairway Capital has introduced.
The Letter of Intent provides for Fairway Capital to have
"piggyback" registration rights in connection with any future registrations of
our securities; these shares are a portion of the shares that we are
registering with the Securities and Exchange Commission.
In addition, the Letter of Intent provided for Fairway Capital to
introduce us to leaders in the internet industry to assist us in building an
advisory board, and to introduce us to at least three people who would be
qualified to serve on the advisory board. We agreed to grant Fairway Capital
options to purchase 600,000 shares of our common stock for each of these
24
<PAGE>
services, for a total of 1,200,000 shares. These services have been rendered
and on February 17, 2000, we issued all shares for these services to Fairway
Capital.
Fairway Capital also has an option under the Letter of Intent to
appoint three of five members of our Board of Directors and to have its
representatives appointed as executive officers of World Internetworks.
Fairway Capital has not yet exercised either option.
The Letter of Intent also provides for the parties to execute a
three-year consulting agreement at fees to be set in that agreement. The
parties entered into a Consulting Agreement on August 16, 1999. The
Consulting Agreement provides for Fairway Capital to render non-exclusive
management, consulting and financial services, including advice on corporate
acquisitions and related matters. In exchange, we agreed to pay Fairway
Capital $5,000 per month for the first three months of the Consulting
Agreement, $10,000 per month for the following three months, and $15,000 for
each month after that. The Consulting Agreement will expire on August 1,
2002.
On February 4, 2000, World Internetworks and Fairway Capital agreed
to modify the agreement. As modified, we will pay Fairway Capital $7,500 per
month, beginning in March 2000, with Fairway Capital, at its option, to
receive an additional $7,500 worth of "unregistered" and "restricted" common
stock priced at the average closing price of such stock over the last five
trading days of each month. The modifications are effective for payments
beginning in March, 2000.
Principal Products or Services and Their Markets.
- -------------------------------------------------
World Internetworks is a full-service internet services provider.
Our principal business is to provide web site design, hosting and access to
our "Main Street Plaza" shopping mall for small and home-based businesses that
want to take advantage of the recent trend toward e-commerce. For a monthly
membership fee of $39.95, our members have access to our web design software,
which allows even non-computer experts to quickly and easily build their own
web sites. Using our software, the typical user can have a fully-functional
web site in a few hours without having to learn any programming language. Our
web site features include:
50 megabytes of web space;
Internet access through Alta Vista Company's Micro Portal;
Personal CGI and log directories;
Microsoft front page extensions;
Unlimited free e-mail;
Domain name hosting at no extra monthly cost; and
25
<PAGE>
Discount web master services to help with web site development.
In addition to our web site hosting services, our $39.95 monthly
membership fee gives our members access to our Main Street Plaza online
shopping mall. The Main Street Plaza, which became fully operational in
October, 1999, currently consists of approximately 340 merchants that
collectively sell approximately 2 million products.
Our online mall includes the web sites of such large, dominant
retailers as Office Max; Toys R U; Dell Computer; LL Bean and Digital River,
alongside the sites of our own members. We believe that the aggregation of
many large and small retailers' web sites into one large online "mall"
provides much greater visibility to our members, whose web sites may never
receive enough "hits" to justify the sites' existence if they stood on their
own.
On October 20, 1999, we entered into a FreeAccess Software License
Agreement with Alta Vista Company. Under the Agreement, Alta Vista licensed
to us the rights to use, distribute, market and sublicense its FreeAccess
internet access software. We also have the right to use Alta Vista's marks in
connection with the marketing and distribution of FreeAccess. The license is
non-exlusive and non-transferable.
We also intend to establish a program of ongoing internet training
and technical support that will help our members understanding the internet
and learn how to profit from it as well.
Distribution Methods of the Products or Services.
- -------------------------------------------------
A key measure of any web site's success is the number of users
accessing the site, or "hits," per day. A retailer's web site is only useful
as long as it is being seen by potential customers. One way to ensure this is
to obtain a listing on a "search engine," which is an online research device
that allows a user to type in certain key words and then locates web sites
that include the information that the user is seeking. For example, a holiday
shopper who is interested in finding out what new toys are popular might
access a search engine and type in the word "toys." The search engine would
then search the worldwide web for web sites that deal with toys. The method
that the search engine uses to locate these sites is called its "search
protocol."
Our web site has been designed to achieve maximum exposure to search
engine protocols. On November 4, 1999, we signed an Advertising Agreement
with Go2Net, Inc., of Seattle, Washington. Under the Advertising Agreement,
we purchased 775,000 "impressions" of banner advertising on Go2Net's
MetaCrawler search engine and the Go2Net Network, at a cost of $5,000. We
expect this advertising to increase the number of "hits" to our web site,
which we believe will help us to achieve an attractive placement with many of
the approximately 1500 search engine organizations currently serving the
internet. We believe that this placement will in turn result in a
26
<PAGE>
substantially increased "hit" count to our site. These potential new visitors
represent potentially thousands of new members, many of whom will register and
begin building their sites on their first or second visit.
In March, 2000, our server received an average of approximately
18,000 hits per day. As our advertising takes effect and we obtain favorable
listings on search engines, we expect these figures to grow three-fold within
the next six months of operations.
One of the most widely used marketing methods on the internet today
is the "affiliate" method. This concept uses the premise that thousands of
"affiliates," each selling a retailers products or services, is potentially
more profitable than a single stand-alone operation. Using this concept, we
have adopted a two-tiered affiliate program that is designed to encourage our
existing members to recruit new members. Under this program, each of our
members is paid a monthly referral commission of $5 every time we receive the
monthly membership fee of a member that the first member has recruited.
Similarly, the first-line member will receive $4 per month for every third-
line member that is recruited by the members that the first-line member has
recruited. We believe that this program will motivate each of our members to
become active proponents of World Internetworks in the marketplace.
Many large retailers have also discovered the benefits of the
affiliate method. Using this method, online retailers establish "links" from
their own web sites to the web sites of other retailers. For every purchase
made as a result of this link, the first retailer receives a commission
ranging from approximately 4% to 10%. The amount of the commission typically
increases with the monthly sales volume that is derived from the first-line
web site. Each retail partner sets its own commission structure.
In order to exploit the advantages of the affiliate method, we have
become a member of the affiliate network established by LinkShare Corporation
of New York City. LinkShare manages the world's largest affiliate network,
which includes tens of thousands of affiliate sites and over 350 leading
merchants such as Office Max; Dell Computer; and 1-800-Flowers. As a result
of this arrangement, each of our members will be eligible for commissions on
all sales by member retailers that originate from the first member's site.
Most retail affiliate relationships do not rely on written
agreements between the parties, but are established through the commission-
paying retailer's web site. However, on April 28, 1999, World Internetworks
entered into a Dealer Agreement with Digital River, Inc., of Eden Prairie,
Minnesota, authorizing us to advertise Digital River's products on our web
site and to maintain a link to Digital River's own web site for a one-time fee
of $500. We will receive a commission for all sales that result from our link
to Digital River's web site. Digital River is engaged in the electronic
distribution of computer software to end users.
27
<PAGE>
Competitive Business Conditions.
- ---------------------------------
For a discussion of the competitive risks that we face, see the Risk
Factors "The Highly Competitive Nature of the Internet Industry May Limit Our
Chances of Success" and "The Web Site Design and Hosting Industry Has Low
Barriers to Entry" of this prospectus.
Sources and Availability of Raw Materials.
- ------------------------------------------
The internet industry is not typically dependent upon raw materials
in the sense that a manufacturer is dependent upon raw materials used in the
production of its products. Our most vital piece of equipment is a web server
that is operated by Blueberry Hill Communications, Inc., of Palm Desert,
California. See the caption "Description of Property" of this prospectus.
Dependence on One or a Few Major Customers.
- -------------------------------------------
World Internetworks does not depend on one or a few major customers.
We currently have a membership base of approximately 600 users. Virtually any
small business that is interested in economically entering the world of e-
commerce is a potential customer.
Our inter-retailer affiliate marketing program is dependent on our
relationships with LinkShare and Commission Junction, both of whom are
affiliate managers. If these relationships were to end for any reason, our
members would not be eligible for the commissions payable under these
programs. Because the programs are an attractive part of our business plan,
we may lose some members and potential members who were drawn to us primarily
due to those programs. If enough potential members make this decision, our
operating results could suffer significantly.
Need for Governmental Approval of Principal Products or Services.
- -----------------------------------------------------------------
We are not aware of any law or regulation that would require
government approval of any of our products or services. However, see the Risk
Factors "The Direct Distribution and Network Marketing Industry is Subject to
Government Scrutiny" and "Any Future Governmental Regulation of the Internet
May Adversely Affect Our Operations" of this prospectus.
Effect of Existing or Probable Governmental Regulations on the Business.
- ------------------------------------------------------------------------
See the Risk Factors "The Direct Distribution and Network Marketing
Industry is Subject to Government Scrutiny" and "Any Future Governmental
Regulation of the Internet May Adversely Affect Our Operations" of this
prospectus.
Research and Development.
- -------------------------
World Internetworks has engaged the services of four computer
engineers, two of whom are employees and two of whom work on an independent
28
<PAGE>
contractor basis. These engineers perform technical tasks such as designing
our Main Street Plaza web site and adding merchants to the site. The
engineers are paid by the hour based on invoices submitted to World
Internetworks for payment. Other than these tasks, we do not expect that
research and development will be a significant part of our operations.
Costs and Effects of Compliance with Environmental Laws.
- --------------------------------------------------------
Management does not believe that compliance with environmental laws
will require a significant portion of our resources.
Number of Employees.
- --------------------
We have six full-time employees. We have also engaged the services
of two independent contractor computer engineers to assist with technical
aspects of our operations, as discussed under the heading "Research and
Development," above.
Reports to Security Holders.
- ----------------------------
The National Association of Securities Dealers, Inc. requires that
all issuers maintaining quotations of their securities on the OTC Bulletin
Board file periodic reports under the Securities Exchange Act of 1934, and
World Internetworks does file periodic reports with the Securities and
Exchange Commission under Section 15(d) of the 1934 Act.
The public may read and copy any materials that we file with the
Securities and Exchange Commission at the Commission's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address
of that site is http://www.sec.gov.
We intend to furnish to our stockholders annual reports containing
financial statements audited and reported upon by our independent accounting
firm and such other periodic reports as we may determine to be appropriate or
as may be required by law.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
World Internetworks temporarily ceased business operations on
October 22, 1998. Since then, it has undergone a restructuring, which
resulted in the resignation of former directors and executive officers and the
election of a new management team.
29
<PAGE>
As of May 31, 1999, we resumed operations with a business model
based upon the premise that a "full service" web hosting company would be able
to fill a market niche. We expect our revenue opportunities to be
classified in four general areas:
Hosting fees generated from membership enrollments;
Advertising revenues received from the sale of advertised space
on
our web site to outside third party organizations;
Commissions from sales of products associated with our retail
partners, including those associated with LinkShare; and
Monthly lease fees received from merchants desiring to be
included
in the Wiworks Main Street Plaza.
We have established relationships with technology and retail
partners such as Alta Vista and LinkShare to facilitate the launch of our
operations. We expect to be self-funded through operations by the second
calendar quarter of 2000.
We are currently attempting to increase the number of hosted web
sites on our service. Our efforts include:
contacting all 28,000 former members of our earlier
unsuccessful
service by telephone in an effort to make them paying members
of
our current service;
follow-up mailings to former members who have not yet converted
to
our new service. Our current plan is to mail a CD-Rom that
shows
the user our web site technology and allows him or her to
launch a
browser to begin building a web site;
acquiring current and accurate e-mail lists and send e-mail
advertising. We believe that recipients of these
advertisements
will be good candidates for a web site because they are already
online;
buying mailing lists of small businesses and mailing
advertisements to them, with follow-up telephone calls to
recipients who have not responded; and
conducting public seminars on the use of the internet as a
business tool.
We have also retained Jordan Richard Assoc. of Salt Lake City, Utah,
to assist us with public relations matters.
We have had good initial success with our telephone marketing
campaign and have been able to hire one receptionist; two customer service
representatives; one computer programmer and a billing and accounting
employee.
30
<PAGE>
Results of Operations.
- ----------------------
For the fiscal year ended February 28, 1998, 69% of World
Internetworks' revenues were generated from a single independent distributor.
In June of 1998, management elected to end our relationship with this
distributor, which resulted in a significant reduction in revenue without a
commensurate reduction in expenses.
In June, 1998, World Internetworks established its wholly-owned
subsidiary, Global Media Group, to replace the revenues generated from this
independent distributor; this effort failed to generate any significant
revenues and only incurred liabilities in the attempt.
In October, 1998, due to this disparity between revenue and
expenses, we temporarily ceased operations and began to explore alternatives,
including voluntary reorganization, receivership or seeking relief under the
bankruptcy statutes. As of February 28, 1999, this evaluation process was
still ongoing. We engaged a search team to actively pursue other business
alternatives.
The search team identified a new President, Steven K. Hansen, and he
was engaged as of March, 1999, along with our other current directors and
executive officers. We commenced our current operations in April, 1999.
Comparison of Fiscal Year End 1999 to Fiscal Year End 1998.
- -----------------------------------------------------------
Due to the termination of our operations in October, 1998, the
differences between the our operating results for the fiscal years ended
February 28, 1999, and 1998, were great. Revenues were reduced significantly
and the expense line increased dramatically due to the failed attempt to
replace the revenues produced by the independent distributor. In addition, we
recommenced our developmental stage in October, 1998, so no revenues have been
recorded from our subsidiaries' past operations for the fiscal years ended
February 28, 1999, and 1998. Net losses from discontinued operations were
($2,450,128) and ($680,930), respectively, in the fiscal years ended February
28, 1999, and 1998.
Comparison of the Nine Months Ended November 30, 1999, and 1998.
- ----------------------------------------------------------------
Following our resumption of business, we received revenues of
$50,940 in the nine months ended November 30, 1999, as compared to $0 during
the nine months ended November 30, 1998, due to our assumption of development
stage status in October, 1998. Operating expenses for the nine months ended
November 30, 1999, totaled $776,786, of which $775,460 was comprised of
selling, general and administrative expenses. By contrast, we incurred no
operating expenses in the nine months ended November 30, 1998.
Net income for the these periods was $(585,617) (a loss of $0.16 per share),
and $(2,337,766) (a loss of $0.69 per share), respectively. The loss in the
nine months ended November 30, 1998, was characterized as a loss from
discontinued operations.
31
<PAGE>
Liquidity and Capital Resources.
- --------------------------------
As of February 28, 1999, all of our open accounts had been closed
and we had no cash assets. At November 30, 1999, we had cash assets of
$4,286.
DESCRIPTION OF PROPERTY
-----------------------
World Internetworks does not currently own any real property. It is
currently renting office facilities from Springwater Office Suites, Inc., an
unaffiliated third party, at a monthly rate of $800. The offices are located
in Orem, Utah.
We have an account with Blueberry Hill Communications, Inc., of Palm
Desert, California, under which Blueberry Hill provides web hosting and DNS
services to us. Our web site is maintained on a Unix BSDI dedicated server
consisting of a 300 MHz Intel Pentium Pro central processing unit with MMX, a
3.2 gigabyte hard drive and 128 megabytes of random access memory. The server
is monitored 24 hours per day and has all necessary power backup systems. We
pay Blueberry Hill a fee of $975 per month for this service. We have also
executed a Reselling Partner Agreement with 4Domains.com, a division of
Blueberry Hill, which allows us to register our members' domain names. The
Reselling Partner Agreement provides for up to 50 registrations at a price of
$49 per registration.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
On February 18, 2000, Fairway Capital loaned us $30,000 for a period
of 30 days, at an interest rate of 7% per year. We have fully repaid the
loan.
Other than as discussed under the heading "Executive Compensation,"
during the calendar years ended December 31, 1999, and 1998, World
Internetworks did not enter into any material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who we know to own of
record or beneficially more than five percent of the Company's common stock,
or any member of the immediate family of any of the foregoing persons, had a
material interest.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
Market Information.
- -------------------
Our common stock is quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc., under the symbol WINW. There is
32
<PAGE>
presently no "established trading market" for our shares. The following table
shows high and low closing bid information for our common stock as quoted on
the OTC Bulletin Board for our fiscal years ended February 28, 1999, and 1998.
These quotations reflect inter-dealer bid prices, without retail mark-up,
mark-down or commissions and may not represent actual transactions.
<TABLE>
Stock Quotations*
<CAPTION>
Quarterly Period Ended High Bid Low Bid
---------------------- -------- -------
<S> <C> <C>
May 31, 1997 $3.375 $2.25
August 31, 1997 $3.50 $1.50
November 30, 1997 $2.625 $1.50
May 31, 1998 $1.375 $0.625
August 31, 1998 $1.625 $0.75
November 30, 1998* $4.375 $0.25
February 28, 1999* $3.50 $0.25
May 31, 1999* $2.3125 $0.96875
August 31, 1999* $1.625 $0.50
November 30, 1999* $0.96875 $0.50
February 29, 2000* $3.25 $0.5625
* We effected a one-for-four reverse split of our outstanding common
stock on September 4, 1998.
Holders.
- --------
As of March 24, 2000, we had approximately 488 stockholders of
record. This figure does not include beneficial owners of common stock held
in "nominee" or "street" name, as we can not accurately estimate the number of
these beneficial owners.
Dividends.
- ----------
World Internetworks has not declared any cash dividends with respect
to its common stock, and does not intend to declare dividends in the
33
<PAGE>
foreseeable future. There are no material restrictions limiting, or that are
likely to limit, our ability to pay dividends on our common stock.
EXECUTIVE COMPENSATION
----------------------
On February 19, 1999, World Internetworks entered into an Employment
Agreement with Steven K. Hansen, our current President. It became effective
in March, 1999. The Employment Agreement provides for Mr. Hansen to receive a
salary of $8,000 per month ($96,000 per year), along with medical and dental
insurance coverage for Mr. Hansen and his dependents. Under the Employment
Agreement, we issued 800,000 "unregistered" and "restricted" shares of our
common stock to Mr. Hansen. The Employment Agreement also requires us to
reimburse Mr. Hansen for all reasonable expenses incurred in connection with
our business and to include him in all pension, profit-sharing and similar
plans.
Phillip Ray, our former Secretary/Treasurer, was hired at a salary
of $3,000 per month. He received three months' salary; his salary was
terminated effective June 1, 1999. Instead, on July 26, 1999, we granted Mr.
Ray options to purchase up to 60,000 "unregistered" and "restricted" shares of
our common stock at a price of $0.40 per share. Ten thousand of these
warrants are deemed to be "cashless," in which Mr. Ray may surrender options
in exchange for shares, rather than paying cash. In addition, we issued
20,000 "unregistered" and "restricted" shares of our common stock to
Automotive Direct, which is controlled by Mr. Ray, in exchange for the
retirement of a $40,000 corporate debt.
On August 12, 1999, we executed a compensation agreement with Gary
S. Winterton with respect to his services as a director. Under the agreement,
Mr. Winterton was granted an option to purchase 110,000 "unregistered" and
"restricted" shares of our common stock at a price of $0.40 per share, with an
additional option to purchase 50,000 such shares at the higher of the closing
bid price of our common stock on July 23, 1999, or $0.75. The exercise price
of these options has been set at $0.75 per share. We have also granted to Mr.
Winterton an option to purchase an additional 10,000 "unregistered" and
"restricted" shares at a price of $0.40 per share.
We have also agreed to compensate Randal L. Roberts for his services
as a director. Our arrangement with Mr. Roberts is the same as our
arrangement with Mr. Winterton with respect to their services as directors.
Summary Compensation Table
--------------------------
The following table sets forth all compensation awarded to Mr.
Hansen, our President, our only executive officer who received compensation in
excess of $100,000 for the fiscal years ended February 28, 1999, and February
29, 2000:
34
<PAGE>
Annual Long Term
Compensation Compensation Awards
Name and Position Year Salary Securities Underlying Options
- ----------------- ---- ------ -----------------------------
Steven K. Hansen 1999 (1) -0- -0-
President 2000 $347,300 (2) -0-
(1) We entered into an Employment Agreement with Mr. Hansen on
February 19, 1999, which became effective in March, 1999. Mr. Hansen did not
receive any compensation during the 1999 fiscal year.
(2) This figure includes $84,800 in cash compensation paid to Mr.
Hansen and $262,500 for services paid with World Internetworks common stock.
Option Grants in 1999
---------------------
This table shows the options that World Internetworks granted to its
executive officers and directors during the calendar year ended February 29,
2000:
Number
of Options Exercise Expiration
Name Granted* Price per Share Date
- ---- ------- --------------- ----
Steven K. Hansen -0- -0- -0-
Phillip Ray 50,000 $0.40 7/26/01
10,000 Market price on 7/26/01
date of exercise
Randal L. Roberts 10,000 $0.40 3/19/01
Gary S. Winterton 110,000 $0.40 8/12/01
50,000 $0.75 8/12/01
* None of these options has yet been exercised.
35
<PAGE>
FINANCIAL STATEMENTS
--------------------
36
<PAGE>
WORLD INTERNETWORKS, INC.
AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Financial Statements
February 28, 1999
37
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
World InterNetWorks, Inc. and Subsidiaries
(A Development Stage Company)
Orem, Utah
We have audited the accompanying consolidated balance sheet of
World InterNetWorks, Inc. and Subsidiaries (a development stage company) as of
February 28, 1999 and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the year ended February
28, 1999 and from inception of the development stage on October 22, 1998
through February 28, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosure in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of World InterNetWorks, Inc. and Subsidiaries (a development stage
company) as of February 28, 1999, and the consolidated results of their
operations and their cash flows for the year ended February 28, 1999 and from
inception of the development stage on October 22, 1998 through February 28,
1999 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 3 to the consolidated financial statements, the Company's
recurring losses from operations and stockholders' equity (deficit) raise
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 3.
The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
August 23, 1999
38
<PAGE>
</TABLE>
<TABLE>
WORLD INTERNETWORKS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
<CAPTION>
ASSETS
February 28,
1999
<S> <C>
CURRENT ASSETS
Cash $ -
Total Current Assets -
FIXED ASSETS (Note 1)
Computers and equipment 9,655
Furniture and fixtures 1,950
Accumulated depreciation (8,545)
Net Fixed Assets 3,060
TOTAL ASSETS $ 3,060
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Reserve for discontinued operations (Note 7) $2,627,271
Total Current Liabilities 2,627,271
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value; 500,000,000
shares authorized; 1,750,107 shares issued
and outstanding 1,750
Additional paid-in capital 1,356,919
Treasury stock at cost (1,020 shares) (3,186)
Deficit accumulated prior to the development
stage (3,979,694)
Deficit accumulated from the inception of the
development stage on October 22, 1998 -
Total Stockholders' Equity (Deficit) (2,624,211)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 3,060
</TABLE>
39
<PAGE>
<TABLE>
WORLD INTERNET WORKS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
<CAPTION>
From
Inception of the
Development
Stage on
October 22,
For the Years Ended 1998 Through
February 28, February 28,
1999 1998 1999
<S> <C> <C> <C>
REVENUES $ - $ - $ -
OPERATING EXPENSES - - -
LOSS FROM OPERATIONS - - -
LOSS FROM DISCONTINUED
OPERATIONS (Note 7) (2,450,128) (680,930) -
LOSS BEFORE INCOME TAXES (2,450,128) (680,930) -
INCOME TAX EXPENSE - - -
NET LOSS $ (2,450,128) $ (680,930) $ -
BASIC LOSS PER SHARE
Loss from operations $ 0.00 $ 0.00
Loss from discontinued operations (0.74) (0.22)
BASIC LOSS PER SHARE $ (0.74) $ (0.22)
FULLY DILUTED LOSS PER SHARE
Loss from operations $ 0.00 $ 0.00
Loss from discontinued operations (0.74) (0.22)
Fully Diluted Loss Per Share $ (0.74) $ (0.22)
</TABLE>
40
<PAGE>
WORLD INTERNETWORKS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional Employee
Common Stock Treasury Paid-In Notes Accumulated
Shares Amount Stock Capital Receivable Deficit
<S> <C> <C> <C> <C> <C> <C>
Balance,
February 28, 1997 2,983,739 $ 2,984 $ - $ 477,905 $ - $ (848,636)
Issuance of common
stock from the
exercise of options 341,500 341 - 564,389 (37,500) -
Issuance of notes
receivable to employees - - - - (41,397) -
Award of common stock to
an officer - - - 56,000 - -
Purchase of treasury stock - - (3,186) - - -
Net loss for the year ended
February 28, 1998 - - - - - (680,930)
Balance, February 28, 1998
(inception of development
stage) 3,325,239 3,325 (3,186) 1,098,294(78,897)(1,529,566)
Issuance of common
stock from the
exercise of options 147,125 147 - 216,603 - -
Issuance of common stock
for services 27,650 28 - 40,272 - -
Cancellation of
common stock (1,750,000) (1,750) - 1,750 - -
Payments received on
employee notes
receivable - - - - 78,897 -
Adjustment for
fractional shares 93 - - - - -
41
<PAGE>
Net loss for the
year ended
February 28, 1999 - - - - - (2,450,128)
Balance,
February 28, 1999 1,750,107 $ 1,750 $ (3,186) $1,356,919$ - $(3,979,694)
</TABLE>
42
<PAGE>
<TABLE>
WORLD INTERNETWORKS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
<CAPTION>
From
Inception of the
Development
Stage on
October 22,
For the Years Ended 1998 Through
February 28, February 28,
1999 1998 1999
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,450,128) $(680,930) $ -
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 103,314 181,310 -
Stock award compensation expense - 56,000 -
Write-off other assets 103,811 - -
Loss on disposal of property
and equipment 400,125 - -
Common stock issued for services 40,300 - -
Allowance for doubtful accounts 250,000 - -
Changes in assets and liabilities:
(Increase) decrease in inventory 103,955 (91,967) -
(Increase) decrease in accounts
receivable (26,147) (223,853) -
(Increase) decrease in other assets - (81,441) -
Increase (decrease) in deferred
revenue 169,423 377,270 -
Increase (decrease) in accounts
payable 512,847 341,218 -
Increase (decrease) in accrued
expenses 190,272 248,949 -
Net Cash Provided (Used) by Operating
Activities (602,228) 126,556 -
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property - 13,049 -
Purchase of property and equipment - (541,561) -
Net Cash Used by Investing Activities - (528,512) -
CASH FLOWS FROM FINANCING ACTIVITIES
(Increase) decrease in employee notes
receivable 78,897 (41,397) -
Proceeds from related party note
payable 230,000 40,000 -
Principal payments on related party
note payable (33,128) (68,489) -
Principal payments on capital leases (16,320) (5,132) -
Purchase of treasury stock - (3,186) -
Issuance of common stock 216,750 527,230 -
Net Cash Provided by Financing
Activities $ 476,199 $ 449,026 $ -
NET INCREASE (DECREASE) IN CASH $(126,029) $ 47,070 $ -
CASH AT BEGINNING OF YEAR 126,029 78,959 -
CASH AT END OF YEAR $ - $ 126,029 $ -
CASH PAID FOR:
Interest expense $ 2,013 $ 5,715 $ -
Income taxes $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Acquisition of equipment through
a capital lease $ - $ 21,452 $ -
Common stock issued for employee note
receivable $ - $ 37,500 $ -
Property and equipment used as payment
of accrued wages $ 13,205 $ - $ -
</TABLE>
43
<PAGE>
WORLD INTERNETWORKS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
February 28, 1999
NOTE 1 - ORGANIZATION AND HISTORY
a. Nature of Operations
World InterNetWorks, Inc., a Nevada corporation, has three wholly-
owned subsidiaries, World Internet Marketplace, Inc. (WIM), a Utah
corporation, engaged in marketing and distributing products and
services relating to internet commerce, Global Wholesale Exchange,
Inc. (GWE), a Utah corporation, which commenced operations in June
1998, providing wholesale goods to consumers via internet and fax
notification, and Global Media Group, Inc. (BMG), which commenced
operations in June 1998, a Utah corporation (dba as the Institute for
Financial Independence) which performs seminars that sell WIM and GWX
products. Collectively, World InterNetWorks, Inc. and the three
wholly-owned subsidiaries are referred to as the Company.
The Company's revenues prior to the Company discontinuing its
operations and entering into the development stage on October 22,
1998 (see Note 7) were substantially derived from two categories of
products and services: (i) personal and commercial web site
development and maintenance, and related internet training; and (ii)
merchandise sales from the Company's internet-based virtual "mall" or
"department store" (orders for merchandise on the Company's virtual
"mall" are generally fulfilled by shipment direct from the
manufacturer or wholesaler to the customer).
b. Organization
On August 27, 1996, the stockholders of Impressive Ventures, Inc.
(the former name of the Company), a non-operating, developmental
stage company, approved an agreement whereby the stockholders of
Wealth International, Inc., a Utah corporation (Wealth Utah),
obtained a controlling interest in the Company. This transaction was
treated as an acquisition of the Company by Wealth Utah, and as a
recapitalization of Wealth Utah. Under the agreement, the
stockholders of Wealth Utah exchanged all of their shares in Wealth
Utah for 2,752,245 common shares of the Company, after the effects of
a 1-for-250 reverse stock split, a 4-for-1 forward stock split and a
1-for-4 reverse stock split.
The Company had essentially no assets or operations prior to the
above referenced acquisition. Wealth Utah was established in
November 1995 as a partnership. It was incorporated in July 1996.
After the transaction was completed, the Company changed its name to
Wealth International, Inc. (Wealth Nevada), a Nevada corporation, and
the operating subsidiary (Wealth Utah) subsequently changed its name
to World Internet Marketplace, Inc. Wealth Nevada changed its name
to World InterNetWorks, Inc. in January 1998 to more accurately
reflect the nature of the Company's business.
44
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a February
28 year end.
b. Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash
equivalents.
c. Depreciation and Amortization
Depreciation is provided for in amounts sufficient to relate the
cost of depreciable assets to operations over their estimated service
lives of between 5 and 7 years. For financial reporting purposes,
the straight-line method of depreciation is followed. Accelerated
methods of depreciation are used for tax purposes.
Maintenance and repairs, which neither materially add to the value of
the asset nor appreciably prolong its life are charged to expense as
incurred. Gains or losses on dispositions of property and equipment
are included in earnings.
d. Revenue Recognition
The Company generally receives the sales price of its web pages and
products in cash at the time orders are made. Sales are generally
recorded at the time the Web page is activated or the product is
shipped.
e. Income Taxes
The Company utilizes the liability method of accounting for income
taxes. Under the liability method, deferred tax assets and
liabilities are determined based on differences between financial
reporting and tax basis of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. An allowance against deferred
tax assets is recorded when it is more likely than not that such tax
benefits will not be realized.
f. Common Stock Split and Reverse Split
During 1997, the Company effected a reverse stock split of 1-for-250
and, subsequently, a forward stock split of 4-for-1. On September 4,
1998, the Company effected a reverse stock split on a 1-for-4 basis.
The accompanying financial statements has been restated to reflect
these stock splits for all periods presented.
45
<PAGE>
g. Use of Estimates
In preparing the Company's financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from estimates.
h. Basic and Fully Diluted Loss Per Share
During February 1997, the FASB issued Statement of Financial
Accounting Standard No. 128, "Earnings per Share". This statement
changed the method in which earnings (loss) per share are determined.
The new standard requires the computation of basic earnings (loss)
per share and earnings (loss) per share assuming dilution. Options
to purchase 1,532,375 and 1,079,500 shares of common stock at $0.25
to $2.50 per share were outstanding during the years ended February
28, 1999 and 1998, respectively. They were not included in the
computation of net loss per common share because they would have had
an antidilutive effect on the net loss per common share for the years
ended February 28, 1999 and 1998. Basic net loss per common share
basic and assuming dilution were the same for the years ended
February 23, 1999 and 1998, respectively.
i. Principles of Consolidation
The consolidated financial statements include the accounts of World
InterNetWorks, Inc., World Internet Marketplace, Inc., Global
Wholesale Exchange, Inc. and Global Media Group, Inc. All
significant intercompany accounts have been eliminated.
j. Advertising
The Company follows the policy of charging the costs of advertising
to expense as incurred.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern.
However, the Company has sustained substantial losses from operations
in recent years the recoverability of a major portion of the recorded
asset amounts shown in the accompanying balance sheets is dependent
upon the Company's ability to meet its financing requirements on a
continuing basis and to succeed in its future operations. The
financial statements do not include, any adjustments relating to the
recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the
Company be unable to continue in existence.
46
<PAGE>
The Company resumed operations in April 1999 with a new management
team and numerous strategic alliances in place for the purpose of
providing state-of-the-art website design, technical support, online
training and interactive e-commerce websites to individuals and small
businesses. Management believes this new direction of the Company
has the ability to achieve the critical mass necessary to result in
significant recurring revenue and profitable growth through hosting
fees as well as product sales. Management also expects to obtain
additional financing through a stock offering in order to meet its
cash flow needs through fiscal year 2000.
NOTE 4 - INCOME TAXES
As of February 28, 1999, the Company had a federal and state net
operating loss carryforwards of approximately $3,600,000. The net
operating losses will expire at various dates beginning in years 2012
through 2014, if not utilized.
The Company operated, for tax purposes, as a partnership under
provisions of the Internal Revenue Code from November 1, 1995 through
July 10, 1996. During this period, losses of the Company flowed
through the partnership. Accordingly, the Company was not subject to
federal income taxes on Company operating results for the period in
which the partnership was in existence, and no provision or current
liability or asset for federal, or state income taxes for those
period has been reflected.
NOTE 5 - STOCK OPTIONS AND STOCK AWARDS
Effective October 13, 1996, the Company adopted a stock option plan
which provides for the granting of stock options and awards to
employees, officers and non-employees to purchase up to 4,000,000
shares of stock, subject to adjustment under certain circumstances.
On October 22, 1996, a 4-for-1 stock split increased the number of
shares available for stock options and awards to non-qualified stock
options or awards.
Incentive Stock Options
Under the plans, incentive stock options may be granted to employees
and officers. During 1998, 1,565,000 incentive stock options were
granted under the plan. Incentive stock options vest at graded rates
over the vesting periods. The exercise price for incentive stock
options may not be less than the fair market value per share of
common stock on the grant date. In the case of incentive stock
options granted to an employee possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the
exercise price may not be less than 110% of the fair market price per
share of common stock on the grant date. An employee may not be
granted incentive stock options that would entitle the employee to
purchase more than $100,000 in fair market value of common stock in
the year in which the options are exercisable for the first time
47
<PAGE>
Non-Qualified Options
Employees, officers, directors and consultants may be granted non-
qualified options. Directors, officers, employees and consultants
are also eligible for awards of stock and opportunities to make
direct purchases of stock in the Company. During 1998, there were no
non-qualified options granted under the plan. Non-qualified options
vest at graded rates over the vesting periods. Non-qualified options
also include options which are performance based. These options vest
20% each time the grantee sells a designated number of storefronts
for the Company. The exercise price for non-qualified stock options
may not be less than the lessor of (1) the book value per share of
common stock as of the end of the fiscal year of the Company
immediately preceding the grant date, or (2) 50% of the fair market
value per share of common stock on the grant date.
Information with respect to the Company's stock option plan at
February 28, 1999 is as follows:
Exercise Number Number Number Number
Price Authorized Exercised Canceled Outstanding
1997 Plan $0.25 - 2.50 1,233,750 447,500 148,000 638,250
1998 Plan $0.38 - 2.50 391,250 147,125 - 244,125
1999 Plan $0.75 - 1.00 650,000 - - 650,000
Totals 2,275,000 594,625 148,000 1,532,375
Stock Awards
During 1998, a stockholder gave 100,000 shares of the Company's
restricted common stock to an officer of the Company. The fair
market value of the stock on the date of gift was estimated to be
$56,000 and has been recorded as compensation expense.
NOTE 6 - COMMITMENT AND CONTINGENCIES
Litigation and Claims
The Company is engaged in various litigation and claims both as
defendant and plaintiff arising through the normal course of
business. In the option of management, based on the advise of legal
counsel, these lawsuits do not represent a material obligation to
the Company as of February 28, 1999.
NOTE 7 - LOSS FROM DISCONTINUED OPERATIONS
On October 22, 1998, the Board of Directors of the Company decided
to discontinue the marketing and distribution of products and
services relating to commerce on the internet due to a lack of
funding and increased losses. The following is a summary of the
loss from discontinued operations.
48
<PAGE>
From
Inception of the
Development
Stage on
October 22,
For the Years Ended 1998 Through
February 28, February 28,
1999 1998 1999
[S] [C] [C] [C]
NET REVENUES $ 1,988,774 $7,762,125 $ -
COST OF PRODUCTS SOLD 826,073 999,612 -
Gross Profit 1,162,701 6,762,513 -
EXPENSES
Selling, general and
administrative 2,827,748 2,986,536 -
Commissions 785,081 4,456,907 -
Total Expenses 3,612,829 7,443,443 -
LOSS BEFORE INCOME TAXES (2,450,128) (680,930) -
INCOME TAX EXPENSE - - -
NET LOSS $(2,450,128) $ (680,930) $ -
BASIC LOSS PER SHARE OF
COMMON STOCK $ (0.74) $ (0.22)
FULLY DILUTED LOSS PER SHARE
OF COMMON STOCK $ (0.74) $ (0.22)
The Company had liabilities of $2,627,271 which are associated with
the discontinued operations. No income tax benefit has been
attributed to the loss from discontinued operations.
49
<PAGE>
World Internetworks, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
November 30, 1999 and February 28, 1999 (Fiscal Year End)
<TABLE>
<CAPTION>
ASSETS
November 30, February 28,
1999 1999
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,286 $ -
Accounts receivable-Trade 1,486 -
Due from shareholder 15,000 -
Total current assets $ 20,772 $ -
Property and Equipment at cost, net 4,412 3,060
$ 25,184 $ 3,060
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts Payable $ 60,159 $ -
Accrued expenses 1,147 -
Reserve for discontinued operations 2,459,206 2,627,271
Total current liabilities 2,520,512 2,627,271
Commitments and contingencies
Shareholders' equity (deficit):
Common stock, $.001 par value; 500,000,000
shares authorized, 5,920,607 and 1,750,107
shares issued at November 30, 1999 and Feb
28, 1999, respectively 6,071 1,750
Capital in excess of par value 2,067,098 1,356,919
Treasury stock, at cost (3,186) (3,186)
Deficit accumulated prior to development
stage (3,979,694) (3,979,694)
Deficit accumulated from the inception of
the development state on October 22, 1998 (585,617) -
Total shareholders' deficit (2,495,328) (2,624,211)
$ 25,184 $ 3,060
</TABLE>
50
<PAGE>
<TABLE>
World Internetworks, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
For the Three Months and Nine Months Ended November 30, 1999 and 1998
<CAPTION>
From Inception of
Development Stage
Three months ended Nine months ended October 22, 1998
November 30, November 30, thru November 30,
1999 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C>
Net sales and revenues: $ 20,793 $ - $ 50,940 $ - $50,940
Costs of Services and
products sold 14,369 - 30,901 - 30,901
Gross Profit 6,424 - 20,039 - 20,039
Operating Expenses:
Selling, General and
Administrative expenses 111,354 - 775,460 - 775,460
Depreciation and
amortization 494 - 1,326 - 1,326
Total operating expenses 111,848 - 776,786 - 776,786
Loss from operations (105,424) - (756,747) - (756,747)
Loss from discontinued
operations - (1,320,486) - (2,337,766) -
Loss before extraordinary
items (105,424) (1,320,486)(756,747)(2,337,766) (756,747)
Extraordinary Item:
Gain on forgiveness of
debt-reserve for
discontinued operations
and accounts payable 171,130 - 171,130 - 171,130
Income tax benefit - - - - -
Net Income (loss) 65,706 (1,320,486)(585,617)(2,337,766) (585,617)
Weighted average common
shares outstanding (1996
restated to give effect to
4 for 1 reverse split
effective September 4,
1998 5,129,774 3,378,594 3,647,774 3,378,594
Net income (loss) per
common share $ 0.01 $ (0.39) $ (0.16) $ (0.69)
</TABLE>
51
<PAGE>
<TABLE>
World Internetworks, Inc.and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended November 30, 1999 and 1998
(Unaudited)
<CAPTION>
From Inception of
Development Stage
Nine months ended October 22, 1998
November 30, thru November 30,
1999 1998 1999
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (585,617) $ (2,337,766) $ (585,617)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and Amortization 1,326 102,908 1,326
Changes in current assets and liabilities
Issuance of common stock for services 372,000 - 372,000
Inventory - 103,955 -
Accounts Receivable - 223,853 -
Due from shareholder (15,000) - (15,000)
Other assets - 103,811 -
Accounts payable 61,738 375,325 61,738
Accrued expenses 1,147 208,233 1,147
Extraordinary gain on forgiveness of
debt-reserve for discontinued
operations and accounts payable (171,130) - (171,130)
Deferred revenue - 169,423 -
Net cash provided (used in)
operating activities (355,535) (1,050,258) (335,536)
Cash flows from investing activities:
Purchase of property and equipment (2,678) - (2,678)
Disposal of property, equipment and
other assets - 801,761 -
Cash flows from financing activities:
Proceeds from issuance of common stock,
net of offering cost 225,000 2,500 225,000
Proceeds from issuance of common stock
options 117,500 - 117,500
Reduction in capital lease obligation - 11,186 -
Net cash provided by financing
activities 342,500 13,686 342,500
Net increase (decrease) in cash 4,286 (243,811) 4,286
Cash at beginning of period - 126,029 -
Cash at end of period $ 4,286 $(108,782) $ 4,286
</TABLE>
52
<PAGE>
NOTE 1 - ORGANIZATION AND HISTORY
a. Nature of Operations
World InterNetWorks, Inc., a Nevada corporation, has three wholly-owned
subsidiaries, World Internet Marketplace, Inc. ("WIM"), a Utah corporation,
was engaged in marketing and distributing products and services relating to
internet commerce, Global Wholesale Exchange, Inc. ("GWE"), a Utah
corporation, which commenced operations in June 1998, and provided wholesale
goods to consumers via internet and fax notification, and Global Media Group,
Inc.("GMG"), a Utah corporation which commenced operations in June 1998, (dba
as the Institute for Financial Independence) and provided seminars that sold
WIM and GWE products and services. Collectively, World InterNetWorks, Inc. and
the three wholly-owned subsidiaries are referred to as the Company.
The Company's revenues prior to discontinuing its operations and entering into
the development stage on October 22, 1998 (see Note 9) were substantially
derived from two categories of products and services: (i) personal and
commercial web site development and maintenance, and related Internet
training; and (ii) merchandise sales from the Company's Internet-based virtual
"mall" or "department store" (orders for merchandise on the Company's virtual
"mall" were generally fulfilled by shipment direct from the manufacturer or
wholesaler to the customer).
The Company is currently engaged in the restructuring of its operations
through development of systems and a customer base for the marketing and
distribution of products and services relating to Internet commerce and
providing state-of-the-art web site design, technical support, online
training and interactive e-commerce web sites to individuals and small
businesses.
b. Organization
On August 27, 1996, the stockholders of Impressive Ventures, Inc. (the former
name of the Company), a non-operating, developmental stage company, approved
an agreement whereby the stockholders of Wealth International, Inc., a Utah
corporation (Wealth Utah), obtained a controlling interest in the Company.
This transaction was treated as an acquisition of the Company by Wealth
Utah, and as a recapitalization of Wealth Utah. Under the agreement, the
stockholders of Wealth Utah exchanged all of their shares in Wealth Utah for
2,752,245 common shares of the Company, after the effects of a 1-for-250
reverse stock split, a 4-for-1 forward stock split and a 1-for-4 reverse
stock split.
Wealth Utah was established in November 1995 as a partnership, had essentially
no assets or operations prior to the acquisition referenced above and was
incorporated in July 1996.
After the transaction was completed, the Company changed its name to Wealth
International, Inc. (Wealth Nevada), a Nevada corporation, and the operating
subsidiary (Wealth Utah) subsequently changed its name to World Internet
Marketplace, Inc. Wealth Nevada changed its name to World
53
<PAGE>
NOTE 1 - ORGANIZATION AND HISTORY (continued)
InterNetWorks, Inc. in January 1998 to more accurately reflect the nature of
the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected a February 28 fiscal year end.
b. Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity
of three months or less when purchased to be cash equivalents. Currently, the
Company's cash consists of a general bank checking account and petty cash
funds.
c. Depreciation and Amortization
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives of between
5 and 7 years. For financial reporting purposes, the straight-line method of
depreciation is followed. Accelerated methods of depreciation are used for
tax purposes.
Maintenance and repairs, which neither materially add to the value of the
asset nor appreciably prolong its life are charged to expense as incurred.
Gains or losses on dispositions of property and equipment are included in
earnings.
d. Revenue Recognition
The Company generally receives the sales price of its web pages and products
in cash at the time orders are made. Sales are generally recorded at the time
the Web page is activated or the product is shipped.
e. Income Taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. An allowance against
deferred tax assets is recorded when it is more likely than not that such tax
benefits will not be realized.
54
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
f. Common Stock Reverse Split
On September 4, 1998, the Company effected a reverse stock split on a 1-for-4
basis. The accompanying financial statements has been restated to reflect this
stock splits for all periods presented.
g. Use of Estimates
In preparing the Company's financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from estimates.
h. Principles of Consolidation
The consolidated financial statements include the accounts of World
InterNetWorks, Inc., World Internet Marketplace, Inc., Global Wholesale
Exchange, Inc. and Global Media Group, Inc. All significant intercompany
accounts have been eliminated.
i. Development costs
The costs of developing the Company's new business plan, including new
web-site design and marketing research and analysis are charged to general and
administrative expense as incurred.
j. Basic and Fully Diluted Net Income (Loss) Per Common Share
Basic and diluted net loss per common share are calculated by dividing net
loss attributable to common stockholders by the weighted average number of
shares of common stock outstanding during the period. At November 30, 1999 and
1998, there were outstanding common stock equivalents (options and warrants)
to purchase 495,000 and 882,375 shares of common stock, respectively. These
common stock equivalents were not included in the computation of diluted net
loss per common share for the three and nine months ended November 30, 1998
and the nine months ended November 30, 1999 as their effect would have been
anti-dilutive, thereby decreasing the net loss per common share. The common
stock equivalents were included in the computation of diluted net income per
common share for the three months ended November 30, 1999.
The following table (next page) is a reconciliation of the net loss numerator
of basic and diluted net income (loss) per common share for the three and nine
months ended November 30,1999 and 1998:
55
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Three months ended November 30,
1999 1998
Income Per share Per share
(Loss) Amount (Loss) Amount
Net (loss) from
continuing operations
attributable to common
stockholders $(105,424) $(0.02) $ - $ -
(Loss) from
discontinued operations - - (1,320,486) (0.39)
Extraordinary items 171,130 0.03 - -
Income (loss)
attributable to common
stockholders $ 65,706 $ 0.01 $(1,320,486) $ (0.39)
Weighted average
common shares
outstanding 5,129,774 3,378,594
Weighted average
shares of common
stock equivalents
outstanding 436,667 N/A
Nine months ended November 30,
1999 1998
Per share Per share
(Loss) Amount (Loss) Amount
Net (loss) from
continuing operations
attributable to common
stockholders $ (756,747) $(0.21) $ - $ -
Discontinued operations - - (2,337,766) (0.69)
Extraordinary items 171,130 0.05 - -
(Loss) attributable to
common stockholders $ (585,617) $(0.16) $(2,337,766) $ (0.69)
Weighted average
common shares
outstanding 3,647,774 3,378,594
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern. However, the Company has sustained substantial
losses from operations from it's inception and the recoverability of a major
portion of the asset amounts in the accompanying balance sheets is dependent
upon the Company's ability to raise sufficient working capital to meet its
operating costs and debt obligations on a continuing basis in its future
operations. The financial statements do not include, any adjustments
relating to the recoverability and classification of recorded asset and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
56
<PAGE>
The Company resumed operations in April 1999 with a new management team and
numerous strategic alliances in place for the purpose of providing
state-of-the-art website design, technical support, online training and
interactive e-commerce websites to individuals and small businesses.
Management believes this new direction of the Company has the ability to
achieve the critical mass necessary to result in significant recurring revenue
and profitable growth through hosting fees as well as product sales.
Management also expects to obtain additional financing through a stock
offering in order to meet its cash flow needs through fiscal year 2000. See
Note 4 for additional steps undertaken by management to improve the Company's
liquidity.
NOTE 4 - FORGIVENESS OF DEBT AND BANKRUPTCY PETITION
a. Forgiveness of debt
On October 28, 1999, the Company reached an agreement with a creditor holding
promissary notes payable by the Company in the amount of $160,000 plus accrued
interest payable related to the notes in the amount of $8,066. Under the
agreement the creditor agreed to release the Company from any and all
obligations to repay the notes and related accrued interest. The creditor
forgave the amounts due under the notes in exchange for the Company's
executive officer arranging for the private sale of 412,500 shares of the
Company's common stock owned by the creditor to unrelated parties. The
promissary notes and related interest payable had been included in the reserve
for discontinued operations in previous consolidated balance sheets of the
Company. Additionally, in November 1999, the Company negotiated reductions of
$3,065 in amounts due various trade creditors. These amounts have been
accounted for as extraordinary items in the accompanying condensed
consolidated statements of operations.
b. Bankruptcy petition filed
On October 26, 1999, the Company's three subsidiaries, WIM, GWE, and GMG filed
a petition under Chapter 7 of the United States Bankruptcy Code for protection
from creditors. The petition requires creditors to halt any collection efforts
of amounts owed them by the Company's subsidiaries until a meeting of
creditors and a hearing is conducted by the US Bankruptcy Court ("Court"). The
meeting of creditors was held on January 19, 2000, however the Court will take
57
<PAGE>
NOTE 4 - FORGIVENESS OF DEBT AND BANKRUPTCY PETITION (continued)
several weeks to determine the disposition of creditors claims under the
petition filed. The Company's subsidiaries have no assets with which to pay
their obligations to creditors. As described in Note 1 the operations of the
subsidiaries were discontinued in October 1998 and the Company intends to
dissolve their corporate status upon the conclusion of the Court's
proceedings. The amounts owed are classified as "reserve for discontinued
operations" in the accompanying consolidated balance sheets.
NOTE 5 - INCOME TAXES
As of August 31, 1999, the Company had federal and state net operating loss
carryforwards of approximately $4,065,000. The net operating losses will
expire at various dates beginning in years 2012 through 2015, if not utilized.
The Company operated, for tax purposes, as a partnership under provisions of
the Internal Revenue Code from November 1, 1995 through July 10, 1996. During
this period, losses of the Company flowed through the partnership to
individual shareholders. Accordingly, the Company was not subject to federal
income taxes on its operations while a partnership.
58
<PAGE>
NOTE 6 - COMMON STOCK ISSUED
a. FOR SERVICES
In November 1999, the Company issued 247,500 shares of common stock under an
S-8 Registration Statement to several individuals in payment of accounts
payable totaling $75,000. Included in the total were 75,000 shares issued to
Steven K. Hansen, President, CEO and Chairman of the Board of Directors of the
Company, for management services previously provided. Additionally, 50,000
shares of the above total were issued to Leonard W. Burningham, Esq., who
is Counsel to the Company for securities matters, for legal and professional
services previously provided. The remaining 122,000 shares were issued to
unrelated parties for legal and professional services previously provided.
Additionally, in November 1999, the Company issued 25,000 shares of common
stock restricted under Rule 144 to Leonard W. Burningham, Esq., who is Counsel
to the Company for securities matters. The Company recorded legal and
professional fees totaling $10,000 in the three months ended November 30, 1999
relating to the shares issued.
In March 1999, the Company issued 1,148,000 shares of common stock restricted
under Rule 144 to several individuals in exchange for services provided to the
Company. Included in the total were 975,000 shares issued to Steven K. Hansen,
President, CEO and Chairman of the Board of Directors of the Company.
Additionally, 50,000 shares of the above total were issued to Leonard
59
<PAGE>
NOTE 6 - COMMON STOCK ISSUED (continued)
W. Burningham, Esq., who is Counsel to the Company for securities matters. The
remaining 123,000 shares were issued to unrelated parties. The Company
recorded management, legal and professional fees totaling $287,000 in the nine
months ended November 30, 1999 relating to the shares issued.
b. FOR CASH
In October 1999, the Company issued 2,000,000 shares of common stock in
exchange for cash of $100,000. The 2,000,000 shares were issued as the second
installment of a total of 4,200,000 shares to be issued under a definitive
agreement with Fairway Capital Partners, LLC., in exchange for a total of
$1,800,000 in cash plus certain consulting services to be provided over a
period of one year.
The definitive agreement is more fully described in the business development
section of the Company's 10Q for the nine months ending November 30, 1999.
In October 1999, the Company issued 100,000 shares of common stock in exchange
for cash in the amount of $40,000. The shares issued are restricted under Rule
144 and were issued in private placements to qualified investors. In addition
to the shares issued, each investor received warrants to purchase an equal
number of additional shares of the Company's common stock at $2.00 per
share.
In August the Company issued 500,000 shares of common stock in exchange for
cash of $25,000. The 500,000 shares were issued as the first installment
under the definitive agreement with Fairway Capital Partners, LLC., described
above and more fully in the business development section of the Company's
10Q for the nine months ending November 30, 1999.
In July the Company issued 50,000 shares of common stock in exchange for cash
of $20,000. In April the Company issued 100,000 shares of common stock in
exchange for cash in the amount of $40,000. All the shares issued are
restricted under Rule 144 and were issued in private placements to qualified
investors. In addition to the shares issued, each investor received warrants
to purchase an equal number of additional shares of the Company's common stock
at $2.00 per share.
NOTE 7 - STOCK OPTIONS, STOCK AWARDS AND STOCK WARRANTS
Effective October 13, 1996, the Company adopted a stock option plan which
provides for the granting of stock options and awards to employees, officers
and non-employees to purchase up to 4,000,000 shares of stock, subject to
adjustment under certain circumstances. On October 22, 1996, a 4-for-1 stock
split increased the number of shares available for stock options and awards
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NOTE 7 - STOCK OPTIONS, STOCK AWARDS AND STOCK WARRANTS (continued)
to eligible participants. On September 4, 1998, the Company effected a reverse
stock split on a 1-for-4 basis, reducing the number of shares available for
stock options and awards to eligible participants to the original 4,000,000
shares. The exercise price for incentive stock options may not be less than
the fair market value per share of common stock on the grant date. In the case
of incentive stock options granted to an employee possessing more than 10% of
the total combined voting power of all classes of stock of the Company, the
exercise price may not be less than 110% of fair market price per share of
common stock on the grant date. An employee may not be granted incentive stock
options that would entitle the employee to purchase more than $100,000 in fair
market value of common stock in the year in which the options are exercisable
for the first time.
Incentive Stock Options
During the nine months ended November 30, 1999 the Company canceled 1,532,375
stock options that were outstanding at February 28, 1999 as all grantees had
terminated their employment with the Company and all unexercised options were
forfeited.
Non-Qualified Options
Employees, officers, directors and consultants may be granted non-qualified
options. Directors, officers, employees and consultants are also eligible for
awards of stock and opportunities to make direct purchases of stock in the
Company. During the nine months ended November 30, 1999, the Company granted
150,000 stock options to a director of the Company for consulting services
provided to the Company at exercise prices ranging from $0.40 to $0.75 per
share. The fair market value of the consultant options was $0.58 per share, or
$87,000 in total, using the Black-Scholes pricing model and was charged to
selling, general and administrative expenses. Additionally, the Company
granted 70,000 non-qualified stock options to employees and directors at
exercise prices of $0.40 per share. Of these employee grants 50,000 shares
were issued at $0.35 per share below the market price of the Company's common
stock on the date of the grant. The fair market value of the 50,000 options
granted below market value was $0.61 per share, or $30,500 in total, using
the Black-Scholes pricing model and was charged to selling, general and
administrative expenses. The weighted average fair value of the options
granted to employees at market value during the nine months ended November 30,
1999 was $0.58 per share using the Black-Scholes pricing model. Had
compensation expense for the issuance of these options been recorded in
accordance with the method prescribed by SFAS No. 123, "Accounting for
Stock-Based Compensation", the Company's net loss from continuing operations
attributable to common stockholders would have been $785,747 or $0.22 per
share for the nine months ended November 30, 1999. All the options granted
expire five years from date of grant. As of November 30, 1999, the Company had
a total of 220,000 non-qualified options outstanding.
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NOTE 7 - STOCK OPTIONS, STOCK AWARDS AND STOCK WARRANTS (continued)
Information with respect to the Company's stock option plans at November 30,
1999 is as follows:
Exercise Number Number Number Number
Price Granted Exercised Canceled Outstanding
1997 Plan $0.25 - 2.50 1,233,750 447,500 786,250 -
1998 Plan $0.38 - 2.50 391,250 147,125 244,125 -
1999 Plan $0.75 - 1.00 650,000 - 650,000 -
1999 Post ** $0.40 - 0.75 270,000 - 100,000 170,000
Totals 2,545,000 594,625 1,780,375 1,802,375
** Granted post reorganization
Common Stock Warrants
During the nine months ended November 30, 1999, the Company granted warrants
to purchase 275,000 shares of the Company's common stock in connection with
the issuance of 250,000 shares of common stock for cash totaling $100,000 (see
Note 6). Additionally, during the nine months ended November 30, 1999, the
Company committed to grant cash-less warrants to purchase 25,000 shares
of the Company's common stock to an executive officer of the Company if and
when certain business opportunities mature (see Note 8). These warrants have
not yet been granted. As of November 30, 1999, the Company had a total of
275,000 warrants outstanding.
NOTE 8 - COMMITMENT AND CONTINGENCIES
Employment Contracts
Effective February 19, 1999 the Company entered into an employment contract
with Steven K. Hansen, President and CEO of the Company, the terms of which
provide a monthly salary of $8,000 together with medical insurance benefits.
In addition Mr. Hansen was issued 975,000 shares of the Company's common stock
restricted under rule 144 and 75,000 shares of the Company's common stock
under an S-8 Registration Statement for management services provided in the
nine months ending November 30, 1999. The term of the employment contract is
three years.
Effective March 4, 1999 the Company entered into an employment contract with
Phillip M. Ray, Secretary/Treasurer of the Company, the terms of which provide
a monthly salary of $3,000 through June 1999. In addition Mr. Ray was granted
20,000 shares of the Company's restricted common stock issued to his designee,
Automotive Direct in consideration for a $40,000 debt of the Company. Mr. Ray
will also be issued 10,000 shares of the Company's restricted common stock at
a price of $1.00 per
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NOTE 8 - COMMITMENT AND CONTINGENCIES (continued)
share in lieu of salary for the period from June through September 1999. In
addition Mr. Ray was granted options to acquire the Company's common stock as
follows: 50,000 shares at a price of $0.40 per share and 50,000 shares to be
granted at a price of $0.40 per share when certain business opportunities have
been successfully completed for the Company. The designated business
opportunities were not completed and the second 50,000 share grant was
rescinded. In addition cash-less warrants to purchase 25,000 shares of the
Company's common stock will be issued as a finders fee to Mr. Ray in the event
the Company benefits from certain business opportunities introduced to the
Company by Mr. Ray.
Directors Compensation Commitments
Effective March 4, 1999 Randall L. Roberts and Gary S. Winterton were
appointed to the Board of Directors of the Company. As Directors compensation
they were each granted options to acquire 10,000 shares of the Company's
restricted common stock at a price of $0.40 per share. In addition,
on July 23, 1999 Mr. Winterton was granted an option to acquire 100,000 shares
of the Company's restricted common stock at a price of $0.40 per share and a
third option to acquire 50,000 shares at a price of $0.75 per share. The
directors options expire in five years. Shares underlying the options
granted Mr. Winterton will be included in a registration statement upon the
demand of the holder.
Litigation and Claims
The Company is engaged in various litigation and claims both as defendant and
plaintiff arising through the normal course of business. In the opinion of
management, based on the advise of legal counsel, these lawsuits do not
represent a material obligation to the Company as of November 30, 1999.
NOTE 9 - LOSS FROM DISCONTINUED OPERATIONS
On October 22, 1998, the Board of Directors of the Company decided to
discontinue the marketing and distribution of products and services relating
to commerce on the Internet due to a lack of funding and increased losses.
Following is a summary of the loss from discontinued operations.
From
Inception of the
Development
Stage on
October 22,
For the nine months Ended 1998 Through
November 30, November 30,
1999 1998 1999
NET REVENUES $ - $ 2,007,608 $ -
COST OF PRODUCTS SOLD - 799,474 -
Gross Profit - 1,208,134 -
EXPENSES
Commissions - 805,081 -
Selling, general and
administrative - 2,740,819 -
Total Expenses - 3,545,900 -
LOSS BEFORE INCOME TAXES - (2,337,766) -
INCOME TAX EXPENSE - - -
NET LOSS $ - $ (2,337,766) $ -
BASIC LOSS PER SHARE OF
COMMON STOCK $ - $ (0.69)
FULLY DILUTED LOSS PER
SHARE OF COMMON STOCK $ - $ (0.69)
The Company had liabilities of $2,459,206 as of November 30, 1999 which are
associated with the discontinued operations. No income tax benefit has been
attributed to the loss from discontinued operations.
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<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
----------
Grant Thornton LLP, Certified Public Accountants, of Provo, Utah,
audited our financial statements for the fiscal year ended February 28, 1998.
On February 9, 1999, Grant Thornton resigned as our certifying accountant and
Jones, Jensen & Company, LLC, of Salt Lake City, Utah was subsequently engaged
as our certifying accountant.
There were no disagreements between World Internetworks and Grant
Thornton, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which, if not resolved, would have caused Grant Thornton to make
reference to the subject matter of the disagreement in connection with its
report.
The reports of Grant Thornton did not contain any adverse opinion or
disclaimer of opinion, and with the exception of a "going concern"
qualification because of substantial losses from operations in recent years,
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
During the fiscal years ended February 28, 1997, and 1998, and since
then, Grant Thornton has not advised us that any of the following exists or is
applicable:
That the internal controls necessary for us to develop reliable
information has come to its attention that has led it to no
longer
be able to rely on management's representations or that has
made
it unwilling to be associated with the financial statements
prepared by management;
That Grant Thornton needed to expand significantly the scope of
its audit or that information has come to its attention that if
further investigated may materially impact the fairness or
reliability of a previously issued audit report or the
underlying
financial statements or any other financial presentation or
cause
it to be unwilling to rely on management's representations or
be
associated with our financial statements for the foregoing
reasons
or any other reason; or
That Grant Thornton has advised us that information has come to
its attention that it has concluded materially impacts the
fairness or reliability of either a previously issued audit
report
or the underlying financial statements for the foregoing
reasons
or any other reason.
On March 23, 1999, we filed with the Securities and Exchange
Commission a Current Report on Form 8-K disclosing Grant Thornton's
resignation. This Current Report may be reviewed by accessing the Securities
and Exchange Commission's web site: www.sec.gov.
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<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors And Officers
-----------------------------------------
Section 78.7502(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer, employee,
or corporate agent "who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.7502(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he
acted in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful."
Section 78.7502(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or in
the right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his or her actions were in or not opposed
to the corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.7502(1) or 78.7502(2), Section 78.7502(3)
of the NRS requires that he be indemnified "against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection
with the defense."
Unless ordered by a court or advanced pursuant to Section 78.751(2),
Section 78.751(1) of the NRS limits indemnification under Section 78.7502 to
situations in which either (1) the stockholders, (2)the majority of a
disinterested quorum of directors, or (3) independent legal counsel determine
that indemnification is proper under the circumstances.
Section 78.751(2) authorizes a corporation's articles of
incorporation, bylaws or agreement to provide that directors' and officers'
expenses incurred in defending a civil or criminal action must be paid by the
corporation as incurred, rather than upon final disposition of the action,
upon receipt by the director or officer to repay the amount if a court
ultimately determines that he is not entitled to indemnification.
Section 78.751(3)(a) provides that the rights to indemnification and
advancement of expenses shall not be deemed exclusive of any other rights
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<PAGE>
under any bylaw, agreement, stockholder vote or vote of disinterested
directors. Section 78.751(3)(b) extends the rights to indemnification and
advancement of expenses to former directors, officers, employees and agents,
as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
Article VIII of our Bylaws contains indemnification provisions that
virtually identical to the indemnification provisions of the NRS. In
addition, Paragraph 6 of our Employment Agreement with Mr. Hansen requires us
to indemnify Mr. Hansen "in any action arising out of the discharge of his
duties," including actions and claims relating to matters that occurred before
February 19, 1999, the date of the Employment Agreement.
The foregoing is only a summary of the indemnification provisions of
our Bylaws and contracts. See the Exhibit Index.
Item 25. Other Expenses of Issuance And Distribution
-------------------------------------------
The following table sets forth the expenses which we expect to incur
in connection with the registration of the shares of common stock being
registered hereby. All of these expenses, except for the Commission
registration fee, are estimated:
Securities and Exchange Commission registration fee........$ 3,445.05
Legal fees and expenses....................................$45,000
Accounting fees............................................$ 1,200
Printing and engraving expenses............................$ 500
Transfer agent fees........................................$ 1,500
Miscellaneous..............................................$ 500
--------
Total................................................$52,145.05
Item 26. Recent Sales of Unregistered Securities
---------------------------------------
The following table provides information about all "unregistered"
and "restricted" securities that World Internetworks has sold within the past
three years and which were not registered under the Securities Act of 1933:
66
<PAGE>
<TABLE>
Number
Date of Aggregate
Name of Owner Acquired Shares (1) Consideration
- ------------- -------- ------ -------------
<S> <C> <C> <C>
Joe Purcell 5/28/97 50,000 (2) Option exercise
Gordon Bradberry 5/28/97 37,500 Option exercise
Brent Wardle 8/18/97 1,500 (2) Option exercise
Brian Wardle 8/18/97 1,500 (2) Option exercise
Ron Wardle 8/18/97 30,000 (2) Option exercise
Paul Foster 10/10/97 750 Option exercise
Shellie Cline 4/28/98 1,250 Option exercise
30 individuals 5/21/98 750 Option exercise
(25 shares per person)
Jerry Foster 6/29/98 3,750 Services
Jerry Foster 7/2/98 15,000 Services
Bill Walsh 7/6/98 3,750 Option exercise
Madeleine Franco 7/6/98 1,875 Services
Danette Uyeda 8/3/98 875 Option exercise
Damien Zamora 8/3/98 6,250 Services
Toni Druce 8/11/98 13,125 Option exercise
Milton Druce 8/11/98 1,125 Option exercise
Justeene Blankenship 8/11/98 15,875 Option exercise
Justeene Blankenship 9/20/98 1,250 Option exercise
Steven K. Hansen 11/30/98 175,000 Services
Dwain Brannon 11/30/98 75,000 Services
Leonard W. Burningham, Esq. 11/30/98 50,000 Services
James C. Thomas 2/19/99 5,000 $5,000
Steven K. Hansen 3/19/99 800,000 Execution of
Employment
Agreement
Douglas L. Rex 3/19/99 10,000 Services
67
<PAGE>
R. Spencer Robinson, Esq. 3/19/99 3,000 Services
David L. Bird, Esq. 3/19/99 15,000 Services
Automotive Direct 3/19/99 20,000 Retirement of
$40,000 debt
Fairway Capital Partners LLC 9/14/99 125,000 (3)
Dwain Brannon Group LLC 9/14/99 125,000 (3)
Bart Walters 9/14/99 125,000 (3)
Patrick Kephart 9/14/99 125,000 (3)
GJM Trading Partners, Ltd. 11/5/99 800,000 (3)
Growth Ventures, Inc. 11/5/99 400,000 (3)
Capital Investment Partners 11/5/99 250,000 (3)
#1 SA
Noziroh, Ltd. 11/5/99 250,000 (3)
Fairway Capital Partners, LLC 11/5/99 300,000 (3)
First Security Bank, Trustee 11/5/99 25,000 (4)
for Harold J. Steele
Sterling K. Jenson 11/5/99 25,000 (4)
Amna S. Jamhour 11/5/99 25,000 (4)
Cherie S. Darrohn 11/5/99 25,000 (4)
Jeffrey H. Barton 11/5/99 62,500 (4)
Triangle Bar Ranch 11/5/99 12,500 (4)
Earlene S. Rex 11/5/99 12,500 (4)
Walter J. Bouck 11/5/99 37,500 (4)
Leonard W. Burningham 11/5/99 50,000 (4)
M. J. Camberlongo 1/12/00 80,000 (4)
Christian Baddour 2/17/00 200,000 (3)
Jeff Parsons 2/17/00 50,000 (3)
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<PAGE>
Noziroh, Ltd. 2/17/00 125,000 (3)
Capital Investment Partners 2/17/00 125,000 (3)
#1 SA
Fairway Capital Partners, LLC 2/17/00 1,200,000 (4)
Madeleine Franco 2/17/00 36,000 Services
Douglas L. Rex 2/17/00 20,000 Services
Tri-Gold Investments Ltd. 3/22/00 250,000 (4)
Jayvee & Co. 3/22/00 250,000 (4)
Nottinghill Resources Ltd. 3/22/00 250,000 (4)
Fairwinds Investments Ltd. 3/22/00 200,000 (4)
Charles Walker 3/22/00 100,000 (4)
K. Warren Mitchell 3/22/00 100,000 (4)
Michael R. Viau 3/22/00 100,000 (4)
O. Bryan Wilkinson 3/22/00 25,000 (4)
(1) These figures take into account the four-for-one reverse
split of our outstanding common stock on September 4, 1998.
(2) On or about December 12, 1998, our Board of Directors
resolved to cancel these shares for failure to pay the option exercise price
of $0.25 per share.
(3) We issued these shares for the total sum of $162,500, the
exercise price of the options to acquire 4,200,000 shares under the Fairway
Capital Letter of Intent. See the caption "Description of Business" of this
Prospectus.
(4) We issued these shares under our private placement of
1,250,000 Units, at a price of $0.40 per Unit. Each Unit consists of one
"unregistered" and "restricted" share of our common stock and one warrant to
purchase an additional "unregistered" and "restricted" share of our common
stock at a price of $2 per share, expiring two years from the completion of
the private placement. Our offering was oversubscribed by 380,000 Units, and
we have issued all subscribed Units.
Management believes that each of these investors was an "accredited
investor" as that term is defined under applicable federal and state
securities laws, rules and regulations, or were sophisticated investors with
such knowledge and experience in financial and business matters that they were
capable of evaluating the merits and risks of their investments. Management
also believes that the offer and sale of these shares of common stock were
69
<PAGE>
exempt from the registration requirements of Section 5 of the Securities Act
of 1933, pursuant to Section 4(2) thereof, and from similar states' securities
laws, rules and regulations covering the offer and sale of securities by
available state exemptions from such registration.
Item 27. Exhibits
--------
The following exhibits are filed as a part of this Registration
Statement:
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ------------
<S> <C>
3.1 Articles of Incorporation, filed March 17, 1986
3.2 Articles of Amendment, filed September 5, 1996
3.3 Certificate Pursuant to Section 78.207(4) of the Nevada
Revised Statutes, filed October 11, 1996
3.4 Certificate Pursuant to Section 78.207(4) of the Nevada
Revised Statutes, filed October 24, 1996
3.5 Certificate of Amendment, filed March 30, 1998
3.6 Certificate of Amendment, filed August 31, 1998
3.7 Bylaws
5.1 Opinion of Branden T. Burningham, Esq. regarding legality
10.1 Letter Agreement with Internet Marketing Concepts, dated
April 13, 1999
10.2 Letter of Intent with Fairway Capital Partners, LLC,
dated September 12, 1999
10.3 Consulting Agreement with Fairway Capital Partners, LLC,
dated August 16, 1999
10.4 Employment Agreement with Steven K. Hansen, dated February
19, 1999
10.5 Employment Agreement with Gary S. Winterton, dated August
12, 1999
23.1 Consent of Jones, Jensen & Company
23.2 Consent of Branden T. Burningham, Esq.
27.1 Financial Data Schedule
70
<PAGE>
Item 28. Undertakings
------------
World Internetworks hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) include any additional or changed material
information
on the plan of distribution.
(2) For determining liability under the Securities Act, to treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, executive officers
and controlling persons the foregoing provisions or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than our payment of expenses incurred or paid by any of our
directors, executive officers or controlling persons in the successful defense
of any action, suit or proceeding) is asserted by such director, executive
officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
71
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing of Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned in the
City of Orem, State of Utah, on April 27, 2000.
WORLD INTERNETWORKS, INC.
By /s/ Steven K. Hansen
---------------------------------
Steven K. Hansen, President and
Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities
and on the dates stated.
/s/ Steven K. Hansen
----------------------------------
Steven K. Hansen, President and
Director
/s/ Gary S. Winterton
----------------------------------
Gary S. Winterton, Director
72
<PAGE>
Date Filed: April 27, 2000 SEC File No. _________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM SB-2 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WORLD INTERNETWORKS, INC.
</TABLE>
ARTICLES OF INCORPORATION
IMPRESSIVE VENTURES, LTD.
1791-8 WE, THE UNDERSIGNED NATURAL PERSONS OF THE AGES OF TWENTY-ONE (21) OR
MORE, ACTING AS INCORPORATORS OF A CORPORATION UNDER THE GENERAL CORPORATION
LAW OF NEVADA, ADOPT THE FOLLOWING ARTICLES OF INCORPORATION:
ARTICLE I
NAME: THE NAME OF THE CORPORATION IS IMPRESSIVE VENTURES, LTD.
ARTICLE II
REGISTERED OFFICE AND AGENT: THE ADDRESS OF THE CORPORATION'S
PRINCIPAL OFFICE IS 2050 ELLIS WAY, IN THE CITY OF ELKO, COUNTY OF ELKO, STATE
OF NEVADA. THE INITIAL AGENT FOR SERVICE OF PROCESS AT THAT ADDRESS WILL BE
GATEWAY ENTERPRISES, INC.
ARTICLE III
PURPOSE: THE PURPOSES FOR WHICH THE CORPORATION IS ORGANIZED ARE
TO ENGAGE IN ANY ACTIVITY OR BUSINESS NOT IN CONFLICT WITH THE LAWS OF THE
STATE OF NEVADA OR OF THE UNITED STATES OF AMERICA, AND WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SPECIFICALLY:
1. TO HAVE AND TO EXERCISE ALL THE POWERS NOW OR HEREAFTER CONFERRED BY
THE LAWS OF THE STATE OF NEVADA UPON CORPORATIONS ORGANIZED PURSUANT TO THE
LAWS UNDER WHICH THE CORPORATION IS ORGANIZED AND ANY AND ALL ACTS AMENDATORY
THEREOF AND SUPPLEMENTAL THERETO.
2. TO DISCOUNT AND NEGOTIATE PROMISSORY NOTES, DRAFTS, BILL OF EXCHANGE
AND OTHER EVIDENCE OF DEBTS, AND TO COLLECT FOR OTHERS MONEY DUE THEM ON
NOTES, CHECKS, DRAFTS, BILL OF EXCHANGE, COMMERCIAL PAPER AND OTHER EVIDENCE
OF INDEBTEDNESS.
<PAGE>
3. TO PURCHASE OR OTHERWISE ACQUIRE, OWN, HOLD, LEASE, SELL, EXCHANGE,
ASSIGN, TRANSFER, MORTGAGE, PLEDGE, OR OTHERWISE DISPOSE OF, TO GUARANTY , TO
INVEST, TRADE, AND DEAL IN AND WITH PERSONAL PROPERTY OF EVERY CLASS AND
DESCRIPTION.
4. TO ENTER INTO ANY KIND OF CONTRACT OR AGREEMENT, COOPERATIVE OR
PROFIT SHARING PLAN WITH ITS OFFICERS OR EMPLOYEES THAT THE CORPORATION MAY
DEEM ADVANTAGEOUS OR EXPEDIENT OR OTHERWISE TO REWARD OR PAY SUCH PERSONS FOR
THEIR SERVICES AS THE DIRECTORS MAY DEEM FIT.
5. TO PURCHASE, LEASE, OR OTHERWISE ACQUIRE, IN WHOLE OR IN PART, THE
BUSINESS, THE GOOD WILL, RIGHTS, FRANCHISES AND PROPERTY OF EVERY KIND, AND TO
UNDERTAKE THE WHOLE OR ANY PART OF THE ASSETS OR LIABILITIES, OR ANY PERSON,
FIRM, ASSOCIATION, NON-PROFIT OR PROFIT CORPORATION, OR OWN PROPERTY NECESSARY
OR SUITABLE FOR ITS PURPOSES, AND TO PAY THE SAME IN CASH, IN THE STOCKS OR
BONDS OF THIS COMPANY OR OTHERWISE, TO HOLD OR IN ANY MANNER DISPOSE OF THE
WHOLE OR ANY PART OF THE BUSINESS OR PROPERTY SO ACQUIRED AND TO EXERCISE ALL
OF THE POWERS NECESSARY OR INCIDENTAL TO THE CONDUCT OF SUCH BUSINESS.
6. TO LEND OR BORROW MONEY AND TO NEGOTIATE AND MAKE LOANS, EITHER ON
ITS OWN ACCOUNT OR AS AGENT, OR BROKER FOR OTHERS.
7. TO ENTER INTO, MAKE, PERFORM AND CARRY OUT CONTRACTS OF EVERY KIND
AND FOR ANY LAWFUL PURPOSE, WITHOUT LIMITS AS TO AMOUNT WITH ANY PERSON, FIRM,
ASSOCIATION, COOPERATIVE PROFIT OR NON-PROFIT CORPORATION, MUNICIPALITY, STATE
OR GOVERNMENT OR ANY SUBDIVISION, DISTRICT OR DEPARTMENT THEREOF.
8. TO BUY, SELL, EXCHANGE, NEGOTIATE, OR OTHERWISE DEAL IN, OR
HYPOTHECATE SECURITIES, STOCKS, BONDS, DEBENTURES, MORTGAGES, NOTES OR OTHER
COLLATERALS OR SECURITIES, CREATED OR ISSUED BY ANY CORPORATION WHEREVER
ORGANIZED INCLUDING THIS CORPORATION, WITHIN SUCH LIMITS AS MAY BE PROVIDED BY
LAW, AND WHILE OWNER OF ANY SUCH STOCKS OR OTHER COLLATERALS TO EXERCISE ALL
RIGHTS, POWERS AND PRIVILEGES OF OWNERSHIP, INCLUDING THE RIGHT TO VOTE THE
SAME; TO SUBSCRIBE FOR STOCK OF ANY CORPORATION TO BE ORGANIZED, OTHER THAN TO
PROMOTE THE ORGANIZATION THEREOF.
<PAGE>
9. TO PURCHASE OTHERWISE ACQUIRE, OWN, HOLD, LEASE, SELL, EXCHANGE,
ASSIGN, TRANSFER, MORTGAGE, PLEDGE, LICENSE, OR OTHERWISE DISPOSE OF ANY
LETTERS, PATENTS, COPYRIGHTS, OR TRADEMARKS OF EVERY CLASS AND DESCRIPTION.
10. TO DO ANY AND ALL OTHER SUCH ACTS, THINGS, BUSINESS OR BUSINESSES IN
ANY MANNER CONNECTED WITH OR NECESSARY, INCIDENTAL, CONVENIENT OR AUXILIARY TO
DO ANY OF THESE OBJECTS HEREINBEFORE ENUMERATED, OR CALCULATED, DIRECTLY OR
INDIRECTLY, TO PROMOTE THE INTEREST OF THE CORPORATION; AND IN CARRYING ON ITS
PURPOSES, OR FOR THE PURPOSE OF OBTAINING OR FURTHERING ANY OF ITS BUSINESS,
TO DO ANY AND ALL ACTS AND THINGS, AND TO EXERCISE ANY AND ALL OTHER POWERS
WHICH A CO-PARTNER OR NATURAL PERSON COULD DO OR EXERCISE, AND WHICH NOW OR
HEREAFTER MAY BE AUTHORIZED BY LAW, HERE AND IN ANY OTHER PART OF THE WORLD.
11. THE SEVERAL CLAUSES CONTAINED IN THIS STATEMENT OF POWERS SHALL BE
CONSTRUED AS BOTH PURPOSES AND POWERS. AND THE STATEMENTS CONTAINED IN EACH
OF THESE CLAUSES SHALL BE IN NO WAY LIMITED OR RESTRICTED, BY REFERENCE TO OR
INFERENCE FROM, THE TERMS OF ANY OTHER CLAUSES, BUT SHALL BE REGARDED AS
INDEPENDENT PURPOSES AND POWERS; AND NO RECITATIONS, EXPRESSION OR DECLARATION
OF SPECIFIC OR SPECIAL POWERS OR PURPOSES HEREIN ENUMERATED SHALL BE DEEMED TO
BE EXCLUSIVE; BUT IS HEREBY EXPRESSLY DECLARED THAT ALL OTHER LAWFUL POWERS
NOT INCONSISTENT HEREWITH, ARE HEREBY INCLUDED.
ARTICLE IV
STOCK: THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION
SHALL HAVE AUTHORITY TO ISSUE IS 500,000,000 SHARES AT A PAR VALUE OF .001 PER
SHARE. ALL STOCKS WHEN ISSUED SHALL BE FULLY PAID AND NON-ASSESSABLE.
NO HOLDER OF SHARES OF COMMON STOCK OF THE CORPORATION SHALL BE ENTITLED,
AS SUCH, TO ANY PRE-EMPTIVE OR PREFERENTIAL RIGHTS TO SUBSCRIBE TO ANY
UNISSUED STOCK OR ANY OTHER SECURITIES WHICH THE CORPORATION MAY NOW OR
THEREAFTER BE AUTHORIZED TO ISSUE. THE BOARD OF DIRECTORS OF THE CORPORATION
MAY, HOWEVER, AT ITS DISCRETION, BY RESOLUTION DETERMINE THAT ANY UNISSUED
SECURITIES OF THE CORPORATION SHALL BE OFFERED FOR SUBSCRIPTION SOLELY TO THE
HOLDERS OF COMMON STOCK OF THE CORPORATION OR SOLELY TO THE HOLDERS OF ANY
CLASS OR CLASSES OF SUCH STOCK, IN SUCH PROPORTIONS BASED ON STOCK OWNERSHIP
AS SAID BOARD AT ITS DISCRETION MAY DETERMINE.
<PAGE>
EACH SHARE OF COMMON STOCK SHALL BE ENTITLED TO ONE VOTE AT STOCKHOLDERS
MEETINGS, EITHER IN PERSON OR BY PROXY. CUMULATIVE VOTING IN ELECTIONS OF
DIRECTORS AND ALL OTHER MATTERS BROUGHT BEFORE STOCKHOLDERS MEETINGS, WHETHER
THEY BE ANNUAL OR SPECIAL, SHALL NOT BE PERMITTED.
ARTICLE V
STOCKHOLDERS MEETING: MEETINGS OF THE SHAREHOLDERS SHALL BE HELD
AT SUCH PLACE WITHIN OR WITHOUT THE STATE OF NEVADA AS MAY BE PROVIDED BY THE
BY-LAWS OF THE CORPORATION. SPECIAL MEETINGS OF THE SHAREHOLDERS MAY BE
CALLED BY THE PRESIDENT OR ANY OTHER EXECUTIVE OFFICER OF THE CORPORATION, THE
BOARD OF DIRECTORS, OR ANY MEMBER THEREOF, OR BY THE RECORD HOLDER OR HOLDERS
OF AT LEASE TEN PERCENT (10%) OF ALL SHARES ENTITLED TO VOTE AT THE MEETING.
ANY ACTION OTHERWISE REQUIRED TO BE TAKEN AT A MEETING OF THE SHAREHOLDERS,
EXCEPT ELECTION OF DIRECTORS, MAY BE TAKEN WITHOUT A MEETING IF A CONSENT IN
WRITING, SETTING FORTH THE ACTION SO TAKEN, SHALL BE SIGNED BY SHAREHOLDERS
HAVING AT LEASE A MAJORITY OF THE VOTING POWER.
ARTICLE VI
COMMENCING BUSINESS: THE CORPORATION SHALL NOT COMMENCE BUSINESS
UNTIL AT LEAST $1,000.00 HAS BEEN RECEIVED BY IT AS CONSIDERATION FOR THE
ISSUANCE OF SHARES.
ARTICLE VII
STOCK RIGHTS: THE BOARD OF DIRECTORS SHALL HAVE THE AUTHORITY TO
DETERMINE THE CLASSES AND SERIES OF ANY SUBSEQUENT STOCK ISSUED BY THE
CORPORATION AND THE RIGHT AND PREFERENCES PERTAINING THERETO.
ARTICLE VIII
BOARD OF DIRECTORS: A MAJORITY OF THE BOARD OF DIRECTORS SHALL
BE NECESSARY TO CONSTITUTE A QUORUM; AND WHEN SO CONSTITUTED, THE BOARD SHALL
BE AUTHORIZED TO TRANSACT SUCH BUSINESS AS MAY BE DELEGATED TO IT BY THE
STOCKHOLDERS AND WHENEVER THE BOARD OF DIRECTORS SHALL BE SO ASSEMBLED AND ACT
AS A BOARD, EITHER WITHIN OR WITHOUT THE STATE OF NEVADA, ANY ACTION TAKEN
SHALL BE THE ACTION OF THE BOARD OF DIRECTORS AND SHALL BE BINDING UPON THE
CORPORATION, PROVIDED THAT THREE DAYS PRIOR NOTICE, GIVEN EITHER ORALLY OR IN
WRITING, OF THE TIME AND PLACE OF THE MEETING AND OF THE NATURE OF THE
BUSINESS
<PAGE>
PROPOSED TO BE TRANSACTED HAVE BEEN GIVEN TO THE ENTIRE BOARD OF DIRECTORS,
UNLESS SUCH NOTICE BE WAIVED AS HEREINAFTER PROVEDED. ANY DIRECTOR MAY WAIVE
NOTICE OF ANY MEETING; AND IN THE EVENT OF SUCH WAIVER, NOTICE SHALL BE IN
WRITING OR A WRITTEN MEMORANDUM SHALL BE MADE OF AN ORAL WAIVER OF NOTICE.
ARTICLE IX
OFFICERS: THE OFFICERS OF THE CORPORATION SHALL CONSIST OF A
BOARD OF DIRECTORS OF NOT LESS THAN THREE NOR MORE THAN TWENTY-FIVE. A
CHAIRMAN OF THE BOARD OF DIRECTORS, A PRESIDENT, A VICE-PRESIDENT, A SECRETARY
AND A TREASURER, WHO SHALL PERFORM SUCH DUTIES AND HAVE SUCH AUTHORITY AS
USUALLY PERTAINS TO SUCH OFFICERS OF A CORPORATION OR AS MAY BE PRESCRIBED BY
THE BOARD OF DIRECTORS FROM TIME TO TIME.
QUALIFICATION OF OFFICERS: OFFICERS AND DIRECTORS OF THE
CORPORATION NEED NOT BE RESIDENTS OF THE STATE OF NEVADA AND NEED NOT OWN
SHARES OF THE CORPORATION'S STOCK. THE SECRETARY AND TREASURER MAY, BUT NEED
NOT BE, THE SAME PERSON.
ELECTION: DIRECTORS SHALL BE ELECTED AT THE ANNUAL MEETING OF
THE SHAREHOLDERS, AND THE PERSONS RECEIVING THE HIGHEST NUMBER OF VOTES SHALL
BE DECLARED DULY ELECTED, PROVIDING SUCH NUMBERS SHALL REPRESENT A MAJORITY OF
ALL VOTES CAST. WITHIN TEN(10) DAYS AFTER THE ELECTION, THE DIRECTORS SHALL
MEET AND ELECT A PRESIDENT, VICE-PRESIDENT, SECRETARY AND TREASURER.
TERM OF OFFICE: THE TERM OF OFFICE OF ALL DIRECTORS AND OFFICERS
SHALL BE ONE YEAR, PROVIDED ALL DIRECTORS AND OFFICERS SHALL HOLD OFFICE UNTIL
THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
RESIGNATION OF OFFICERS: ANY OFFICER OR DIRECTOR MAY RESIGN BY
FILING HIS WRITTEN RESIGNATION WITH THE SECRETARY OF THE CORPORATION, OR IN
THE CASE OF THE SECRETARY, WITH THE PRESIDENT OF THE CORPORATION AND UPON
ACCEPTANCE THEREOF BY THE BOARD OF DIRECTORS OR IF SUCH BOARD SHALL NEGLECT TO
ACT UPON SUCH RESIGNATION WITHIN FOURTEEN (14) DAYS AFTER RECEIPT, THE
RESIGNATION SHALL BECOME EFFECTIVE AND THE OFFICE SHALL BE DEEMED VACANT.
<PAGE>
REMOVAL OF OFFICERS: ANY OFFICER OR DIRECTOR OF THIS CORPORATION
MAY BE REMOVED AT ANY TIME WITHOUT CAUSE IN THE MANNER PROVIDED BY THE LAWS OF
THE STATE OF NEVADA FOR THE REMOVAL OF SUCH OFFICER OR DIRECTOR, OR BY A
MAJORITY VOTE OF THE OUTSTANDING STOCK OF THE CORPORATION AT ANY SPECIAL
MEETING OF THE STOCKHOLDERS CALLED FOR THAT PURPOSE AS HEREIN PROVIDED.
VACANCIES: IN THE CASE OF DEATH, DISABILITY, OR RESIGNATION OF
ANY OFFICER OR DIRECTOR OF THE COMPANY, THE REMAINING DIRECTORS OR DIRECTOR OF
THE COMPANY, EVEN THOUGH LESS THAN A QUORUM, SHALL FILL VACANCIES FOR THE
UNEXPIRED TERM OR TERMS.
ORIGINAL DIRECTORS: THE NUMBER OF DIRECTORS CONSTITUTING THE
INITIAL BOARD OF DIRECTORS OF THE CORPORATION IS THREE (3), AND THE NAMES AND
ADDRESSES OF THE PERSONS WHO ARE THE INCORPORATORS AND WHO ARE TO SERVE AS
DIRECTORS UNTIL THE FIRST ANNUAL MEETING OF SHAREHOLDERS OR UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED ARE:
1. SHIRRELL W. HUGHES
2929 ? DRIVE, SALT LAKE CITY, UTAH 84111
2. SYDNEY L. HOAGLAND
??42 SOUTH RIVER HOLLOW ROAD, SALT LAKE CITY, UTAH 84123
3. SINDIE SPENCER
11131 SOUTH 2820 WEST, SOUTH JORDAN, UTAH 84065
ARTICLE X
DURATION: THE PERIOD OF DURATION OF THE CORPORATION SHALL BE
PERPETUAL.
ARTICLE XI
AMENDMENT: THESE ARTICLES OF INCORPORATION, BY VOTE OF NOT LESS
THAN FIFTY PER CENT OF THE ISSUED AND OUTSTANDING CAPITAL STOCK OF THE
CORPORATION, MAY BE DEEMED AMENDED IN ANY RESPECT AMENDABLE AT LAW AT ANY
MEETING. A COPY OF THE PROPOSED AMENDMENT SHALL BE GIVEN TO THE STOCKHOLDERS
AS PROVIDED IN ARTICLE VI HEREOF, FOR CALLING AND HOLDING MEETINGS OF THE
STOCKHOLDERS.
<PAGE>
ARTICLE XII
BY-LAWS: THE BOARD OF DIRECTORS OF THE CORPORATION SHALL HAVE
AUTHORITY TO ADOPT SUCH BY-LAWS AS IN THEIR JUDGMENT MAY BE DEEMED NECESSARY
OR ADVISABLE FOR THE MANAGEMENT AND TRANSACTION OF THE BUSINESS OF THE
CORPORATION PROVIDED THAT SUCH BY-LAWS ARE NOT IN CONFLICT WITH THESE ARTICLES
OF INCORPORATION OR THE CONSTITUTION OF THE STATE OF NEVADA.
IN WITNESS WHEREOF, THE UNDERSIGNED INCORPORATORS HAVE HEREUNTO AFFIXED
THEIR SIGNATURES AT SALT LAKE CITY THIS 14TH DAY OF MARCH 1986.
/S/ SHIRRELL W. HUGHES
-----------------------
SHIRRELL W. HUGHES
/S/ SYDNEY L. HOAGLAND
-----------------------
SYDNEY L. HOAGLAND
/S/ SINDIE SPENCER
-----------------------
SINDIE SPENCER
STATE OF UTAH )
:
COUNTY OF SALT LAKE )
I, KELLIE HUMES, A NOTARY PUBLIC, DO HEREBY CERTIFY THAT SHIRRELL W.
HUGHES, SIDNEY L. HOAGLAND, AND SINDIE SPENCER DID PERSONALLY APPEAR BEFORE ME
TO AFFIX THEIR SIGNATURES TO THIS DOCUMENT.
/S/ KELLIE HUMES
-----------------------
NOTARY PUBLIC, RESIDING IN
SALT LAKE COUNTY.
7-26-87
- -------------------
COMMISSION EXPIRES
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
IMPRESSIVE VENTURES, LTD.
Pursuant to the provision of the Nevada Corporation Laws, Impressive
Ventures, Ltd. adopts the following amendment to its Articles of
Incorporation.
AMENDMENTS
Articles I of the Company's Articles of Incorporation was amended to read:
NAME: The Name of the Corporation is Wealth International, Inc.
ADOPTION OF AMENDMENTS
The above amendments to the Articles of Incorporation of Impressive
Ventures, Ltd. was duly adopted by the shareholders of the corporation at a
meeting held August 27, 1996, in the manner prescribed by the State of Nevada
General Corporation Laws.
The corporation had 8,651,200 shares vote FOR the amendment and 0 shares
vote AGAINST.
IT WITNESS WHEREOF, the undersigned president and secretary, having been
hereunto duly authorized, have executed the foregoing Articles of Amendment
for the corporation this 27th day of August, 1996.
Impressive Ventures, Ltd.
By:/s/Nicholas Julian
President
By:/s/Dannette Uyeda
Secretary
State of Utah ).ss
City of Salt Lake )
Subscribed and sworn to before me this 27th day of August, 1996.
Notary Public
CERTIFICATE OF WEALTH INTERNATIONAL, INC.
A NEVADA CORPORATION
PURSUANT TO SECTION 78.207(4) OF THE
NEVADA REVISED STATUTES
FIRST: The name of the corporation is Wealth International, Inc. (the
"Company").
SECOND: On August 27, 1996, pursuant to a resolution of the Board of
Directors and the affirmative vote at a special meeting of stockholders of
persons owning a majority of the outstanding voting securities of the Company,
the Company effected a reverse split of the Company's issued and outstanding
common stock, effective as of August 29, 1996, on the basis of one share for
250 shares; however, the resolution provided that such reverse split shall not
alter the Company's authorized capital of 500,000,000 shares and that the par
value of the Company's common stock shall be retained at one mili ($0.001),
with appropriate adjustments in the additional paid in capital and stated
capital accounts of the Company; and such resolution provided further that no
fractional shares shall be issued as a result thereof, with all fractions
being rounded to the nearest whole share, and that no certificate shall
represent nor shareholder shall own less than 50 shares as a result of such
reverse split.
THIRD: The number of authorized shares and the par value of the Company's
common stock immediately before the reverse split were 500,000,000 shares and
one mill ($0.001), respectively.
FOURTH: The number of authorized shares and the par value of the
Company's common stock immediately after the reverse split were 500,000,000
shares and one mill ($.001), respectively.
FIFTH: The number of shares of the Company's common stock to be issued
after the reverse split in exchange for each pre-split share of common stock
is 45,500, subject to any adjustment as outlined in the SECOND paragraph above
or one 250th of one share for each outstanding share.
SIXTH: No fractional shares will be issued as a result of the reverse
split. There is no provision for the payment of money or the issuance of
script to stockholders otherwise entitled to a fraction of a share as a result
of the reverse split.
SEVENTH: The approval of the affected stockholders is not required,
though persons who owned in excess of a majority of the outstanding voting
securities of the Company voted in favor of the reverse split in accordance
with the Nevada Revised Statutes.
EIGHTH: The reverse split was recorded on the books and records of the
Company as being effective at the close of business on August 29, 1996.
<PAGE>
IN WITNESS WHEREOF, the undersigned executive officers of the Company
hereby executive this Certificate on the 9 day of October, 1996
/S/ Ronald A. Nilsson
------------------------------
Ronald A. Nilsson, President
/S/ Netella K. Montague
------------------------------
Netella K. Montague, Secretary
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
Ronald A. Nilsson hereby acknowledges that he is the President of Wealth
International, Inc., A Nevada corporation, that he has read the foregoing
information, and of his personal knowledge, he represents and warrants that
such information is true and correct in every material respect.
/S/ Ronald A. Nilsson
------------------------------
Ronald A. Nilsson
Subscribed and sworn to before me this 9 day of October, 1996.
/S/ Sheryl A. Ross
------------------------------
NOTARY PUBLIC
CERTIFICATE OF WEALTH INTERNATIONAL, INC.
A NEVADA CORPORATION
PURSUANT TO SECTION 78.207(4) OF THE
NEVADA REVISED STATUTES
FIRST: The name of the corporation is Wealth International,
Inc.("Company").
SECOND: On October 22, 1996, pursuant to a resolution of the Board of
Directors, the Company effected a forward split of the Company's issued and
outstanding common stock, effective as of October 25, 1996, on the basis of
four shares for one share: however, the resolution provided that such forward
split shall not alter the Company's authorized capital of 500,000,000 shares
and that the par value of the Company's common stock shall be retained at one
mill ($0.001), with appropriate adjustments in the additional paid in capital
and stated capital accounts of the Company.
THIRD: The number of authorized shares and the par value of the Company's
common stock immediately before the forward split were 500,000,000 shares and
one mill ($0.001), respectively.
FOURTH: The number of authorized shares and the par value of the
Company's common stock immediately after the forward split were 500,000,000
shares and one mill ($0.001), respectively.
FIFTH: The number of shares of the Company's common stock to be issued
after the forward split in exchange for each pre-split share of common stock
is 4.
SIXTH: No fractional shares will be issued as a result of the forward
split. There is no provision for the payment of money or the issuance of
scrip to stockholders otherwise entitled to a fraction of a share as a result
of the forward split.
SEVENTH: The approval of the affected stockholders is not required in
accordance with the Nevada Revised Statutes.
EIGHTH: The forward split will be recorded on the books and records of
the Company as being effective at 8:00 o'clock a.m., local time, on October
25, 1996.
IN WITNESS WHEREOF, the undersigned executive officers of the Company
hereby execute this Certificate on the 22nd day of October, 1996.
/S/ Ronald A. Nilsson
----------------------------
Ronald A. Nilsson, President
<PAGE>
/S/ Netella K. Montague
------------------------------
Netella K. Montague, Secretary
STATE OF UTAH )
)ss
COUNTY OF SALT LAKE )
Ronald A. Nilsson hereby acknowledges that he is the President of Wealth
International, Inc., a Nevada corporation, that he has read the foregoing
information, and of his personal knowledge, he represents and warrants that
such information is true and correct on every material respect.
/S/ Ronald A. Nilsson
-----------------------
Ronald A. Nilsson
Subscribed and sworn to before me this 22 day of October, 1996.
/S/ Sheryl A. Ross
-----------------------
Sheryl A. Ross
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF WEALTH INTERNATIONAL, INC.
In accordance with the requirements of Section 78.385 and 78.390 of the
Nevada Revised Statutes, the Articles of Incorporation of Wealth
International, Inc., a Nevada corporation (the "Company") are hereby amended
as set forth in this Certificate of Amendment.
1. Prior to the filing of this Certificate of Amendment, the name of the
Company has been Wealth International, Inc.
2. Pursuant to this Certificate of Amendment, Article I of the Company's
Articles of Incorporation shall be named as follows:
"ARTICLE I
The name of the Corporation is World InterNetworks, Inc."
3. Except as set forth in paragraph 2 of this Certificate of Amendment, the
Articles of Incorporation shall remain the same as previously
constituted.
4. This Certificate of Amendment, and the amendment to the Company's
Articles of Incorporation contemplated herein, has been approved by
unanimous resolution of the Company's Board of Directors, in a manner
consistent with the provisions of Section 78.390.
5. This Certificate of Amendment, and the amendment to the Company's
Articles of Incorporation contemplated herein, has been approved by the
holders of a majority of the Company's outstanding shares, as required
under Section 78.390 of the Nevada Revised Statutes and the Company's
Articles of Incorporation, pursuant to an action without a meeting, in
accordance with the requirements of Section 78.320 of the Nevada Revised
Statutes.
IN WITNESS WHEREOF, the undersigned persons have executed this
Certificate of Amendment effective as of the 1st day of March, 1998.
/S/ Ronald A. Nilsson
----------------------------
Ronald A. Nilsson, President
/S/ Daniel G. Lloyd
----------------------------
Daniel G. Lloyd, Secretary
<PAGE>
STATE OF UTAH )
):ss
COUNTY OF UTAH )
ACKNOWLEDGMENT
SUBSCRIBED AND SWORN TO before me this 25th day of March 1998, by Ronald
A. Nilsson, President of Wealth International, Inc., which is hereby changing
its name to World InterNetworks, Inc.
/S/ Miriam Rushton
------------------------
Notary Public
My Commission Expires: Residing At:
5/3/99 565 W. 300 S. Provo Utah
- ---------------------- ------------------------
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
WORLD INTERNETWORKS, INC.
We, the undersigned, Ronald A. Nilsson, President, and Robert H.
Schneck, Secretary, of World Internetworks, Inc., a Nevada corporation (the
"Corporation"), do hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the
Articles of Incorporation of the Corporation shall be amended as indicated
below.
II
The following amendment was adopted by Consent of the Board of
Directors pursuant to Section 78.315 of the Nevada Revised Statutes and by
Consent of the Majority Stockholders pursuant to Section 78.320 of the Nevada
Revised Statutes.
III
Pursuant to resolutions adopted by the Board of Directors and the
Majority Stockholders as set forth in Paragraph II above, the 13,704,376
common outstanding shares of the Corporation were reverse split on a basis of
one for four, effective on the opening of business on the 4th day of
September, 1998, while retaining the authorized common shares at 500,000,000
and the par value at one mill ($0.001) per share, with appropriate adjustments
being made in the additional paid in capital and stated capital accounts of
the Corporation.
IV
The number of common shares entitled to vote on the amendment was
13,704,376.
V
The number of common shares voted in favor of the amendment was
9,362,780, with none opposing and none abstaining.
/s/ Ronald A. Nilsson
---------------------
Ronald A. Nilsson, President
/s/ Robert H. Schneck
---------------------
Robert H. Schneck, Secretary
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 19 day of August, 1998, personally appeared before me, a
Notary Public, Ronald A. Nilsson, who acknowledged that he is the President of
World Internetworks, Inc., and that he is authorized to and did execute the
above instrument.
/s/ Janice B. Becker
--------------------
NOTARY PUBLIC
(Notary Seal)
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 19 day of August, 1998, personally appeared before me, a
Notary Public, Robert H. Schneck, who acknowledged that he is the Secretary of
World Internetworks, Inc., and that he is authorized to and did execute the
above instrument.
/s/ Janice B. Becker
--------------------
NOTARY PUBLIC
(Notary Seal)
BYLAWS
OF
WORLD INTERNETWORKS, INC.
ARTICLE I
OFFICES
Section 1.01 Location of Offices. The corporation may maintain such
offices within or without the State of Nevada as the Board of Directors may
from time to time designate or require.
Section 1.02 Principal Office. The address of the principal office of
the corporation shall be at the address of the registered office of the
corporation as so designated in the office of the Lieutenant
Governor/Secretary of State of the state of incorporation, or at such other
address as the Board of Directors shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the shareholders
shall be held in May of each year or at such other time designated by the
Board of Directors and as is provided for in the notice of the meeting, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the election of directors shall
not be held on the day designated for the annual meeting of the shareholders,
or at any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon thereafter as may
be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders
may be called at any time by the chairman of the board, the president, or by
the Board of Directors, or in their absence or disability, by any vice
president, and shall be called by the president or, in his or her absence or
disability, by a vice president or by the secretary on the written request of
the holders of not less than one-tenth of all the shares entitled to vote at
the meeting, such written request to state the purpose or purposes of the
meeting and to be delivered to the president, each vice-president, or
secretary. In case of failure to call such meeting within 60 days after such
request, such shareholder or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate
any place, either within or without the state of incorporation, as the place
of meeting for any annual meeting or for any special meeting called by the
Board of Directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or without the state
of incorporation, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary,
if any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at
least ten days, but not more than 50 days, prior to the meeting, to each
shareholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a
written waiver of notice or a consent to the holding of such meeting, or an
approval of the minutes thereof. Attendance at a meeting, in person or by
proxy, shall constitute waiver of all defects of call or notice regardless of
whether waiver, consent, or approval is signed or any objections are made.
All such waivers, consents, or approvals shall be made a part of the minutes
of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors of the corporation may
provide that the share transfer books shall be closed, for the purpose of
determining shareholders entitled to notice of or to vote at such meeting, but
not for a period exceeding fifty (50) days. If the share transfer books are
closed for the purpose of determining shareholders entitled to notice of or to
vote at such meeting, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) and, in
case of a meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting or to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof. Failure to comply with
this Section shall not affect the validity of any action taken at a meeting of
shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation
having charge of the share transfer books for shares of the corporation shall
make, at least ten (10) days before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of, and the number
of shares held by each, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder during the
whole time of the meeting. The original share transfer book shall be prima
facie evidence as to the shareholders who are entitled to examine such list or
transfer books, or to vote at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the
outstanding shares of the corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of the shareholders. If a
quorum is present, the affirmative vote of the majority of the voting power
represented by shares at the meeting and entitled to vote on the subject shall
constitute action by the shareholders, unless the vote of a greater number or
voting by classes is required by the laws of the state of incorporation of the
corporation or the Articles of Incorporation. If less than one-half of the
outstanding voting power is represented at a meeting, a majority of the voting
power represented by shares so present may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the
corporation entitled to vote shall be entitled to one vote on each matter
submitted to vote at a meeting of shareholders, except to the extent that the
voting rights of the shares of any class or series of stock are determined and
specified as greater or lesser than one vote per share in the manner provided
by the Articles of Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case
the instrument authorizing such proxy to act shall have been executed in
writing by the registered holder or holders of such shares, as the case may
be, as shown on the share transfer of the corporation or by his or her or her
attorney thereunto duly authorized in writing. Such instrument authorizing a
proxy to act shall be delivered at the beginning of such meeting to the
secretary of the corporation or to such other officer or person who may, in
the absence of the secretary, be acting as secretary of the meeting. In the
event that any such instrument shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or if only one be
present, that one shall (unless the instrument shall otherwise provide) have
all of the powers conferred by the instrument on all persons so designated.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held and the persons whose shares are pledged shall be entitled to
vote, unless in the transfer by the pledge or on the books of the corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case the pledgee, or his or her or her proxy, may represent such shares and
vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action
required to be taken at a meeting of the shareholders, or any other action
which may be taken at a meeting of the shareholders, may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of
the corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all the powers of the corporation whether derived from
law or the Articles of Incorporation, except such powers as are by statute, by
the Articles of Incorporation or by these Bylaws, vested solely in the
shareholders of the corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors
shall consist of three to nine persons. Increases or decreases to said number
may be made, within the numbers authorized by the Articles of Incorporation,
as the Board of Directors shall from time to time determine by amendment to
these Bylaws. An increase or a decrease in the number of the members of the
Board of Directors may also be had upon amendment to these Bylaws by a
majority vote of all of the shareholders, and the number of directors to be so
increased or decreased shall be fixed upon a majority vote of all of the
shareholders of the corporation. Each director shall hold office until the
next annual meeting of shareholders of the corporation and until his or her
successor shall have been elected and shall have qualified. Directors need
not be residents of the state of incorporation or shareholders of the
corporation.
Section 3.03 Classification of Directors. In lieu of electing the
entire number of directors annually, the Board of Directors may provide that
the directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting
after their election, and that of the third class, if any, to expire at the
third annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
following, and at the same place as, the annual meeting of shareholders. The
Board of Directors may provide by resolution the time and place, either within
or without the state of incorporation, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the president, vice president,
or any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the state of incorporation, as the place for holding any special meeting of
the Board of Directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the
Board of Directors may participate in a meeting of the Board of Directors or a
committee of the Board of Directors by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at
least ten (10) days prior thereto by written notice delivered personally or
mailed to each director at his or her regular business address or residence,
or by telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting solely for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 3.08 Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly Created Directorship. If any
vacancies shall occur in the Board of Directors by reason of death,
resignation or otherwise, or if the number of directors shall be increased,
the directors then in office shall continue to act and such vacancies or newly
created directorships shall be filled by a vote of the directors then in
office, though less than a quorum, in any way approved by the meeting. Any
directorship to be filled by reason of removal of one or more directors by the
shareholders may be filled by election by the shareholders at the meeting at
which the director or directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors,
the directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his or her or her dissent shall be entered in the minutes of the
meeting, unless he or she shall file his or her or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof, or shall forward such dissent by registered or certified
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 3.13 Resignations. A director may resign at any time by
delivering a written resignation to either the president, a vice president,
the secretary, or assistant secretary, if any. The resignation shall become
effective on its acceptance by the Board of Directors; provided, that if the
board has not acted thereon within ten days from the date presented, the
resignation shall be deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action
required to be taken at a meeting of the directors of the corporation or any
other action which may be taken at a meeting of the directors or of a
committee, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors, or all of
the members of the committee, as the case may be. Such consent shall have the
same legal effect as a unanimous vote of all the directors or members of the
committee.
Section 3.15 Removal. At a meeting expressly called for that purpose,
one or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a
president, one or more vice-presidents, as shall be determined by resolution
of the Board of Directors, a secretary, a treasurer, and such other officers
as may be appointed by the Board of Directors. The Board of Directors may
elect, but shall not be required to elect, a chairman of the board and the
Board of Directors may appoint a general manager.
Section 4.02 Election, Term of Office, and Qualifications. The
officers shall be chosen by the Board of Directors annually at its annual
meeting. In the event of failure to choose officers at an annual meeting of
the Board of Directors, officers may be chosen at any regular or special
meeting of the Board of Directors. Each such officer (whether chosen at an
annual meeting of the Board of Directors to fill a vacancy or otherwise) shall
hold his or her office until the next ensuing annual meeting of the Board of
Directors and until his or her successor shall have been chosen and qualified,
or until his or her death, or until his or her resignation or removal in the
manner provided in these Bylaws. Any one person may hold any two or more of
such offices, except that the president shall not also be the secretary. No
person holding two or more offices shall act in or execute any instrument in
the capacity of more than one office. The chairman of the board, if any,
shall be and remain a director of the corporation during the term of his or
her office. No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The Board of Directors from
time to time may appoint such other officers or agents as it may deem
advisable, each of whom shall have such title, hold office for such period,
have such authority, and perform such duties as the Board of Directors from
time to time may determine. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of office,
authorities, and duties. Subordinate officers need not be shareholders or
directors.
Section 4.04 Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall
take effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without
cause. Any officer or agent appointed in accordance with the provisions of
Section 4.03 hereof may also be removed, either with or without cause, by any
officer on whom such power of removal shall have been conferred by the Board
of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal,
disqualification, or any other cause, or if a new office shall be created,
then such vacancies or new created offices may be filled by the Board of
Directors at any regular or special meeting.
Section 4.07 The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties.
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors;
and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following
powers and duties:
(a) If no general manager has been appointed, he or she shall be the
chief executive officer of the corporation, and, subject to the direction of
the Board of Directors, shall have general charge of the business, affairs,
and property of the corporation and general supervision over its officers,
employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders
and Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing
shares of the corporation, the issuance of which shall have been authorized by
the Board of Directors; and
(e) He or she shall have all power and shall perform all duties
normally incident to the office of a president of a corporation, and shall
exercise such other powers and perform such other duties as from time to time
may be assigned to him or her by the Board of Directors.
Section 4.09 The Vice Presidents. The Board of Directors may, from
time to time, designate and elect one or more vice presidents, one of whom may
be designated to serve as executive vice president. Each vice president shall
have such powers and perform such duties as from time to time may be assigned
to him or her by the Board of Directors or the president. At the request or
in the absence or disability of the president, the executive vice president
or, in the absence or disability of the executive vice president, the vice
president designated by the Board of Directors or (in the absence of such
designation by the Board of Directors) by the president, the senior vice
president, may perform all the duties of the president, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
president.
Section 4.10 The Secretary. The secretary shall have the following
powers and duties:
(a) He or she shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the board or directors
in books provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance
with the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of
the corporation, and shall cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the corporation prior to
the issuance thereof and to all instruments, the execution of which on behalf
of the corporation under its seal shall have been duly authorized in
accordance with these Bylaws, and when so affixed, he or she may attest the
same;
(d) He or she shall assume that the books, reports, statements,
certificates, and other documents and records required by statute are properly
kept and filed;
(e) He or she shall have charge of the share books of the corporation
and cause the share transfer books to be kept in such manner as to show at any
time the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for,
the names alphabetically arranged and the addresses of the holders of record
thereof, the number of shares held by each holder and time when each became
such holder or record; and he or she shall exhibit at all reasonable times to
any director, upon application, the original or duplicate share register. He
or she shall cause the share book referred to in Section 6.04 hereof to be
kept and exhibited at the principal office of the corporation, or at such
other place as the Board of Directors shall determine, in the manner and for
the purposes provided in such Section;
(f) He or she shall be empowered to sign certificates representing
shares of the corporation, the issuance of which shall have been authorized by
the Board of Directors; and
(g) He or she shall perform in general all duties incident to the
office of secretary and such other duties as are given to him or her by these
Bylaws or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.11 The Treasurer. The treasurer shall have the following
powers and duties:
(a) He or she shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation
in such banks or trust companies or with such banks or other depositories as
shall be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed
by checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and
preserved property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president,
whenever requested, a statement of the financial condition of the corporation
and of all of this transactions as treasurer, and render a full financial
report at the annual meeting of the shareholders, if called upon to do so;
(e) He or she shall cause to be kept correct books of account of all
the business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he or she may desire with respect to any and all financial
transactions of the corporation; and
(g) He or she shall perform in general all duties incident to the
office of treasurer and such other duties as are given to him or her by these
Bylaws or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.12 General Manager. The Board of Directors may employ and
appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any shall have the
following powers and duties:
(a) He or she shall be the chief executive officer of the corporation
and, subject to the directions of the Board of Directors, shall have general
charge of the business affairs and property of the corporation and general
supervision over its officers, employees, and agents:
(b) He or she shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times
subject to the control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation, or
delegate such employment to subordinate officers, and shall have authority to
discharge any person so employed; and
(d) He or she shall make a report to the president and directors as
often as required, setting forth the results of the operations under his or
her charge, together with suggestions looking toward improvement and
betterment of the condition of the corporation, and shall perform such other
duties as the Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the
officers of the corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 4.03 hereof. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he or she is also a director
of the corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board
of Directors may direct, conditioned upon the faithful performance of his or
her duties to the corporation, including responsibility for negligence and for
the accounting of all property, monies, or securities of the corporation which
may come into his or her hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation
contained in the Articles of Incorporation or these Bylaws, the president or
any vice president or the general manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other
instrument authorized in writing by the Board of Directors. The Board of
Directors may, subject to any limitation contained in the Articles of
Incorporation or in these Bylaws, authorize in writing any officer or agent to
execute and delivery any contract or other instrument in the name and on
behalf of the corporation; any such authorization may be general or confined
to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf
of the corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or
conveyed as security for the payment of any loan, advance, indebtedness, or
liability of the corporation, unless and except as authorized by the Board of
Directors. Any such authorization may be general or confined to specific
instances.
Section 5.03 Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks and
or trust companies or with such bankers or other depositories as the Board of
Directors may select, or as from time to time may be selected by any officer
or agent authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances,
checks, endorsements, and, subject to the provisions of these Bylaws,
evidences of indebtedness of the corporation, shall be signed by such officer
or officers or such agent or agents of the corporation and in such manner as
the Board of Directors from time to time may determine. Endorsements for
deposit to the credit of the corporation in any of its duly authorized
depositories shall be in such manner as the Board of Directors from time to
time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by
the corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed
with the seal of the corporation. The seal may be a facsimile, engraved or
printed. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, should cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as through the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by
or standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to
any such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any
vice president and the secretary or assistant secretary of the corporation, or
by any officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the
corporation shall be entitled to have a certificate, signed by the president
or any vice president and the secretary or assistant secretary, and sealed
with the seal (which may be a facsimile, engraved or printed) of the
corporation, certifying the number and kind, class or series of shares owned
by him or her in the corporation; provided, however, that where such a
certificate is countersigned by (a) a transfer agent or an assistant transfer
agent, or (b) registered by a registrar, the signature of any such president,
vice president, secretary, or assistant secretary may be a facsimile. In case
any officer who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate, shall cease to be such officer
of the corporation, for any reason, before the delivery of such certificate by
the corporation, such certificate may nevertheless be adopted by the
corporation and be issued and delivered as though the person who signed it, or
whose facsimile signature or signatures shall have been used thereon, has not
ceased to be such officer. Certificates representing shares of the
corporation shall be in such form as provided by the statutes of the state of
incorporation. There shall be entered on the share books of the corporation
at the time of issuance of each share, the number of the certificate issued,
the name and address of the person owning the shares represented thereby, the
number and kind, class or series of such shares, and the date of issuance
thereof. Every certificate exchanged or returned to the corporation shall be
marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the
corporation shall be made on the books of the corporation by the holder of
record thereof, or by his or her attorney thereunto duly authorized by a power
of attorney duly executed in writing and filed with the secretary of the
corporation or any of its transfer agents, and on surrender of the certificate
or certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such shares. Except as provided by law, the
corporation and transfer agents and registrars, if any, shall be entitled to
treat the holder of record of any stock as the absolute owner thereof for all
purposes, and accordingly, shall not be bound to recognize any legal,
equitable, or other claim to or interest in such shares on the part of any
other person whether or not it or they shall have express or other notice
thereof.
Section 6.03 Regulations. Subject to the provisions of this Article VI
and of the Articles of Incorporation, the Board of Directors may make such
rules and regulations as they may deem expedient concerning the issuance,
transfer, redemption, and registration of certificates for shares of the
corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of
Business. A share book (or books where more than one kind, class, or series
of stock is outstanding) shall be kept at the principal place of business of
the corporation, or at such other place as the Board of Directors shall
determine, containing the names, alphabetically arranged, of original
shareholders of the corporation, their addresses, their interest, the amount
paid on their shares, and all transfers thereof and the number and class of
shares held by each. Such share books shall at all reasonable hours be
subject to inspection by persons entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors
may appoint one or more transfer agents and one or more registrars with
respect to the certificates representing shares of the corporation, and may
require all such certificates to bear the signature of either or both. The
Board of Directors may from time to time define the respective duties of such
transfer agents and registrars. No certificate for shares shall be valid
until countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of
the corporation for a period of not to exceed 50 days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board
of Directors may fix in advance a date, not exceeding 50 days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
or to give such consent.
(c) If the share transfer books shall be closed or a record date set
for the purpose of determining shareholders entitled to notice of or to vote
at a meeting of shareholders, such books shall be closed for, or such record
date shall be, at least ten (10) days immediately preceding such meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may issue
a new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate or his or her legal representatives, to give the
corporation a bond in such form and amount as the Board of Directors may
direct, and with such surety or sureties as may be satisfactory to the board,
to indemnify the corporation and its transfer agents and registrars, if any,
against any claims that may be made against it or any such transfer agent or
registrar on account of the issuance of such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the Board of Directors, it is proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any
jurisdiction to which the corporation may become subject by reason of the
conduct of business, the ownership of assets, the residence of shareholders,
the location of offices or facilities, or any other item, the corporation
elects not to be governed by the provisions of any statute that (i) limits,
restricts, modified, suspends, terminates, or otherwise affects the rights of
any shareholder to cast one vote for each share of common stock registered in
the name of such shareholder on the books of the corporation, without regard
to whether such shares were acquired directly from the corporation or from any
other person and without regard to whether such shareholder has the power to
exercise or direct the exercise of voting power over any specific fraction of
the shares of common stock of the corporation issued and outstanding or (ii)
grants to any shareholder the right to have his or her stock redeemed or
purchased by the corporation or any other shareholder on the acquisition by
any person or group of persons of shares of the corporation. In particular,
to the extent permitted under the laws of the state of incorporation, the
corporation elects not to be governed by any such provision, including the
provisions of the Nevada Control Share Acquisitions Act, Sections 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes, or any statute of similar
effect or tenor.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may
deem appropriate, each of which committees shall consist of two or more
directors. Members of the executive committee and of any such other
committees shall be designated annually at the annual meeting of the Board of
Directors; provided, however, that at any time the Board of Directors may
abolish or reconstitute the executive committee or any other committee. Each
member of the executive committee and of any other committee shall hold office
until his or her successor shall have been designated or until his or her
resignation or removal in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the
Board of Directors, the executive committee shall have and may exercise all
powers of the Board of Directors in the management of the business and affairs
of the corporation, except for the power to fill vacancies in the Board of
Directors or to amend these Bylaws, and except for such powers as by law may
not be delegated by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix
its own presiding and recording officer or officers, and may meet at such
place or places, at such time or times and on such notice (or without notice)
as it shall determine from time to time. It will keep a record of its
proceedings and shall report such proceedings to the Board of Directors at the
meeting of the Board of Directors next following.
Section 7.04 Quorum and Manner of Acting. At all meeting of the
executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, the presence of members constituting a
majority of the total authorized membership of the committee shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of
the executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, shall act only as a committee and the
individual members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive committee, and
of such other committees as may be designated hereunder by the Board of
Directors, may resign at any time by delivering a written resignation to
either the president, the secretary, or assistant secretary, or to the
presiding officer of the committee of which he or she is a member, if any
shall have been appointed and shall be in office. Unless otherwise specified
herein, such resignation shall take effect on delivery.
Section 7.06 Removal. The Board of Directors may at any time remove
any member of the executive committee or of any other committee designated by
it hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors.
Section 7.08 Compensation. The Board of Directors may allow a fixed
sum and expenses of attendance to any member of the executive committee, or of
any other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
any such action, suit or proceeding, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, he or she had reasonable cause to believe
that his or her conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection with the defense or settlement of such action or suit, if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such a person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation, unless
and only to the extent that the court in which the action or suit was brought
shall determine on application that, despite the adjudication of liability but
in view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in
Sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Any other indemnification under Sections 8.01 and 8.02 hereof, shall be made
by the corporation upon a determination that indemnification of the officer,
director, employee, or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in Sections 8.01 and 8.02
hereof. Such determination shall be made either (i) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit, or proceeding; or (ii) by independent legal counsel on a
written opinion; or (iii) by the shareholders by a majority vote of a quorum
of shareholders at any meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by
this Section shall not be deemed exclusive of any other indemnification
granted under any provision of any statute, in the corporation's Articles of
Incorporation, these Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, or agent,
and shall inure to the benefit of the heirs and legal representatives of such
a person.
Section 8.05 Advances. Expenses incurred in defending a civil or
criminal action, suit, or proceeding as contemplated in this Section may be
paid by the corporation in advance of the final disposition of such action,
suit, or proceeding upon a majority vote of a quorum of the Board of Directors
and upon receipt of an undertaking by or on behalf of the director, officers,
employee, or agent to repay such amount or amounts unless if it is ultimately
determined that he or she is to indemnified by the corporation as authorized
by this Section.
Section 8.06 Scope of Indemnification. The indemnification authorized
by this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who ceases to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification
permitted by law.
Section 8.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the corporation would have
the power to indemnify him or her against any such liability and under the
laws of the state of incorporation, as the same may hereafter be amended or
modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and on
the terms and conditions provided by the Articles of Incorporation and these
Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors
or the shareholders, shall be subject to amendment, alteration, or repeal, and
new Bylaws may be made, except that:
(a) No Bylaws adopted or amended by the shareholders shall be altered
or repealed by the Board of Directors.
(b) No Bylaws shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a meeting of
shareholders, or more than a majority of the votes cast to constitute action
by the shareholders, except where higher percentages are required by law;
provided, however that (i) if any Bylaw regulating an impending election of
directors is adopted or amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of directors, the Bylaws so adopted or amended or repealed, together
with a concise statement of the changes made; and (ii) no amendment,
alteration or repeal of this Article XI shall be made except by the
shareholders.
CERTIFICATE OF PRESIDENT
The undersigned does hereby certify that he is the President of WORLD
INTERNETWORKS, INC., a corporation duly organized and existing under and by
virtue of the laws of the State of Nevada; that the above and foregoing Bylaws
of said corporation were duly and regularly adopted as such by the Board of
Directors of the corporation, acting by unanimous consent, and that the above
and foregoing Bylaws are now in full force and effect.
DATED THIS 14 day of March, 2000.
/s/ Steven K. Hansen
--------------------
Steven K. Hansen, President
[LETTERHEAD OF BRANDEN T. BURNINGHAM]
March 29, 2000
World Internetworks, Inc.
418 South Commerce Road, Suite 422
Orem Utah 84058
Re: World Internetworks, Inc., a Nevada corporation (the
"Company")
Ladies and Gentlemen:
I refer to the Company's Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended (the "Registration Statement"), which
will be filed with the Securities and Exchange Commission. The Registration
Statement relates to the registration of approximately 7,326,000 shares of the
Company's one mill ($0.001) par value common stock (the "Common Stock"), to be
offered and sold by the holders thereof (the "Selling Stockholders").
You should be aware that I am the son of Leonard W. Burningham,
Esq., who is one of the Selling Stockholders. I am also the beneficial owner
of approximately 7,625 shares of the Company's common stock.
Assumptions
In rendering the opinion expressed below, I have assumed, with
your permission and without independent verification or investigation:
1. That all signatures on documents I have examined in
connection herewith are genuine and that all items submitted to me as original
are authentic and all items submitted to me as copies conform with originals;
2. Except for the documents stated herein, there are no
documents or agreements between the Company and/or any third parties which
would expand or otherwise modify the respective rights and obligations of the
parties as set forth in the documents referred to herein or which would have
an effect on the opinion;
3. That each of the documents referred to constitutes the
legal, valid and binding obligation of the party executing the same; and
4. That as to all factual matters, each of the representations
and warranties contained in the documents referred to herein is true, accurate
and complete in all material respects, and the opinion expressed herein is
given in reliance thereon.
I have examined the following documents in connection with this
matter:
1. Articles of Incorporation of the Company, as amended;
2. Bylaws of the Company;
3. The Registration Statement;
4. Unanimous Consents of the Board of Directors and of the
majority stockholders of the Company; and
5. Form of Subscription Agreement used in the Company's recently
completed $ 400,000 private placement of units, together with a list of the
subscribers thereunder.
I have also examined various other documents, books, records,
instruments and certificates of public officials, directors, executive
officers and agents of the Company, and have made such investigations as I
have deemed reasonable, necessary or prudent under the circumstances. Also,
in rendering this opinion, I have reviewed various statutes and judicial
precedence as I have deemed relevant or necessary.
Based upon my examination mentioned above, and relying on the
statements of fact contained in the documents that I have examined, I am of
the opinion that the Common Stock, when sold, will be legally issued, fully
paid and non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and the reference to me in the Prospectus under the
caption "Legal Opinions."
Sincerely yours,
/s/ Branden T. Burningham
Branden T. Burningham
INTERNET MARKETING CONCEPTS
Steven K. Hansen
CEO
World Internetworks, Inc.
418 S. Commerce Dr. Suite 422
Orem, UT, 84058
This Letter Agreement ("Agreement"), once accepted by World Internetworks
Inc., ("World Internetworks Inc.") and Internet Marketing Concepts ("Vendor")
will constitute a binding Agreement that will be enforceable against the
parties in accordance with its terms.
1. Development Services. Vendor agrees to make available to World
Internetworks Inc. Independent Team Members, who are independent contractors
("Customer"), certain proprietary internet functionality that includes the
following attributes and features, at no charge to World Internetworks Inc.:
A. Allow Customer to build and use a 3-commerce website from IMC's
quicksite 3.0 technology.
B. Allow Customer to individualize and update certain picture and
text information on Customer's individual website.
C. Create framing links to World Internetworks Inc. corporate
website(s) within Customer's website.
D. Create links to Customer's product ordering service at a future
date to be agreed upon by both parties.
E. Create a "rotating database" of World Internetworks Inc.
independent distributors on World Internetworks Inc. corporate
website for lead generation purposes.
F. No other links to other sites will be permitted except with the
prior approval of World Internetworks Inc..
<PAGE>
2. Schedule of Deliveries. Vendor acknowledges that time is of the
essence and therefore agrees to the following schedule:
A. Vendor will set up a "demonstration site" having full internet
functionality as set forth above for World Internetworks Inc. no
later than March 15, 1999.
B. Vendor will make all necessary modifications, if any, that are
identified and agreed upon by both parties as a result of such
demonstration, for incorporation into the final product offering.
3. Modifications. Vendor shall turnaround modification requests in a
timely manner, and in any event not longer than 5 business days after receipt
of such request whenever reasonably practicable, unless otherwise mutually
agreed. In case of an emergency, upon notice by Works Internetworks Inc.,
Vendor shall make every reasonable attempt to implement requested changes
immediately.
4. Hosting & Backup Services. For the term of this agreement, and
thereafter as may be agreed upon by the parties at such time, Vendor agrees to
maintain and host Customer websites on Vendor's web server. As part of this
service, Vendor agrees to monitor Customer's websites and make sites available
to Internet users 24 hours per day. Vendor agrees to back-up Customer
websites daily, and to store said back-up materials in a safe and secure
environment, and not located at the same location as Vendor's web server.
5. Reporting. Vendor shall provide World Internetworks Inc. monthly
summary transactional reports, in a format to be mutually agreed upon. Such
reports shall include access logs and shall at a minimum include the date,
time, source IP address, and file, graphic or other material viewed during the
month. In addition, the report shall include the total number of Customers,
broken down by new Customers, canceled Customers, and the type of hosting plan
selected by Customers.
6. Technical Support. For the term of this agreement, Vendor will be
solely responsible for providing any and all reasonable technical and customer
service support relative to this program that Customers may require to create
and maintain Customer websites.
7. Domain Names. Vendor shall provide Customers with the following
Internet Protocol address and corresponding domain name: (domainname)/(plus
the Customer's name). Processing fees for such service shall be included in
the monthly hosting fee charged to Customer. Restriction. Vendor will not
process any other domain names for Customers except upon prior approval from
World Internetworks Inc..
<PAGE>
8. Customer Charges and Billing. Vendor agrees to provide the internet
functionality and hosting services set forth in this Agreement to all
Customers who elect to sign up for Vendor's services at the following rates:
1) $29.95 per month hosting fee. 2) $5 dollars per site hosted will be paid
to the each distributor who sponsors a quicksite 3.0 web site, World
Internetworks will be responsible for handling those payments, and tracking
that information. 3) IMC will receive 50% of $24.95 or $12.24. 4) World
Internetworks new members will retail website for $495.00, the new member will
receive $200.00 as a commission on the website sale. IMC will retain $147.50,
World Internetworks will retain $147.50. Vendor will be responsible for all
billing and collection on monthly hosting fees for those World Internetworks
quicksite 3.0 web sites being hosted. The fees and charges set forth in this
paragraph shall be fixed, and shall be alterable only with written mutual
agreement of both parties. World Internetworks Inc. will be responsible for
all merchant account fees, and charge backs associated with World
Internetworks distributors using the IMC merchant account, and the quicksite
3.0 builder, and will be paid back to IMC upon receipt of fee, or charge back.
9. Audit Rights. Vendor shall maintain in a professional and
workmanlike manner such books and records as are reasonably required for
verification of the amounts due World Internetworks Inc. under this Agreement.
World Internetworks Inc. shall have the right to audit or review Vendor's
accounting records upon reasonable notice in connection with obtaining the
information necessary to verify amounts due World Internetworks Inc. under
this Agreement. If such audit reveals a discrepancy in World Intsernetworks
Inc. favor of more than two percent (2%) of the amounts due to World
Internetworks Inc., Vendor shall reimburse World Internetworks Inc. for all
reasonable costs relating to such audit. Vendor shall also remit any amounts
due to World Internetworks Inc. immediately.
10. Ownership and Rights.
A. Ownership by World Internetworks Inc. Except as set forth
below, certain specific deliverables and other materials, products, and
modifications thereto that are developed or prepared for World Internetworks
Inc. by Vendor under this Agreement, including and specifically limited to,
text, Content, that are provided completely by World Internetworks Inc. to
Vendor for use within Customer Web Sites. All other template designs prepared
by Vendor for use within Customer Web Sites shall be exclusively licensed to
World Internetworks Inc. for its use during the term of this agreement.
Except as set forth below, World Internetworks Inc. shall exclusively own all
United States and international copyrights relating to the text and content
mentioned in this paragraph.
B. Ownership and Licensing of Vendor Materials. Vendor has
developed, owns and retains all ownership and proprietary rights relating to
its programming architecture, including, but not limited to, HTML code,
program code, graphical code, etc. (Hereinafter "Vendor Materials"). Vendor
Materials shall remain the property of Vendor. During the term of this
agreement, Vendor grants to World Internetworks Inc. its successors and
assigns, a perpetual, nonexclusive, worldwide, royalty-free, license to use
<PAGE>
Vendor Materials in Connection with the use and maintenance of the World
Internetworks Inc. Customer Web Site, consistent with the terms of this
Agreement.
12. Publicity. No press releases, public statements, promotions or
advertising concerning the existence or terms of this Agreement, or the
parties' relationship, including marketing materials, shall be released in any
medium except with the prior approval of both parties. It is further agreed
the the necessary WI disclusures for the SEC will approved by both parties
involved. IMC is not required to release any privitly held information
regarding the company, principles, or financials.
13. Warranties and Indemnification.
A. Representations and Warranties. Vendor represents and warrants
that: (a) all of the services to be performed by it hereunder shall
be rendered using sound, professional practices in a competent and
professional manner by knowledgeable, trained and qualified
personnel; (b) the deliverables and Work Product shall operate in
conformance with the relevant terms of this Agreement, including
without limitation, the Development services; (c) Vendor
<PAGE>
is the owner of or otherwise has the right to use and distribute all
materials and methodologies used in connection with providing the
deliverables and Work Product pursuant to this Agreement; (d) Vendor
is under no obligation or restriction, nor will it assume any such
obligation or restriction that does or wold in any way interfere or
conflict with the work to be performed by Vendor under this
Agreement; (e) Vendor shall comply with all applicable federal,
state and local laws in the performance of its obligations
hereunder; (f) the deliverables and Work Product are and shall be
free of any software disabling devices or internal controls,
including, without limitation, time bombs, viruses, or devices of
similar nature; (g) the deliverables and Work Product shall not
infringe upon third party copyright, patent, trade secret or other
proprietary right, privacy right or similar rights of any person or
entity; (h) all deliverables and Work Product hereunder shall be
compatible and (i) Vendor's deliverables and Work Product shall be
Year 2000 compliant.
B. Indemnification. Each Party hereto shall indemnify, defend, and
hold harmless the other Party, its directors, officers, employees
and agents with respect to any claim, demand, cause of action, debt
or liability, including reasonable attorneys' fees, to the extent
that it is based upon a claim that: (a) if true, would constitute a
breach of any of the indemnifying Party's representations,
warranties, or agreements hereunder, or (b) arises out of the gross
negligence or willful misconduct of the indemnifying Party. In
claiming any indemnification hereunder, the Party claiming
indemnification (the "Claimant") shall provide the other Party with
written notice of any claim, which the Claimant believes, calls for
indemnification under this Agreement. The Claimant may, at its own
expense, assist in the defense if it so chooses, provided that the
other party shall control such defense and all negotiations relative
to the settlement intended to bind the Claimant shall not be final
without the Claimant's written consent.
14. Term. The initial term of this Agreement will be for five (5) years
from the date of signing of this agreement. Thereafter, this Agreement shall
be automatically renewed for successive two (2) year terms unless terminated
in accordance with this agreement. IMC will be the exclusive provider of
websites technology for WI during this period.
15. Termination. This Agreement may be terminated by either party upon
sixty (60) days written notice given to the party to be terminated by
terminating party. Specific cause for termination must be cited, said cause
being deemed reasonable, justifiable, and non-remediable by the offending
party. In the event that the cause cited is remediable, offending party shall
have thirty (30) days from the date of written notice to remedy the offense.
In the event that such remedy does not occur, notice of termination shall be
considered given, and termination shall be effective sixty (60) days from the
date of the original notice. This termination is directly related to World
Internetworks Inc., and not the independent distributor. Independent
distributors may cancel the monthly hosting at anytime, with no refund of the
hosting fee collected.
16. Duties Upon Termination. In the event that this Agreement is
terminated either party or it is not renewed in accordance with the terms in
this agreement, Vendor agrees to transfer a copy of "Work Product", as defined
in this agreement, to World Internetworks Inc., said transfer to occur by
either copying files onto media provided by World Internetworks Inc. or by
modem transfer, FTP transfer, electronic mail or otherwise as selected by
World Internet Inc.. Transfer of "Work Product" will be done in a manor that
allows the current list of web sites to be put on the web and viewed. No
proprietary code or programming outside the "Work Product" will be provided.
Vendor shall maintain one complete electronic version of Customers' websites,
including all Code therefor, available to the public via the Internet, until
such time as World Internetworks Inc. informs Vendor that the transfer is
complete, at which time Vendor shall render inoperable all World Internetworks
Inc. Customer Web Sites, and shall delete all "Work Product" from all of
Vendor's computers and media. Vendor shall return or destroy within 10 days
all originals and copies of any Confidential Information regarding this
project. World Internet Inc. shall return or destroy within 10 days all
originals and copies of any Confidential Information regarding this project.
WI will assume all costs associated with this transfer process.
15. Governing Law. This Agreement shall be governed by the laws of
Utah, without reference to the choice of law provisions thereof.
16. Limited Liability. EXCEPT WITH RESPECT OT LIABILITY ARISING FROM A
PARTY'S INDEMNIFICATION OBLIGATIONS HEREUNDER, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT, (A) NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), AND (B)
EXCEPT WITH RESPECT TO LIABILITY ARISING FROM WORLD INTERNETWORKS INC.
INDEMNIFICATION OBLIGATIONS HEREUNDER, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT, THE LIABILITY OF WORLD INTERNETWORKS INC. HEREUNDER SHALL NOT
EXCEED THE FEES, IF ANY, DUE AND OWNING TO VENDOR HEREUNDER.
17. Independent Contractor. The parties to this Agreement are
independent contractors and there is no relationship of agency, partnership,
joint venture, employment or franchise between the parties. Neither party has
the authority to bind the other, or to incur any obligation on the other's
behalf.
18. No Assignment. Vendor may not, without the prior written consent of
World Internetworks Inc., assign, transfer, or sublicense this Agreement or
any obligation hereunder. Any attempt to do so in contravention of this
Section shall be void and of no force and effect.
20. Partial Invalidity. Should any provision of the agreement be held
to ve void, invalid or inoperative, the remaining provisions of this agreement
shall not be affected and shall continue in effect and the invalid provision
shall be deemed modified to the least degree necessary to remedy such
invalidity.
<PAGE>
21. No Waiver. The failure of either Party to partially or fully
exercise any right or the waiver by either party of any breach, shall not
prevent a subsequent exercise of such right or be deemed a waiver of any
subsequent breach of the same or any other term of this Agreement.
22. Notices. Any notice required or permitted to be sent shall be in
writing and shall be sent in a manner requiring a signed receipt, and if
mailed, then mailed by registered or certified mail, return receipt requested.
Notice is effective upon receipt.
23. Entire Agreement. This agreement sets forth the entire agreement
between the Parties on this subject and supersedes all prior negotiations,
understandings and agreements between the Parties concerning the subject
matter. No amendment or modification of this Agreement shall be made unless
agreed to in writing and signed by both parties.
24. Headings. The section headings contained in the Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
25. Counterparts. This Agreement may be executed in counterparts, and
each of which shall be deemed an original and all of which together shall
constitute one and the same document.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of 13
April, 1999
World Internetworks Inc., Inc.
/s/ Steven K. Hansen
------------------------------
Name: Steven K. Hansen
Title: CEO/Chairman
Internet Marketing Concepts
/s/ Gary S. Winterton
------------------------------
Name: Gary S. Winterton
Title: President
FAIRWAY CAPITAL PARTNERS, LLC
Dear Mr. Hansen,
Fairway Capital Partners, LLC has studied with much interest World
InterNetWorks, Inc. You have developed a very interesting business model. We
believe World InterNetWorks, Inc. has a unique opportunity to become a
worldwide leader in the e-commerce industry. We are of the opinion that the
window of opportunity is open and are optimistic that with our combined
resources we should be able to carve out a profitable. fair share of this
market.
Fairway Capital Partners, LLC is pleased to present the following proposal for
the purpose of introducing the World InterNetWorks, Inc. opportunity to
potential financial partners so that World InterNetWorks, Inc. may explore
fund-raising. This is a non-binding letter of intent to aid in negotiating
definitive agreements for the matters set forth herein. No party will be
legally obligated to the other until definitive agreements are executed.
ASSUMPTIONS
Prospective Funding: Up to $1,800,000 on a best efforts basis
$25,000 at closing
$75,000 within 30 days of closing
$250,000 within 90 days of closing
$650,000 within 180 days of closing
$800,000 within 365 days of closing
Use of proceeds: To fund general-working capital and provide advertising and
marketing funds for World InterNetWorks, Inc. to drive traffic to the site.
Anticipated Closing: On or before August 20, 1999
Allocation. Fairway Capital Partners, LLC will be issued options to purchase
shares of World InterNetWorks, Inc. common stock as described and scheduled in
this document based on successful completion of activities described to be
issued the aforementioned options.
There will be co-dilution on all funding. All options issued based on this
agreement will have piggyback registration rights on all future registrations.
Fairway Capital Partners, LLC will receive a consulting agreement for a three-
year term at fees determined in the consulting agreement.
Fairway Capital Partners, LLC at its option will have the ability to hold 3 of
5 board seats. The timing of the acquisition of these board seats will be at
the discretion of Fairway Capital Partners, LLC,
Fairway Capital Partners, LLC representatives at its option will be named
corporate officers of World InterNetWorks, Inc. to assist with strategic
planning, corporate finance, marketing and legal. These FCP representatives
will not be on World InterNetWorks, Inc. payroll, and will be exclusively
compensated by FCP.
Employment Agreements: All management will be bound by employment agreements
at closing. It is anticipated that initial salaries will be $3,000 - $8,000
per month for the management of World InterNetWorks, Inc. with performance
bonuses to be determined by formation of a compensation committee.
Advisory Board: World InterNetWorks, Inc, will create an advisory board to
which FCP will recruit industry veterans to help guide the company.
Communication and Representation: Dwain Brannon will represent FCP in all
communications and discussions concerning this initial agreement with World
InterNetWorks, Inc.
Activities and Option Agreements:
FCP will be granted options to purchase shares of WINW common stock relative
to the activities described below. The total number of shares to be granted
for option will be 4,200,000.
FCP will visit World InterNetWorks, Inc. to complete due diligence regarding
the current corporate structure, corporate activities, finance, business
model, and other pertinent business activities. Upon completion of this due
diligence visit, FCP will be granted options to purchase 500,000 shares of the
WINW common stock.
FCP will assist World InterNetWorks, Inc. in the development of future
strategies including but not limited to corporate finance, business model,
Internet presence, and public relations. Upon completion of this strategy
session, FCP will be granted options to purchase 500,000 shares of WINW common
stock.
FCP will introduce the World InterNetWorks, Inc. opportunity to
representatives of investment firms. The purpose of the introduction is to
establish a level of interest for WINW with these investment firms in hopes of
providing exposure of the WINW opportunity. Upon completion of these
introductions, FCP will be granted options to purchase 500,000 shares of the
WINW common stock.
FCP will assist in the design, layout, content, graphics, and overall strategy
of the physical business plan to be used as an introduction piece to introduce
the WINW opportunity to potential strategic partners, brokerage firms,
investors. FCP Will also introduce WINW to parties that have experienced
success in producing business plans that have been effective in corporate
activities. Upon completion of the strategy for the business plan and the
introduction to parties to produce the plan, FCP will be granted options to
purchase 500,000 shares of WINW common stock.
Upon completion of the aforementioned business plan and acceptance of such by
World InterNetWorks, Inc., FCP will be granted options to buy 500,000 shares
of WINW common stock.
FCP will introduce World InterNetWorks Inc. to the Regional Investment Bankers
Association in an effort to assist in the development of a sponsor to a RIBA
conference. Members of RIBA represent brokerage firms from across the United
States. The potential for corporate presentation to the RIBA membership could
result in increased exposure to the brokerage community for WINW, Upon
completion of this introduction, FCP will be granted options to purchase
500,000 shares of the WINW common stock.
FCP will introduce World InterNetWorks, Inc. to industry leaders in the
Internet/technology field in order to assist in the building of an advisory
board to provide guidance to the company. These industry leaders will have
leadership experience in the founding of technology companies and building
successful strategies for these companies. Upon completion of these
introductions, FCP will be granted options to purchase 600,000 shares of WINW
common stock.
FCP will introduce World InterNetWorks, Inc. to such persons that would be
considered appropriate by FCP to serve as advisory board members for WINW.
Upon completion of introduction to at least three individuals, FCP will be
granted options to purchase 600,000 shares of WINW common stock.
This proposal is subject only to the negotiation and execution of definitive
agreements usual and customary in transactions of this type.
Proposal Expiration: August 23, 1999
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is made and entered into as of
the 16TH day of August, 1999, by and between World InterNetWorks, Inc., a
Nevada corporation (the "Corporation"), and Fairway Capital Partners, LLC, a
Florida corporation (the "Consultant").
1. Appointment of Consultant. The Corporation appoints the Consultant
and the Consultant accepts appointment on the terms and conditions provided in
this Agreement as a consultant to the Corporation's business, including any
other corporations hereafter formed or acquired by the Corporation to engage
in any business.
2. Board of Directors Supervision. The activities of the Consultant to
be performed under this Agreement shall be subject to the supervision of the
Board of Directors of the Corporation (the "Board") to the extent required by
applicable law or regulation and subject to reasonable policies not
inconsistent with the terms of this Agreement adopted by the Board and in
effect from time to time. Where not required by applicable law or regulation,
the Consultant shall not require the prior approval of the Board to perform
its duties under this Agreement.
3. Authority of Consultant. Subject to any limitations imposed by
applicable law or regulation, the Consultant shall render management,
consulting and financial services to the Corporation which services shall
include advice and assistance concerning any and all aspects of the
operations, planning and financing of the Corporation as needed from time to
time, including conducting relations on behalf of the Corporation with
accountants, attorneys, financial advisors and other professionals as to
services already approved for payment by the Board of Directors, the Chairman
of the Board of Directors or the President. The Consultant will also make
reports to the Corporation as requested by the Board of Directors. The
Consultant will use its best efforts to cause its employees and agents to give
the Corporation the benefit of their special knowledge, skill and business
expertise to the extent relevant to the Corporation's business and affairs
(including, without limitation, financing and securities affairs). In
addition, the Consultant shall render advice and expertise (including, without
limitation, financing and securities expertise) in connection with any
acquisitions or dispositions undertaken by the Corporation and shall from time
to time bring to the attention of the Corporation such investment and other
acquisition opportunities as the Consultant deems appropriate in its sole
discretion.
4. Reimbursement of Expenses; Independent Contractor. All obligations
or expenses reasonably incurred by the Consultant in the performance of its
duties under this Agreement which are performed with the prior written or oral
approval of the Corporation shall be for the account of, on behalf of, and at
the expense of the Corporation; provided that no such written or oral approval
shall be required for reimbursement of any individual expense which is less
than $500. The Consultant shall not be obligated to make any advance to or
for the account of the Corporation or to pay any sums, except out of funds
held in accounts maintained by the Corporation nor shall the Consultant be
obligated to incur any liability or obligation for the account of the
Corporation without assurance that the necessary funds for the discharge of
such liability or obligation will be provided. The Corporation shall
reimburse each such expense within 15 days of submission by the Consultant
to the Corporation of a properly documented expense report. The Consultant
<PAGE>
shall be an independent contractor, and nothing contained in this Agreement
shall be deemed or construed (i) to create a partnership or joint venture
between the Corporation and the Consultant, or (ii) to cause the Consultant to
be responsible in any way for the debts, liabilities or obligations of the
Corporation or any other party, or (iii) to constitute the Consultant or any
of its employees as employees, officers or agents of the Corporation. The
Consultant shall not hold itself out or permit itself to be regarded (to the
extent practical) as an employee, officer or agent of the Corporation and
shall strictly avoid any act or omission that may reasonably lead to a
contractual or tortious claim against or liability to the Corporation.
5. Other Activities of Consultant; Investment Opportunities. The
Corporation acknowledges and agrees that neither the Consultant nor any of the
Consultant's employees, officers, directors, affiliates or associates shall be
required to devote full time and business efforts to the duties of the
Consultant specified in this Agreement, but instead shall devote only so much
of such time and efforts as the Consultant reasonably deems necessary. The
Corporation further acknowledges and agrees that the Consultant and its
affiliates are engaged in the business of investing in, acquiring and/or
managing businesses for the Consultant's own account, for the account of
unaffiliated parties, and understands that the Consultant plans to continue to
be engaged in such businesses (and other business or investment activities)
during the term of this Agreement. No aspect or element of such activities
shall be deemed to be engaged in for the benefit of the Corporation or any of
its subsidiaries nor to constitute a conflict of interest. Furthermore,
notwithstanding anything herein to the contrary, the Consultant shall be
required to bring only such investments and/or business opportunities to the
attention of the Corporation as the Consultant, in its sole discretion, deems
appropriate.
6. Compensation of Consultant. In consideration of Consultant's
agreement to provide the management services described herein, the Corporation
will pay a cash consulting and management fee equal to $5,000 per month
(payable each month in advance) for the first three months, $10,000 per month
for the fourth, fifth, and sixth month, and $15,000 for the remaining months
from the date hereof through [July 31], 2002.
7. Term. This Agreement shall commence as of the date hereof and shall
remain in effect through [July 31], 2002.
8. Termination Upon Breach. Either the Corporation or the Consultant
may terminate this Agreement in the event of the breach of any of the material
terms or provisions of this Agreement by the other party, which breach is not
cured within 10 business days after notice of the same is given to the party
alleged to be in breach by the other party.
9. Standard of Care. The Consultant (including any person or entity
acting for or on behalf of the Consultant) shall not be liable for any
mistakes of fact, errors of judgment, for losses sustained by the Corporation
or for any acts or omissions of any kind (including acts or omissions of the
Consultant), unless caused by intentional misconduct, recklessness or gross
negligence of the Consultant.
10. Confidentiality. All information, knowledge and data relating to or
concerned with the operations, business and affairs of the Consultant or the
Corporation which are exchanged by the parties hereto in connection with the
performance by the Consultant of its duties hereunder shall be the property of
the Corporation and be treated as confidential information and shall be held
in a fiduciary capacity by the parties hereunder. The Consultant shall not
disclose or divulge such information to any firm, person, corporation or other
entity other than as required by law or in connection with the performance of
its duties hereunder.
11. Non-Competition. During the "Restricted Period" (as hereinafter
defined), the Consultant agrees not to in any capacity, either separately,
jointly or in association with others, directly or indirectly do any of the
following: (a) employ or seek to employ any person or agent who is then
employed or retained by the Corporation (or who was so employed or retained at
any time within the two (2) years prior to the date either Consultant employs
or seeks to employ such person); and (b) solicit, induce, or influence any
proprietor, partner, stockholder, lender, director, officer, employee, joint
venturer, investor, consultant, agent, lessor, supplier, customer or any other
person which has a business relationship with the Corporation or any
subsidiary, at any time during the Restricted Period, to discontinue or reduce
or modify the extent of such relationship with the Corporation. The
"Restricted Period" shall mean one (1) year after the date of termination of
this Agreement.
12. Indemnification of Consultant. The Corporation hereby agrees to
indemnify and hold harmless the Consultant and its present and future
officers, directors, affiliates, employees and agents ("Indemnified Parties")
to the fullest extent permitted by law. The Corporation further agrees to
reimburse the Indemnified Parties on a monthly basis for any cost of defending
any action or investigation (including attorneys' fees and expenses), subject
to an undertaking from such Indemnified Party to repay the Corporation if such
party is determined not to be entitled to such indemnity.
13. Assignment. Without the consent of the Consultant, the Corporation
shall not assign, transfer or convey any of its rights, duties or interest
under this Agreement, nor shall it delegate any of the obligations or duties
required to be kept or performed by it hereunder. The Consultant shall not
assign, transfer or convey any of its rights, duties or interests under this
Agreement, nor shall it delegate any of the obligations or duties required to
be kept or performed by it under this Agreement, except that the Consultant
may transfer its rights and obligations hereunder to one of its affiliates.
14. Notices. All notices, demands, consents, approvals and requests
given by either party to the other hereunder shall be in writing and shall be
personally delivered or sent by registered or certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses:
If to the Corporation: World InterNetWorks, Inc.
422 South Commerce Rd.
Orem, Utah 84058
Attention: Steven K Hansen
If to the Consultant: Fairway Capital Partners, LLC
56 E Pine St., Second Floor
Orlando, FL 32801
Attention: Dwain Brannon
Any party may at any time change its respective address by sending written
notice to the other party of the change in the manner herein above prescribed.
15. Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or enforceable, shall not be affected thereby, and
each term or provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
16. No Waiver. The failure by any party to exercise any right, remedy
or elections herein contained or permitted by law shall not constitute or be
construed as a waiver or relinquishment for the future exercise of such right,
remedy or election, but the same shall continue and remain in full force and
effect. All rights and remedies that any party may have at law, in equity or
otherwise upon breach of any term or condition of this Agreement, shall be
distinct, separate and cumulative rights and remedies and no one of them,
whether exercised or not, shall be deemed to be in exclusion of any other
right or remedy.
17. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the matters herein contained and
any change or modification must be in writing and signed by the party against
whom enforcement of the change or modification is sought.
18. Governing Laws. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida .
* * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Consulting
Agreement to be duly executed by their authorized representatives as of the
date first above written.
World InterNetWorks, Inc.
/s/ Steven K. Hansen
By: ----------------------
Name: Steven K. Hansen
Title: CEO/President
Fairway Capital Partners, LLC
By: /s/ Dwain Brannon
------------------
Name: Dwain Brannon
Title: President
</TEXT
EMPLOYMENT AGREEMENT
An agreement is made February 19, 1999, between the company, World
InterNetWorks, a corporation organized and existing under the laws of the
state of Nevada, and Steven Kent Hansen, of Sandy, Utah.
It is agreed as follows:
1. The company will employ Mr. Hansen as the president of the company.
He will act as the president of the company for the term of three years from
the date of the signing of this contract, and thereafter until this agreement
shall be determined by either party giving to the other three months' notice
in writing of such intended determination.
2. During the continuance of this agreement the president shall devote
sufficient of his time during the business hours of the company to the
business of the company and shall use his best endeavors to promote the
interests and welfare of the company. The president shall not either before
or after the termination of this agreement disclose to any person whatever any
information relating to the company or its customers or any trade secrets of
which he shall become possessed while acting as president.
3. The president shall exercise and carry out all such powers and duties
necessary to control the general management of the business of the company and
shall have power to appoint and dismiss all personnel as needed and to
establish a new management team, as well as a new board of directors, with Mr.
Hansen appointed as chairman of the board, and to enter into any which he may
consider necessary or conducive to the interests of the company.
4. The president shall be entitled by way of remuneration for his
services to a salary of $8,000.00 per month, to be paid monthly. The company
shall provide a full benefits package, to include medical and dental insurance
for the president and his dependents. The company shall transfer 800,000
shares of restricted stock to Mr. Hansen within ten days of the signing of
this contract. All shares and similar plans of the company for the benefit of
its executives.
5. Mr. Hansen, in his role as president, shall be entitled to
reimbursement of all reasonable expenses incurred in connection with the
business of the company, and to participate in all pension, profit-sharing and
similar plans of the company for the benefit of its executives.
6. The company shall represent and indemnify the president in any action
arising out of the discharge of his duties. It shall hold Mr. Hansen harmless
for any legal action, creditor claims, class action suits, share holder suits,
or any other cause of action arising in whole or in part on any matter
involving the company or its officers occurring prior to the execution of this
agreement.
7. The company has employed the president to recognize the company,
resume operations, and negotiate its obligations. Mr. Hansen, as president,
is retained as a "turn-around specialist." The board of directors recognizes
the president's best efforts may be unsuccessful. It agrees to hold Mr.
Hansen harmless from any action resulting in the closure of the business.
8. All amendments to this Agreement shall be in writing and signed by
both parties. The original written Agreement, and any written and signed
modifications, shall control in any dispute between the parties. Oral
Modifications are not permitted.
9. The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same, or any other provision of this agreement.
10. Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not effect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed, and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
11. This Agreement shall be governed by and construed in accordance with
the laws of the State of Utah without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Utah or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Utah.
12. The Agreement, and those documents expressly referred to herein and
other documents of even date signed by the parties, constitute the complete
agreement and understanding among the parties and supercede any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
13. Any dispute arising between the parties regarding this Agreement,
which the parties are not able to resolve by mutual consent, shall be
submitted to binding arbitration conducted in accordance with the rules of the
American Arbitration Association. Each party shall bear its own costs.
INTENDING TO BE LEGALLY BOUND, the parties -hereto have executed this
Agreement as of the date first written above.
/s/ Steven K. Hansen /s/ Ronald A. Nilsson
- ---------------------------- ---------------------------
Steven K. Hansen Ronald A. Nilsson
CEO, World Internet Works, Inc.
Chairman of the Board
Original agreement forwarded to Fax copy to R. Spencer Robinson
Mr. Hansen at 1379 East Indian Attorney at Law
Ridge Circle, Sandy, UT 84092 801-576-9551
This agreement for stock is between Gary S. Winterton, and WI Works. This
stock compensation is for services rendered, as a board member, and consultant
to WI Works. Compensation is as follows:
Compensation
1. 100,000 shares of restricted common stock with an option price of .40 per
share vested immediately and dated March of 1999 as an amendment to our
original agreement dated On March 22, 1999.
2. 50,000 shares of restricted common stock with an option price set by the
closing price of the stock on July 23, 1999 or .75. These shares are fully
vested, and dated March of 1999.
3. Your Board Compensation will remain as outlined with the exception of
considering an adjustment to the Strike price. 10,000 Shares vested
immediately, and dated March of 1999. Adjusted strike price is set at .40 per
share.
4. All shares are once vested March 1, 1999 will be registered to Gary S.
Winterton. These shares will be registered for trading upon request from Gary
S. Winterton.
This agreement is grandfathered, and will survive any and all future
agreements between WI Works and any third party or other entity or
individuals.
Gary, You have been instrumental in our progress to date and I am grateful.
This compensation plan provides you with more shares than you had detailed in
your request. I look forward to your continued involvement in the future of
World InterNetWorks as we begin to market our new business model.
Gary S. Winterton Steve Hansen
CEO WI Works
/s/ Gary S. Winterton 8/12/99 /s/ Steve Hansen 8/12/99
- ----------------------------- --------------------------
Notary
/s/ Kimberly Harris
- -----------------------------
Kimberly Harris
[LETTERHEAD OF JONES, JENSEN & COMPANY, LLC]
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We hereby consent to the use of our audit report dated August 23, 1999 in this
Form SB-2 of World Internetworks, Inc. and Subsidiaries for the year ended
February 28, 1999, and from the inception of the development stage on October
22, 1998 through February 28, 1999, which is part of this Form SB-2 and all
references to our firm included in this Form SB-2.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
April 27, 2000
[Letterhead of Branden T. Burningham]
March 29, 2000
Steven K. Hansen, President
World Internetworks, Inc.
418 South Commerce Road
Orem, Utah 84058
Re: Opinion letter, dated March 29, 2000, regarding shares of common stock of
World Internetworks, Inc., a Nevada corporation (the "Company")
Dear Mr. Hansen:
I hereby consent to being named in the Prospectus included in the
Company's Registration Statement on Form SB-2 as having rendered the above-
referenced opinion and as having represented the Company in connection with
such Registration Statement.
Sincerely yours,
/s/ Branden T. Burningham
Branden T. Burningham
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIODS ENDED FEBRUARY 28, 1999, AND NOVEMBER 31, 1999, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> OTHER 9-MOS
<FISCAL-YEAR-END> FEB-28-1999 FEB-29-2000
<PERIOD-END> FEB-28-1999 NOV-30-1999
<CASH> 0 4286
<SECURITIES> 0 0
<RECEIVABLES> 0 16486
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 20772
<PP&E> 11605 5738
<DEPRECIATION> (8545) 1326
<TOTAL-ASSETS> 3060 25184
<CURRENT-LIABILITIES> 2627271 2520512
<BONDS> 0 0
0 0
0 0
<COMMON> 1750 6071
<OTHER-SE> (2625961) (2501399)
<TOTAL-LIABILITY-AND-EQUITY> 3060 25184
<SALES> 0 50940
<TOTAL-REVENUES> 0 50940
<CGS> 0 30901
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<OTHER-EXPENSES> 0 776786
<LOSS-PROVISION> 2450128 0
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<INCOME-PRETAX> (2450128) (756747)
<INCOME-TAX> 0 0
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<NET-INCOME> (2450128) (585617)
<EPS-BASIC> (0.74) (0.16)
<EPS-DILUTED> (0.74) (0.16)
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